EXHIBIT 10.6
THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT OF
RENT-A-CENTER, INC.
THIS THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (the
"AGREEMENT"), is effective as of the 31st day of December, 2002, and is entered
into by and among (i) each of Apollo Investment Fund IV, L.P., a Delaware
limited partnership, and Apollo Overseas Partners IV, L.P., an exempted limited
partnership registered in the Cayman Islands acting through its general partner
(individually and collectively with their Permitted Transferees (defined below),
"APOLLO"), (ii) Xxxx X. Xxxxxx, an individual ("XXXXXX"), (iii) Rent-A-Center,
Inc., a Delaware corporation (formerly known as Rent-A-Center Holdings, Inc.,
the "COMPANY"), (iv) each Person (defined below) named in Exhibit A attached
hereto (the "XXXXXX OTHER PARTIES" and together with Xxxxxx, the "XXXXXX
GROUP"), and (v) each other Person who becomes a party to the Agreement in
accordance with the terms hereof (all of the foregoing, collectively, the
"PARTIES"). Terms with initial capital letters used but not otherwise defined
herein shall have the meanings given in Section 1.1.
WITNESSETH
WHEREAS, the Parties (other than the Company) and Rent-A-Center East,
Inc., a Delaware corporation (formerly known as Rent-A-Center, Inc., the
"ORIGINAL COMPANY") are parties to that certain Second Amended and Restated
Stockholders Agreement dated as of August 5, 2002 (the "2002 AGREEMENT"), that
amended and restated that certain Amended and Restated Stockholders Agreement,
dated as of October 8, 2001 (the "2001 AGREEMENT"), that amended and restated
that certain Stockholders Agreement dated as of August 5, 1998 (the "ORIGINAL
AGREEMENT");
WHEREAS, as a result of the merger of the Original Company into a
wholly-owned subsidiary of the Company (the "MERGER"), the shares of stock held
by the stockholders of the Original Company have been converted into shares of
stock of the Company (the "CONVERSION");
WHEREAS, the Parties and the Original Company desire to amend and
restate the 2002 Agreement to reflect the agreement of the Parties and the
Original Company to, among other things, reflect the removal of the Original
Company as a party and the addition of the Company as a party as a result of and
in connection with the Merger and the Conversion;
WHEREAS, the authorized capital stock of the Company consists of
125,000,000 shares of common stock, $.01 par value (the "COMMON STOCK") and
5,000,000 shares of preferred stock, $.01 par value (the "PREFERRED STOCK"), of
which 400,000 shares are designated Series A Preferred Stock, $.01 par value
(the "SERIES A PREFERRED STOCK"), and (ii) as of December 27, 2002, the issued
and outstanding capital stock of the Company consists of approximately
34,927,718 shares of Common Stock and two shares of Series A Preferred Stock,
with as of December 31, 2002, approximately 5,317,616 shares of Common Stock
reserved for issuance upon the exercise of certain stock options and upon
conversion of the Series A Preferred Stock;
WHEREAS, as of December 31, 2002 (i) Apollo beneficially owns two
shares of Series A Preferred Stock and 7,001,903 shares of Common Stock, and
(ii) the Xxxxxx Group collectively owns 1,176,832 shares of Common Stock;
WHEREAS, the Parties desire to restrict the Transfer of the Shares,
including both issued and outstanding Shares as well as Shares that may be
issued or otherwise acquired hereafter, to
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provide for certain rights and obligations in respect to the Shares and the
Company as hereinafter provided; and
WHEREAS, the Parties desire that this Agreement become effective
immediately.
NOW THEREFORE, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"AFFILIATE" as applied to any specified Person, shall mean 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, Apollo and its
Affiliates shall not be deemed Affiliates of the Company for purposes of this
Agreement.
"APOLLO NOMINEES" shall have the meaning set forth in Section 4.1(a).
"BENEFICIAL OWNER" of a security shall mean any Person who, directly or
indirectly, through any contract, arrangement, understanding, relationship, or
otherwise has (i) the power to vote, or to direct the voting of, such security
or (ii) the power to dispose, or to direct the disposition of, such security.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Company.
"BUSINESS DAY" shall mean each day other than Saturdays, Sundays and
days when commercial banks are authorized to be closed for business in New York,
New York.
"CERTIFICATE OF DESIGNATION" shall mean the Certificate of Designation
of the Series A Preferred Stock in the form attached as an exhibit hereto.
