0001657853 false --12-31 0000047129 false 8-K 2021-06-30 false false false false false 8501 Williams Road Estero Florida 301-7000 0001657853 2021-06-30 2021-06-30 0001657853 htz:TheHertzCorprationMember 2021-06-30 2021-06-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

Co-Registrant CIK 0000047129
Co-Registrant Amendment Flag false
Co-Registrant Form Type 8-K
Co-Registrant DocumentPeriodEndDate 2021-06-30
Co-Registrant Written Communications false
Co-Registrant Solicitating Materials false
Co-Registrant PreCommencement Tender Offer false
Co-Registrant PreCommencement Issuer Tender Offer false
Co-Registrant Emerging Growth Company false
  8501 Williams Road
  Estero
  Florida 33928
  239 301-7000
   

 

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) July 7, 2021 (June 30, 2021)

 

HERTZ GLOBAL HOLDINGS, INC.

THE HERTZ CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   001-37665   61-1770902
Delaware   001-07541   13-1938568
(State or other jurisdiction of incorporation)   (Commission File
Number)
  (I.R.S. Employer Identification No.)

 

8501 Williams Road

Estero, Florida 33928

239 301-7000

(Address, including Zip Code, and
telephone number, including area code,
of registrant's principal executive offices)

 

Not Applicable

Not Applicable

(Former name, former address and
former fiscal year, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

    Title of Each Class   Trading
Symbol(s)
  Name of Each Exchange
on which Registered
Hertz Global Holdings, Inc.   Common Stock par value $0.01 per share   HTZZ   *
The Hertz Corporation   None   None   None

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

* Hertz Global Holdings, Inc.’s common stock trades on the over-the-counter market under the symbol HTZZ.

 

 

 

 

 

Explanatory Note

 

As previously disclosed, on May 22, 2020 (the “Petition Date”), Hertz Global Holdings, Inc. (the “Company” or “we”), The Hertz Corporation, a wholly-owned subsidiary of the Company, (“THC”) and certain of their direct and indirect subsidiaries in the U.S. and Canada (collectively, the “Debtors”) filed voluntary petitions for relief (collectively, the “Petitions”) under chapter 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 cases (the “Chapter 11 Cases”) are jointly administered for procedural purposes only under the caption In re The Hertz Corporation, et al., Case No. 20-11218 (MFW). Additional information about the Chapter 11 Cases, including access to documents filed with the Bankruptcy Court, is available online at https://restructuring.primeclerk.com/hertz, a website administered by Prime Clerk, LLC (“Prime Clerk”), a third-party bankruptcy claims and noticing agent. The information on that website is not incorporated by reference and does not constitute part of this Current Report on Form 8-K.  

 

The Debtors filed with the Bankruptcy Court a proposed Third Amended Joint Chapter 11 Plan of Reorganization, dated as of May 12, 2021 (the “Proposed Plan”), which embodied the plan proposal of the plan sponsor group comprised of, among others, (a) one or more funds associated with Knighthead Capital Management, LLC (“Knighthead”), (b) one or more funds associated with Certares Opportunities LLC (“Certares”) and (c) investment funds, separate accounts, and other entities owned (in whole or in part), controlled, or managed by Apollo Capital Management, L.P. or its affiliates (collectively, “Apollo” and, together with Knighthead and Certares, the “Plan Sponsors”). The Proposed Plan amended and superseded prior versions of the plan of reorganization filed by the Debtors in the Chapter 11 Cases. In connection with the Proposed Plan, the Debtors entered into a Plan Support Agreement, dated as of May 14, 2021 (the “PSA”), with the Plan Sponsors, pursuant to which the parties thereto agreed to take certain actions to support the prosecution and consummation of the Proposed Plan on the terms and conditions set forth in the PSA. The Debtors also entered into an Equity Purchase and Commitment Agreement, dated as of May 14, 2021 (the “EPCA”), with the Plan Sponsors, providing for the purchase or otherwise syndication of $1.5 billion in New Preferred Stock (as defined below) by Apollo and $2.781 billion in New Common Stock (as defined below) by the Plan Sponsors. In addition, the Plan Sponsors and certain other parties agreed to backstop the rights offering contemplated by the Proposed Plan (the “Rights Offering”) totaling $1.635 billion of New Common Stock which was offered first to eligible holders of Existing Common Stock (as defined below) and then, if not fully subscribed, to certain eligible holders of unsecured funded debt claims.

 

On June 10, 2021, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Second Modified Third Amended Joint Chapter 11 Plan of Reorganization of the Debtors (the “Plan”), which incorporated the Proposed Plan as amended by the Debtors (with the consent of the Plan Sponsors). On June 30, 2021 (the “Effective Date”), the Plan became effective in accordance with its terms and the Debtors emerged from the Chapter 11 Cases.

 

On June 30, 2021, the Company issued a press release announcing the consummation of the Plan and emergence from the Chapter 11 Cases on the Effective Date. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated by reference herein. The information contained in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any filings made by the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

 

Item 1.01Entry into a Material Definitive Agreement.

 

New Warrant Agreement

 

On the Effective Date and pursuant to the Plan, the Company entered into a Warrant Agreement (the “Warrant Agreement”) with Computershare Inc. and Computershare Trust Company, N.A., collectively as warrant agent (the “Warrant Agent”), which provides for the Company’s issuance of up to an aggregate of 89,049,029 warrants (the “Warrants”) to purchase New Common Stock to former holders of the Company’s common stock outstanding prior to the Effective Date, par value $0.01 (the “Existing Common Stock”), on the Effective Date in accordance with the terms of the Plan, the Confirmation Order and the Warrant Agreement.

 

2

 

 

The Warrants are exercisable from the date of issuance until June 30, 2051, at which time all unexercised Warrants will expire and the rights of the holders of such expired Warrants to purchase New Common Stock will terminate. Each Warrant is initially exercisable for one share of New Common Stock per Warrant at an initial exercise price of $13.80 per Warrant (the “Exercise Price”), subject to the cashless exercise provisions contained in the Warrant Agreement. Any payment of dividends in cash shall adjust the Exercise Price pursuant to the terms of the Warrant Agreement.

 

The Exercise Price is subject to adjustment from time to time upon the occurrence of certain dilutive events, including stock splits, reverse stock splits, recapitalizations, reclassifications of the New Common Stock, consolidations, mergers or combinations involving the Company, sales of all or substantially all of or substantially all of the assets of the Company, stock dividends to holders of New Common Stock, the issuance of rights or warrants to holders of New Common Stock, dividends or distributions to holders of New Common Stock of shares of the Company’s capital stock, rights or warrants to purchase the Company’s securities or indebtedness, assets or property, or certain reclassification or reorganization events in respect of the New Common Stock.

 

In the event of a Change of Control Event (as defined in the Warrant Agreement) where stock registered under Section 12 of the Exchange Act that is listed for trading on any national securities exchange (or will be within 30 days following the consummation of such Change of Control Event) (“Registered and Listed Shares”) issued as consideration represents less than 90% of the Market Price (as defined in the Warrant Agreement) of all cash, stock, securities or other assets or property to be received by holders of New Common Stock in respect of or in exchange for New Common Stock, then holders of Warrants will receive an amount of cash as calculated in accordance with the Black-Scholes option pricing model in respect of the portion of consideration that is not Registered and Listed Shares. In connection with any consolidation, merger, sale, lease or other transfer of the Company, the successor to the Company shall be required to assume all of the Company’s obligations under the Warrant Agreement and the Warrants.

 

Pursuant to the Warrant Agreement, no holder of a Warrant, by virtue of holding or having a beneficial interest in the Warrant, will have the right to vote, receive dividends, receive notice as stockholders with respect to any meeting of stockholders for the election of the Company’s directors or any other matter, or exercise any rights whatsoever as a stockholder of the Company unless, until and only to the extent such holders become holders of record of shares of New Common Stock issued upon settlement of Warrants. Under the Warrant Agreement, the Company and its subsidiaries are not permitted to enter into or amend or modify any transaction with its affiliates (other than subsidiaries of the Company) unless such transaction (i) is on terms no less favorable to the Company or its applicable subsidiaries than terms that would be obtained by the Company or such Subsidiary from a disinterested third party on an arm’s length basis, or (ii) has been approved by a majority of the Disinterested Directors (as defined in the Warrant Agreement), subject to certain permitted exceptions set forth in the Warrant Agreement.

 

The foregoing description of the Warrant Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Warrant Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.

 

Registration Rights Agreement

 

Pursuant to the Plan, on the Effective Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain stockholders (the “Holders”). The Registration Rights Agreement provides resale registration rights for the Holders’ Registrable Securities (as defined in the Registration Rights Agreement).

 

Pursuant to the Registration Rights Agreement, after an initial public offering (which is described in the Registration Rights Agreement as an action pursuant to which shares of New Common Stock are listed on a national securities exchange in the United States) and upon a request of any Demand Holder (as defined in the Registration Rights Agreement), the Company is required to file a long-form registration statement on Form S-1 or, if available, a short-form registration statement on Form S-3, with respect to the Registrable Securities owned by such Demand Holder. The Company is required to make such filing within 60 days in the case of a Form S-1 or 30 days in the case of a Form S-3, in each case after receiving a demand notice from such Demand Holder.

 

The Company is required to maintain the effectiveness of any such registration statement until the Registrable Securities covered by the registration statement are no longer Registrable Securities. Additionally, the Holders have customary underwritten offering and piggyback registration rights, subject to the limitations set forth in the Registration Rights Agreement.

 

The foregoing registration rights are subject to certain conditions and limitations, including customary blackout periods, the Company’s right to delay or withdraw a registration statement under certain circumstances and, if an underwritten offering is contemplated, the number of such underwritten offerings to be initiated during a year and the right of underwriters to limit the number of shares to be included in a registration statement.

 

The Company will generally pay all registration expenses in connection with its obligations under the Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective. The registration rights granted in the Registration Rights Agreement are subject to customary indemnification and contribution provisions. The Registration Rights Agreement will terminate, with respect to each Holder, at such time as such Holder no longer owns any Registrable Securities, and in full and be of no further effect, at such time as there are no Registrable Securities held by any Holders.

 

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated by reference herein.

 

3

 

 

Exit Credit Agreement

 

On the Effective Date and pursuant to the Plan, THC (the “Parent Borrower” and, collectively with the subsidiary borrowers from time to time party thereto, the “Borrower”), entered into a credit agreement (the “Credit Agreement”) with the lenders party thereto (the “Lenders”) and Barclays Bank PLC, as administrative agent and collateral agent (in such capacity, respectively, the “Administrative Agent” and the “Collateral Agent”), providing for (i) a term loan “B” facility for term loans (the “Term B Loans”) initially in an aggregate principal amount of $1,300,000,000, (ii) a term loan “C” facility (the “Term C Facility”) for term loans (the “Term C Loans” and, together with the Term B Loans, the “Term Loans”) to cash collateralize letters of credit initially in an aggregate principal amount of $245,000,000 (the letters of credit issued thereunder, the “Term Letters of Credit”) and (iii) a revolving credit facility (“Revolving Loan Facility”) for revolving loans (the “Revolving Loans”) and letters of credit (the “Revolving Letters of Credit”) initially up to an aggregate principal amount of $1,255,000,000. In addition, the Parent Borrower may request one or more incremental facilities up to an aggregate amount of the sum of (i) a fixed dollar basket equal to the greater of $635,000,000 and 100% of LTM Consolidated EBITDA plus (ii) a basket equal to the aggregate amount of voluntary prepayments and commitment reductions of certain indebtedness, in each case secured on a pari passu basis with the credit facilities plus (iii) a leverage based basket subject to compliance with leverage ratios set forth in the Credit Agreement.

 

Proceeds received under the Credit Agreement will be used to (i) repay the Existing Credit Agreements (as defined in the Credit Agreement) and all other third party indebtedness of the Debtors (other than indebtedness contemplated to survive the consummation of the Plan), (ii) pay fees, expenses and costs relating to the consummation of the Plan, (iii) fund distributions required in connection with the consummation of the Plan, (iv) fund working capital and general corporate purposes, and (v) backstop or replace existing letters of credit.

 

Term Loans

 

The Term Loans bear interest based on, at the Parent Borrower’s option, an alternate base rate or adjusted LIBOR, in each case plus an initial applicable margin of (a) 2.50% in the case of the alternate base rate, or (b) 3.50% in the case of the adjusted LIBOR, in each case which margin may decrease depending on the Parent Borrower’s Consolidated Total Corporate Leverage Ratio (as defined in the Credit Agreement).

 

In addition to paying interest on the outstanding principal under the Term Loans, the Credit Agreement requires the Term B Loans to be repaid in quarterly installments beginning September 30, 2021 until maturity, in an amount equal to 0.25% of the aggregate original principal amount together with all accrued interest thereon. Unless otherwise extended in accordance with the Credit Agreement, the Term Loans mature on June 30, 2028.

 

Revolving Loans and Swing Line Loans

 

Depending on the currency in which they are denominated, the Revolving Loans bear interest based on an alternate base rate, an adjusted LIBOR, an adjusted Canadian prime rate, an adjusted CDOR rate or the Daily Simple SONIA, in each case plus an initial applicable margin of (i) 2.50% in the case of the alternate base rate and the adjusted Canadian prime rate, or (ii) 3.50% in the case of the adjusted LIBOR, the Daily Simple SONIA and the adjusted CDOR, in each case which margin may decrease depending on the Parent Borrower’s Consolidated Total Corporate Leverage Ratio.

 

Subject to the terms and conditions of the Credit Agreement, Barclays Bank PLC agrees to make swing line loans (the “Swing Line Loans”) to the Borrowers, from time to time in an aggregate amount up to $250,000,000. The Swing Line Loans bear interest at a rate equal to the alternate base rate plus an initial applicable margin of 2.50% per annum, which margin may decrease depending on the Parent Borrower’s Consolidated Total Corporate Leverage Ratio.

 

In addition to paying interest on outstanding principal under the Revolving Loans and Swing Line Loans, the Borrowers are required to pay a commitment fee to the Lenders equal to 0.50% (which may decrease depending on the Parent Borrower’s Consolidated Total Corporate Leverage Ratio) of the actual daily unutilized portion of the commitment of such Lender thereunder, payable quarterly beginning September 30, 2021 until maturity. Unless otherwise extended in accordance with the Credit Agreement, the Revolving Loans and the Swing Line Loans mature on June 30, 2026.

 

4

 

 

Letters of Credit

 

Subject to and upon the terms and conditions of the Credit Agreement, the Parent Borrower may request (i) a Lender under the Revolving Credit Facility that has agreed to be an issuing lender to issue Revolving Letters of Credit or (ii) initially Barclays Bank PLC (or such other Person who has agreed to issue Term Letters of Credit) to issue Term Letters of Credit, in each case, for the account of the Parent Borrower or any of its subsidiaries, in the form of a standby letter of credit to support its obligations or a commercial letter of credit in respect of the purchase of goods or services by it.

 

The Borrowers are required to pay (a) a customary fronting fee of 0.125% per annum of the daily average stated amount of outstanding Letters of Credit, and (b) with respect to Revolving Letters of Credit, a commission equal to the applicable margin then in effect for the adjusted LIBOR-based Revolving Loans, of the maximum amount available to be drawn under such Letter of Credit, in each case, payable quarterly from the issuance date to the expiration date of such Letter of Credit.

 

Unless otherwise increased in accordance with the Credit Agreement, at any time during the term of the Credit Agreement, the aggregate principal amounts of Revolving Loans, Swing Line Loans and Revolving Letters of Credit obligations may not exceed $1,255,000,000 or its dollar equivalent.

 

Covenants and Events of Default

 

The Credit Agreement requires the Parent Borrower to comply with the following financial covenants: (i) until the expiration of the Relief Period (as defined in the Credit Agreement), a minimum liquidity of $500,000,000 in the first and last quarters of the calendar year, and $400,000,000 in the second and third quarters of the calendar year, and (ii) following the expiration of the Relief Period, a Consolidated First Lien Leverage Ratio (as defined in the Credit Agreement) of less than or equal to 3.00 to 1.00 in the first and last quarters of the calendar year, and 3.50 to 1.00 in the second and third quarters of the calendar year.

 

5

 

 

In addition, the Credit Agreement contains customary affirmative covenants including, among other things, the delivery of quarterly and annual financial statements and compliance certificates, conduct of business, maintenance of property and insurance, compliance with environmental laws, and the granting of security interest to the Collateral Agent for the benefit of the secured parties thereunder on after-acquired real property, fixtures and future subsidiaries. The Credit Agreement also contains customary negative covenants, including, among other things, the incurrence of liens, indebtedness, asset dispositions, and restricted payments.

 

The Credit Agreement contains customary events of default and remedies for credit facilities of this nature. If the Company does not comply with the financial and other covenants in the Credit Agreement, the Lenders may, subject to customary cure rights, require immediate payment of all amounts outstanding under the Credit Agreement and any outstanding unfunded commitments may be terminated.

 

Guarantee and Security

 

Obligations under the Credit Agreement are guaranteed by Rental Car Intermediate Holdings, LLC and the Parent Borrower’s domestic subsidiaries set forth therein (the “Guarantors”) and, subject to customary exceptions, are secured by substantially all of the Borrowers’ and Guarantors’ assets. On the Effective Date, the Parent Borrower and the Guarantors entered into a guarantee and collateral agreement (the “Guarantee and Collateral Agreement”) in favor of the Collateral Agent for the benefit of the secured parties thereunder, pursuant to which the Guarantors guaranteed the payment and performance of all indebtedness and liabilities arising pursuant to or in connection with the Credit Agreement, and granted a first priority security interest in all the collateral described therein.

 

The foregoing description of the Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Credit Agreement, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

 

HVF III Rental Car Backed Note Offerings

 

Pursuant to the Plan, on June 29, 2021, Hertz Vehicle Financing III LLC (“HVF III”), a wholly-owned, special-purpose and bankruptcy remote subsidiary of THC issued Series 2021-A Variable Funding Rental Car Asset Backed Notes, Class A (the “Series 2021-A Notes”) with a principal amount of up to $2,812,500,000, to unaffiliated third parties under the Series 2021-A Supplement (the “Series 2021-A Supplement”), dated as of June 29, 2021, among HVF III, THC, as administrator, Deutsche Bank AG, New York Branch, as program agent, the several committed note purchasers party thereto, the several conduit investors party thereto, the several funding agents for the investor groups party thereto and The Bank of New York Mellon Trust Company, N.A. (“BNYM”), as trustee, to the Base Indenture (the “Base Indenture”), dated as of June 29, 2021, between HVF III and BNYM, as trustee.

 

Pursuant to the Plan, on the Effective Date, HVF III issued two additional series of notes: (1) the Series 2021–1 Fixed Rate Rental Car Asset Backed Notes (the “Series 2021-1 Notes”) in four classes in an aggregate principal amount equal to $2,000,000,000 pursuant to the Series 2021-1 Supplement (the “Series 2021-1 Supplement”), dated as of the Effective Date, among HVF III, as issuer, THC, as administrator, and BNYM, as trustee, to the Base Indenture and (2) the Series 2021–2 Fixed Rate Rental Car Asset Backed Notes (the “Series 2021-2 Notes” and, together with the Series 2021-A Notes and the Series 2021-1 Notes, the “Exit ABS Notes”) in four classes in an aggregate principal amount equal to $2,000,000,000 pursuant to the Series 2021-2 Supplement (the “Series 2021-2 Supplement”), dated as of the Effective Date, among HVF III, as issuer, THC, as administrator, and BNYM, as trustee, to the Base Indenture. Subject to certain conditions, additional notes may be issued in the future under the Base Indenture.

 

6

 

 

The Exit ABS Notes were issued with the following terms:

 

Notes Issued  Principal  Interest Rate  Expected Final
Payment Date
  Legal Final
Payment Date
Series 2021-A            
  Class A  Up to $2,812,500,000  Floating rate plus 1.50%  June 29, 2023  July 1, 2024
             
Series 2021-1            
  Class A  $1,420,000,000  1.21%  December 2024  December 2025
  Class B  $180,000,000  1.56%  December 2024  December 2025
  Class C  $140,000,000  2.05%  December 2024  December 2025
  Class D  $260,000,000  3.98%  December 2024  December 2025
             
Series 2021-2            
  Class A  $1,420,000,000  1.68%  December 2026  December 2027
  Class B  $180,000,000  2.12%  December 2026  December 2027
  Class C  $140,000,000  2.52%  December 2026  December 2027
  Class D  $260,000,000  4.34%  December 2026  December 2027

 

Principal payments are not required to be made on the Series 2021-A Notes until June 2023, and will not be required if the expected final payment date and the legal final payment date are extended. The Series 2021-A are revolving in nature, which means the principal may increase or decrease at HVF III’s option, so long as certain conditions set forth in the Series 2021-A Supplement are satisfied.

 

Unless an amortization event occurs, HVF III is not required to make any principal payments on (i) the Series 2021-1 Notes until July 2024, and (ii) the Series 2021-2 Notes until July 2026. Beginning in July 2024 for the Series 2021-1 Notes and July 2026 for the Series 2021-2 Notes, HVF III is expected to make a payment of one-sixth of the initial principal amount until repayment in full on the applicable legal final payment date for such series of notes in December 2024 and December 2026, respectively.

 

The occurrence and continuation of an amortization event related to the Exit ABS Notes may result in HVF III being required to pay principal on the Exit ABS Notes earlier than anticipated. Amortization events include, among other things, the failure to pay principal or interest in a timely manner, the failure to maintain sufficient assets compared to the outstanding amount of debt, the failure to maintain sufficient liquidity in the form of reserve accounts or letters of credit, the presence of certain liens on HVF III’s assets, any misrepresentations by HVF III, any covenant defaults and defaults by either HVF III or THC, as administrator of HVF III under the Administration Agreement (described below). In the event that one or more amortization events occurs and is continuing, holders of the Exit ABS Notes may force HVF III or the trustee on their behalf to sell vehicles and, if a default occurs under the Lease (described below), the holders of the Exit ABS Notes may force THC and/or DTG Operations, Inc., each as a lessee under the Lease, to return vehicles for sale by HVF III. Proceeds of any such sales made during the enforcement of remedies are required to repay the Exit ABS Notes and any notes issued by HVF III in the future.

