EXHIBIT 1
SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT OF
RENT-A-CENTER, INC.
THIS SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (the "Agreement"),
is effective as of the close of business on the 5th day of August, 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) ▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇"), (iii)
Rent-A-Center, Inc., a Delaware corporation (the "Company"), (iv) each Person
(defined below) named in Exhibit A attached hereto (the "▇▇▇▇▇▇ Other Parties"
and together with ▇▇▇▇▇▇, the "▇▇▇▇▇▇ 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.
W I T N E S S E T H
WHEREAS, the Parties are parties to 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, the Parties desire to amend and restate the 2001 Agreement to
reflect the agreement of the Parties to, among other things: (a) reflect the
removal of the ▇▇▇▇▇▇ Group (as defined in the 2001 Agreement) as a party
pursuant to the terms of the 2001 Agreement, and (b) reflect the current capital
structure of the Company and beneficial ownership of the Company's capital stock
by the Parties;
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 400,000 shares are designated Series B
Preferred Stock, $.01 par value, and (ii) as of the close of business on August
5, 2002, the issued and outstanding capital stock of the Company consists of
approximately 35,130,609 shares of Common Stock, two shares of Series A
Preferred Stock and no shares of Series B Preferred Stock, with approximately
10,735,693 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 the close of business on August 5, 2002 (i) Apollo
beneficially owns two shares of Series A Preferred Stock and 7,001,903 shares of
Common Stock, and (ii) the ▇▇▇▇▇▇ 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 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 to the Stock
Purchase Agreement.
"Charter Documents" shall mean the Amended and Restated Certificate of
Incorporation and Amended and Restated By-Laws of the Company, each as amended
to date, as included as exhibits (or incorporated therein) to the Company's
periodic reports filed with the Commission under the Exchange Act.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning set forth in the recitals.
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"Company" shall have the meaning set forth in the preamble.
"Effective Date" shall mean as of the close of business on August 5, 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 ▇▇▇▇▇▇ 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;
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(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, 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 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.
"▇▇▇▇▇▇ Group" shall have the meaning set forth in the preamble.
"▇▇▇▇▇▇ Included Shares" shall mean those 1,176,832 shares of Common Stock
owned by the ▇▇▇▇▇▇ Group as of October 8, 2001.
"▇▇▇▇▇▇ 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 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,
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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.
"2001 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Group or its Permitted Transferees shall
Transfer its respective pecuniary interests in any of the ▇▇▇▇▇▇ Included
Shares to any party other than a Permitted Transferee of the ▇▇▇▇▇▇ Group,
except that during any twelve-month period the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Group
or its Permitted Transferees (i) Transfer more than 50% of the ▇▇▇▇▇▇
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,
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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.
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
Effective Date shall bear the legend as set forth in Section 2.3 therein, and
(iii) 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 SECOND 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 SECOND 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.
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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.
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
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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;
(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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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
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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 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 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.
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(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).
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 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.
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(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 most recently
included (or incorporated therein) as exhibits to the Company's periodic reports
filed with the Commission 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 continue to be in effect in the forms most
recently included as exhibits to the Company's periodic reports filed with
the Commission and the Certificate of Designation continues to be in effect
in the form attached as an exhibit to the Stock Purchase Agreement.
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:
(i) the mutual agreement of the Parties,
(ii) with respect to any party hereto other than the Company, such
party ceasing to own, beneficially or otherwise, any Shares,
(iii) such time as less than 1,737,104 Shares continue to be subject
to the provisions of this Agreement, or
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(iv) 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 2001 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 2001 Agreement, the
Registration Rights Agreement and that certain Registration Rights Agreement,
dated August 18, 1998, by and between the Company and RC Acquisition Corp., a
Delaware corporation, 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. 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.
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;
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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 ▇▇▇▇▇▇ Group:
Rent-A-Center, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
5400 Renaissance Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
13
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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 2001
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.
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.
14
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 have executed this Amended and Restated
Stockholders Agreement as of the date first above written.
RENT-A-CENTER, INC.
a Delaware corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
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---------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ 2000 GRANTOR RETAINED ANNUITY TRUST
By:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, as Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2000 GRANTOR RETAINED ANNUITY TRUST
By:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, as Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2000 REMAINDER TRUST
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, as Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2000 REMAINDER TRUST
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, as Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2000 REMAINDER TRUST
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, as Trustee
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