"CHARTER DOCUMENTS" shall mean the Certificate of Incorporation and
By-Laws of the Company, in the forms attached as exhibits hereto.
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
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"COMMON STOCK" shall have the meaning set forth in the recitals.
"COMPANY" shall have the meaning set forth in the preamble.
"EFFECTIVE DATE" shall mean as of December 31, 2002.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GROUP MEMBER" shall mean a member of the Xxxxxx Group.
"INDEBTEDNESS" shall mean with respect to any person, without
duplication, all liabilities of such person (a) for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), (b) evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (other than any such balance that represents an account
payable or any other monetary obligation to a trade creditor (whether or not an
Affiliate)), or (c) for the payment of money relating to a capitalized lease
obligation.
"IRR" shall have the meaning set forth in Section 4.2(b).
"MD&A" shall mean a management's discussion and analysis of the
Company's financial condition and results of operation comparable to the
discussion that is required to be included in periodic reports filed under the
Exchange Act.
"NOTICES" shall have the meaning set forth in Section 6.5.
"ORIGINAL AGREEMENT" shall have the meaning set forth in the recitals.
"PIK SHARES" means any Shares issued in lieu of cash dividends pursuant
to the Certificate of Designation.
"PECUNIARY INTEREST" in any security shall mean the opportunity,
directly or indirectly, to profit or share in any profit derived from a
transaction in such security, and shall include securities owned by an
individual's spouse or issue or any trust solely for the benefit of such
individual, spouse or issue.
"PERMITTED TRANSFEREE" shall mean:
(a) in the case of Apollo (i) any officer, director or partner
of, or Person controlling, Apollo, (ii) any other Person that is (x) an
Affiliate of the general partners, investment managers or investment
advisors of Apollo, (y) an Affiliate of Apollo 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 Apollo or a Permitted Transferee
of Apollo 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;
(b) in the case of a Group Member, (i) any Person that is
solely controlled by such Group Member, (ii) upon a bona fide
liquidation of, or a bona fide withdrawal from,
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such Group Member, in each case, not intended to avoid the provisions
of this Agreement, the shareholders, partners or principals, as the
case may be, of such Group Member, or (iii) if such Group Member is an
individual, (x) any spouse or issue of such individual, or any trust or
limited partnership 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; and
(c) any Person who is a party to this Agreement.
"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.
"PREFERRED STOCK" shall have the meaning set forth in the recitals.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Series A Registration
Rights Agreement, dated as of August 5, 1998, by and between the Original
Company and Apollo, as amended from time to time.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"SERIES A PREFERRED STOCK" shall have the meaning set forth in the
recitals.
"SHARES" shall mean, collectively, the Common Stock and the Preferred
Stock, whether now owned or acquired after the date hereof. Whenever this
Agreement refers to a number or percentage of Shares, such number or percentage
shall be calculated as if each of the Shares (including, in the case of Apollo,
any PIK Shares) had been exchanged or converted into shares of Common Stock
immediately prior to such calculation regardless of the existence of any
restrictions on such exchange or conversion.
"XXXXXX GROUP" shall have the meaning set forth in the preamble.
"XXXXXX INCLUDED SHARES" shall mean those 1,176,832 shares of Common
Stock owned by the Xxxxxx Group as of October 8, 2001.
"XXXXXX OTHER PARTIES" shall have the meaning set forth in the
preamble.
"STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement,
dated as of August 5, 1998, between the Original Company and Apollo.
"SUBSIDIARY" shall mean, with respect to any Person, (a) a corporation
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a Subsidiary of such Person, or by such Person and one or
more Subsidiaries of such Person, (b) a partnership in which such Person or a
Subsidiary of such Person is, at the date of determination, a general partner of
such partnership, or (c) any other Person (other than a corporation) in which
such Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (i) at least a majority ownership interest or (ii)
the power to elect or direct the election of the directors or other governing
body of such Person.
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"2001 AGREEMENT" shall have the meaning set forth in the recitals.
"2002 AGREEMENT" shall have the meaning set forth in the recitals.
"TRANSFER" shall mean (i) when used as a noun: any direct or indirect
transfer, sale, assignment, pledge, hypothecation, encumbrance or other
disposition and (ii) when used as a verb: to directly or indirectly transfer,
sell, assign, pledge, hypothecate, encumber, or otherwise dispose of; provided,
however, Transfer shall not include a pledge in connection with a recourse, bona
fide loan transaction that is not intended to avoid the provisions of this
Agreement.