 

7

 

 

In connection with the issuance of the Exit ABS Notes, THC also entered into (1) the Master Motor Vehicle Operating Lease and Servicing Agreement (HVF III) (the “Lease”) on June 29, 2021, among HVF III, as the lessor, THC, as a lessee, servicer and guarantor, DTG Operations, Inc., a wholly-owned subsidiary of the Company, as a lessee, and the permitted lessees from time to time party thereto, pursuant to which HVF III, as lessor, will lease vehicles to the lessees thereunder and (2) the Administration Agreement (the “Administration Agreement”) on June 29, 2021, among THC, as administrator, HVF III, as issuer, and BNYM, as trustee, pursuant to which THC, as administrator, will provide certain services to HVF III and to take certain actions on behalf of HVF III, including performing or otherwise satisfying any action, determination, calculation, direction, instruction, notice, delivery or other performance obligation, in each case, permitted or required by HVF III pursuant to the Base Indenture.

 

The proceeds of Exit ABS Notes were used to fund the purchase of certain vehicles from (i) Hertz Vehicle Financing LLC, an indirect wholly-owned bankruptcy remote subsidiary of the Company (“HVF”), and (ii) Hertz Vehicle Interim Financing LLC, an indirect wholly-owned bankruptcy remote subsidiary of the Company (“HVIF”). A portion of the purchase price for vehicles was used for the repayment in full of (i)approximately $3,500,000,000 in aggregate outstanding principal amount of the notes issued by Hertz Vehicle Financing II LP, an indirect wholly-owned bankruptcy remote subsidiary of the Company, who borrowed that amount from HVF and (ii) approximately $2,200,000,000 in aggregate outstanding principal amount of the notes issued by HVIF. Any remaining funds are expected to be used for the future acquisition or refinancing of vehicles to be leased under the Lease.

 

The foregoing descriptions of the Exit ABS Notes, the Lease and the Administration Agreement are qualified in their entirety by reference to the complete terms and conditions of the Series 2021-A Supplement, the Series 2021-1 Supplement, the Series 2021-2 Supplement, the Base Indenture, the Lease and the Administration Agreement, copies of which are attached hereto as Exhibits 10.4, 10.5, 10.6, 10.7, 10.8 and 10.9, respectively, which are incorporated by reference herein.

 

Item 1.02.Termination of Material Definitive Agreement

 

Plan Support Agreement

 

On the Effective Date, the PSA entered into between the Debtors and the Plan Sponsors, pursuant to which the parties thereto had agreed to take certain actions to support the prosecution and consummation of the Plan on the terms and conditions set forth in the PSA, was terminated.

 

Equity Interests

 

In accordance with the Plan, all agreements, instruments and other documents evidencing, relating to or otherwise connected with any of the Company’s equity interests outstanding prior to the Effective Date were cancelled and all such equity interests have no further force or effect after the Effective Date. The Company issued New Common Stock (as defined below), Warrants and New Preferred Stock (as defined below) to holders of claims and interests entitled to receive New Common Stock, Warrants and New Preferred Stock pursuant to (i) the Plan, (ii) the Rights Offering, and (iii) the EPCA in the proportions set forth in the Plan and the EPCA.

 

8

 

 

Debt Instruments

 

In accordance with the Plan, on the Effective Date, all outstanding obligations under the indebtedness set forth below (collectively, the “Existing Debt Instruments”) of the Debtors, including the applicable indentures, credit agreements and guarantees governing such obligations, were cancelled, except to the limited extent expressly set forth in the Plan or the Confirmation Order:

 

5.500% Senior Unsecured Notes due 2024;

 

6.000% Senior Unsecured Notes due 2028;

 

6.250% Senior Unsecured Notes due 2022;

 

7.125% Senior Unsecured Notes due 2026;

 

7.000% Unsecured Promissory Notes due 2028;

 

guarantee of the Hertz Holdings Netherlands B.V. (“HHN”) 4.125% Unsecured Notes and the HHN 5.500% Unsecured Notes by the Debtors;

 

THC’s guarantees of obligations relating to the European ABS Facility (as defined in the Plan);

 

the ALOC Credit Agreement (as defined in the Plan);

 

the Lombard Vehicle Financing Facility Guarantee (as defined in the Plan);

 

the Australian Performance Guarantee (as defined in the Plan);

 

term loans and revolving loans, hedge claims and letters of credit under the First Lien Credit Agreement (as defined in the Plan); and

 

the Second Lien Notes (as defined in the Plan).

 

Pursuant to the Plan, the Company repaid in full, in cash, all of its remaining principal under the Existing Debt Instruments for which it was the primary obligor and all amounts related to accrued and unpaid interest and premiums in respect of Existing Debt Instruments required to consummate the Plan, subject to the rights of creditors (if any) to claim additional interest and/or premiums. Upon making these payments, the Existing Debt Instruments were immediately terminated other than for certain provisions expressly specified to survive termination. Some creditors may assert that the Company owes additional interest and, in certain cases, additional premiums. The Company retains all rights with respect to any such asserted amounts. In connection with the Plan, on July 2, 2021, HHN redeemed the HHN 4.125% Unsecured Notes and the HHN 5.500% Unsecured Notes.

 

General Unsecured Interests

 

Pursuant to the Plan, the holders of General Unsecured Claims, at the option of the applicable Debtor, will be reinstated or receive on the Effective Date or as soon as reasonably practicable thereafter payment in full, in cash, of the allowed amount of such claims.

 

Debtor-in-Possession Facility

 

Pursuant to the Plan, on the Effective Date, the debtor-in-possession credit agreement, dated as of October 30, 2020, by and among THC, as borrower, Barclays Bank PLC, as administrative agent, and the lenders party thereto (the “DIP Facility”), was terminated and the holders of claims under the DIP Facility received payment in full, in cash, for allowed claims. On the Effective Date, all liens and security interests granted to secure such obligations were automatically terminated and are of no further force and effect.

 

On April 23, 2021, Hertz International Limited entered into a multi-draw term loan facility (the "HIL Credit Agreement") which provided an aggregate maximum principal of €250 million to meet the liquidity requirements of the European business. On the Effective Date, pursuant to the Plan, the HIL Credit Agreement and all obligations owed pursuant to that agreement were cancelled and released.

 

9

 

 

 

 

Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-balance Sheet Arrangement of a Registrant.

 

The descriptions of the following documents set forth under Item 1.01 above are incorporated by reference herein: (i) the Exit Credit Agreement, (ii) the Series 2021-A Supplement, (iii) the Series 2021-1 Supplement, (iv) the Series 2021-2 Supplement, (v) the Base Indenture, (vi) the Lease and (vii) the Administration Agreement.

 

Item 3.02.Unregistered Sales of Equity Securities.

 

On the Effective Date, the Company issued the following in accordance with the Plan:

 

14,133,075 shares of New Common Stock were issued pro rata to holders of Existing Common Stock;

 

89,049,029 Warrants to purchase 89,049,029 shares of New Common Stock were issued pro rata to holders of Existing Common Stock that did not participate in the Rights Offering;

 

127,362,114 shares of New Common Stock were issued to participants in the Rights Offering, which includes 7,858,805 shares of New Common Stock were issued to commitment parties under the EPCA in connection with their participation in the Rights Offering;

 

277,119,438 shares of New Common Stock and 1,500,000 shares of New Preferred Stock were issued to commitment parties under the EPCA, or their designees, in connection with their direct investment commitment thereunder; and

 

36,137,887 shares of New Common Stock were issued to commitment parties under the EPCA, or their designees, in connection with their backstop obligation thereunder to purchase unsubscribed shares of New Common Stock under the Rights Offering and an additional 16,350,000 shares of New Common Stock were issued to commitment parties under the EPCA in respect of the backstop fee thereunder.

 

As of the Effective Date, there were 471,102,514 shares of New Common Stock (symbol HTZZ), 1,500,000 shares of New Preferred Stock and 89,049,029 Warrants (symbol HTZZW) issued and outstanding.

 

With the exception of shares of New Common Stock issued on account of the backstop obligation under the EPCA, the direct investment commitment under the EPCA and the Rights Offering, the shares of New Common Stock and the Warrants issued pursuant to the Plan were issued pursuant to the exemption from the registration requirements of the Securities Act, under Section 1145 of the Bankruptcy Code, which generally exempts from such registration requirements the issuance of certain securities under a plan of reorganization. Shares of New Common Stock and shares of New Preferred Stock issued on account of the backstop obligation under the EPCA, the direct investment commitment under the EPCA and the Rights Offering were issued under Section 4(a)(2) of the Securities Act.

 

10

 

 

Item 3.03.Material Modification to Rights of Security Holders.

 

Except as otherwise provided in the Plan, all notes, equity, agreements, instruments, certificates and other documents evidencing any security interest of the Debtors were cancelled on the Effective Date.. The securities to be cancelled on the Effective Date include all of the Existing Common Stock and the Debtors’ obligations under the Existing Debt Instruments. For further information, see the Explanatory Note and Items 1.02 and 5.03 of this Current Report on Form 8-K, which are incorporated herein by reference.

 

Item 5.01.Changes in Control of Registrant.

 

As previously disclosed, on the Effective Date, all of the Existing Common Stock, and the Debtors’ obligations under the Existing Debt Instruments were cancelled, and the Company issued approximately 3% of the New Common Stock to holders of the Existing Common Stock.

 

The information set forth in Items 1.01 and 3.02 of this Current Report on Form 8-K is incorporated by reference herein.

 

Item 5.02.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Departure of Directors

 

In accordance with the Plan, David A. Barnes, SungHwan Cho, Henry R. Keizer, Anindita Mukherjee, Daniel A. Ninivaggi and Kevin A. Sheehan ceased to hold office as members of the Company’s board of directors (the “Board”) on the Effective Date.

 

Appointment of Directors

 

As of the Effective Date, by operation of and in accordance with the Plan, the directors of the Company include: (i) M. Gregory O’Hara (Chair – Class I); (ii) Thomas Wagner (Vice Chair – Class I); (iii) Colin Farmer (Class III); (iv) Andrew Shannahan (Class III); (v) Christopher Lahoud (Preferred Stock Director); (vi) Vincent Intrieri (Class I); (vii) Paul Stone (CEO – Class II); (viii) Mark Fields (Class II); and (ix) up to three directors to be identified at a later date. Each such director shall serve from and after the Effective Date pursuant to the terms of the New Organizational Documents (as defined in the Plan), the Employment Agreements (as defined in the Plan), and other constituent documents of the reorganized Company. In addition, William Jones will serve as observer of the reorganized Company’s board. An explanation of the classes of the directors of the Company is provided at Section 5.2 of the Certificate of Incorporation (defined below).

 

·M. Gregory O’Hara. Michael Gregory (Greg) O’Hara is the Founder and a Senior Managing Director of Certares. Prior to forming Certares, he served as Chief Investment Officer of JPMorgan Chase’s Special Investments Group (“JPM SIG”). Prior to this role at JPM SIG, Mr. O’Hara was a Managing Director of One Equity Partners (“OEP”), the private equity arm of JPMorgan. Before joining OEP in 2005, he served as Executive Vice President of Worldspan and was a member of its Board of Directors. Mr. O’Hara is the Executive Chairman of American Express Global Business Travel, Chairperson of Hertz Global Holdings and Vice Chairman of Liberty TripAdvisor Holdings and serves on the Boards of Directors of Hertz Global Holdings, Liberty TripAdvisor Holdings and Tripadvisor, The Innocence Project, World Travel & Tourism Council and Certares Holdings. Greg is the Head of the Investment Committee and a member of the Management Committee of Certares Management LLC. Mr. O’Hara received his Master of Business Administration degree from Vanderbilt University.

 

11

 

 

·Thomas Wagner. Thomas (Tom) Wager is a co-founder of, and partner at, Knighthead Capital Management, LLC. Prior to Knighthead Capital’s founding, Mr. Wagner was most recently employed by Goldman, Sachs & Co. where he was a managing director responsible for running the distressed and high yield credit trading desks. He also co-managed the firm’s Capital Structure Franchise Trading desk, which combined the trading of credit and equity products issued by stressed and distressed companies. Prior to joining Goldman in 2000, he was employed for two years at Credit Suisse First Boston (“CSFB”) as a high yield trader and special situations desk analyst. Mr. Wagner graduated Beta Gamma Sigma from Columbia Business School in 1999. Prior to attending business school, he worked for 5 years at Ernst & Young, LLP in the firm’s hedge fund practice providing audit and consulting services to a wide range of investment funds. During his tenure at Ernst & Young, LLP, Mr. Wagner was registered as a Certified Public Accountant in Massachusetts and the Cayman Islands. Mr. Wagner graduated from Villanova University with a Bachelor of Science in Accounting in 1992.

 

·Colin Farmer. Colin Farmer is a Senior Managing Director and the Head of the Management Committee of Certares. Prior to joining Certares, he was a Managing Director of One Equity Partners (“OEP”). Prior to joining OEP, he worked for eight years at Harvest Partners, a middle market private equity firm, and for two years at Robertson Stephens & Company, a middle market investment bank. Mr. Farmer serves on the Boards of Directors of AmaWaterways, Guardian Alarm, Hertz Global Holdings, Internova Travel Group, Mystic Invest and Certares Holdings and is a member of the Investment Committee and is the Head of the Management Committee of Certares Management LLC. Mr. Farmer received his A.B. in English Literature from Princeton University.

  

·Andrew Shannahan. Andrew Shannahan is a Partner at Knighthead Capital Management, LLC. Mr. Shannahan joined Knighthead in 2008 shortly after the firm’s launch and has worked on numerous situations including complex restructurings, financial liquidations, and multijurisdictional litigations, spin-offs and post-reorganization equities. Prior to joining Knighthead, Mr. Shanahan spent six years working as a senior research analyst for Litespeed Partners, an event-driven hedge fund. Mr. Shanahan earned a BA degree in Economics and Operations Research from Columbia University.

  

·Christopher Lahoud. Christopher Lahoud is a Partner in Apollo Credit. Mr Lahoud joined Apollo in 2018. Prior to joining Apollo, he was the Head of the Distressed Product Group at Deutsche Bank, managing a team of 15 individuals. He began his career with Citigroup in 2006 as a credit trader. He currently also serves on the board of directors of Moxe Health Corporation. Mr. Lahoud graduated from the University of Richmond in 2006 with a Bachelor of Science in Accounting and Finance. Mr. Lahoud was appointed to the Company’s board by Apollo pursuant to its board designation rights described herein.

 

·

Vincent J. Intrieri. Vincent J. Intrieri previously served as a director of the Company since June 2016 and THC since September 2014. Mr. Intrieri is the Chief Executive Officer and founder of VDA Capital Management LLC, a private investment fund. Previously, he was with Icahn-related entities from October 1998 to December 2016 in various investment-related capacities, including as Senior Managing Director of Icahn Capital LP, Senior Managing Director of Icahn Onshore LP, and Icahn Offshore LP. From 1992 to 1995, Mr. Intrieri was a partner at Arthur Andersen LLP, a professional services organization. He is the co-lead director of Navistar International and a director of Transocean Limited. Previously, he served as a director of Energen Corporation, Conduent Incorporated, Chesapeake Energy, Forest Laboratories Inc, CVR Energy Inc, Federal-Mogul Corporation, and various other public companies. Mr. Intrieri graduated, with Distinction, from The Pennsylvania State University (Erie Campus) with a B.S. in Accounting in 1984.

  

12

 

  

·Mark Fields. Mark Fields is a Senior Advisor at TPG Capital and former President and CEO of Ford Motor Company. He held senior leadership roles at the company, including Chief Operating Officer, Executive Vice President & President of the Americas, Executive Vice President and Chief Executive Officer of Premier Automotive Group and Ford Europe, Chairman and Chief Executive Officer of the Premier Automotive Group, and President and Chief Executive Officer of Mazda Motor Corporation. He is the Lead Independent Director of Tanium and serves on Qualcomm's Board of Directors. He has served on the Boards of Ford, IBM and Mazda, as well as four private companies on behalf of TPG Capital. Mr. Fields holds a bachelor’s degree in economics from Rutgers University and a Master of Business Administration from Harvard Business School.

  

·Paul Stone. Paul Stone is President and Chief Executive Officer of Hertz Global Holdings, Inc. Named CEO in May 2020, Paul has led the Company through its successful operational and financial restructuring. He joined Hertz in March 2018 as Executive Vice President and Chief Retail Operations Officer for North America. Previously, he was Chief Retail Officer at Cabela's Inc. He spent the first 28 years of his career in various leadership roles at Walmart Inc. Mr. Stone is a graduate of the West Virginia State University.

 

Except as described in this Current Report on Form 8-K, there are no transactions between the appointed directors, on the one hand, and the Company, on the other hand, that would be reportable under Item 404(a) of Regulation S-K.

 

Committees of the Board of Directors

 

The Board expects to have three standing committees: an audit committee, a compensation committee and a governance committee, and the Board expects each committee to be in compliance with any and all applicable rules that govern committee composition that are applicable to the Company.

  

13

 

 

Appointment of Officers

 

The Debtors’ current officers that served prior to the Effective Date will retain their positions as officers of the Debtors and continue to serve in such positions after the Effective Date.

 

Severance Plan

 

Pursuant to the Plan, on the Effective Date, each severance plan of the Debtors in existence immediately prior to the Effective Date, including (i) the Amended and Restated Hertz Global Holdings, Inc. Severance Plan for Senior Executives, and (ii) the Amended and Restated Hertz Global Holdings, Inc. Severance Plan for Vice Presidents, was terminated in accordance with its terms, without further action by any of the Debtors, the Debtors’ board of directors or any committee thereof, or any officer or other employee of the Debtors. To the extent any severance plan constitutes an Executory Contract (as defined in the Plan), it is deemed rejected pursuant to the Plan and termination of such severance plan will be deemed to have occurred immediately prior to such rejection.

 

Notwithstanding the foregoing, in the event that a member of the Senior Management Group (as defined in the Plan) is terminated by the Debtors without cause within twelve (12) months following the Effective Date, the Debtors agree to, within thirty (30) days following such termination, pay such terminated member a single lump-sum cash payment equal to two times the value of such terminated member’s annual base compensation (including base salary and non-variable benefits). Additionally, the Company and its subsidiaries intend to adopt and implement such other plans, policies, or other agreements with respect to employee severance for their employees.

  

Indemnification of Directors and Officers

 

Section 102(b)(7) of the Delaware General Corporation Law (the “DGCL”) allows a corporation to provide in its Certificate of Incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. The Company’s Certificate of Incorporation provides for this limitation of liability.

 

14

 

 

Section 145 of the DGCL, provides, among other things, that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. A Delaware corporation may indemnify any persons who were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests, provided further that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses (including attorneys’ fees) which such officer or director has actually and reasonably incurred.

 

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify such person under Section 145.

 

The Certificate of Incorporation and Bylaws (as defined below) provide that we must indemnify and advance expenses to our directors and officers to the full extent authorized by the DGCL.

 

We have entered into indemnification agreements (the “Indemnification Agreements”) with each of our directors and executive officers. Such agreements may require us, among other things, to advance expenses and otherwise indemnify our executive officers and directors against certain liabilities that may arise by reason of their status or service as executive officers or directors, to the fullest extent permitted by law. We intend to enter into Indemnification Agreements with any new directors and executive officers in the future. The foregoing description of the Indemnification Agreements does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Indemnification Agreements, a form of which is filed as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein by reference.

 

The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, any provision of the Company’s Certificate of Incorporation, the Company’s Bylaws or otherwise. Notwithstanding the foregoing, the Company shall not be obligated to indemnify a director or officer in respect of a proceeding (or part thereof) instituted by such director or officer, except as otherwise provided in the Certificate of Incorporation or Bylaws.

 

The Company maintains and expect to maintain standard policies of insurance that provide coverage (1) to its directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and (2) to the Company with respect to indemnification payments that the Company may make to such directors and officers.

 

These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit the Company and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

 

15

 

 

The Company believes that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.

 

Item 5.03.Amendments to Articles of Incorporation or Bylaws.

 

On the Effective Date, pursuant to the Plan, the Company filed the Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Delaware Secretary of State, and adopted the Second Amended and Restated Bylaws (the “Bylaws”).

 

Each holder of shares of new common stock, par value $0.01 per share (the “New Common Stock”), is entitled to one vote for each outstanding share of New Common Stock held of record by such holder on all matters properly submitted to a vote of the stockholders on which holders of the New Common Stock are entitled to vote. Except as otherwise required by law or provided in the Certificate of Incorporation (including in the Preferred Stock Designation, as described below), subject to the right of Apollo to designate a director as long as it owns, together with its affiliates, at least 50% of the outstanding New Preferred Stock, at any annual or special meeting of stockholders the New Common Stock will have the exclusive right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders.

 

The Certificate of Incorporation provides that, except as otherwise required by law or as otherwise provided with respect to any then-outstanding series of preferred stock, at any annual or special meeting of the stockholders, the affirmative vote of the holders of a majority of the votes cast at the meeting on the subject matter will be the act of the stockholders, while directors will be elected by a plurality of the votes of the shares of capital stock of the Company present and entitled to vote at the meeting.

 

Subject to the rights of holders of any then-outstanding shares of preferred stock, the holders of New Common Stock may receive such dividends as the Board may declare in its discretion out of legally available funds. Following such distributions to holders of then-outstanding shares of preferred stock, holders of New Common Stock will be entitled to receive all the remaining assets of the Company available for distribution to its stockholders, ratably in proportion to the number of shares of New Common Stock held by them. Shares of New Common Stock are not subject to any redemption provisions and are not convertible into any of the Company’s other securities.

 

New Preferred Stock

 

In accordance with the Plan and the Certificate of Incorporation, as of the Effective Date, the Company designated 1,500,000 shares of the preferred stock, $0.01 par value per share, of the Company, as “Series A Preferred Stock” (the “New Preferred Stock”), by filing a certificate of designation (the “Preferred Stock Designation”) with the Secretary of State of the State of Delaware.  Pursuant to the EPCA, the Company issued all 1,500,000 shares of the New Preferred Stock to Apollo and its designees at the Effective Date.