"TRANSFEREE" shall mean any Person to whom Shares have been Transferred
in compliance with the terms of this Agreement.
ARTICLE II
RESTRICTIONS ON TRANSFERS
Section 2.1 Transfers in Accordance with this Agreement. Any attempt to
Transfer, or purported Transfer of, any of the Xxxxxx Included Shares in
violation of the terms of this Agreement shall be null and void and the Company
shall not register upon its books, and shall direct its transfer agent not to
register on its books any such Transfer. A copy of this Agreement shall be filed
with the Secretary of the Company and the Company's transfer agent and kept with
the records of the Company.
Section 2.2 Agreement to be Bound.
(a) No party hereto (other than the Company, Apollo and their
Permitted Transferees) shall Transfer any Shares except (i) to a
Permitted Transferee, or (ii) as specifically provided herein.
(b) No member of the Xxxxxx Group or its Permitted Transferees
shall Transfer its respective pecuniary interests in any of the Xxxxxx
Included Shares to any party other than a Permitted Transferee of the
Xxxxxx Group, except that during any twelve-month period the Xxxxxx
Group and its Permitted Transferees shall be entitled to Transfer up to
300,000 Shares in aggregate through sales pursuant to Rule 144 under
the Securities Act, or otherwise. Notwithstanding the foregoing, in no
case shall the Xxxxxx Group or its Permitted Transferees (i) Transfer
more than 50% of the Xxxxxx Included Shares during the one year period
commencing on August 5, 2002, or (ii) Transfer any Shares if such
Transfer would trigger default or change-in-control provisions under
any material debt instrument of the Company.
(c) No Transfer to a Permitted Transferee of Apollo or of any
party as provided in the foregoing clauses (a) and (b) of this Section
2.2 shall be permitted unless (i) the certificates representing such
Shares issued to the Transferee bear the legend provided in Section
2.3, and (ii) the Transferee (if not already a party hereto) has
executed and delivered to each other party hereto, as a condition
precedent to such Transfer, an instrument or instruments, reasonably
satisfactory to the Company, confirming that the Transferee agrees to
be bound by the terms of this Agreement in the same manner as such
Transferee's transferor, except as otherwise specifically provided in
this Agreement.
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Section 2.3 Legend. Apollo and each Group Member hereby agree that each
outstanding certificate representing Shares issued to any of them (i) on or
after the date of the Original Agreement and prior to the date of the 2001
Agreement shall bear the legend as set forth in Section 2.3 of the Original
Agreement, (ii) on or after the date of the 2001 Agreement and prior to the date
of the 2002 Agreement shall bear the legend as set forth in Section 2.3 of the
2001 Agreement, (iii) on and after the date of the 2002 Agreement and prior to
the Effective Date shall bear the legend as set forth in Section 2.3 therein,
and (iv) on or after the Effective Date, or any certificate issued after the
Effective Date in exchange for or upon conversion of any similarly legended
certificate, shall bear a legend reading substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR
AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE HOLDER OF THESE SHARES
MAY BE REQUIRED TO DELIVER TO THE COMPANY, IF THE COMPANY SO REQUESTS,
AN OPINION OF COUNSEL (REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO
THE COMPANY) TO THE EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT (OR FROM REGISTRATION OR QUALIFICATION UNDER STATE
SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO ANY TRANSFER OF THESE
SHARES THAT HAS NOT BEEN SO REGISTERED (OR QUALIFIED).
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND OBLIGATIONS, TO WHICH ANY
TRANSFEREE AGREES BY HIS ACCEPTANCE HEREOF, AS SET FORTH IN THE THIRD
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, AS AMENDED FROM TIME TO
TIME, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. NO TRANSFER OF
SUCH SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED
BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT AND BY AN
AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE RESTRICTIONS SET FORTH
IN THE THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, AS AMENDED
FROM TIME TO TIME.
ARTICLE III
ADDITIONAL RIGHTS AND OBLIGATIONS OF
APOLLO AND THE COMPANY
Section 3.1 Access to Information; Confidentiality. Upon the request of
Apollo, the Company shall afford Apollo and its accountants, counsel and other
representatives reasonable access to all of the properties, books, contracts,
commitments and records (including, but not limited to, tax returns) of the
Company and its Subsidiaries that are reasonably requested. Apollo will, and
will cause its agents to, conduct any such investigations on reasonable advance
notice, during normal business hours, with reasonable numbers of persons and in
such a manner as not to interfere unreasonably with the normal operations of the
Company and its Subsidiaries.
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Except as otherwise required by applicable law, neither the Company nor
any of its Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of any customer or other Person, would jeopardize the attorney-client
privilege of the Person in possession or control of such information, or would
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date hereof. The Parties will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
Apollo shall, and shall use its best efforts to cause their
representatives to, keep confidential all such information to the same extent
such information is treated as confidential by the Company, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
not apply to (i) any information that (x) was already in Apollo's possession
prior to the disclosure thereof by the Company (other than through disclosure by
any other Person known by Apollo to be subject to a duty of confidentiality),
(y) was then generally known to the public, or (z) was disclosed to Apollo by a
third party not known by Apollo to be bound by an obligation of confidentiality
or (ii) disclosures made as required by law or legal process or to any person
exercising regulatory authority over such Apollo or its Affiliates. If in the
absence of a protective order or the receipt of a waiver hereunder, Apollo is
nonetheless, in the opinion of their counsel, compelled to disclose information
concerning the Company to any tribunal or governmental body or agency or else
stand liable for contempt or suffer other censure or penalty, Apollo may
disclose such information to such tribunal or governmental body or agency
without liability hereunder. In addition, in the event that any information
disclosed by the Company to Apollo is material nonpublic information, Apollo
agrees to comply with its obligations under the applicable Federal and state
securities laws with respect thereto, including but not limited to, the laws
pertaining to the possession, dissemination and utilization of such material
nonpublic information.
Section 3.2 Furnishing of Information. (a) The Company shall deliver to
Apollo, as long as Apollo shall own any Shares:
(i) As promptly as practical, but in no event later
than 30 days after the end of each calendar month, a copy of
the monthly financial reporting package for such month
customarily prepared for the Company's Chief Executive
Officer.
(ii) As promptly as practical, but in no event later
than 60 days after the close of each of its first three
quarterly accounting periods during any fiscal year of the
Company, the consolidated balance sheet of the Company as at
the end of such quarterly period, and the related consolidated
statements of operations, stockholders' equity and cash flows
for such quarterly period, and for the elapsed portion of the
fiscal year ended with the last day of such quarterly period,
and in each case setting forth comparative figures for the
related periods in the prior fiscal year (if such comparative
figures are available without unreasonable expense), all of
which shall be certified by the chief financial officer of the
Company, to have been prepared in accordance with generally
accepted accounting principles, subject to year-end audit
adjustments, together with an MD&A;
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(iii) As promptly as practical, but in no event later
than 105 days after the close of each fiscal year of the
Company, the consolidated balance sheet of the Company as of
the end of such fiscal year and the related consolidated
statements of operations, stockholders' equity and cash flows
for such fiscal year, in each case setting forth comparative
figures for the preceding fiscal year, and certified by
independent certified public accountants of recognized
national standing, together with an MD&A; and
(iv) All reports, if any, filed by the Company or any
Subsidiary of the Company with the Commission under the
Exchange Act, as promptly as practical, but in no event later
than 15 days after filing any such reports with the
Commission.
(b) The provisions of Sections 3.2(a)(ii) and (iii) above shall be
deemed to have been satisfied if the Company delivers the reports
timely filed by the Company with the Commission on Form 10-Q or 10-K,
as applicable, for such periods promptly, but in no event later than 15
days after filing any such Form with the Commission.
ARTICLE IV
CORPORATE GOVERNANCE AND VOTING
Section 4.1 Board of Directors of the Company.
(a) As of the Effective Date, the number of directors constituting the
entire Board of Directors of the Company is seven, but the Board of Directors
may increase its size to eight (8). Apollo (or any representative thereof
designated by Apollo) shall be entitled, but not required, to nominate up to
three (3) members to the Board of Directors (collectively, the "APOLLO
NOMINEES") and the Company shall be entitled, but not required, to nominate the
remaining members to the Board of Directors. One Apollo Nominee shall be
classified as a Class I Director of the Company, one Apollo Nominee shall be
classified as a Class II Director of the Company, and one Apollo Nominee shall
be classified as a Class III Director of the Company.