 

Pursuant to the Preferred Stock Designation, shares of New Preferred Stock will accrue a dividend, payable semi-annually in arrears (with the first dividend paid on the six month anniversary of the Effective Date), in an amount equal to the applicable dividend rate multiplied by the then-current stated value (which was initially set at $1,000 per share). Subject to the remedies of holders following the occurrence of “Non-Compliance Events” (as defined below), the applicable dividend rate is:

 

with respect to a dividend accrued prior to the second anniversary of the Effective Date, 9.00% per annum;

 

16

 

 

with respect to a dividend accrued from and after the second anniversary of the Effective Date and prior to the third anniversary of the Effective Date, 7.00% per annum for any portion paid in cash and 9.00% per annum for any portion paid as a compounded dividend;

 

with respect to a dividend accrued from and after the third anniversary of the Effective Date and prior to the 42-month anniversary of the Effective Date, 8.00% per annum for any portion paid in cash and 10.00% per annum for any portion paid as a compounded dividend;

 

with respect to a dividend accrued from and after the 42-month anniversary of the Effective Date and prior to the fourth anniversary of the Effective Date, 9.00% per annum;

 

with respect to a dividend accrued from and after the fourth anniversary of the Effective Date and prior to the 54 month anniversary of the Effective Date, 10.00% per annum;

 

with respect to a dividend accrued from and after the 54-month anniversary of the Effective Date and prior to the fifth anniversary of the Effective Date, 11.00% per annum; and

 

with respect to a dividend accrued from and after the fifth anniversary of the Effective Date, an amount equal to the sum of 13.00% per annum and the product of 2.00% per annum multiplied by the number of whole years elapsed since the fifth anniversary of the Effective Date through and including such dividend payment date;

 

provided that each of the foregoing rates will be increased by 6.00% per annum at any time that the funded corporate indebtedness (including certain preferred stock and undrawn letters of credit) of the Company, THC and its restricted subsidiaries exceeds $3,300,000,000.

 

Pursuant to the Preferred Stock Designation, holders of the New Preferred Stock will have no voting rights, except as required by law or as described below following the occurrence of “Non-Compliance Events”.

 

The Preferred Stock Designation contains provisions (the “Protective Provisions”) restricting, among other things, the amendment of the Certificate of Incorporation or Bylaws in a manner that adversely affects the rights, preferences and privileges of the New Preferred Stock; liquidation, dissolution or winding up of the Company or its business and affairs; the creation, authorization or issuance of any class or series of capital stock other than the New Common Stock; issuance of additional shares of New Preferred Stock; affiliate transactions, restricted payments; mergers or other business combinations; asset sales, indebtedness and investments, in each case, subject to the exceptions set forth in the Certificate of Designations. Holders of the New Preferred Stock (including Apollo) are also entitled to certain information and inspection rights, in each case as set forth more specifically in the Preferred Stock Designation.

 

Non-compliance events (the “Non-Compliance Events”), including, among other things, the failure to pay a preferred dividend when due (including failure to pay dividends on the New Preferred Stock in cash following the 42-month anniversary of the Effective Date), breaches of the Protective Provisions, changes of control, insolvency events and other customary defaults, may, depending on the length of time for which such Non-Compliance Event is continuing, result in an increased accretion of stated value of the New Preferred Stock, board reconstitution, a forced exit transaction to redeem the New Preferred Stock, and/or a majority voting right being granted to holders of a majority of the outstanding New Preferred Stock. These remedies are also available to holders of a majority of the outstanding New Preferred Stock to the extent any shares of New Preferred Stock remain outstanding on the 87-month anniversary of the Effective Date.

 

17

 

 

Pursuant to the Preferred Stock Designation, the Company may redeem the New Preferred Stock in whole or in part at any time and from time to time, in cash, at a redemption price (the “Redemption Price”) equal to the then current accrued stated value of the New Preferred Stock being redeemed, subject to a multiple of invested capital floor price. Any partial redemption of the New Preferred Stock will be in amounts of shares with no less than $250,000,000 aggregate accrued stated value as of the time of such redemption (unless the then current aggregate accrued stated value of the New Preferred Stock is equal to or less than $250,000,000, in which case any such redemption will redeem all of the then outstanding New Preferred Stock). Holders of the New Preferred Stock will not have the right to require the Company to offer to redeem all or a portion of the New Preferred Stock.

 

The New Preferred Stock will have a payment priority, liquidation preference and ranking senior to any other class or series of equity securities of the Company currently issued or outstanding. In the event of any liquidation, dissolution or winding up of the Company, the Company will be required to offer to redeem all of the outstanding New Preferred Stock in cash at the then-applicable Redemption Price, subject to the sufficiency of the Company’s assets.

 

For so long as Apollo and its affiliates collectively hold more than a majority of the outstanding shares of New Preferred Stock, Apollo will have the right to designate one individual to serve on the Company’s board of directors (and any committee thereof to which the board of directors has delegated substantially all of its authority) and one observer to the board (but not to any committee).

 

Anti-Takeover Provisions

 

Some provisions of the DGCL, the Certificate of Incorporation and the Bylaws summarized below could make certain change of control transactions more difficult, including acquisitions of the Company by means of a tender offer, proxy contest or otherwise, as well as removal of the incumbent directors. These provisions may have the effect of preventing changes in management. It is possible that these provisions would make it more difficult to accomplish or deter transactions that a stockholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the New Common Stock.

 

Number and Election of Directors

 

The Certificate of Incorporation provides that the Board, other than those directors who may be elected by the holders of one or more series of the New Preferred Stock voting separately by class or series, will initially comprise up to eleven directors, with the number of directors to be determined from time to time solely by resolution adopted by the affirmative vote of a majority of the Board. The Board is composed of three classes, with directors in each class elected for a three-year term.

 

Calling of Special Meeting of Stockholders

 

The Bylaws provide that special meetings of stockholders may be called only by or at the direction of the Board by the direction of a majority of the total number of directors that the Company would have if there were no vacancies on the Board; or by one or more stockholders holding not less than 25% of the voting power of all shares of the Company entitled to vote (except that a special meeting for the purpose of considering any action to directly or indirectly facilitate or effect a business combination, including any action to change or otherwise affect the composition of the Board for that purpose, must be called by 50% or more of the voting power of all shares of the Company entitled to vote).

 

18

 

 

 

 

No Stockholder Action by Written Consent

 

The Certificate of Incorporation provides that, except for the rights of the holders of any outstanding series of preferred stock, any action required or permitted to be taken by the stockholders of the Company must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders in lieu of a meeting.

 

Amendments to the Certificate of Incorporation

 

The Company reserves the right, at any time and from time to time, to amend, alter, change or repeal any provision contained in the Certificate of Incorporation (including the Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware in the manner prescribed by the Certificate of Incorporation (including the Preferred Stock Designation) and the DGCL to the extent not inconsistent with the Certificate of Incorporation.

 

Amendments to the Bylaws

 

The Bylaws may be altered, amended or repealed, or new bylaws may be made, by a majority of the Board. The Bylaws also may be adopted, amended, altered or repealed by the stockholders in a manner not inconsistent with the Certificate of Incorporation (including the Preferred Stock Designation); provided, that in addition to any vote of the holders of any class or series of capital stock of the Company required by applicable law or the Certificate of Incorporation (including the Preferred Stock Designation), the affirmative vote of the holders of at least a majority of the voting power of all then outstanding shares of capital stock of the Company entitled to vote generally in the election of directors, voting together as a single class, is required for the stockholders to adopt, amend, alter or repeal the Bylaws.

 

Other Limitations on Stockholder Actions

 

Advance notice is required for stockholders to nominate directors or to submit proposals for consideration at an annual meeting of stockholders. The Bylaws provide that notice of stockholder proposals must be timely given in writing to the corporate secretary prior to the annual meeting at which the action is to be taken. Generally, to be timely, notice must be received at the principal offices of the Company’s executive officers not less than 90 days nor more than 120 days before the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so received no earlier than the opening of business on the 120th day before the annual meeting and not later than the later of (x) the close of business on the 90th day before the annual meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by the Company, whichever occurs first. In the case of a special meeting of stockholders called for the purpose of electing directors, any such notice must be delivered no earlier than the opening of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the special meeting is first made by the Company. The Bylaws provide that only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Company’s notice of meeting. The Bylaws specify in detail the requirements as to form and content of all stockholder notices. These requirements may preclude stockholders from bringing matters before the stockholders at any stockholder meeting. The Bylaws also describe certain criteria for when the stockholder-requested meetings must be held.

 

19

 

 

Except as described below under the heading “Directors Elected by Holders of Preferred Stock”, the Certificate of Incorporation provides that no director may be removed from office by the stockholders except for cause and with the affirmative vote of the holders of not less than a majority of the total voting power of all outstanding securities of the Company generally entitled to vote in the election of directors, voting together as a single class.

 

Newly Created Directorships and Vacancies on the Board

 

Except as described below under the heading “Directors Elected by Holders of Preferred Stock”, the Certificate of Incorporation provides that any newly created directorships resulting from any increase in the number of directors and any vacancies on the Board for any reason may be filled solely by a majority vote of the directors then in office, even if less than a quorum, or by a sole remaining director (and not by stockholders).

 

Directors Elected by Holders of Preferred Stock

 

The Certificate of Incorporation provides that, except as otherwise required by law, whenever the holders of the New Preferred Stock will have the right to nominate or elect one or more directors, the nomination of such directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships will be governed by the terms of the New Preferred Stock as set forth in Certificate of Incorporation (including the Preferred Stock Designation) and such directors may not be included in any of the classes created pursuant to the Certificate of Incorporation unless expressly provided by such terms. The Board will act to fill any vacancies created pursuant to the exercise of remedies by holders of the New Preferred Stock as promptly as practicable following the nomination of any Board nominees by such holders in accordance with the terms of the New Preferred Stock.

 

No Cumulative Voting

 

The Certificate of Incorporation provides that there will be no cumulative voting.

 

Authorized but Unissued Shares

 

Under Delaware law, the Company’s authorized but unissued shares of New Common Stock are available for future issuance without stockholder approval. The Company may use these additional shares of New Common Stock for a variety of corporate purposes, including future public offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued shares of New Common Stock could render more difficult or discourage an attempt to obtain control of the Company by means of a proxy contest, tender offer, merger or otherwise.

 

Other Classes or Series of Shares

 

The Board is authorized to provide for the issuance of shares of preferred stock, or “blank check” preferred shares, in one or more series (subject to the approval by the holders of the New Preferred Stock), and to establish from time to time the number of shares of preferred stock to be included in each such series, and to fix the terms, including designation, powers, preferences, rights, qualifications, limitations and restrictions of the shares of preferred stock of each such series.

 

20

 

 

Exclusive Forum

 

The Certificate of Incorporation provides that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) (or, if the Court of Chancery lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on the Company’s behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former directors, officers, other employees or agents of the Company to the Company or to the stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate of Incorporation or the Bylaws (as each may be amended from time to time), (iv) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery, or (v) any action asserting a claim that is governed by the internal affairs doctrine.

 

The foregoing descriptions of the Certificate of Incorporation, Bylaws and Preferred Stock Designation (including the terms of the New Preferred Stock) do not purport to be complete and are qualified in their entirety by reference to the Certificate of Incorporation, Bylaws and Preferred Stock Designation, which are filed as Exhibits 3.1, 3.2 and 3.3 to this Current Report on Form 8-K and incorporated by reference herein.

 

Cautionary Statement Concerning Forward-Looking Statements

 

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of federal securities laws. Words such as “expect” and “intend” and similar expressions identify forward-looking statements, which include but are not limited to statements related to our liquidity and potential financing sources and the effects of Chapter 11 on the interests of various constituents. We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including those in our risk factors that we identify in our most recent annual report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on February 26, 2021, and any updates thereto in the Company’s quarterly reports on Form 10-Q and current reports on Form 8-K. We caution you not to place undue reliance on our forward-looking statements, which speak only as of their date, and we undertake no obligation to update this information. 

 

21

 

 

Item 9.01Exhibits

 

(d) Exhibits

 

Exhibit
Number
  Title
3.1   Second Amended and Restated Certificate of Incorporation of Hertz Global Holdings, Inc.
     
3.2   Second Amended and Restated Bylaws of Hertz Global Holdings, Inc.
     
3.3   Certificate of Designation relating to the Series A Preferred Stock of Hertz Global Holdings, Inc.
     
10.1   Warrant Agreement, dated as of June 30, 2021, by and among Hertz Global Holdings, Inc. and Computershare Inc. and Computershare Trust Company, N.A., collectively as warrant agent
     
10.2   Registration Rights Agreement, dated as of June 30, 2021, by and among Hertz Global Holdings, Inc. and the Holder Party thereto
   
10.3   Credit Agreement, dated as of June 30, 2021, by and among The Hertz Corporation and the Subsidiary Borrowers party thereto as borrowers, the Several Lenders and Issuing Lenders from time to time parties thereto, and Barclays Bank PLC, as administrative agent and collateral agent
     
10.4   Series 2021-A Supplement, dated as of June 29, 2021, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, Deutsche Bank AG, New York Branch, as program agent, the several committed note purchasers party thereto, the several conduit investors party thereto, the several funding agents for the investor groups party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee
     
10.5   Series 2021-1 Supplement, dated as of June 30, 2021, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee
     
10.6   Series 2021-2 Supplement, dated as of June 30, 2021, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee
     
10.7   Base Indenture, dated as of June 29, 2021, between Hertz Vehicle Financing III LLC, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee
     
10.8   Master Motor Vehicle Operating Lease and Servicing Agreement dated as of June 29, 2021, among Hertz Vehicle Financing III LLC, as lessor, The Hertz Corporation, as a lessee, servicer and guarantor, DTG Operations, Inc., as a lessee, and those permitted lessees from time to time party thereto
     
10.9   Administration Agreement, dated as of June 29, 2021, among Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation, as administrator, and The Bank of New York Mellon Trust Company, N.A., as trustee
     
10.10   Form of Indemnification Agreement of Hertz Global Holdings, Inc.
     
99.1   Press release, dated June 30, 2021

 

22

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  HERTZ GLOBAL HOLDINGS, INC.
THE HERTZ CORPORATION
  (each, a Registrant)
     
     
  By: /s/ M. David Galainena 
  Name:  M. David Galainena
  Title: Executive Vice President, General Counsel and Secretary

 

Date:  July 7, 2021

 

23

 

Exhibit 3.1

 

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
HERTZ GLOBAL HOLDINGS, INC.

 

Hertz Global Holdings, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY AS FOLLOWS:

 

1.              The name of the Corporation is “Hertz Global Holdings, Inc.”. The Corporation was originally incorporated under the name “Hertz Rental Car Holding Company, Inc.” and the date of filing of its original certificate of incorporation with the Secretary of State of the State of Delaware was August 28, 2015 (the “Original Certificate”).

 

2.              An amended and restated certificate of incorporation, which both restated and amended the provisions of the Original Certificate, was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, as amended from time to time (the “DGCL”) and by the written consent of its sole stockholder in accordance with Section 228 of the DGCL, and the date of filing of such amended and restated certificate of incorporation with the Secretary of State of the State of Delaware was June 30, 2016 (the “First A&R Certificate”).

 

3.            This Second Amended and Restated Certificate of Incorporation (“Second A&R Certificate”) was duly adopted without the need for approval of the Board of Directors or the stockholders of the Corporation pursuant to the First Modified Third Amended Joint Chapter 11 Plan of Reorganization of The Hertz Corporation and its Debtor Affiliates (the “Plan”), which was confirmed by an order of the United States Bankruptcy Court for the District of Delaware entered on May 22, 2021 in jointly administered chapter 11 cases captioned In re The Hertz Corporation, et al., Case No. 20-11218 (MFW) and in accordance with Section 303 of the DGCL.

 

4.              This Second A&R Certificate restates, integrates and further amends the provisions of the First A&R Certificate.

 

5.              The text of the First A&R Certificate is hereby restated and amended to read in its entirety as follows:

 

Article I
NAME

 

Section 1.1           The name of the corporation is Hertz Global Holdings, Inc.

 

Article II
PURPOSE

 

Section 2.1          The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

 

 

 

 

Article III
REGISTERED AGENT

 

Section 3.1           The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle 19801 and the name of the Corporation’s registered agent at such address is The Corporation Trust Company.

 

Article IV
CAPITALIZATION

 

Section 4.1            Authorized Capital Stock. The total number of shares of all classes of capital stock which the Corporation is authorized to issue is one billion, one hundred million (1,100,000,000) shares, consisting of (a) one billion (1,000,000,000) shares of Common Stock, par value $0.01 per share (the “Common Stock”) and (b) one hundred million (100,000,000) shares of preferred stock, par value $0.01 per share (the “Preferred Stock”). The Corporation will not issue non-voting equity securities (as such term is defined in Section 101(16) of Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”)) (which shall be deemed not to include warrants or options or similar instruments to purchase equity of the Corporation or any equity security issued pursuant to the Plan (all of which constitute voting equity securities)) to the extent prohibited by Section 1123(a)(6) of the Bankruptcy Code; providedhowever, that this provision (i) will have no further force or effect beyond that required under Section 1123(a)(6) of the Bankruptcy Code, (ii) will have such force and effect, if any, only for so long as such section is in effect and applicable to the Corporation and (iii) in all events may be amended or eliminated to the extent consistent with and in accordance with applicable law as from time to time in effect.

 

Section 4.2            Preferred Stock.

 

(a)        The Board is hereby expressly authorized to provide out of the unissued shares of the Preferred Stock for one or more series of Preferred Stock and to establish from time to time the number of shares to be included in each such series and to fix the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations and restrictions thereof, as shall be stated in the resolution or resolutions adopted by the Board providing for the issuance of such series and included in a certificate of designation (a “Preferred Stock Designation”) filed pursuant to the DGCL, and the Board is hereby expressly vested with the authority to the full extent provided by law, now or hereafter, to adopt any such resolution or resolutions.

 

(b)         Upon the occurrence and during the continuance of a Non-Compliance Event (as defined in the Preferred Stock Designation with respect to the Series A Preferred Stock), each holder of Series A Preferred Stock shall have the rights and remedies set forth in the Preferred Stock Designation governing the Series A Preferred Stock (including all voting rights set forth therein), and rights and remedies under applicable law or at equity.

 

Section 4.3           Common Stock. The preferences, qualifications, limitations, restrictions, and the special or relative rights in respect of the Common Stock shall be as follows:

 

(a)           Voting.

 

(i)             Except as otherwise required by law or this Second A&R Certificate (including any Preferred Stock Designation), the holders of the shares of Common Stock shall exclusively possess all voting power with respect to the Corporation.

 

2 

 

 

(ii)             Except as otherwise required by law, the holders of shares of Common Stock shall be entitled to one vote for each such share on each matter properly submitted to the stockholders of the Corporation on which the holders of the shares of Common Stock are entitled to vote. There shall be no cumulative voting.

 

(iii)             Except as otherwise required by law or this Second A&R Certificate (including any Preferred Stock Designation), at any annual or special meeting of the stockholders of the Corporation, the holders of the shares of Common Stock shall have the exclusive right to vote on all items submitted to a vote of the stockholders of the Corporation, including for the election of directors and on all other matters properly submitted to a vote of the stockholders of the Corporation.

 

(iv)           Notwithstanding anything herein to the contrary, except as otherwise required by law or this Second A&R Certificate (including any Preferred Stock Designation), the holders of the shares of Common Stock shall not be entitled to vote on any amendment to this Second A&R Certificate (including any amendment to any Preferred Stock Designation) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series of Preferred Stock are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Second A&R Certificate (including any Preferred Stock Designation) or the DGCL.

 

(b)         Dividends. Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Preferred Stock and the terms of any Preferred Stock Designation, the holders of the shares of Common Stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the Corporation) when, as and if declared thereon by the Board from time to time out of any assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in such dividends and distributions.

 

(c)           Liquidation, Dissolution or Winding Up of the Corporation. Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Preferred Stock and the terms of any Preferred Stock Designation, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of the shares of Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them.

 

Section 4.4            Rights and Options. The Corporation has the authority to create and issue rights, warrants and options entitling the holders thereof to acquire from the Corporation any shares of its capital stock of any class or classes, with such rights, warrants and options to be evidenced by or in instrument(s) approved by the Board. The Board is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however, that the consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof.

 

3 

 

 

Article V
BOARD OF DIRECTORS

 

Section 5.1              Board Powers. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. In addition to the powers and authority expressly conferred upon the Board by statute, this Second A&R Certificate or the Bylaws of the Corporation (“Bylaws”), the Board is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Second A&R Certificate, and the Bylaws adopted by the stockholders of the Corporation; provided, however, that no Bylaws hereafter adopted by the stockholders of the Corporation shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.

 

Section 5.2               Number, Election and Term.

 

(a)              Except as otherwise required by this Second A&R Certificate (including any Preferred Stock Designation) and subject to Section 5.5, the number of directors of the Corporation, other than those who may be elected by the holders of one or more series of the Preferred Stock voting separately by class or series, shall be fixed from time to time exclusively by the Board pursuant to a resolution adopted by a majority of the Board and the initial Board immediately following consummation of the Plan shall be up to eleven (11) directors.

 

(b)              Subject to Section 5.5 hereof and any Preferred Stock Designation, the Board shall be divided into three classes, as nearly equal in number as possible and designated Class I, Class II and Class III. The Board is authorized to assign members of the Board already in office to Class I, Class II or Class III. The term of the initial Class I Directors shall expire at the first annual meeting of the stockholders of the Corporation following the effectiveness of this Second A&R Certificate, the term of the initial Class II Directors shall expire at the second annual meeting of the stockholders of the Corporation following the effectiveness of this Second A&R Certificate and the term of the initial Class III Directors shall expire at the third annual meeting of the stockholders of the Corporation following the effectiveness of this Second A&R Certificate. At each succeeding annual meeting of the stockholders of the Corporation, beginning with the first annual meeting of the stockholders of the Corporation following the effectiveness of this Second A&R Certificate, each of the successors elected to replace the class of directors whose term expires at that annual meeting shall be elected for a three-year term or until the election and qualification of their respective successors in office, subject to their earlier death, resignation or removal. Subject to Section 5.5 hereof, if the number of directors that constitute the Board is changed, any increase or decrease shall be apportioned by the Board among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors constituting the Board shorten the term of any incumbent director. Subject to the rights of the holders of one or more series of Preferred Stock, voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Stock, the election of directors shall be determined by a plurality of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon.

 

(c)              Subject to Section 5.5 hereof, a director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.

 

(d)              Unless and except to the extent that the Bylaws shall so require, the election of directors need not be by written ballot.

 

Section 5.3             Newly Created Directorships and Vacancies. Subject to Section 5.5, newly created directorships resulting from an increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal or other cause may be filled solely and exclusively by a majority vote of the remaining directors then in office, even if less than a quorum, or by a sole remaining director (and not by stockholders), and any director so chosen shall hold office for the remainder of the full term of the class of directors to which the new directorship was added in which the vacancy occurred and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.

 

4 

 

 

Section 5.4              Removal. Subject to Section 5.5 hereof, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

 

Section 5.5            Preferred Stock—Directors. Notwithstanding any other provision of this Article V, this Second A&R Certificate or the Bylaws and except as otherwise required by law, whenever the holders of one or more series of the Preferred Stock shall have the right, voting separately by class or series, to nominate or elect one or more directors, the nomination of such directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships shall be governed by the terms of such series of the Preferred Stock as set forth in this Second A&R Certificate (including any Preferred Stock Designation) and such directors shall not be included in any of the classes created pursuant to this Article V unless expressly provided by such terms. The Board shall act to fill any vacancies created pursuant to the exercise of remedies by holders of one or more series of Preferred Stock as promptly as practicable following the nomination of any Board nominees by such holders in accordance with the terms of such Preferred Stock.

 

Section 5.6              Quorum. A quorum for the transaction of business by the directors shall be set forth in the Bylaws.

 

Article VI
BYLAWS

 

In furtherance and not in limitation of the powers conferred upon it by law, the Board shall have the power and is expressly authorized to adopt, amend, alter or repeal the Bylaws in a manner not inconsistent with this Second A&R Certificate (including any Preferred Stock Designation) by the affirmative vote of a majority of the total number of directors present at a regular or special meeting of the Board at which there is a quorum or by unanimous written consent. The Bylaws also may be adopted, amended, altered or repealed by the stockholders of the Corporation in a manner not inconsistent with this Second A&R Certificate (including any Preferred Stock Designation); provided, however, that in addition to any vote of the holders of any class or series of capital stock of the Corporation required by law or by this Second A&R Certificate (including any Preferred Stock Designation), the affirmative vote of the majority of the holders of voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders of the Corporation to adopt, amend, alter or repeal the Bylaws; and provided further, however, that no Bylaws hereafter adopted by the stockholders of the Corporation shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.

 

Article VII
SPECIAL MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT

 

Section 7.1             Special Meetings. Except as otherwise required by applicable law, special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time only by or at the direction of the Board pursuant to a written resolution adopted by the affirmative vote of the majority of the total number of directors that the Corporation would have if there were no vacancies; or by one or more stockholders holding not less than 25% of the voting power of all shares of the Corporation entitled to vote (except that a special meeting for the purpose of considering any action to directly or indirectly facilitate or effect a business combination, including any action to change or otherwise affect the composition of the Board for that purpose, must be called by 50% or more of the voting power of all shares of the Corporation entitled to vote), who shall demand such special meeting by written notice given to the Board specifying the purpose or purposes of such meeting. Business transacted at any special meeting shall be limited to the purposes stated in the notice delivered in accordance with Section 7.2.

 

5 

 

 

Section 7.2          Advance Notice. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.

 

Section 7.3             Action by Written Consent. Except as may be otherwise provided for or fixed pursuant to this Second A&R Certificate (including any Preferred Stock Designation) relating to the rights of the holders of any outstanding series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders of the Corporation in lieu of a meeting.

 

Article VIII
LIMITED LIABILITY; INDEMNIFICATION

 

Section 8.1              Limitation of Director Liability. To the fullest extent that the DGCL or any other law of the State of Delaware as the same exists or is hereafter amended permits, no person that is or was a director of the Corporation shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director. Any amendment, modification or repeal of the foregoing sentence shall, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to further limit or eliminate the liability of directors) and shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.

 

Section 8.2              Indemnification and Advancement of Expenses.

 

(a)            To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify and hold harmless each person who is or was made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit, proceeding, arbitration, alternative dispute resolution procedure, legislative hearing or inquiry, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she is or was a director, officer or board observer of the Corporation or, while a director, officer or board observer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, agent or board observer of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, agent or board observer, or in any other capacity while serving as a director, officer, employee, agent or board observer, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred by such indemnitee in connection with such proceeding. The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by an indemnitee in defending or otherwise participating in any proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking, by or on behalf of the indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that the indemnitee is not entitled to be indemnified under this Section 8.2 or otherwise. The rights to indemnification and advancement of expenses conferred by this Section 8.2 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee, agent or board observer and shall inure to the benefit of his or her heirs, executors and administrators. Notwithstanding the foregoing provisions of this Section 8.2(a), except for proceedings to enforce rights to indemnification and advancement of expenses, the Corporation shall indemnify and advance expenses to an indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board.

 

6 

 

 

(b)             The rights to indemnification and advancement of expenses conferred on any indemnitee by this Section 8.2 shall not be exclusive of any other rights that any indemnitee may have or hereafter acquire under law, this Second A&R Certificate (including any Preferred Stock Designation), the Bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.

 

(c)              Any repeal or amendment of this Section 8.2 by the stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Second A&R Certificate inconsistent with this Section 8.2, shall, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to provide broader indemnification rights on a retroactive basis than permitted prior thereto), and shall not in any way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.

 

(d)             This Section 8.2 shall not limit the right of the Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other than indemnitees.

 

Article IX
CORPORATE OPPORTUNITY

 

To the fullest extent of law, the Corporation, on behalf of itself and its subsidiaries, renounces and waives any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, directly or indirectly, any potential transactions, matters or business opportunities (including, without limitation, any business activities or lines of business that are the same as or similar to those pursued by, or competitive with, the Corporation or any of its subsidiaries or any dealings with customers or clients of the Corporation or any of its subsidiaries) that are from time to time presented to any of its officers, directors, stockholders or indirect equityholders, other than those officers, directors, stockholders or indirect equityholders who are employees of the Corporation or any of its subsidiaries, even if the transaction, matter or opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. None of its respective officers, directors, stockholders or indirect equityholders shall be liable to the Corporation or any of its subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person pursues, acquires or participates in such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries, unless, in the case of any such person who is a director or officer of the Corporation, such business opportunity is expressly offered to such director or officer in writing solely in his or her capacity as a director or officer of the Corporation. Without limiting and in addition to the foregoing, the doctrine of corporate opportunity, or any other analogous doctrine, shall not apply with respect to the Corporation or any of its officers or directors in circumstances where the application of any such doctrine to a corporate opportunity would conflict with any fiduciary duties or contractual obligations they or it may have as of the date of this Second A&R Certificate or in the future. In addition to and without limiting the foregoing, the doctrine of corporate opportunity shall not apply to any other corporate opportunity with respect to any of the officers or directors of the Corporation unless such corporate opportunity is offered to such person solely in his or her capacity as an officer or director of the Corporation and such opportunity is one the Corporation is financially able and legally and contractually permitted to undertake and would otherwise be reasonable for the Corporation to pursue.

 

7 

 

 

This ARTICLE IX shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of the Corporation under this Second A&R Certificate, the Bylaws, applicable law, any agreement or otherwise.

 

Article X
AMENDMENTS

 

The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Second A&R Certificate (including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware at the time in force that may be added or inserted, in the manner now or hereafter prescribed by this Second A&R Certificate (including any Preferred Stock Designation) and the DGCL to the extent not inconsistent with this Second A&R Certificate (including any Preferred Stock Designation); and, except as set forth in ARTICLE VIII, all rights, preferences and privileges of whatever nature herein conferred upon stockholders, directors or any other persons by and pursuant to this Second A&R Certificate in its present form or as hereafter amended are granted subject to the right reserved in this ARTICLE X.

 

Article XI
EXCLUSIVE FORUM FOR CERTAIN LAWSUITS

 

Section 11.1          Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) (or, if the Court of Chancery lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware (together with the Court of Chancery, the “Delaware Courts” and, individually, a “Delaware Court”)) shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee, or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of the DGCL or this Second A&R Certificate or the Bylaws, (d) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery, or (e) any action asserting a claim governed by the internal affairs doctrine, except for, as to each of (a) through (e) above, any claim (i) as to which such Delaware Court determines that there is an indispensable party not subject to the jurisdiction of such Delaware Court (and the indispensable party does not consent to the personal jurisdiction of such Delaware Court within ten days following such determination), (ii) which is vested in the exclusive jurisdiction of a court or forum other than the Delaware Courts, or (iii) for which the Delaware Courts do not have subject matter jurisdiction.

 

8 

 

 

Section 11.2           Consent to Jurisdiction. If any action the subject matter of which is within the scope of Section 11.1 immediately above is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (a) the personal jurisdiction of the Delaware Courts in connection with any action brought in any such court to enforce Section 11.1 immediately above (an “FSC Enforcement Action”) and (b) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 11.2.

 

Section 11.3          Federal Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 11.3.

 

Article XII
SEVERABILITY

 

If any provision or provisions (or any part thereof) of this Second A&R Certificate shall be held to be invalid, illegal or unenforceable as applied to any person, entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Second A&R Certificate (including, without limitation, each portion of any paragraph of this Second A&R Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby, and (b) the provisions of this Second A&R Certificate (including, without limitation, each portion of any paragraph of this Second A&R Certificate containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service or for the benefit of the Corporation to the fullest extent permitted by law.

 

* * *

 

9 

 

 

IN WITNESS WHEREOF, the Corporation has caused this Second A&R Certificate to be signed on its behalf by the duly authorized officer below on this 30th day of June, 2021.

 

 HERTZ GLOBAL HOLDINGS, INC.

 

By:  
Name: M. David Galainena
 Title: Executive Vice President, General Counsel and Secretary

 

 

 

Exhibit 3.2

 

SECOND AMENDED AND RESTATED BYLAWS
OF HERTZ GLOBAL HOLDINGS, INC.
(THE “CORPORATION”)

(Amended and Restated June 30, 2021)

 

Article I
OFFICES

 

Section 1.1            Registered Office. The registered office of the Corporation within the State of Delaware shall be located at either (a) the principal place of business of the Corporation in the State of Delaware or (b) the office of the Corporation or individual acting as the Corporation’s registered agent in Delaware.

 

Section 1.2            Additional Offices. The Corporation may, in addition to its registered office in the State of Delaware, have such other offices and places of business, both within and outside the State of Delaware, as the Board of Directors of the Corporation (the “Board”) may from time to time determine or as the business and affairs of the Corporation may require.

 

Article II
STOCKHOLDERS MEETINGS

 

Section 2.1            Annual Meetings. The annual meeting of stockholders shall be held at such place, either within or without the State of Delaware and time and on such date as shall be determined by the Board and stated in the notice of the meeting, provided that the Board may in its sole discretion determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication pursuant to Section 9.5(a).

 

At each annual meeting, the stockholders entitled to vote on such matters shall elect those directors of the Corporation to fill any term of a directorship that expires on the date of such annual meeting and may transact any other business as may properly be brought before the meeting in accordance with these Bylaws.

 

Section 2.2            Special Meetings. Except as otherwise required by applicable law and subject to the rights, if any, of the holders of any outstanding series of the preferred stock of the Corporation (“Preferred Stock”) or provided in the Corporation’s Second Amended and Restated Certificate of Incorporation, as the same may be amended or restated from time to time (the “Certificate of Incorporation”), special meetings of the stockholders of the Corporation, for any purpose or purposes, may be called at any time only by or at the direction of the Board by the direction of a majority of the total number of directors that the Corporation would have if there were no vacancies on the Board; or by one or more stockholders holding not less than 25% of the voting power of all shares of the Corporation entitled to vote (except that a special meeting for the purpose of considering any action to directly or indirectly facilitate or effect a business combination, including any action to change or otherwise affect the composition of the Board for that purpose, must be called by 50% or more of the voting power of all shares of the Corporation entitled to vote), who shall demand such special meeting by written notice given to the Board specifying the purpose or purposes of such meeting. Only such business that is specified in the notice of the meeting shall be transacted at a properly called special meeting. Special meetings of stockholders shall be held at such place, either within or without the State of Delaware, and at such time and on such date as shall be determined by the Board and stated in the Corporation’s notice of the meeting, provided that the Board may in its sole discretion determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication pursuant to Section 9.5(a).

 

 

 

 

Section 2.3          Notices. Written notice of each stockholders meeting stating the place, if any, date, and time of the meeting, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting and the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, shall be given in the manner permitted by Section 9.3 to each stockholder entitled to vote thereat as of the record date for determining the stockholders entitled to notice of the meeting, by the Corporation not less than 10 nor more than 60 days before the date of the meeting unless otherwise required by the General Corporation Law of the State of Delaware (the “DGCL”). If said notice is for a stockholders meeting other than an annual meeting, it shall in addition state the purpose or purposes for which the meeting is called, and the business transacted at such meeting shall be limited to the matters so stated in the Corporation’s notice of meeting (or any supplement thereto). Any meeting of stockholders as to which notice has been given may be postponed, and any meeting of stockholders as to which notice has been given may be cancelled, by the Board upon public announcement (as defined in Section 2.7(c)) given before the date previously scheduled for such meeting.

 

Section 2.4          Quorum. Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, the presence, in person or by proxy, at a stockholders meeting of the holders of shares of outstanding capital stock of the Corporation representing a majority of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote at such meeting shall constitute a quorum for the transaction of business at such meeting, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of shares representing a majority of the voting power of the outstanding shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. If a quorum shall not be present or represented by proxy at any meeting of the stockholders of the Corporation, the chairperson of the meeting may adjourn the meeting from time to time in the manner provided in Section 2.6 until a quorum shall attend. The stockholders present at a duly convened meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

 

Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the voting power of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any such other corporation to vote shares held by it in a fiduciary capacity.

 

2

 

 

Section 2.5          Voting of Shares.

 

(a)          Voting Lists. The Secretary of the Corporation (the “Secretary”) shall prepare, or shall cause the officer or agent who has charge of the stock ledger of the Corporation to prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders of record entitled to vote at such meeting; provided, however, that if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order and showing the address and the number and class of shares registered in the name of each stockholder. Nothing contained in this Section 2.5(a) shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If a meeting of stockholders is to be held solely by means of remote communication as permitted by Section 9.5(a), such list of stockholders of record entitled to vote at the meeting shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of meeting. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list required by this Section 2.5(a) or to vote in person or by proxy at any meeting of stockholders.

 

(b)          Manner of Voting. At any stockholders meeting, every stockholder entitled to vote may vote in person or by proxy. If authorized by the Board, the voting by stockholders or proxy holders at any meeting conducted by remote communication may be effected by a ballot submitted by electronic transmission (as defined in Section 9.3), provided that any such electronic transmission must either set forth or be submitted with information from which the Corporation can determine that the electronic transmission was authorized by the stockholder or proxy holder. The Board, in its discretion, or the chairperson of the meeting of stockholders, in such person’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

 

(c)           Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Proxies need not be filed with the Secretary until the meeting is called to order, but shall be filed with the Secretary before being voted. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, either of the following shall constitute a valid means by which a stockholder may grant such authority. No stockholder shall have cumulative voting rights.

 

(i)              A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.

 

(ii)            A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

 

3

 

 

(d)            Required Vote. All matters presented to the stockholders at a meeting at which a quorum is present shall be determined by the vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon (other than the election of directors (who shall be elected by a plurality of all votes cast)), unless the matter is one upon which, by applicable law, the Certificate of Incorporation, these Bylaws or applicable stock exchange rules, a different vote is required, in which case such provision shall govern and control the decision of such matter.

 

(e)            Inspectors of Election. The Board may, and shall if required by law, in advance of any meeting of stockholders, designate one or more persons as inspectors of election, who may be employees of the Corporation or otherwise serve the Corporation in other capacities, to act at such meeting of stockholders or any adjournment thereof and to make a written report thereof. The Board may appoint one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspectors of election or alternates are appointed by the Board, the chairperson of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain and report the number of outstanding shares and the voting power of each; determine the number of shares present in person or represented by proxy at the meeting and the validity of proxies and ballots; count all votes and ballots and report the results; determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. No person who is a candidate for an office at an election may serve as an inspector at such election. Each report of an inspector shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors.

 

Section 2.6            Adjournments. Any meeting of stockholders, annual or special, may be recessed or adjourned by the chairperson of the meeting, from time to time, whether or not there is a quorum, to reconvene at the same or some other place. Notice need not be given of any such adjourned meeting if the date, time, and place, if any, thereof, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the recessed or adjourned meeting the stockholders, or the holders of any class or series of stock entitled to vote separately as a class, as the case may be, may transact any business that properly could have been transacted at the original meeting. If the adjournment is for more than 30 days, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix a new record date for notice of such adjourned meeting in accordance with Section 9.2, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

 

4

 

 

Section 2.7            Advance Notice for Business.

 

(a)           Annual Meetings of Stockholders. No business (other than the election of directors, which is governed by Section 3.2) may be transacted at an annual meeting of stockholders, other than business that is either (i) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board, (ii) otherwise properly brought before the annual meeting by or at the direction of the Board or (iii) otherwise properly brought before the annual meeting by any stockholder of the Corporation (x) who was a stockholder of record entitled to vote at such annual meeting on the date of the giving of the notice provided for in this Section 2.7(a), on the record date for the determination of stockholders entitled to vote at the meeting and on the date of such annual meeting, (y) who is entitled to vote at such annual meeting and (z) who complies with the notice procedures set forth in this Section 2.7(a). Notwithstanding anything in this Section 2.7(a) to the contrary, only persons nominated for election as a director to fill any term of a directorship that expires on the date of the annual meeting pursuant to Section 3.2 will be considered for election at such meeting. For the avoidance of doubt, the foregoing clause (iii) will be the exclusive means for a stockholder to submit business before an annual meeting of stockholders (other than proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “Exchange Act”) and included in the notice of meeting given by or at the direction of the Board).

 

(i)              In addition to any other applicable requirements, for business (other than nominations) to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary and such business must otherwise be a proper matter for stockholder action. Subject to Section 2.7(a)(iii), a stockholder’s notice to the Secretary with respect to such business, to be timely, must be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day before the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so received no earlier than the opening of business on the 120th day before the annual meeting and not later than the later of (x) the close of business on the 90th day before the annual meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by the Corporation, whichever occurs first. The public announcement of an adjournment or postponement of an annual meeting shall not commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described in this Section 2.7(a).

 

5

 

 

(ii)             To be in proper written form, a stockholder’s notice to the Secretary with respect to any business (other than nominations) must set forth, on the form provided to the stockholder upon written request to the Secretary and verification that the requesting party is a stockholder or is acting on behalf of a stockholder, as to each such matter such stockholder proposes to bring before the annual meeting (A) a description in reasonable detail of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event such business includes a proposal to amend these Bylaws, the language of the proposed amendment) and the reasons that such stockholder believes conducting such business at the annual meeting and taking such actions would be in the best interests of the Corporation and its stockholders, (B) the name and record address of such stockholder and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, and the name and address of any other Stockholder Associated Person, (C) the class or series and number of shares of capital stock of the Corporation (including any rights to dividends on the shares of the Corporation owned beneficially by such stockholder and any Stockholder Associated Person that are separated or separable therefrom) that are owned beneficially and of record by such stockholder, by the beneficial owner, if any, on whose behalf the proposal is made, and by any other Stockholder Associated Person (including any shares of any class or series of the Corporation as to which such stockholder has a right to acquire beneficial ownership, whether such right is exercisable immediately or only after the passage of time, including where such stockholder has any proportionate interest in shares held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner), (D) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice, by or on behalf of, such stockholder and any Stockholder Associated Persons, the effect or intent of which is to provide the opportunity to profit or share in any profit derived from any increase or decrease in the value of shares held by, mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such Stockholder Associated Person, with respect to shares of stock of the Corporation, (E) any material interest of such stockholder and any Stockholder Associated Person in such business, (F) any direct or indirect legal, economic or financial interest (including short position) of such stockholder and any Stockholder Associated Person in the outcome of any vote to be taken with respect to any matter that is substantially related, directly or indirectly, to any business proposed to be brought before a meeting by any stockholder under these Bylaws, (G) any proxy, contract, agreement, arrangement, understanding or relationship pursuant to which such stockholder or any Stockholder Associated Person or any other person representing such stockholder has a right to vote any shares of the Corporation or which has the effect of increasing or decreasing the voting power of such stockholder or person, (H) any material pending or threatened legal proceeding involving the Corporation, any affiliate of the Corporation or any of their respective directors or officers, to which such stockholder or Stockholder Associated Person is a party, (I) any equity interests, including any convertible, derivative or short positions, in any principal competitor of the Corporation held by such stockholder or Stockholder Associated Person (for purposes of this Section 2.7(a), a person shall be deemed to have a short position in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (J) any performance-related fees (other than an asset-based fee) to which such person or any affiliate or immediate family member of such person may be entitled as a result of any increase or decrease in the value of shares of the Corporation or any derivative securities of the Corporation’s equity, (K) a representation that such stockholder (or a qualified representative of such stockholder) intends to appear in person or by proxy at the annual meeting to bring such business before the meeting, (L) any other information related to such stockholder or Stockholder Associated Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies or consents (even if a solicitation is not involved) by such stockholder or Stockholder Associated Person in support of the business proposed to be brought before the meeting pursuant to Section 14 of the Exchange Act, and the rules, regulations and schedules promulgated thereunder, (M) a certification that such stockholder and any Stockholder Associated Person has complied with all applicable federal, state and other legal requirements in connection with its acquisition of shares or other securities of the Corporation and such person’s acts or omissions as a stockholder of the Corporation, (N) a statement as to whether such stockholder or any Stockholder Associated Person intends to deliver a proxy statement and/or form of proxy to the holders of at least the percentage of the Corporation’s outstanding capital stock required to approve the proposal or otherwise to solicit proxies or votes from stockholders in support of the proposal, and (O) a representation as to the accuracy of the information set forth in the notice. “Stockholder Associated Person” of any stockholder means (A) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (B) any beneficial owner (other than any such beneficial owner that is (x) a limited partner of such stockholder or (y) an equityholder of a person described under clause (x)) of shares of stock of the Corporation owned of record or beneficially by such stockholder (as defined in Rule 16a-1(a)(1), without reference to the proviso therein, or Rule 16a-1(a)(2), or any successor provisions, under the Exchange Act) or (C) any person directly or indirectly controlling, controlled by or under common control with such stockholder or Stockholder Associated Person.