(b) The Xxxxxx Group shall vote all of the Shares owned or held of
record by them at all regular and special meetings of the stockholders of the
Company called or held for the purpose of filling positions on the Board of
Directors, and in each written consent executed in lieu of such a meeting of
stockholders, and, to the extent entitled to vote thereon, each party hereto
shall take all actions otherwise necessary to ensure (to the extent within the
Parties' collective control) that the Apollo Nominees are elected to the Board
of Directors.
(c) The Company and the Xxxxxx Group shall use their respective best
efforts to call, or cause the appropriate officers and directors of the Company
to call, a special meeting of stockholders of the Company, as applicable, and
the Xxxxxx Group shall vote all of the Shares owned or held of record by them
for, or to take all actions by written consent in lieu of any such meeting
necessary to cause, the removal (with or without cause) of any Apollo Nominee if
Apollo requests such director's removal in writing for any reason. Apollo shall
have the right to designate a new nominee in the event any
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Apollo Nominee shall be so removed under this Section 4.1(c) or shall vacate his
directorship for any reason.
Except as provided in this Section 4.1(c), each Group Member hereto
agrees that, at any time that it is then entitled to vote for the election or
removal of directors, it will not vote in favor of the removal of Apollo Nominee
unless (i) such removal shall be at the request of Apollo or (ii) the right of
Apollo to designate such director has terminated in accordance with clause (e)
below.
(d) The Company shall not, and shall not permit any of its
Subsidiaries to, without the consent of holders of a majority of the
Shares held by Apollo, take any action under Section 4.2(b) of this
Agreement that requires the approval of the Apollo Nominees, if any of
the Apollo Nominees are Persons whose removal from the Board of
Directors has been requested at or prior to the time of such action by
Apollo. Each party hereto shall use reasonable efforts to prevent any
action from being taken by the Board of Directors, during the pendency
of any vacancy due to death, resignation or removal of a director,
unless the Person entitled to have a person nominated by it elected to
fill such vacancy shall have failed, for a period of ten (10) days
after notice of such vacancy, to nominate a replacement.
(e) At such time as Apollo, together with any and all of its
Permitted Transferees, cease to hold in the aggregate 4,474,673 Shares,
Apollo shall be entitled, but not required, to nominate only two Apollo
Nominees in accordance with this Article IV. At such time as Apollo,
together with any and all of its Permitted Transferees, cease to hold
in the aggregate 2,982,817 Shares, Apollo shall be entitled, but not
required, to nominate only one Apollo Nominees in accordance with this
Article IV. At such time as Apollo, together with any and all of its
Permitted Transferees, cease to hold in the aggregate 894,934 Shares,
Apollo shall no longer be entitled to nominate any Apollo Nominees in
accordance with this Article IV.
(f) In the event the Company establishes an Executive
Committee of the Board of Directors, it shall be comprised of such
persons as a majority of the Board of Directors shall approve,
provided, however, such committee shall also include at least one
Apollo Nominee. The Executive Committee shall have authority, subject
to applicable law, to take all actions that (A) are ancillary to or
arise in the normal course of the businesses of the Company, or (B)
implement and are consistent with resolutions of the Board of Directors
provided, however, that such Executive Committee shall not be
authorized to take any action which, if proposed to be taken by the
full Board of Directors would require the affirmative vote of the
Apollo Nominees in accordance with Section 4.2.
(g) Unless otherwise approved in advance in writing by all the
Apollo Nominees, each and every committee of the Board of Directors
shall be comprised of three directors, one of whom shall be an Apollo
Nominee and at least one of whom is selected by the Board of Directors
but who is not also a member of management of the Company.
(h) Each committee of the Board of Directors, to which
authority has been delegated, shall keep complete and accurate minutes
and records of all actions taken by
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such committee, prepare such minutes and records in a timely fashion
and promptly distribute such minutes and records to each member of the
Board of Directors.
(i) The Parties agree that upon the request of Apollo, the
Company shall cause the Board of Directors of any wholly-owned
subsidiary of the Company to include such number of individuals
designated by Apollo (or any representative thereof designated by
Apollo) in the same proportion of the total number of members of the
Board of Directors of such subsidiary as the proportion of the
Company's Board of Directors to which Apollo is entitled pursuant to
Section 4.1(a), and shall cause each and every committee of such Board
of Directors of such subsidiaries to include at least one of the
individuals designated by Apollo and included as a member of such Board
of Directors pursuant to the foregoing.
Section 4.2 Action by the Board of Directors.