 

6

 

 

(iii)            No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 2.7(a), provided, however, that once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 2.7(a) shall be deemed to preclude discussion by any stockholder of any such business. If the Board or the chairperson of the annual meeting determines that any stockholder proposal was not made in accordance with the provisions of this Section 2.7(a) or that the information provided in a stockholder’s notice does not satisfy the information requirements of this Section 2.7(a), such proposal shall not be presented for action at the annual meeting. Notwithstanding the foregoing provisions of this Section 2.7(a), if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to present the proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such matter may have been received by the Corporation.

 

(iv)            In addition to the provisions of this Section 2.7(a), a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 2.7(a) shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

(b)           Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting only pursuant to Section 3.2.

 

(c)            Certain Definitions. For purposes of these Bylaws, (i) “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act (or any successor thereto), (ii) “business day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York City, New York are authorized or obligated by law or executive order to close, (iii) “close of business” shall mean 5:00 p.m. local time at the principal executive offices of the Corporation, and if an applicable deadline falls on the close of business on a day that is not a business day, then the applicable deadline shall be deemed to be the close of business on the immediately preceding business day, and (iv) delivery of materials by a shareholder to the Corporation as required under Section 3.2 shall be made by hand delivery, overnight courier service, or by certified or registered mail, return receipt required.

 

7

 

 

(d)          A stockholder providing notice of business proposed to be brought before an annual meeting pursuant to Section 2.7 must further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to Section 2.7 is true and correct as of the record date for notice of the meeting and as of the date that is ten days prior to the meeting or any recess, adjournment or postponement thereof. Any such update and supplement must be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation, as promptly as practicable.

 

Section 2.8            Conduct of Meetings. The chairperson of each annual and special meeting of stockholders shall be the Chairperson of the Board or, in the absence (or inability or refusal to act) of the Chairperson of the Board, the Chief Executive Officer (if he or she shall be a director) or, in the absence (or inability or refusal to act) of the Chief Executive Officer or if the Chief Executive Officer is not a director, the President (if he or she shall be a director) or, in the absence (or inability or refusal to act) of the President or if the President is not a director, such other person as shall be appointed by the Board. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the chairperson of the meeting. The Board may adopt such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with these Bylaws or such rules and regulations as adopted by the Board, the chairperson of any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairperson, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairperson of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairperson of the meeting shall determine; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; (e) limitations on the time allotted to questions or comments by participants; and (f) restrictions on the use of cell phones, audio or video recording devices and similar devices at the meeting. The chairperson of the meeting’s rulings on procedural matters shall be final. Unless and to the extent determined by the Board or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The secretary of each annual and special meeting of stockholders shall be the Secretary or, in the absence (or inability or refusal to act) of the Secretary, an Assistant Secretary so appointed to act by the chairperson of the meeting. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairperson of the meeting may appoint any person to act as secretary of the meeting.

 

Section 2.9          Consents in Lieu of Meeting. Except as may be otherwise provided for or fixed pursuant to the Certificate of Incorporation relating to the rights of the holders of any outstanding series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders of the Corporation.

 

Section 2.10         Preferred Stock—Voting. Notwithstanding anything herein to the contrary, the notice requirements set forth in this Section 2 shall not apply with respect to any meeting of stockholders at which holders of the Preferred Stock issued on June 30, 2021 are entitled to vote in accordance with the terms thereof (which vote may be cast by holders of Preferred Stock in accordance with the requirements of the Certificate of Incorporation).

 

8

 

 

Article III
DIRECTORS

 

Section 3.1            Powers; Number; Term of Office. The business and affairs of the Corporation shall be managed by or under the direction of the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders. Directors need not be stockholders or residents of the State of Delaware. Subject to the Certificate of Incorporation, the number of directors shall be fixed exclusively by resolution of the Board.

 

Section 3.2            Advance Notice for Nomination of Directors.

 

(a)           Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided by the terms of one or more series of Preferred Stock with respect to the rights of holders of one or more series of Preferred Stock to nominate or elect directors. Nominations of persons for election to the Board at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors as set forth in the Corporation’s notice of such special meeting, may be made (i) by or at the direction of the Board (or any duly authorized committee thereof) or (ii) by any stockholder of the Corporation (A) who was a stockholder of record entitled to vote in the election of directors on the date of the giving of the notice provided for in this Section 3.2, on the record date for the determination of stockholders of the Corporation entitled to vote at the meeting and on the date of such meeting, (B) who is entitled to vote at the meeting, and (C) who complies with the notice procedures set forth in this Section 3.2.

 

(b)           Except to the extent directors are elected by written consent of stockholders in accordance with the DGCL or as may be otherwise provided by the terms of one or more series of Preferred Stock with respect to the rights of holders of such series to nominate or elect directors, only persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors.

 

(c)           Except as may be otherwise provided by the terms of one or more series of Preferred Stock with respect to the rights of holders of such series to nominate directors, in addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary. To be timely, a stockholder’s notice to the Secretary must be received by the Secretary at the principal executive offices of the Corporation (i) in the case of an annual meeting, not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day before the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so received no earlier than the opening of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting was first made by the Corporation; and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, no earlier than the opening of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the special meeting is first made by the Corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting or special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described in this Section 3.2. For the avoidance of doubt, except as may be otherwise provided by the terms of one or more series of Preferred Stock with respect to the rights of holders of such series to nominate directors, a stockholder shall not be entitled to make additional or substitute nominations following the expiration of the time periods set forth in these Bylaws.

 

9

 

 

(d)         Notwithstanding anything in paragraph (c) to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting is greater than the number of directors whose terms expire on the date of the annual meeting and there is no public announcement by the Corporation naming all of the nominees for the additional directors to be elected or specifying the size of the increased Board before the close of business on the 90th day prior to the anniversary date of the immediately preceding annual meeting of stockholders, a stockholder’s notice required by this Section 3.2 shall also be considered timely, but only with respect to nominees for the additional directorships created by such increase that are to be filled by election at such annual meeting, if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the date on which such public announcement was first made by the Corporation.

 

(e)          Except with respect to nominations by holders of one or more series of Preferred Stock in accordance with the terms thereof, to be in proper written form, a stockholder’s notice of a nomination of a person or persons for election as a director or directors to the Secretary must set forth, on the form provided to the stockholder upon written request to the Secretary and verification that the requesting party is a stockholder or is acting on behalf of a stockholder:

 

(i)              as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person (present and for the past five years), (C) the ownership information specified in Sections 3.2(e)(ii)(B) through (J) for such person and any member of the immediate family of such person, or any affiliate or associate (as such terms are defined pursuant to the Exchange Act and the rules and regulations promulgated thereunder) of such person, or any person acting in concert therewith, (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected), (E) a completed, accurate and signed questionnaire (in the form to be provided by the Secretary to any stockholder of record identified by name within seven days of any written request) with respect to the identity, background and qualification of the proposed nominee and the background of any other person or entity on whose behalf the nomination is being made, and (F) a written representation and agreement (in the form to be provided by the Secretary to any stockholder of record identified by name within seven days of any written request) that the proposed nominee (1) is qualified and if elected intends to serve as a director of the Corporation for the entire term for which such proposed nominee is standing for election, (2) is not and will not become a party to (x) any agreement, arrangement or understanding (whether written or oral) with, and has not given any commitment or assurance to, any person or entity as to how the proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (y) any Voting Commitment that could limit or interfere with the proposed nominee’s ability to comply, if elected as a director of the Corporation, with the proposed nominee’s fiduciary duties under applicable law, (3) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation and (4) if elected as a director of the Corporation, the proposed nominee would be in compliance and will comply, with all applicable publicly disclosed corporate governance, ethics, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation; and

 

10

 

 

(ii)            as to the stockholder giving the notice (A) the name and record address of such stockholder as they appear on the Corporation’s books and the name and address of the beneficial owner, if any, on whose behalf the nomination is made, and the name and address of any other Stockholder Associated Person, (B) the class or series and number of shares of capital stock of the Corporation (including any rights to dividends on the shares of the Corporation owned beneficially by such stockholder and any Stockholder Associated Person that are separated or separable therefrom) that are owned beneficially and of record by such stockholder and the beneficial owner, if any, on whose behalf the nomination is made, and by any other Stockholder Associated Person (including any shares of any class or series of the Corporation as to which such stockholder has a right to acquire beneficial ownership, whether such right is exercisable immediately or only after the passage of time, including where such stockholder has any proportionate interest in shares held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner), (C) a description of all direct and indirect compensation and other material agreements, arrangements and understandings during the past three years, and any arrangements or understandings relating to the nomination to be made by such stockholder, among such stockholder and any Stockholder Associated Person, each proposed nominee and any other person or persons (including their names), (D) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice, by or on behalf of, such stockholder and any Stockholder Associated Persons, the effect or intent of which is to provide the opportunity to profit or share in any profit derived from any increase or decrease in the value of shares held by, mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such Stockholder Associated Person, with respect to shares of stock of the Corporation, (E) any material interest of such stockholder and any Stockholder Associated Person in such nomination, (F) any direct or indirect legal, economic or financial interest (including short position) of such stockholder and any Stockholder Associated Person in the outcome of any vote to be taken at any meeting of stockholders of any other entity with respect to any matter that is substantially related, directly or indirectly, to any nomination by any stockholder under these Bylaws, (G) any proxy, contract, agreement, arrangement, understanding or relationship pursuant to which such stockholder or any Stockholder Associated Person or any other person representing such stockholder has a right to vote any shares of the Corporation or which has the effect of increasing or decreasing the voting power of such stockholder or person, (H) any material pending or threatened legal proceeding involving the Corporation, any affiliate of the Corporation or any of their respective directors or officers, to which such stockholder or Stockholder Associated Person is a party, (I) any equity interests, including any convertible, derivative or short positions, in any principal competitor of the Corporation held by such stockholder or Stockholder Associated Person (for purposes of this Section 3.2(e), a person shall be deemed to have a short position in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (J) any performance-related fees (other than an asset-based fee) to which such person or any affiliate or immediate family member of such person may be entitled as a result of any increase or decrease in the value of shares of the Corporation or any derivative securities of the Corporation’s equity, (K) a representation that such stockholder (or a qualified representative of such stockholder) intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, (L) any other information relating to such stockholder and the beneficial owner, if any, on whose behalf the nomination is made that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules, regulations and schedules promulgated thereunder, and (M) a statement as to whether such stockholder or Stockholder Associated Person intends to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect such stockholder’s nominees or otherwise to solicit proxies or votes from stockholders in support of the nomination. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

 

11

 

 

(f)           The Corporation may also, as a condition to any such nomination, require any nominating stockholder or any proposed nominee to deliver to the Secretary, within seven days of any such request, such other information (A) as may reasonably be requested by the Corporation, including such other information as may be reasonably required by the Board, in its sole discretion, to determine (i) the eligibility of such proposed nominee to serve as a director of the Corporation and, (ii) whether such nominee qualifies as an “independent director” or “audit committee financial expert” under applicable law, securities exchange rule or regulation, or any publicly disclosed corporate governance guideline or committee charter of the Corporation or (B) that the Board determines, in its sole discretion, could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

 

(g)           A stockholder providing notice of a director nomination to be made at an annual meeting pursuant to Section 3.2 must further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to Section 3.2, as applicable, is true and correct as of the record date for notice of the meeting and as of the date that is ten days prior to the meeting or any recess, adjournment or postponement thereof. Any such update and supplement must be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation, as promptly as practicable. Notwithstanding the foregoing, following the conclusion of the relevant time period to provide timely notice to the Corporation pursuant to Section 3.2, a stockholder will not be permitted to update the information provided or required to be provided in such notice to substitute or replace a nominee.

 

(h)           If the Board or the chairperson of the meeting of stockholders determines that any nomination was not made in accordance with the provisions of this Section 3.2 or that the information provided in a stockholder’s notice does not satisfy the information requirements of this Section 3.2, then such nomination shall not be considered at the meeting in question. Notwithstanding the foregoing provisions of this Section 3.2, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting of stockholders of the Corporation to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Corporation.

 

12

 

 

(i)            In addition to the provisions of this Section 3.2, a stockholder shall also comply with all of the applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 3.2 shall be deemed to affect any rights of the holders of Preferred Stock to nominate or elect directors pursuant to the Certificate of Incorporation or the right of the Board to fill newly created directorships and vacancies on the Board pursuant to the Certificate of Incorporation.

 

Section 3.3           Compensation. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board shall have the authority to fix the compensation of directors. The directors may be reimbursed their expenses, if any, of attendance at each meeting of the Board, including for service on a committee of the Board, and may be paid either a fixed sum for attendance at each meeting of the Board or other compensation as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees of the Board may be allowed like compensation and reimbursement of expenses for service on the committee.

 

Article IV
BOARD MEETINGS

 

Section 4.1          Annual Meetings. The Board shall meet as soon as practicable after the adjournment of each annual stockholders meeting at the place of the annual stockholders meeting unless the Board shall fix another time and place and give notice thereof in the manner required herein for special meetings of the Board. No notice to the directors shall be necessary to legally convene this meeting, except as provided in this Section 4.1.

 

Section 4.2            Regular Meetings. Regularly scheduled, periodic meetings of the Board may be held without notice at such times, dates and places (within or without the State of Delaware) as shall from time to time be determined by the Board.

 

Section 4.3           Special Meetings. Special meetings of the Board shall be called by the Chairperson of the Board, by the President, or by the Secretary on the written request of the Chairperson of the Board or directors comprising at least a majority of directors of the Board, or the sole director, as the case may be, and shall be held at such time, date and place (within or without the State of Delaware) as may be determined by the person calling the meeting or, if called upon the request of directors or the sole director, as specified in such written request. Notice of each special meeting of the Board shall be given, as provided in Section 9.3, to each director (i) at least 24 hours before the meeting if such notice is oral notice given personally or by telephone or written notice given by hand delivery or by means of a form of electronic transmission and delivery; (ii) at least two days before the meeting if such notice is sent for next day delivery by a nationally recognized overnight delivery service; and (iii) at least five days before the meeting if such notice is sent through the United States mail. If the Secretary shall fail or refuse to give such notice, then the notice may be given by the officer who called the meeting or the directors who requested the meeting. Any and all business that may be transacted at a regular meeting of the Board may be transacted at a special meeting. Except as may be otherwise expressly provided by applicable law, the Certificate of Incorporation, or these Bylaws, neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice or waiver of notice of such meeting. A special meeting may be held at any time without notice if all the directors are present and do not object to the absence of notice or if those not present waive notice of the meeting in accordance with Section 9.4.

 

Section 4.4           Quorum; Required Vote. A majority of the Board shall constitute a quorum for the transaction of business at any meeting of the Board, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board, except as may be otherwise specifically provided by applicable law, the Certificate of Incorporation or these Bylaws. If a quorum shall not be present at any meeting, a majority of the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

 

13

 

 

Section 4.5           Consent In Lieu of Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions (or paper reproductions thereof) are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Section 4.6            Organization. The chairperson of each meeting of the Board shall be the Chairperson of the Board or, in the absence (or inability or refusal to act) of the Chairperson of the Board, the Chief Executive Officer (if he or she shall be a director) or, in the absence (or inability or refusal to act) of the Chief Executive Officer or if the Chief Executive Officer is not a director, the President (if he or she shall be a director) or in the absence (or inability or refusal to act) of the President or if the President is not a director, a chairperson elected from the directors present. The Secretary shall act as secretary of all meetings of the Board. In the absence (or inability or refusal to act) of the Secretary, an Assistant Secretary shall perform the duties of the Secretary at such meeting. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairperson of the meeting may appoint any person to act as secretary of the meeting.

 

Article V
COMMITTEES OF DIRECTORS

 

Section 5.1          Establishment. The Board may by resolution passed by a majority of the Board designate one or more committees, each committee to consist of one or more of the directors of the Corporation (the composition of which, in any event, shall be consistent with the requirements of the terms of any Preferred Stock). Each committee shall keep regular minutes of its meetings and report the same to the Board when required. The Board shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee.

 

Section 5.2         Available Powers. Any committee established pursuant to Section 5.1, to the extent permitted by applicable law and by resolution of the Board, shall have and may exercise all of the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it.

 

Section 5.3         Alternate Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint such alternate member of the Board to act at the meeting in place of any such absent or disqualified member.

 

Section 5.4          Procedures. Unless the Board otherwise provides, the time, date, place, if any, and notice of meetings of a committee shall be determined by such committee. At meetings of a committee, a majority of the number of members of the committee (but not including any alternate member, unless such alternate member has replaced any absent or disqualified member at the time of, or in connection with, such meeting) shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of the committee, except as otherwise specifically provided by applicable law, the Certificate of Incorporation, these Bylaws or the Board. If a quorum is not present at a meeting of a committee, the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. Unless the Board otherwise provides and except as provided in these Bylaws, each committee designated by the Board may make, alter, amend and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board is authorized to conduct its business pursuant to Article III and Article IV of these Bylaws.

 

14

 

 

Article VI
OFFICERS

 

Section 6.1          Officers. The officers of the Corporation elected by the Board shall be a Chief Executive Officer, a Chief Financial Officer, a Secretary and such other officers (including without limitation, an executive Chairperson of the Board, President, Vice Presidents, Assistant Secretaries, Treasurer and Assistant Treasurers) as the Board from time to time may determine. Officers elected by the Board shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article VI or such other authority as may be specifically conferred by the Board upon such election. Such officers shall also have such other powers and duties as from time to time may be conferred by the Board. The Chairperson of the Board, Chief Executive Officer or President may also appoint such other officers (including without limitation one or more Executive Directors, Vice Presidents or Controllers) as may be necessary or desirable for the conduct of the business of the Corporation. Such other officers shall have such powers and duties and shall hold their offices for such terms as may be provided in these Bylaws or as may be prescribed by the Board or, if such officer has been appointed by the Chief Executive Officer or President, as may be prescribed by the appointing officer.

 

(a)          Chairperson of the Board. The Board may appoint a Chairperson of the Board who may be an executive or non-executive Chairperson of the Board as determined by the Board. If the Board appoints a Chairperson of the Board, he or she shall perform such duties and possess such powers as are assigned to the Chairperson of the Board by the Board, including as an officer of the Corporation if so designated. Unless otherwise provided by the Board, the Chairperson of the Board shall preside at all meetings of the stockholders and the Board. The Chairperson of the Board shall exercise such powers and perform such duties as shall be assigned to or required of the Chairperson of the Board from time to time by the Board or these Bylaws. The powers and duties of the Chairperson of the Board shall not include supervision or control of the preparation of the financial statements of the Corporation (other than through participation as a member of the Board). The Chairperson of the Board must be a director of the Corporation. The position of Chairperson of the Board and Chief Executive Officer may be held by the same person.

 

(b)          Vice Chairperson.  The Board may appoint a Vice Chairperson of the Board and prescribe his or her powers and duties.  The Vice Chairperson shall not be considered an officer or employee of the corporation.  The appointment of the Vice Chairperson shall not diminish the power, duties or authority of the Chairperson appointed by the Board of Directors.

 

(c)           Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation, shall have general supervision of the affairs of the Corporation and general control of all of its business subject to the ultimate authority of the Board, and shall be responsible for the execution of the policies of the Board with respect to such matters, except to the extent any such powers and duties have been prescribed to the Chairperson of the Board pursuant to Section 6.1(a) or the Vice Chairperson of the Board pursuant to Section 6.1(b), as applicable. In the absence (or inability or refusal to act) of the Chairperson of the Board, the Chief Executive Officer (if he or she shall be a director) shall preside when present at all meetings of the stockholders and the Board. The position of Chief Executive Officer and President may be held by the same person.

 

 15

 

 

(d)          President. The President shall make recommendations to the Chief Executive Officer on all operational matters that would normally be reserved for the final executive responsibility of the Chief Executive Officer. In the absence (or inability or refusal to act) of the Chairperson of the Board and Chief Executive Officer, the President (if he or she shall be a director) shall preside when present at all meetings of the stockholders and the Board. The President shall also perform such duties and have such powers as shall be designated by the Board. The position of President and Chief Executive Officer may be held by the same person. If no President has been appointed by the Board, the Chief Executive Officer shall be the President.

 

(e)           Vice Presidents. In the absence (or inability or refusal to act) of the President, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board or, in the absence of such designation, in the order designated by the Chief Executive Officer) shall perform the duties and have the powers of the President. Any one or more of the Vice Presidents may be given an additional designation of rank or function by the Board or, in the absence of such designation or function, by the Chief Executive Officer, or in the absence of any such designation or function by the Board and the Chief Executive Officer, by the President.

 

(f)           Secretary.

 

(i)            The Secretary shall attend all meetings of the stockholders, the Board and (as required) committees of the Board and shall record the proceedings of such meetings in books to be kept for that purpose. In the absence of the Secretary from any meeting, an Assistant Secretary, or if there be none or he or she be absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board and shall perform such other duties as may be prescribed by the Board, the Chairperson of the Board, Chief Executive Officer or President. The Secretary shall have custody of the corporate seal of the Corporation and the Secretary, or any Assistant Secretary, shall have authority to affix the same to any instrument requiring it, and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing thereof by his or her signature.

 

(ii)          The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation’s transfer agent or registrar, if one has been appointed, a stock ledger, or duplicate stock ledger, showing the names of the stockholders and their addresses, the number and classes of shares held by each and, with respect to certificated shares, the number and date of certificates issued for the same and the number and date of certificates cancelled.

 

(g)         Assistant Secretaries. The Assistant Secretary or, if there be more than one, the Assistant Secretaries in the order determined by the Board (or, in the absence of such designation, by the Chief Executive Officer, or in the absence of any such designation by the Board and the Chief Executive Officer, by the President).shall, in the absence (or inability or refusal to act) of the Secretary, perform the duties and have the powers of the Secretary.

 

 16

 

 

(h)          Chief Financial Officer. The Chief Financial Officer shall perform all duties commonly incident to that office (including, without limitation, the care and custody of the funds and securities of the Corporation, which from time to time may come into the Chief Financial Officer’s hands and the deposit of the funds of the Corporation in such banks or trust companies as the Board, the Chief Executive Officer or the President may authorize).

 

(i)           Treasurer. The Treasurer shall, in the absence (or inability or refusal to act) of the Chief Financial Officer, perform the duties and exercise the powers of the Chief Financial Officer.

 

(j)            Assistant Treasurers. The Assistant Treasurer or, if there be more than one, the Assistant Treasurers in the order determined by the Board shall, in the absence (or inability or refusal to act) of the Treasurer, perform the duties and have the powers of the Treasurer.

 

Section 6.2           Term of Office; Removal; Vacancies. The elected officers of the Corporation shall be appointed as set forth in this Article VI and shall hold office until their successors are duly elected and qualified or until their earlier death, resignation, retirement, disqualification, or removal from office. Any officer may be removed, with or without cause, at any time by the Board. Any officer appointed by the Chairperson of the Board, Chief Executive Officer or President may also be removed, with or without cause, by the Chairperson of the Board, Chief Executive Officer or President, as the case may be, unless the Board otherwise provides. Any vacancy occurring in any elected office of the Corporation may be filled by the Board. Any vacancy occurring in any office appointed by the Chairperson of the Board, Chief Executive Officer or President may be filled by the Chairperson of the Board, Chief Executive Officer, or President, as the case may be, unless the Board then determines that such office shall thereupon be elected by the Board, in which case the Board shall elect such officer.

 

Section 6.3           Other Officers. The Board may delegate the power to appoint such other officers and agents, and may also remove such officers and agents or delegate the power to remove same, as it shall from time to time deem necessary or desirable.

 

Section 6.4          Multiple Officeholders; Stockholder and Director Officers. Any number of offices may be held by the same person unless the Certificate of Incorporation or these Bylaws otherwise provide. Officers need not be stockholders or residents of the State of Delaware.

 

Article VII
SHARES

 

Section 7.1          Certificated and Uncertificated Shares. The shares of the Corporation may be certificated or uncertificated, subject to the sole discretion of the Board and the requirements of the DGCL.

 

Section 7.2           Multiple Classes of Stock. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the Corporation shall (a) cause the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights to be set forth in full or summarized on the face or back of any certificate that the Corporation issues to represent shares of such class or series of stock or (b) in the case of uncertificated shares, within a reasonable time after the issuance or transfer of such shares, send to the registered owner thereof a notice, in writing or by electronic transmission, containing the information required to be set forth on certificates as specified in clause (a) above; provided, however, that, except as otherwise provided by applicable law, in lieu of the foregoing requirements, there may be set forth on the face or back of such certificate or, in the case of uncertificated shares, on such written or electronic notice a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights.

 

 17

 

 

Section 7.3           Signatures. Each certificate representing capital stock of the Corporation shall be signed by or in the name of the Corporation by (a) the Chairperson of the Board, Chief Executive Officer, the President or a Vice President and (b) the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Corporation. Any or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar on the date of issue.

 

Section 7.4           Consideration and Payment for Shares.

 

(a)         Subject to applicable law and the Certificate of Incorporation, shares of stock may be issued for such consideration, having in the case of shares with par value a value not less than the par value thereof, and to such persons, as determined from time to time by the Board. The consideration may consist of any tangible or intangible property or any benefit to the Corporation including cash, promissory notes, services performed, contracts for services to be performed or other securities, or any combination thereof.

 

(b)          Subject to applicable law and the Certificate of Incorporation, shares may not be issued until the full amount of the consideration has been paid, unless upon the face or back of each certificate issued to represent any partly paid shares of capital stock or upon the books and records of the Corporation in the case of partly paid uncertificated shares, there shall have been set forth the total amount of the consideration to be paid therefor and the amount paid thereon up to and including the time said certificate representing certificated shares or said uncertificated shares are issued.

 

Section 7.5            Lost, Destroyed or Wrongfully Taken Certificates.

 

(a)         If an owner of a certificate representing shares claims that such certificate has been lost, destroyed or wrongfully taken, the Corporation shall issue a new certificate representing such shares or such shares in uncertificated form if the owner: (i) requests such a new certificate before the Corporation has notice that the certificate representing such shares has been acquired by a protected purchaser; (ii) if requested by the Corporation, delivers to the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, wrongful taking or destruction of such certificate or the issuance of such new certificate or uncertificated shares; and (iii) satisfies other reasonable requirements imposed by the Corporation.

 

(b)        If a certificate representing shares has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the Corporation of that fact within a reasonable time after the owner has notice of such loss, apparent destruction or wrongful taking and the Corporation registers a transfer of such shares before receiving notification, the owner shall be precluded from asserting against the Corporation any claim for registering such transfer or a claim to a new certificate representing such shares or such shares in uncertificated form.

 

 18

 

 

Section 7.6            Transfer Agent and Transfers of Stock.

 

(a)           The Board may appoint one or more bank or trust companies organized under the laws of the United States or any state thereof to act as transfer agent or registrar, or both, in connection with the transfer of any class or series of securities of the Corporation

 

(b)           Transfers of shares of stock of the Corporation shall be made only on the stock record of the Corporation by the holder of record thereof or by his, her or its attorney thereunto authorized by the power of attorney duly executed and filed with the Secretary of the Corporation or the transfer agent thereof. Certificated shares, if any, shall be transferred only upon surrender of the certificate or certificates representing such shares, properly endorsed or accompanied by a duly executed stock transfer power. Uncertificated shares shall be transferred by delivery of a duly executed stock transfer power. Registration of transfer of any shares shall be subject to applicable provisions of the Certificate of Incorporation and applicable law with respect to the transfer of such shares. The Board may make such additional rules and regulations, subject to any applicable requirement of law, as it may deem necessary and appropriate concerning the issue, transfer and registration of transfer of shares of stock of the Corporation.

 

(c)           Whenever any transfer of shares shall be made for collateral security and not absolutely, the Corporation shall so record such fact in the entry of transfer if, when the certificate for such shares is presented to the Corporation for transfer or, if such shares are uncertificated, when the instruction for registration of transfer thereof is presented to the Corporation, both the transferor and transferee request the Corporation to do so.

 

Section 7.7           Registered Stockholders. Before due presentment for registration of transfer of a certificate representing shares of the Corporation or of an instruction requesting registration of transfer of uncertificated shares, the Corporation may treat the registered owner as the person exclusively entitled to inspect for any proper purpose the stock ledger and the other books and records of the Corporation, vote such shares, receive dividends or notifications with respect to such shares and otherwise exercise all the rights and powers of the owner of such shares, except that a person who is the beneficial owner of such shares (if held in a voting trust or by a nominee on behalf of such person) may, upon providing documentary evidence of beneficial ownership of such shares and satisfying such other conditions as are provided under applicable law, may also so inspect the books and records of the Corporation.

 

Section 7.8            Effect of the Corporation’s Restriction on Transfer.

 

(a)       A written restriction on the transfer or registration of transfer of shares of the Corporation or on the amount of shares of the Corporation that may be owned by any person or group of persons, if permitted by the DGCL and noted conspicuously on the certificate or certificates representing such shares or, in the case of uncertificated shares, contained in a notice, offering circular or prospectus sent in writing or by electronic transmission by the Corporation to the registered owner of such shares within a reasonable time prior to or after the issuance or transfer of such shares, may be enforced against the holder of such shares or any successor or transferee of the holder including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder.

 

(b)          A restriction imposed by the Corporation on the transfer or the registration of shares of the Corporation or on the amount of shares of the Corporation that may be owned by any person or group of persons, even if otherwise lawful, is ineffective against a person without actual knowledge of such restriction unless: (i) the shares are certificated and such restriction is noted conspicuously on the certificate; or (ii) the shares are uncertificated and such restriction was contained in a notice, offering circular or prospectus sent in writing or by electronic transmission by the Corporation to the registered owner of such shares prior to or within a reasonable time after the issuance or transfer of such shares.

 

 19

 

 

Section 7.9          Regulations. The Board shall have power and authority to make such additional rules and regulations, subject to any applicable requirement of law, as the Board may deem necessary and appropriate with respect to the issue, transfer or registration of transfer of shares of stock or certificates representing shares. The Board may appoint one or more transfer agents or registrars and may require for the validity thereof that certificates representing shares bear the signature of any transfer agent or registrar so appointed.

 

Article VIII
INDEMNIFICATION

 

Section 8.1          Right to Indemnification. To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify and hold harmless each person who was or is involved in any manner (including, without limitation, as a party or a witness) or was or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative investigative or otherwise (including by or in the right of the Corporation to procure a judgment in its favor) (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (hereinafter an “Indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or agent, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred by such Indemnitee in connection with such proceeding; provided, however, the Corporation shall indemnify an Indemnitee in connection with a proceeding (or part thereof) initiated by such Indemnitee only if such proceeding (or part thereof) was authorized by the Board; provided, further, that the Corporation shall indemnify an Indemnitee in connection with any judicial action or arbitration to enforce such Indemnitee’s rights under this Article VIII.

 

Section 8.2           Right to Advancement of Expenses. In addition to the right to indemnification conferred in Section 8.1, an Indemnitee shall also have the right to be paid by the Corporation to the fullest extent not prohibited by applicable law the expenses (including, without limitation, attorneys’ fees) incurred in defending, testifying, or otherwise participating in any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the DGCL requires, an advancement of expenses incurred by an Indemnitee in his or her capacity as a director or officer of the Corporation (and not in any other capacity in which service was or is rendered by such Indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon the Corporation’s receipt of an undertaking (hereinafter an “undertaking”), by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such Indemnitee is not entitled to be indemnified under this Article VIII or otherwise.

 

 20

 

 

Section 8.3          Procedure for Advancement of Expenses.

 

(a)       To obtain indemnification, an Indemnitee shall submit to the Chief Executive Officer or Secretary of the Corporation a written request, including such documentation and information as is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the indemnitee is entitled to indemnification (the “Supporting Documentation”). The Secretary of the Corporation shall promptly advise the Board in writing that the Indemnitee has requested indemnification. The determination of the Indemnitee’s entitlement to indemnification shall be made not later than sixty (60) days after receipt by the Corporation of the written request and Supporting Documentation and unless a contrary determination is made, such indemnification shall be paid in full not later than five (5) days after such determination has been made.

 

Section 8.4           [Reserved].

 

Section 8.5           [Reserved]. 

 

Section 8.6          Non-Exclusivity of Rights. The rights provided to any Indemnitee pursuant to this Article VIII shall not be exclusive of any other right, which such Indemnitee may have or hereafter acquire under applicable law, the Certificate of Incorporation, the terms of any Preferred Stock, these Bylaws, an agreement, a vote of stockholders or disinterested directors, or otherwise. For the avoidance of doubt, an Indemnitee shall be free to proceed under any of the rights or procedures available to him or her.

 

Section 8.7           Insurance. The Corporation shall maintain insurance, at its expense, to protect itself and/or any director, officer, employee or agent of the Corporation against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

 

Section 8.8          Indemnification of Other Persons. This Article VIII shall not limit the right of the Corporation to the extent and in the manner authorized or permitted by law to indemnify and to advance expenses to persons other than Indemnitees. Without limiting the foregoing, the Corporation may, to the extent authorized from time to time by the Board, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation and to any other person who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan, to the fullest extent of the provisions of this Article VIII with respect to the indemnification and advancement of expenses of Indemnitees under this Article VIII.

 

Section 8.9         Amendments. Any repeal or amendment of this Article VIII by the Board or the stockholders of the Corporation or by changes in applicable law, or the adoption of any other provision of these Bylaws inconsistent with this Article VIII, will, to the extent permitted by applicable law, be prospective only (except to the extent such amendment or change in applicable law permits the Corporation to provide broader indemnification rights to Indemnitees on a retroactive basis than permitted prior thereto), and will not in any way diminish or adversely affect any right or protection existing hereunder in respect of any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.

 

 21

 

 

Section 8.10         Certain Definitions. For purposes of this Article VIII, (a) references to “other enterprise” shall include any employee benefit plan; (b) references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; (c) references to “serving at the request of the Corporation” shall include any service that imposes duties on, or involves services by, a person with respect to any employee benefit plan, its participants, or beneficiaries; (d) a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest of the Corporation” for purposes of Section 145 of the DGCL; (e) “Change of Control” shall mean a change in control of the Corporation of a nature that would be required to be reported in response to Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not the Corporation is then subject to such reporting requirement; provided that, without limitation, such a change in control shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 20 percent or more of the combined voting power of the Corporation’s then outstanding securities without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such acquisition; (ii) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which, members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Corporation’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board; (f) “Disinterested Director” shall mean a director of the Corporation who is not or was not a material party to the proceeding in respect of which indemnification is sought by the Indemnitee; (g) “Independent Counsel” shall mean a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent (i) the Corporation or the Indemnitee in any manner or (ii) any other party to the proceeding giving rise to a claim for indemnification under this Article VIII. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing under the law of the State of Delaware, would have a conflict of interest in representing either the Corporation or the indemnitee in an action to determine the indemnitee’s rights under this Article VIII.

 

Section 8.11         Contract Rights. The rights provided to Indemnitees pursuant to this Article VIII (a) shall be contract rights based upon good and valuable consideration, (b) shall fully vest at the time the Indemnitee first assumes his or her position as a director, officer, agent or employee of the Corporation, (c) are intended to be retroactive and shall be available with respect to any act or omission occurring prior to the adoption of this Article VIII, (d) shall continue as to an Indemnitee who has ceased to be a director, officer, agent or employee and (e) shall inure to the benefit of the Indemnitee’s heirs, executors and administrators.

 

Section 8.12         Acts of Disinterested Directors. Disinterested Directors considering or acting on any indemnification matter under this Article VIII or under governing corporate law or otherwise may consider or take action as the Board or may consider or take action as a committee or individually or otherwise. In the event that Disinterested Directors consider or take action as the Board, one-third of the whole Board of Directors shall constitute a quorum.

 

Section 8.13         Severability. If any provision or provisions of this Article VIII shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law: (a) the validity, legality and enforceability of the remaining provisions of this Article VIII shall not in any way be affected or impaired thereby; and (b) the provisions of this Article VIII (including, without limitation, each such portion of this Article VIII containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. Any person or entity purchasing or otherwise acquiring any interest in the shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article VIII.

 

 22

 

 

Section 8.14        Primary Obligation. With respect to any Indemnified Party who is employed, retained or otherwise associated with, or appointed or nominated by a stockholder or any of its affiliates and who acts or serves as a director, officer, manager, fiduciary, employee, consultant, advisor or agent of, for or to the Corporation or any of its subsidiaries, the Corporation or its subsidiaries shall be primarily liable for all indemnification, reimbursements, advancements or similar payments (the “Indemnity Obligations”) afforded to such Indemnified Party acting in such capacity or capacities on behalf or at the request of the Corporation or any of its subsidiaries, in such capacity, whether the Indemnity Obligations are created by law, organizational or constituent documents, contract (including these Bylaws) or otherwise. Notwithstanding the fact that such stockholder and or any of its affiliates, other than the Corporation (such persons, together with its and their heirs, successors and assigns, the “Stockholder Parties”) may have concurrent liability to an Indemnified Party with respect to the Indemnity Obligations, in no event shall the Corporation or any of its subsidiaries have any right or claim against any of the Stockholder Parties for contribution or have rights of subrogation against any of the Stockholder Parties through an Indemnified Party for any payment made by the Corporation or any of its subsidiaries with respect to any Indemnity Obligation. In addition, in the event that any Stockholder Party pays or advances to an Indemnified Party any amount with respect to an Indemnity Obligation, the Corporation shall, or shall cause its subsidiaries to, as applicable, promptly reimburse such Stockholder Party for such payment or advance upon request.

 

Article IX
MISCELLANEOUS

 

Section 9.1          Place of Meetings. If the place of any meeting of stockholders, the Board or committee of the Board for which notice is required under these Bylaws is not designated in the notice of such meeting, such meeting shall be held at the principal business office of the Corporation; provided, however, if the Board has, in its sole discretion, determined that a meeting shall not be held at any place, but instead shall be held by means of remote communication pursuant to Section 9.5(a), then such meeting shall not be held at any place.

 

Section 9.2           Fixing Record Dates.

 

(a)          In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board so fixes a record date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless (i) otherwise provided for pursuant to the Certificate of Incorporation relating to the rights of the holders of any outstanding series of Preferred Stock or (ii) the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of the stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 9.2(a) at the adjourned meeting.

 

(b)         In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

 23

 

 

Section 9.3           Means of Giving Notice.

 

(a)          Notice to Directors. Whenever under applicable law, the Certificate of Incorporation or these Bylaws notice is required to be given to any director, such notice shall be given either (i) in writing and sent by mail, or by a nationally recognized delivery service, (ii) by means of facsimile telecommunication or other form of electronic transmission, or (iii) by oral notice given personally or by telephone. A notice to a director will be deemed given as follows: (i) if given by hand delivery, orally, or by telephone, when actually received by the director, (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation, (iii) if sent for next day delivery by a nationally recognized overnight delivery service, when deposited with such service, with fees thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation, (iv) if sent by facsimile telecommunication, when sent to the facsimile transmission number for such director appearing on the records of the Corporation, (v) if sent by electronic mail, when sent to the electronic mail address for such director appearing on the records of the Corporation, or (vi) if sent by any other form of electronic transmission, when sent to the address, location or number (as applicable) for such director appearing on the records of the Corporation.

 

(b)          Notice to Stockholders. Whenever under applicable law, the Certificate of Incorporation or these Bylaws notice is required to be given to any stockholder, such notice may be given (i) in writing and sent either by hand delivery, through the United States mail, or by a nationally recognized overnight delivery service for next day delivery, or (ii) by means of a form of electronic transmission consented to by the stockholder, to the extent permitted by, and subject to the conditions set forth in Section 232 of the DGCL. A notice to a stockholder shall be deemed given as follows: (i) if given by hand delivery, when actually received by the stockholder, (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the stockholder at the stockholder’s address appearing on the stock ledger of the Corporation, (iii) if sent for next day delivery by a nationally recognized overnight delivery service, when deposited with such service, with fees thereon prepaid, addressed to the stockholder at the stockholder’s address appearing on the stock ledger of the Corporation, and (iv) if given by a form of electronic transmission consented to by the stockholder to whom the notice is given and otherwise meeting the requirements set forth above, (A) if by facsimile transmission, when directed to a number at which the stockholder has consented to receive notice, (B) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice, (C) if by a posting on an electronic network together with separate notice to the stockholder of such specified posting, upon the later of (1) such posting and (2) the giving of such separate notice, and (D) if by any other form of electronic transmission, when directed to the stockholder. A stockholder may revoke such stockholder’s consent to receiving notice by means of electronic communication by giving written notice of such revocation to the Corporation. Any such consent shall be deemed revoked if (1) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (2) such inability becomes known to the Secretary or an Assistant Secretary or to the Corporation’s transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

 

 24

 

 

(c)           Electronic Transmission. “Electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process, including but not limited to transmission by telex, facsimile telecommunication, electronic mail, telegram and cablegram.

 

(d)           Electronic Mail. “Electronic mail” means an electronic transmission directed to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the Corporation who is available to assist with accessing such files and information).

 

(e)            Electronic Mail Address. “Electronic mail address” means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.

 

(f)             Notice to Stockholders Sharing Same Address. Without limiting the manner by which notice otherwise may be given effectively by the Corporation to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these Bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. A stockholder may revoke such stockholder’s consent by delivering written notice of such revocation to the Corporation. Any stockholder who fails to object in writing to the Corporation within 60 days of having been given written notice by the Corporation of its intention to send such a single written notice shall be deemed to have consented to receiving such single written notice.

 

(g)           Exceptions to Notice Requirements. Whenever notice is required to be given, under the DGCL, the Certificate of Incorporation or these Bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting that shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the Corporation is such as to require the filing of a certificate with the Secretary of State of Delaware, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

 

Whenever notice is required to be given by the Corporation, under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, to any stockholder to whom (1) notice of two consecutive annual meetings of stockholders and all notices of stockholder meetings or of the taking of action by written consent of stockholders without a meeting to such stockholder during the period between such two consecutive annual meetings, or (2) all, and at least two payments (if sent by first-class mail) of dividends or interest on securities during a 12-month period, have been mailed addressed to such stockholder at such stockholder’s address as shown on the records of the Corporation and have been returned undeliverable, the giving of such notice to such stockholder shall not be required. Any action or meeting that shall be taken or held without notice to such stockholder shall have the same force and effect as if such notice had been duly given. If any such stockholder shall deliver to the Corporation a written notice setting forth such stockholder’s then-current address, the requirement that notice be given to such stockholder shall be reinstated. In the event that the action taken by the Corporation is such as to require the filing of a certificate with the Secretary of State of Delaware, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to Section 230(b) of the DGCL. The exception in subsection (1) of the first sentence of this paragraph to the requirement that notice be given shall not be applicable to any notice returned as undeliverable if the notice was given by electronic transmission.

 

 25

 

 

Section 9.4        Waiver of Notice. Whenever any notice is required to be given under applicable law, the Certificate of Incorporation, or these Bylaws, a written waiver of such notice, signed before or after the date of such meeting by the person or persons entitled to said notice, or a waiver by electronic transmission by the person entitled to said notice, shall be deemed equivalent to such required notice. All such waivers shall be kept with the books of the Corporation. Attendance at a meeting shall constitute a waiver of notice of such meeting, except where a person attends for the express purpose of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened.

 

Section 9.5           Meeting Attendance via Remote Communication Equipment.