(a) Except as provided below, all decisions of the Board of
Directors shall require the affirmative vote of a majority of the
directors of the Company then in office, or a majority of the members
of an Executive Committee of the Board of Directors, to the extent such
decisions may be lawfully delegated to an Executive Committee pursuant
to Section 4.1(f).
(b) The Company shall not, and it shall cause each of its
Subsidiaries not to, take (or agree to take) any action regarding the
following matters, directly or indirectly, including through a merger
or consolidation with any other corporation or otherwise, without the
affirmative vote of the Apollo Nominees: (i) increase the number of
authorized shares of Preferred Stock or authorize the issuance or issue
of any shares of Preferred Stock other than to existing holders of
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 Charter Documents or the
Certificate of Designation 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 4.2; (v) directly or indirectly, redeem, purchase or
otherwise acquire for value (including through an exchange), or set
apart money or other property for any mandatory purchase or other
analogous fund for the redemption, purchase or acquisition of any
shares of Common Stock or Junior Stock (as defined in the Certificate
of Designation), or declare or pay any dividend or make any
distribution (whether in cash, shares of capital stock of the Company,
or other property) on shares of Common Stock or Junior Stock; (vi)
cause the number of directors of the Company to be greater than eight
(8); (vii) enter into any agreement or arrangement with or for the
benefit of any Person who is an Affiliate of the Company with a value
in excess of $5 million in a single transaction or series of related
transactions; (viii) effect a voluntary liquidation, dissolution or
winding up of the Company; (ix) sell or agree to sell all or
substantially all of the assets of the Company, unless such transaction
(1) occurs after August 5, 2002, (2) is a sale for cash and (3) results
in an internal rate of return ("IRR") to Apollo of 30% compounded
quarterly or greater with respect to each Share issued to Apollo on
August 5, 1998; or (x) enter into any merger or consolidation or other
business combination involving the Company (except a merger of a
wholly-owned subsidiary of the Company into the Company in
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which the Company's capitalization is unchanged as a result of such
merger) unless such transaction (1) occurs after August 5, 2002, (2) is
for cash and (3) results in an IRR to Apollo of 30% compounded
quarterly or greater with respect to each Share issued to Apollo on
August 5, 1998.
(c) Notwithstanding the foregoing Section 4.2(b), if Apollo
owns less than 2,982,817 Shares, the provisions of Section 4.2(b) shall
cease to exist and shall be of no further force or effect.
(d) While any shares of Series A Preferred Stock are
outstanding, the Company shall not and it shall cause each of its
Subsidiaries not to, issue any debt securities of the Company with a
value in excess of $10 million (including any refinancing of existing
indebtedness) without the majority affirmative vote of the Finance
Committee.
(e) While any shares of Series A Preferred Stock are
outstanding, the Company shall not, and it shall cause each of its
Subsidiaries not to, issue any equity securities of the Company with a
value in excess of $10 million (including any refinancing of existing
indebtedness) without the unanimous affirmative vote of the Finance
Committee; provided, however, that the following equity issuances shall
require only a majority affirmative vote of the Finance Committee: (A)
an offering of Common Stock in which the selling price is equal to or
greater than the price that would imply a 25% or greater IRR compounded
quarterly on the Conversion Price (as defined in the Certificate of
Designation) and (B) 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).
Section 4.3 Charter Documents. (a) The Charter Documents attached as
exhibits hereto are the Charter Documents as in effect on the Effective Date.
(b) The Company covenants that it will act, and each Group
Member and Apollo agrees to use its best efforts to cause the Company
to act, in accordance with its Charter Documents and Certificate of
Designation in all material respects and to cause compliance with all
provisions contained herein. Each Group Member and Apollo shall vote
all the Shares owned or held of record by it at any regular or special
meeting of stockholders of the Company or in any written consent
executed in lieu of such a meeting of stockholders, and shall take all
action necessary, to ensure (to the extent within the Parties'
collective control) that (i) the Charter Documents and Certificate of
Designation of the Company do not, at any time, conflict with the
provisions of this Agreement, and (ii) unless an amendment is approved
by the Board of Directors in accordance with Section 4.2, the Charter
Documents of the Company and the Certificate of Designation continue to
be in effect in the forms attached as exhibits hereto.
ARTICLE V
TERMINATION
Section 5.1 Termination. Except as otherwise provided herein with
respect to certain specific provisions, this Agreement shall terminate upon the
earlier to occur of:
11
(a) the mutual agreement of the Parties,
(b) with respect to any party hereto other than the Company, such party
ceasing to own, beneficially or otherwise, any Shares,
(c) such time as less than 1,737,104 Shares continue to be subject to
the provisions of this Agreement, or
(d) on August 5, 2009.