 

(a)          Stockholder Meetings. If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the Board may adopt, stockholders entitled to vote at such meeting and proxy holders not physically present at a meeting of stockholders may, by means of remote communication:

 

(i)            participate in a meeting of stockholders; and

 

(ii)          be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (A) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder, (B) the Corporation shall implement reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and, if entitled to vote, to vote on matters submitted to the applicable stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (C) if any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

 

(b)        Board Meetings. Unless otherwise restricted by applicable law, the Certificate of Incorporation or these Bylaws, members of the Board or any committee thereof may participate in a meeting of the Board or any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened.

 

Section 9.6          Dividends. The Board may from time to time declare, and the Corporation may pay, dividends (payable in cash, property or shares of the Corporation’s capital stock) on the Corporation’s outstanding shares of capital stock or any class thereof, subject to applicable law and the Certificate of Incorporation.

 

Section 9.7         Reserves. The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.

 

 26

 

 

Section 9.8         Contracts and Negotiable Instruments. Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, any contract, bond, deed, lease, mortgage or other instrument may be executed and delivered in the name and on behalf of the Corporation by such officer or officers or other employee or employees of the Corporation as the Board may from time to time authorize. Such authority may be general or confined to specific instances as the Board may determine. The Chairperson of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer or any Vice President may execute and deliver any contract, bond, deed, lease, mortgage or other instrument in the name and on behalf of the Corporation. Subject to any restrictions imposed by the Board, the Chairperson of the Board, Chief Executive Officer, President, the Chief Financial Officer, the Treasurer or any Vice President may delegate powers to execute and deliver any contract, bond, deed, lease, mortgage or other instrument in the name and on behalf of the Corporation to other officers or employees of the Corporation under such person’s supervision and authority, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

 

Section 9.9          Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board.

 

Section 9.10        Seal. The Board may adopt a corporate seal, which shall be in such form as the Board determines. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced. Notwithstanding the foregoing, no seal shall be required by virtue of this Section.

 

Section 9.11        Books and Records. The books and records of the Corporation may be kept within or outside the State of Delaware at such place or places as may from time to time be designated by the Board.

 

Section 9.12        Resignation. Any director, committee member or officer may resign by giving notice thereof in writing or by electronic transmission to the Chairperson of the Board, the Chief Executive Officer, the President or the Secretary. The resignation shall take effect at the time specified therein, or at the time of receipt of such notice if no time is specified or the specified time is earlier than the time of such receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

 

Section 9.13       Surety Bonds. Such officers, employees and agents of the Corporation (if any) as the Chairperson of the Board, Chief Executive Officer, President or the Board may direct, from time to time, shall be bonded for the faithful performance of their duties and for the restoration to the Corporation, in case of their death, resignation, retirement, disqualification or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation, in such amounts and by such surety companies as the Chairperson of the Board, Chief Executive Officer, President or the Board may determine. The premiums on such bonds shall be paid by the Corporation and the bonds so furnished shall be in the custody of the Secretary.

 

Section 9.14       Securities of Other Corporations. Powers of attorney, proxies, waivers of notice of meeting, consents in writing and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairperson of the Board, Chief Executive Officer, President, any Vice President or any officers authorized by the Board. Any such officer, may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities, or to consent in writing, in the name of the Corporation as such holder, to any action by such corporation, and at any such meeting or with respect to any such consent shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed. The Board may from time to time confer like powers upon any other person or persons.

 

 27

 

 

Section 9.15         Amendments. The Board shall have the power to adopt, amend, alter or repeal the Bylaws to the extent not inconsistent with the Certificate of Incorporation (including the terms of any Preferred Stock). The affirmative vote of a majority of the Board shall be required to adopt, amend, alter or repeal the Bylaws. The Bylaws also may be adopted, amended, altered or repealed by the stockholders; provided, that in addition to any vote of the holders of any class or series of capital stock of the Corporation required by applicable law or the Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend, alter or repeal the Bylaws; provided, further, that no Bylaws hereafter adopted by the stockholders shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.

 

Section 9.16        Remedies of Holders of Preferred Stock. Upon the occurrence and during the continuance of a Non-Compliance Event (as defined in the Certificate of Incorporation with respect to the Corporation’s Series A Preferred Stock), each holder of such Series A Preferred Stock shall have the rights and remedies set forth in the Certificate of Incorporation (including all voting rights set forth therein), and rights and remedies under applicable law or at equity.

 

Article X 

EMERGENCY BYLAWS

 

Section 10.1        During periods of emergency resulting from an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of its Board or its stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, including but not limited to, an epidemic or pandemic, and a declaration of national emergency by the United States government or other similar emergency condition, the provisions of this Article X shall apply notwithstanding any different provisions elsewhere contained in these Bylaws.

 

Section 10.2        Whenever, during such emergency irrespective of whether a quorum of the Board or a standing or special committee thereof can readily be convened for action, a meeting of such Board or committee thereof may be called by any officer of the Corporation or director by a notice of the time and place given only to such of the directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publications or radio. Three directors in attendance at the meeting shall constitute a quorum; provided, however, that the officers of the Corporation or other persons present who have been designated on a list approved by the Board before the emergency, all in such order of priority and subject to such conditions and for such period of time as may be provided in the resolution approving such list, or in the absence of such a resolution, the officers of the Corporation who are present, in order of rank, and within the same rank in order of seniority, shall to the extent required to provide a quorum be deemed directors for such meeting.

 

Section 10.3        The Board, both before or during any such emergency, may provide and modify lines of succession in the event that during such emergency any or all officers or agents of the Corporation shall for any reason be rendered incapable of discharging their duties.

 

Section 10.4         The Board, both before or during any such emergency, may, effective as of the emergency, change the principal executive office or designate several alternative principal executive offices or regional offices or authorize the officers of the Corporation so to do.

 

 28

 

 

Section 10.5         No director or officer or employee of the Corporation acting in accordance with this Article X shall be liable for any act or failure to act, except for willful misconduct.

 

Section 10.6       To the extent not inconsistent with this Article X, all other Articles of these Bylaws shall remain in effect during any emergency described in this Article X and, upon termination of the emergency (to be determined by the Board in its sole discretion), the provisions of this Article X shall cease to be operative.

 

Article XI 

 

Section 11.1         The Corporation expressly elects not to be governed by Section 203 of the DGCL.

 

 

[Remainder of Page Intentionally Left Blank]

 

 29

 

Exhibit 3.3

 

CERTIFICATE OF DESIGNATIONS OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES A PREFERRED STOCK

 

 

 

Pursuant to Section 151(g) and 303 of the

General Corporation Law of the State of Delaware

 

 

 

Hertz Global Holdings, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the “Company”), hereby certifies that pursuant to the Second Modified Third Amended Joint Chapter 11 Plan of Reorganization of the Company, dated as of June 10, 2021 (the “Plan of Reorganization”), which Plan of Reorganization was confirmed by order of the United States Bankruptcy Court for the District of Delaware pursuant to Chapter 11 of the United States Bankruptcy Code and provides for the authorization and issuance of the Series A Preferred Stock (as defined below), and pursuant to the provisions of Section 151(g) and 303 of the General Corporation Law of the State of Delaware (the “DGCL”), a series of Preferred Stock, $0.01 par value per share, of the Company, herein designated as “Series A Preferred Stock,” is hereby issued, designated, created, authorized and provided for on the terms and with the voting powers, designations, preferences and relative, participating, optional, or other special rights and the qualifications, limitations or restrictions set forth herein and in the Second Amended and Restated Certificate of Incorporation of the Company (as may be further amended, supplemented or otherwise modified from time to time, the “Certificate”):

 

SECTION 1.          Classification and Number of Shares. The shares of such series of Preferred Stock shall be classified as “Series A Preferred Stock” (the “Series A Preferred Stock”). The number of authorized shares constituting the Series A Preferred Stock shall be 1,500,000. Subject to the provisions of Section 8, that number from time to time may be increased or decreased (but not below the number of shares of Series A Preferred Stock then outstanding) by (a) further resolution duly adopted by the Board, or any duly authorized committee thereof, and (b) the filing of an amendment to this Certificate of Designation pursuant to the provisions of the DGCL stating that such increase or decrease, as applicable, has been so authorized.

 

SECTION 2.           Ranking. The Series A Preferred Stock will rank, with respect to dividend rights, rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company and (except as permitted hereby) redemption rights:

 

(a)           on a parity basis with each other class or series of Capital Stock of the Company now existing or hereafter authorized, classified or reclassified, the terms of which expressly provide that such class or series ranks on a parity basis with the Series A Preferred Stock as to dividend rights, rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company and (except as permitted hereby) redemption rights (such Capital Stock, “Parity Stock”);

 

(b)           junior to each other class or series of Capital Stock of the Company now existing or hereafter authorized, classified or reclassified, the terms of which expressly provide that such class or series ranks senior to the Series A Preferred Stock as to dividend rights, rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company and (except as permitted hereby) redemption rights (such Capital Stock, “Senior Stock”); and

 

 

 

 

(c)           senior to the Common Stock and each other class or series of Capital Stock of the Company now existing or hereafter authorized, classified or reclassified, the terms of which do not expressly provide that such class or series ranks on a parity basis with, or senior to, the Series A Preferred Stock as to dividend rights, rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company and (except as permitted hereby) redemption rights (such Capital Stock, “Junior Stock”).

 

The Company’s ability to issue Parity Stock, Senior Stock and Junior Stock shall be subject in all respects to the provisions of Section 8, and the Company shall not, and shall not be permitted to, issue any Parity Stock, Senior Stock or Junior Stock in violation thereof. The respective definitions of Parity Stock, Senior Stock and Junior Stock shall also include any securities, rights or options exercisable or exchangeable or convertible into Parity Stock, Senior Stock or Junior Stock, as the case may be.

 

SECTION 3.           Definitions. As used herein with respect to Series A Preferred Stock:

 

Accrued Dividends” means, as of any date, with respect to any share of Series A Preferred Stock, all Dividends that have accrued on such share through the most recent Dividend Payment Date on or prior to such date pursuant to Section 4(b) or Section 11(a)(i), whether or not declared, but that have not, as of such date, been paid in cash.

 

ACM” means Apollo Capital Management, L.P., together with investment funds, separate accounts, and other entities owned (in whole or in part), controlled, managed, and/or advised by it or its Affiliates.

 

Acquired Indebtedness” means Indebtedness of a Person (i) existing at the time such Person becomes a Subsidiary of the OpCo Borrower or (ii) assumed by the OpCo Borrower or a Restricted Subsidiary in connection with the acquisition of assets from such Person, in each case other than Indebtedness Incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the OpCo Borrower or such acquisition. Acquired Indebtedness shall be deemed to be Incurred on the date of the related acquisition of assets from any Person or the date the acquired Person becomes a Subsidiary of the OpCo Borrower.

 

Additional Assets” means (i) any property or assets that replace the property or assets that are the subject of an Asset Disposition; (ii) any property or assets (other than Indebtedness and Equity Capital Stock) used or to be used by the OpCo Borrower or a Restricted Subsidiary or otherwise useful in a Related Business (including any capital expenditures on any property or assets already so used); (iii) the Equity Capital Stock of a Person that is engaged in a Related Business and becomes a Restricted Subsidiary as a result of the acquisition of such Equity Capital Stock by the OpCo Borrower or another Restricted Subsidiary; or (iv) Equity Capital Stock of any Person that at such time is a Restricted Subsidiary acquired from a third party.

 

Affiliate” means, with respect to any specified Person, any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. 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 “controlling” and “controlled” have meanings correlative to the foregoing.

 

2

 

 

Amex GBT Contracts” means any contracts, agreements or arrangements (including any preferred partner agreements) by and between GBT Travel Services UK Limited d/b/a American Express Global Business Travel or any of its affiliates (“Amex GBT”) and the OpCo Borrower or any of its Restricted Subsidiaries, pursuant to which Amex GBT, among other things, designates the OpCo Borrower and/or any of its Restricted Subsidiaries as a preferred supplier.

 

Asset Disposition” means any sale, lease, transfer or other disposition of shares of Equity Capital Stock of a member of the Restricted Group (other than the Equity Capital Stock of the Company) (other than directors’ qualifying shares or, in the case of a Foreign Subsidiary, to the extent required by applicable law), property or other assets (each referred to for purposes of this definition as a “disposition”) by a member of the Restricted Group (including any disposition by means of a merger, consolidation or similar transaction), other than (i) a disposition to a member of the Restricted Group, (ii) a disposition in the ordinary course of business, (iii) a disposition of Cash Equivalents, Investment Grade Securities or Temporary Cash Investments, (iv) the sale or discount (with or without recourse, and on customary or commercially reasonable terms, as determined by the OpCo Borrower in good faith) by the OpCo Borrower and its Restricted Subsidiaries of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable for notes receivable, (v) any Restricted Payment Transaction, (vi) a disposition that is governed by Section 8(b)(vii), (vii) any Financing Disposition by the OpCo Borrower or its Restricted Subsidiaries, (viii) any “fee in lieu” or other disposition of assets by the OpCo Borrower or any Restricted Subsidiary to any Governmental Authority that continue in use by the OpCo Borrower or any Restricted Subsidiary, so long as the OpCo Borrower or any Restricted Subsidiary may obtain title to such assets upon reasonable notice by paying a nominal fee, (ix) any exchange of property by the OpCo Borrower and its Restricted Subsidiaries pursuant to or intended to qualify under Section 1031 (or any successor section) of the Code, or any exchange of equipment to be leased, rented or otherwise used in a Related Business, including pursuant to any Rental Car LKE Program, (x) any financing transaction by the OpCo Borrower and its Restricted Subsidiaries with respect to property built or acquired by the OpCo Borrower or any Restricted Subsidiary, including any sale/leaseback transaction or asset securitization, (xi) any disposition by the OpCo Borrower and its Restricted Subsidiaries arising from foreclosure, condemnation, eminent domain or similar action with respect to any property or other assets, or exercise of termination rights under any lease, license, concession or other agreement, or necessary or advisable (as determined by the OpCo Borrower in good faith) in order to consummate any acquisition of any Person, business or assets, or pursuant to buy/sell arrangements under any joint venture or similar agreement or arrangement, or of non-core assets acquired in connection with any acquisition of any Person, business or assets or any Investment, (xii) any disposition by the OpCo Borrower and its Restricted Subsidiaries of Equity Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary, (xiii) a disposition by the OpCo Borrower and its Restricted Subsidiaries of Equity Capital Stock of a Restricted Subsidiary pursuant to an agreement or other obligation with or to a Person (other than a member of the Restricted Group) from whom such Restricted Subsidiary was acquired, or from whom such Restricted Subsidiary acquired its business and assets (having been newly formed in connection with such acquisition), entered into in connection with such acquisition, (xiv) a disposition of not more than 5% of the outstanding Equity Capital Stock of a Foreign Subsidiary that has been approved by the Board of Directors, (xv) any disposition or series of related dispositions by the OpCo Borrower and its Restricted Subsidiaries for aggregate consideration not to exceed the greater of $75,000,000 and 12.5% of LTM Consolidated EBITDA, (xvi) any disposition by the OpCo Borrower and its Restricted Subsidiaries of all or any part of the Equity Capital Stock or business or assets of (a) Etma, Inc. or any successor in interest thereto, or (b) CAR Inc. or any successor in interest thereto, (xvii) the abandonment or other disposition of patents, trademarks or other intellectual property that are, in the good faith determination of the OpCo Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the OpCo Borrower and its Subsidiaries taken as a whole, (xviii) any license, sublicense or other grant of rights by the OpCo Borrower and its Restricted Subsidiaries in or to any trademark, copyright, patent or other intellectual property, (xix) any lease or sublease of real or other property by the OpCo Borrower and its Restricted Subsidiaries, (xx) any disposition by the OpCo Borrower and its Restricted Subsidiaries for Fair Market Value to any Franchisee or any Franchise Special Purpose Entity, (xxi) any disposition of securities by the OpCo Borrower and its Restricted Subsidiaries pursuant to an agreement entered into in connection with any securities lending or other securities financing transaction to the extent such securities were otherwise permitted to be disposed of at the time of entering into the agreement for such securities lending or other securities financing transaction or (xxii) so long as no Non-Compliance Event under clauses (i) or (vi) of the definition thereof shall have occurred and be continuing (or would result therefrom), any other disposition by the OpCo Borrower and its Restricted Subsidiaries if on a pro forma basis after giving effect to such disposition (including any application of proceeds therefrom) the Consolidated Total Net Corporate Leverage Ratio would be equal to or less than 4.00 to 1.00.

 

3

 

 

Unless otherwise specified herein, a Person shall be deemed to “beneficially own”, to have “beneficial ownership” of, or to be “beneficially owning” any securities (which securities shall also be deemed “beneficially owned” by such Person) that such Person is deemed to “beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act; provided that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable within sixty (60) days or thereafter.

 

Bank Products Agreement” means any agreement pursuant to which a bank or other financial institution or other Person agrees to provide (i) treasury services, (ii) credit card, debit card, merchant card, purchasing card, stored value card, non-card electronic payable or other similar services (including the processing of payments and other administrative services with respect thereto), (iii) cash management or related services (including controlled disbursements, automated clearinghouse transactions, return items, netting, overdrafts, depository, lockbox, stop payment, electronic funds transfer, information reporting, wire transfer and interstate depository network services) and (iv) other banking, financial or treasury products or services as may be requested by the OpCo Borrower or any Restricted Subsidiary (other than letters of credit and other than loans and advances except indebtedness arising from services described in clauses (i) through (iii) of this definition).

 

Bank Products Obligations” means, with respect to any Person, the obligations of such Person pursuant to any Bank Products Agreement.

 

Board” and “Board of Directors” means the Board of Directors of the Company or the OpCo Borrower, as the context may require.

 

Borrowing Base” means the sum of (i) 95% of the book value of revenue earning equipment of the OpCo Borrower and its Subsidiaries, (ii) 95% of the book value of Fleet Receivables and VAT Receivables of the OpCo Borrower and its Subsidiaries, (iii) 95% of the book value of Service Vehicles of the OpCo Borrower and its Subsidiaries and (iv) Restricted Fleet Cash (in each case, determined as of the end of the most recently ended fiscal month of the OpCo Borrower ending immediately prior to such date of determination for which internal consolidated financial statements of the OpCo Borrower are available, and, in the case of any determination relating to any Incurrence of Indebtedness, on a pro forma basis including (1) any property or assets of a type described above acquired since the end of such fiscal month and (2) any property or assets of a type described above being acquired in connection therewith).

 

Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

 

Bylaws” means the Amended and Restated By-laws of the Company, as may be amended from time to time in accordance with the terms of the Certificate (including this Certificate of Designation).

 

Capital Stock” means, of any Person, any and all shares of, rights to purchase, warrants or options for, or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock.

 

4

 

 

Capitalized Lease Obligation” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP; provided that unless the Company elects otherwise, all obligations of any Person that are or would have been treated as operating leases for purposes of GAAP prior to the issuance by the Financial Accounting Standards Board on February 25, 2016 of an Accounting Standards Update shall continue to be accounted for as operating leases for purposes of all financial definitions (including the definition of Indebtedness), calculations and deliverables under this Certificate of Designation (whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that such obligations are required in accordance with the Accounting Standards Update or otherwise (on a prospective or retroactive basis or otherwise) to be treated as or to be recharacterized as capital lease obligations or otherwise accounted for as liabilities in financial statements.

 

Captive Insurance Subsidiary” means any Subsidiary of the OpCo Borrower that is subject to regulation as an insurance company (and any Subsidiary thereof).

 

Case” means the voluntary cases commenced by the Company and certain of its Subsidiaries and Affiliates (the debtors in such cases being referred to collectively as the “Debtors”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq., in the United States Bankruptcy Court for the District of Delaware, which were jointly administered under Case No. 20-11218 (MFW).

 

Cash Equivalents” means (i) money and (ii)(1) securities issued or fully guaranteed or insured by the United States of America, Canada or a member state of the European Union or any agency or instrumentality of any thereof, (2) time deposits, certificates of deposit or bankers’ acceptances of (A) any lender under the Exit Facilities or any Refinancing Indebtedness thereof or Affiliate thereof or (B) any commercial bank having capital and surplus in excess of $500,000,000 (or the foreign currency equivalent thereof as of the date of such investment) and the commercial paper of the holding company of which is rated at least A-2 or the equivalent thereof by S&P Global Ratings or any successor rating agency (“S&P”) or at least P-2 or the equivalent thereof by Moody’s Investors Service, Inc. or any successor rating agency (“Moody’s”) (or if at such time neither is issuing ratings, then a comparable rating of such other nationally recognized rating agency), (3) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2)(A) or (2)(B) above, (4) money market instruments, commercial paper or other short term obligations rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of such other nationally recognized rating agency), (5) investments in money market funds complying with the risk limiting conditions of Rule 2a-7 or any successor rule of the SEC under the Investment Company Act, (6) investment funds investing at least 95% of their assets in cash equivalents of the types described in clauses (i) and (ii)(1) through (5) above (which funds may also hold reasonable amounts of cash pending investment and/or distribution), (7) investments similar to any of the foregoing denominated in foreign currencies approved by the Board of Directors, and (8) solely with respect to any Captive Insurance Subsidiary, any investment that such Person is permitted to make in accordance with applicable law.

 

Certificate” has the meaning set forth in the recitals above.

 

Certificate of Designation” means this Certificate of Designations of Rights, Preferences and Limitations of the Series A Preferred Stock.

 

Change of Control” means the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, shall be the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of the Company or (b) the Company shall cease to own, directly or indirectly, 100% of the Capital Stock of each of (x) the OpCo Borrower and (y) Rental Car Intermediate Holdings, LLC, a Delaware limited liability company (or any successor in interest thereto) (“OpCo Holdings”).

 

5

 

 

close of business” means 5:00 p.m. (New York City time).

 

Closing Date” has the meaning set forth in the Purchase Agreement.

 

Closing Date ABS Facilities” means one or more new asset backed securitization facilities pursuant to which Hertz Vehicle Financing III LLC, a Delaware limited liability company (“HVF III”), will issue notes in an aggregate original principal amount not to exceed $7.0 billion on the initial funding date thereof, issued pursuant to and subject to the terms of, that certain Base Indenture, dated as of June 29, 2021, between HVF III and The Bank of New York Mellon Trust Company, N.A., a national banking association, as trustee, as amended, restated, modified or supplemented from time to time, exclusive of Series Supplements (as defined therein) creating a new Series of Notes (as defined in such Base Indenture).