ARTICLE VI
MISCELLANEOUS
Section 6.1 No Inconsistent Agreements. Each party hereto hereby consents to the
termination of any prior written or oral agreement or understanding, including
without limitation the 2002 Agreement, restricting, conditioning or limiting the
ability of any party to transfer or vote Shares.
Each of the Company and the Group Members represents and agrees that,
as of the Effective Date, there is no (and from and after the Effective Date
they will not, and will cause their respective Subsidiaries and Affiliates not
to, enter into any) agreement with respect to any securities of the Company or
any of its Subsidiaries (and from and after the Effective Date neither the
Company nor any Group Members shall take, or permit any of their Subsidiaries or
Affiliates to take, any action) that is inconsistent in any material respect
with the rights granted to Apollo in this Agreement.
Without limiting the foregoing and other than the 2002 Agreement and
the Registration Rights Agreement, the Company represents that there are no
existing agreements relating to the voting or registration of any equity
securities of the Company or any of its Subsidiaries, and there are no other
existing agreements between the Company and any other holder of Shares relating
to the transfer of any equity securities of the Company or any of its
Subsidiaries.
Section 6.2 Recapitalization, Exchanges, etc.
(a) If any capital stock or other securities are issued in
respect of, in exchange for, or in substitution of, any Shares by
reason of any reorganization, recapitalization, reclassification,
merger, consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, sale of assets, distribution to stockholders or
combination of the Shares or any other change in capital structure of
the Company, appropriate adjustments shall be made with respect to the
relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of
the Parties under this Agreement and the terms "Common Stock,"
"Preferred Stock" and "Shares," each as used herein, shall be deemed to
include shares of such capital stock or other securities, as
appropriate. Without limiting the foregoing, whenever a particular
number of Shares is specified herein, such number shall be adjusted to
reflect stock dividends, stock-splits, combinations or other
reclassifications of stock or any similar transactions.
(b) The Parties agree that for the purposes of the Certificate
of Designation, the "Initial Issue Date" and the "Initial Issuance
Date" as defined therein shall mean the
12
date that the Original Company first issued shares of its Series A
preferred stock, par value $.01, to the Initial Holders (as defined in
the Certificate of Designation).
Section 6.3 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Parties, and their respective
successors and permitted assigns; provided that (i) neither this Agreement nor
any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law in any permitted merger); (ii) neither this
Agreement nor any rights or obligations hereunder may be transferred or assigned
by the Group Members or Apollo except to any Person to whom it has Transferred
Shares in compliance with this Agreement and who has become bound by this
Agreement pursuant to Section 2.2 hereof; and (iii) the rights of the Parties
under Article IV hereof may not be assigned to any Person except as explicitly
provided therein.
Section 6.4 No Waivers: Amendments. (a) No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended or modified, nor may any
provision hereof be waived, other than by a written instrument signed
by the Parties.
Section 6.5 Notices. All notices, demands, requests, consents or
approvals (collectively, "NOTICES") required or permitted to be given hereunder
or which are given with respect to this Agreement shall be in writing and shall
be personally delivered or mailed, registered or certified, return receipt
requested, postage prepaid (or by a substantially similar method), or delivered
by a reputable overnight courier service with charges prepaid, or transmitted by
hand delivery or facsimile, addressed as set forth below, or such other address
(and with such other copy) as such party shall have specified most recently by
written notice. Notice shall be deemed given or delivered on the date of service
or transmission if personally served or transmitted by facsimile. Notice
otherwise sent as provided herein shall be deemed given or delivered on the
third business day following the date mailed or on the next business day
following delivery of such notice to a reputable overnight courier service.
To the Company or the Xxxxxx Group:
Rent-A-Center, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
13
To Apollo:
Apollo Investment Fund IV, L.P. and/or
Apollo Overseas Partners IV, L.P.
c/o Apollo Management IV, L.P.
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Section 6.6 Inspection. So long as this Agreement shall be in effect,
this Agreement and any amendments hereto and waivers hereof shall be distributed
to all Parties after becoming effective and shall be made available for
inspection at the principal office of the Company by Apollo.
Section 6.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS, EXCEPT AS TO MATTERS OF CORPORATE GOVERNANCE,
WHICH SHALL BE INTERPRETED IN ACCORDANCE WITH THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE. EACH PARTY HERETO CONSENTS TO THE NON-EXCLUSIVE JURISDICTION
OF THE FEDERAL AND STATE COURTS WITHIN THE STATE OF NEW YORK.
Section 6.8 Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section 6.9 Entire Agreement. This Agreement, together with the Stock
Purchase Agreement, the Certificate of Designation and the Registration Rights
Agreement, constitutes the entire agreement and understanding among the Parties
with respect to the subject matter hereof and thereof and supersedes the 2002
Agreement and any and all prior agreements and understandings, written or oral,
relating to the subject matter hereof.
Section 6.10 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdictions, it
being intended that all rights and obligations of the Parties hereunder shall be
enforceable to the fullest extent permitted by law.
Section 6.11 Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and which together
shall constitute one and the same agreement.
14
Section 6.12 Required Approvals. If approval of this Agreement or any
of the transactions contemplated hereby shall be required by any governmental or
supra-governmental agency or instrumentality or is considered to be necessary or
advisable to all the Parties, all Parties shall use their best efforts to obtain
such approval.
Section 6.13 Public Disclosure. The Company shall not, and shall not
permit any of its Subsidiaries to, make any public announcements or disclosures
relating or referring to Apollo, any of its affiliates, or any of their
respective directors, officers, partners, employees or agents (including,
without limitation, any Person designated as a director of the Company pursuant
to the terms hereof) unless Apollo has consented to the form and substance
thereof, which consent shall not be unreasonably withheld except to the extent
such disclosure is, in the opinion of counsel, required by law or by stock
exchange regulation, provided that (i) any such required disclosure shall only
be made, to the extent consistent with the law, after consultation with Apollo
and (ii) no such announcement or disclosure (except as required by law or by
stock exchange regulation) shall identify any such Person without Apollo's prior
consent.
Section 6.14 Payment of Costs and Expenses. The Company shall pay
Apollo's reasonable and documented costs and expenses (including attorneys'
fees) associated with negotiation, documentation and completion of this
Agreement and the transactions contemplated herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the Parties and the Original Company have executed
this Third Amended and Restated Stockholders Agreement as of the date first
written above.
RENT-A-CENTER, INC. (FORMERLY KNOWN AS RENT-A-CENTER HOLDINGS, INC.)
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------------------------------
Name: Xxxxxxxx X. Xxxxx
--------------------------------------------------------
Title: President
-------------------------------------------------------
RENT-A-CENTER EAST, INC. (FORMERLY KNOWN AS RENT-A-CENTER, INC.) a Delaware
corporation (SOLELY FOR PURPOSES OF CONSENTING TO THE AMENDMENT OF THE 2002
AGREEMENT AND NOT AS A CONTINUING PARTY TO THIS AGREEMENT)
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------------------------------
Name: Xxxxxxxx X. Xxxxx
--------------------------------------------------------
Title: President
-------------------------------------------------------
APOLLO INVESTMENT FUND IV, L.P.
a Delaware limited partnership
By: Apollo Advisors IV, L.P.
its General Partner
By: Apollo Capital Management IV, Inc.
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------------------
Title: Vice President
--------------------------------
[Signature Page to Third Amended and Restated Stockholders Agreement]
APOLLO OVERSEAS PARTNERS IV, L.P.
an exempted limited partnership registered in the Cayman Islands
By: Apollo Advisors IV, L.P.
its General Partner
By: Apollo Capital Management IV, Inc.
its Managing General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------------------
Title: Vice President
--------------------------------
/s/ Xxxx X. Xxxxxx
-----------------------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxxx Xxxxxx
-----------------------------------------------------
Xxxxxxx Xxxxxx
XXXX XXXXXX 2000 GRANTOR RETAINED ANNUITY TRUST
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx, as Trustee
XXXXXXX XXXXXX 2000 GRANTOR RETAINED ANNUITY TRUST
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx, as Trustee
XXXXXXX XXXXXXX XXXXXX 2000 REMAINDER TRUST
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx, as Trustee
[Signature Page to Third Amended and Restated Stockholders Agreement]
XXXXXXX XXXXXXXXX XXXXXX 2000 REMAINDER TRUST
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx, as Trustee
XXXXXX XXXXXXX XXXXXX 2000 REMAINDER TRUST
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx, as Trustee
[Signature Page to Third Amended and Restated Stockholders Agreement]