 

Closing Date Refinancing” means the payment in frill of principal, accrued and unpaid interest, and other amounts due and owing under (i) the Existing DIP Credit Agreement, (ii) the Existing HIL Credit Agreement and (iii) all other third party Indebtedness for borrowed money of the Debtors (other than indebtedness contemplated by the Plan of Reorganization to survive the consummation of the Transactions), and, in each case the termination of all commitments with respect to the foregoing and the termination and release of any Liens securing the foregoing.

 

Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

Commodities Agreement” means, in respect of a Person, any commodity futures contract, forward contract, option or similar agreement or arrangement (including derivative agreements or arrangements), as to which such Person is a party or beneficiary.

 

Common Sponsor Affiliated Purchasers” means Knighthead, Certares or Amarillo LP or, in each case, any Affiliate thereof.

 

Common Stock” means the common stock, par value $0.01 per share, of the Company issued on the Closing Date.

 

Commonly Controlled Entity” means an entity, whether or not incorporated, which (i) is under “common control” (within the meaning of Section 4001 of ERISA) with the OpCo Borrower or (ii) is part of a group of entities (whether or not incorporated), which includes the OpCo Borrower, which (1) is treated as a “single employer” under Section 414(b) or (c) of the Code or (2) solely for the purpose of Section 302 or 303 of ERISA or Section 412 or 430 of the Code, is treated as a “single employer” under Sections 414(b), (c), (m) or (o) of the Code.

 

Company” has the meaning set forth in the recitals above.

 

Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense excluding any non-cash interest expense of the OpCo Borrower and its Restricted Subsidiaries for such period.

 

6

 

 

Consolidated EBITDA” means, in each case solely with respect to the OpCo Borrower and its Restricted Subsidiaries, for any period, the Consolidated Net Income for such period, plus, without duplication, (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) provision for all taxes (whether or not paid, estimated or accrued) based on income, profits or capital (including penalties and interest, if any), (ii) Consolidated Interest Expense, all items excluded from the definition of “Consolidated Interest Expense” pursuant to clauses (iii)(u) through (iii)(z) thereof and any Special Purpose Financing Fees, and to the extent not reflected in Consolidated Interest Expense, costs of surety bonds in connection with financing activities, (iii) depreciation (excluding Consolidated Vehicle Depreciation), amortization (including amortization of goodwill and intangibles and amortization and write-off of financing costs), (iv) all other noncash charges or noncash losses, including, without limitation, any non-cash asset retirement costs, non-cash compensation charges, non-cash translation (gain) loss and non-cash expense relating to the vesting of warrants, (v) any expenses or charges related to any Investment or Indebtedness permitted by this Certificate of Designation (whether or not consummated or incurred, and including any offering or sale of Equity Capital Stock to the extent the proceeds thereof were intended to be contributed to the equity capital of the OpCo Borrower or its Restricted Subsidiaries), (vi) the amount of loss on any Financing Disposition, (vii) any costs or expenses pursuant to any management or employee stock option or other equity-related plan, program or arrangement, or other benefit plan, program or arrangement, or any equity subscription or equityholder agreement, to the extent funded with cash proceeds contributed to the capital of the OpCo Borrower, (viii) realized foreign exchange losses resulting from the impact of foreign currency changes on the valuation of assets or liabilities on the balance sheet of the OpCo Borrower and its Restricted Subsidiaries, (ix) other accruals, payments and expenses (including rationalization, legal, tax, structuring and other costs and expenses) related to the Transactions, acquisitions (including acquisitions subject to a letter of intent or purchase agreement), including Investments, dividends, Restricted Payments, Asset Dispositions, refinancings or issuances of debt or equity permitted hereunder or related to any amendment, modification or waiver in respect of the documentation governing the transactions described in this clause (ix), (x) charges, losses or expenses to the extent paid for, reimbursable, indemnifiable or insurable, or reasonably expected to be paid for reimbursable, indemnifiable or insured, by a third party, (xi) the amount of any expense or deduction associated with any Restricted Subsidiary that is attributable to any non-controlling interest and/or minority interest of any third party, (xii) cash expenses relating to contingent or deferred payments in connection with any Permitted Acquisition or other Investment permitted under this Certificate of Designation or any Permitted Acquisition or Investment permitted under this Certificate of Designation consummated prior to its effective date (including earn-outs, contingent consideration, non-compete payments, consulting payments and similar obligations), to the extent included in the calculation of Consolidated Net Income in accordance with GAAP as an accounting adjustment for such period to the extent that the actual amount payable or paid in respect of such contingent or deferred payments exceeds the liability booked by the applicable person and (xiii) the Transaction Costs, plus (b) pro forma results for (i) acquisitions (including acquisitions subject to a letter of intent or purchase agreement at such time), (ii) dispositions of business entities or properties or assets constituting a division or line of business of any business entity and (iii) operational changes, operational initiatives, new businesses, new contract value and revenue enhancements (including pricing and volume) (including, to the extent applicable, from the Transactions or any restructuring), including any “run-rate” cost savings, synergies, operating expense reductions and improvements, enhanced revenue and business optimizations determined in good faith by the OpCo Borrower to result from actions which have been taken or with respect to which substantial steps have been taken or are expected to be taken no later than 24 months following any such acquisition, disposition, other transaction, operational change, operational initiative, new business, new contract or revenue enhancement, in each case, reasonably identifiable and factually supportable as determined in good faith by the OpCo Borrower), plus (c) the adjustments previously identified in the Financial Model, plus (d) such other adjustments contained in, or of the type contained in, a due diligence quality of earnings report made available to the Preferred Majority Holders prepared by (x) a “big-four” nationally recognized accounting firm or (y) any other accounting firm that shall be reasonably acceptable to the Preferred Majority Holders, plus (e) the proceeds of any business interruption insurance received or reasonably expected to be received plus (f) adjustments determined on a basis consistent with Article 11 of Regulation S-X.

 

7

 

 

Consolidated First Lien Indebtedness” means, as of any date of determination, an amount equal to (a) the Consolidated Total Corporate Indebtedness (for purposes of this definition, with respect to clause (b) of the definition thereof, without any deduction in respect of any Indebtedness (A) of a Special Purpose Subsidiary secured by a Lien on Customer Receivables or otherwise Incurred in connection with a Financing Disposition of Customer Receivables or (B) otherwise Incurred in connection with a Special Purpose Financing consisting of Customer Receivables) as of such date that is then either (1) secured by Liens on the collateral securing the Exit Facilities or any Refinancing Indebtedness thereof or (2) consists of Indebtedness of the type referenced in the parenthetical above (other than in the case of each of the foregoing clauses (1) and (2), (x) Indebtedness secured by a Lien ranking junior to or subordinated to the Lien securing the Exit Facilities or any Refinancing Indebtedness thereof and (y) property or assets held in a defeasance or similar trust or arrangement for the benefit of the Indebtedness secured thereby) minus (b) Unrestricted Cash and minus (c) amounts in the Term C Loan Collateral Accounts.

 

Consolidated First Lien Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated First Lien Indebtedness of the OpCo Borrower and its Restricted Subsidiaries as at such date (after giving effect to any Incurrence or Discharge of Indebtedness on such date) to (b) the aggregate amount of Consolidated EBITDA for the Most Recent Four Quarter Period ending prior to the date of such determination for which consolidated financial statements of the OpCo Borrower are available, provided, that;

 

(i)           if since the beginning of such period the OpCo Borrower or any Restricted Subsidiary shall have made a Sale (including any Sale occurring in connection with a transaction causing a calculation to be made hereunder), the Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets that are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period;

 

(ii)          if since the beginning of such period the OpCo Borrower or any Restricted Subsidiary (by merger, consolidation or otherwise) shall have made a Purchase (including any Purchase occurring in connection with a transaction causing a calculation to be made hereunder), Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Purchase occurred on the first day of such period; and

 

(iii)         if since the beginning of such period any Person became a Restricted Subsidiary or was merged or consolidated with or into the OpCo Borrower or any Restricted Subsidiary, and since the beginning of such period such Person shall have made any Sale or Purchase that would have required an adjustment pursuant to clause (i) or (ii) above if made by the OpCo Borrower or a Restricted Subsidiary since the beginning of such period, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Sale or Purchase occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to any Sale, Purchase or other transaction, or the amount of income or earnings relating thereto, the pro forma calculations in respect thereof (including in respect of anticipated cost savings or synergies relating to any such Sale, Purchase or other related transaction (subject, in each case, to the provisions and limitations set forth in the definition of “Consolidated EBITDA”)) shall be as determined in good faith by the OpCo Borrower.

 

8

 

 

Consolidated Interest Expense” means, for any period, (i) the total interest expense of the OpCo Borrower and its Restricted Subsidiaries to the extent deducted in calculating Consolidated Net Income, net of any interest income of the OpCo Borrower and its Restricted Subsidiaries, including any such interest expense consisting of (1) interest expense attributable to Capitalized Lease Obligations, (2) amortization of debt discount, (3) interest in respect of Indebtedness of any other Person that has been Guaranteed by the OpCo Borrower or any Restricted Subsidiary, but only to the extent that such interest is actually paid by the OpCo Borrower or any Restricted Subsidiary, (4) noncash interest expense, (5) the interest portion of any deferred payment obligation and (6) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing plus (ii) without limiting the provisions hereof restricting any such issuance or payment, Preferred Stock dividends paid in cash in respect of Disqualified Stock of the OpCo Borrower held by Persons other than the OpCo Borrower or a Restricted Subsidiary, or, after the Relief Period, in respect of Designated Preferred Stock of the OpCo Borrower (provided that no Non-Compliance Event under clauses (i) or (vi) of the definition thereof shall have occurred and be continuing (or would result therefrom) and the Consolidated Total Net Corporate Leverage Ratio would be equal to or less than 3.00 to 1.00 for the Most Recent Four Quarter Period), minus (iii) to the extent otherwise included in such interest expense referred to in clause (i) above, (t) Consolidated Vehicle Interest Expense and (u) amortization or write-off of financing costs, (v) accretion or accrual of discounted liabilities not constituting Indebtedness, (w) any expense resulting from discounting of Indebtedness in conjunction with recapitalization or purchase accounting, (x) any “additional interest” in respect of registration rights arrangements for any securities, (y) any expensing of bridge, commitment and other financing fees and (z) interest with respect to Indebtedness of the Company or any Subsidiary of the Company (other than the OpCo Borrower and its Subsidiaries) appearing upon the balance sheet of the OpCo Borrower solely by reason of push-down accounting under GAAP, in each case under clauses (i) through (iii) as determined on a Consolidated basis in accordance with GAAP (to the extent applicable, in the case of Consolidated Vehicle Interest Expense); provided, that gross interest expense shall be determined after giving effect to any net payments made or received by the OpCo Borrower and its Restricted Subsidiaries with respect to Interest Rate Agreements.

 

Consolidated Net Income” means, for any period, the net income (loss) of the OpCo Borrower and its Restricted Subsidiaries, determined on a Consolidated basis in accordance with GAAP and before any reduction in respect of Preferred Stock dividends; provided, that, without duplication, there shall not be included in such Consolidated Net Income:

 

(i)           any net income (loss) of any Person if such Person is not the OpCo Borrower or a Restricted Subsidiary, except that (1) the OpCo Borrower’s or any Restricted Subsidiary’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount actually distributed by or that (as determined by the OpCo Borrower in good faith) could have been distributed by such Person during such period to the OpCo Borrower or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (ii) below) and (2) the OpCo Borrower’s or any Restricted Subsidiary’s equity in the net loss of such Person shall be included to the extent of the aggregate Investment of the OpCo Borrower or any of its Restricted Subsidiaries in such Person,

 

(ii)         solely for purposes of determining the amount available for Investments under clause (xxv)(y) of the definition of “Permitted Investment”, any net income (loss) of any Restricted Subsidiary that is not a borrower or guarantor under the Exit Facilities or any Refinancing Indebtedness in respect thereof if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of similar distributions by such Restricted Subsidiary, directly or indirectly, to the OpCo Borrower by operation of the terms of such Restricted Subsidiary’s charter or any agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such Restricted Subsidiary or its stockholders (other than (1) restrictions that have been waived or otherwise released, (2) restrictions pursuant to the Exit Facilities or Refinancing Indebtedness in respect thereof and (3) restrictions in effect on the Closing Date with respect to any Restricted Subsidiary and other restrictions with respect to any Restricted Subsidiary that taken as a whole are not materially less favorable to the lenders under the Exit Facilities or Refinancing Indebtedness in respect thereof than such restrictions in effect on the Closing Date as determined by the OpCo Borrower in good faith), except that (x) the OpCo Borrower’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of any dividend or distribution that was or that (as determined by the OpCo Borrower in good faith) could have been made by such Restricted Subsidiary during such period to the OpCo Borrower or another Restricted Subsidiary (subject, in the case of a dividend that could have been made to another Restricted Subsidiary, to the limitation contained in this clause) and (y) the net loss of such Restricted Subsidiary shall be included to the extent of the aggregate Investment of the OpCo Borrower or any of its other Restricted Subsidiaries in such Restricted Subsidiary,

 

9

 

 

 

(iii)         (1) any gain or loss realized upon the sale, abandonment or other disposition of any asset of the OpCo Borrower or any Restricted Subsidiary (including pursuant to any sale/leaseback transaction) that is not sold, abandoned or otherwise disposed of in the ordinary course of business (as determined in good faith by the OpCo Borrower) and (2) any gain or loss realized upon the disposal, abandonment or discontinuation of operations of the OpCo Borrower or any Restricted Subsidiary, and any income (loss) from disposed, abandoned or discontinued operations (but if such operations are classified as discontinued because they are subject to an agreement to dispose of such operations, only when and to the extent such operations are actually disposed of), including in each case any closure of any branch,

 

(iv)        any item classified as an extraordinary, unusual or nonrecurring gain, loss or charge (including fees, expenses and charges associated with any acquisition, merger or consolidation after the Closing Date or any accounting change) (other than the accrual of revenue in the ordinary course),

 

(v)         the cumulative effect of a change in accounting principles,

 

(vi)        all deferred financing costs written off and premiums paid in connection with any early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments,

 

(vii)       any unrealized gains or losses in respect of Hedge Agreements, or any ineffectiveness recognized in earnings related to qualifying hedge transactions or the fair value of changes therein recognized in earnings for derivatives that do not qualify as hedge transactions, in each case, in respect of any Hedging Obligations,

 

(viii)      any unrealized foreign currency translation or transaction gains or losses, including in respect of Indebtedness of any Person denominated in a currency other than the functional currency of such Person,

 

(ix)         (1) any noncash compensation charge arising from any grant of stock, stock options or other equity based awards and any non-cash deemed finance charges in respect of any pension liabilities or other provisions and (2) income (loss) attributable to deferred compensation plans or trusts,

 

(x)          to the extent otherwise included in Consolidated Net Income, any unrealized foreign currency translation or transaction gains or losses, including in respect of Indebtedness or other obligations of the OpCo Borrower or any Restricted Subsidiary owing to the OpCo Borrower or any Restricted Subsidiary,

 

(xi)        any noncash charge, expense or other impact attributable to application of the purchase or recapitalization method of accounting (including the total amount of depreciation and amortization, cost of sales or other noncash expense resulting from the write-up of assets to the extent resulting from such purchase or recapitalization accounting adjustments), non-cash charges for deferred tax valuation allowances and non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP,

 

10

 

 

(xii)        the amount of any restructuring costs, integration costs, costs of strategic initiatives, business optimization expenses or costs, retention, recruiting, relocation and signing and stay bonuses and expenses, including payments made to employees or producers who are subject to non-compete agreements, closing and consolidation costs, contract termination costs, stock option and other equity-based compensation expenses, severance costs, transaction fees and expenses and consulting and advisory fees, indemnities and expenses, including, without limitation, any one time expense relating to enhanced accounting function or other transaction costs and Public Company Costs, and

 

(xiii)       to the extent covered by insurance and actually reimbursed (or the OpCo Borrower has determined that there exists reasonable evidence that such amount will be reimbursed by the insurer and such amount is not denied by the applicable insurer in writing within 180 days and is reimbursed within 365 days of the date of such evidence (with a deduction in any future calculation of Consolidated Net Income for any amount so added back to the extent not so reimbursed within such 365 day period)), any expenses with respect to liability or casualty events or business interruption,

 

provided, further, that the exclusion of any item pursuant to the foregoing clauses (i) through (xiii) shall also exclude the tax impact of any such item, if applicable.

 

Consolidated Total Corporate Indebtedness” means, as of any date of determination, an amount equal to (a) the aggregate principal amount of outstanding funded Indebtedness of the OpCo Borrower and its Restricted Subsidiaries as of such date consisting of (without duplication) Indebtedness for borrowed money (including Purchase Money Obligations and unreimbursed outstanding drawn amounts under funded letters of credit, but excluding, for the avoidance of doubt, undrawn letters of credit); the amount of outstanding Capitalized Lease Obligations in excess of $20,000,000; debt obligations evidenced by bonds, debentures, notes or similar instruments; Disqualified Stock; and (in the case of the OpCo Borrower or any of its Restricted Subsidiaries) Preferred Stock, determined on a Consolidated basis in accordance with GAAP (excluding items eliminated in Consolidation, and for the avoidance of doubt, excluding Hedging Obligations), minus (b) the amount of such Indebtedness consisting of Indebtedness (i) of a Special Purpose Subsidiary secured by a Lien on all or part of the assets disposed of in, or otherwise Incurred in connection with, a Financing Disposition or (ii) otherwise Incurred in connection with a Special Purpose Financing, in each case to the extent not Incurred to finance or refinance the acquisition of Rental Car Vehicles; provided that such Indebtedness is not recourse to the OpCo Borrower or any Restricted Subsidiary that is not a Special Purpose Subsidiary (other than with respect to Special Purpose Financing Undertakings), minus (c) the aggregate principal amount of outstanding Consolidated Vehicle Indebtedness as of such date.

 

Consolidated Total Net Corporate Leverage Ratio” means, as of any date of determination, the ratio of (a) (i) Consolidated Total Corporate Indebtedness of the OpCo Borrower and its Restricted Subsidiaries as at such date (after giving effect to any Incurrence or Discharge of Indebtedness on such date) minus (ii) Unrestricted Cash and minus (iii) amounts in the Term C Loan Collateral Account to (b) the aggregate amount of Consolidated EBITDA for the Most Recent Four Quarter Period ending prior to the date of such determination for which consolidated financial statements of the OpCo Borrower are available, provided, that:

 

(i)           if since the beginning of such period the OpCo Borrower or any Restricted Subsidiary shall have made a Sale (including any Sale occurring in connection with a transaction causing a calculation to be made hereunder), the Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets that are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period;

 

11

 

 

(ii)          if since the beginning of such period the OpCo Borrower or any Restricted Subsidiary (by merger, consolidation or otherwise) shall have made a Purchase (including any Purchase occurring in connection with a transaction causing a calculation to be made hereunder), Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Purchase occurred on the first day of such period; and

 

(iii)         if since the beginning of such period any Person became a Restricted Subsidiary or was merged or consolidated with or into the OpCo Borrower or any Restricted Subsidiary, and since the beginning of such period such Person shall have made any Sale or Purchase that would have required an adjustment pursuant to clause (i) or (ii) above if made by the OpCo Borrower or a Restricted Subsidiary since the beginning of such period, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Sale or Purchase occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to any Sale, Purchase or other transaction, or the amount of income or earnings relating thereto, the pro forma calculations in respect thereof (including in respect of anticipated cost savings or synergies relating to any such Sale, Purchase or other related transaction (subject, in each case, to the provisions and limitations set forth in the definition of “Consolidated EBITDA”)) shall be as determined in good faith by the OpCo Borrower.

 

Consolidated Total Secured Indebtedness” means, as of any date of determination, an amount equal to the Consolidated First Lien Indebtedness without regard to clause (x) of the definition thereof.

 

Consolidated Total Secured Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Secured Indebtedness of the OpCo Borrower and its Restricted Subsidiaries as at such date (after giving effect to any Incurrence or Discharge of Indebtedness on such date) to (b) the aggregate amount of Consolidated EBITDA for the Most Recent Four Quarter Period ending prior to the date of such determination for which consolidated financial statements of the OpCo Borrower are available, provided, that:

 

(1)       if since the beginning of such period the OpCo Borrower or any Restricted Subsidiary shall have made a Sale (including any Sale occurring in connection with a transaction causing a calculation to be made hereunder), the Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets that are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period;

 

(2)       if since the beginning of such period the OpCo Borrower or any Restricted Subsidiary (by merger, consolidation or otherwise) shall have made a Purchase (including any Purchase occurring in connection with a transaction causing a calculation to be made hereunder), Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Purchase occurred on the first day of such period; and

 

(3)       if since the beginning of such period any Person became a Restricted Subsidiary or was merged or consolidated with or into the OpCo Borrower or any Restricted Subsidiary, and since the beginning of such period such Person shall have made any Sale or Purchase that would have required an adjustment pursuant to clause (1) or (2) above if made by the OpCo Borrower or a Restricted Subsidiary since the beginning of such period, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Sale or Purchase occurred on the first day of such period.

 

12

 

 

For purposes of this definition, whenever pro forma effect is to be given to any Sale, Purchase or other transaction, or the amount of income or earnings relating thereto, the pro forma calculations in respect thereof (including in respect of anticipated cost savings or synergies relating to any such Sale, Purchase or other related transaction (subject, in each case, to the provisions and limitations set forth in the definition of “Consolidated EBITDA”)) shall be as determined in good faith by the OpCo Borrower.

 

Consolidated Vehicle Depreciation” means for any period, depreciation on all Rental Car Vehicles (after adjustments thereto), to the extent deducted in calculating Consolidated Net Income for such period.

 

Consolidated Vehicle Indebtedness” means Indebtedness of a member of the Restricted Group Incurred in connection with the acquisition, sale, leasing, financing or refinancing of, or secured by, Vehicles and/or related rights (including under leases, manufacturer warranties, buy-back programs, insurance policies and Indebtedness under any incentive rebates programs) and/or assets, as determined in good faith by the OpCo Borrower. For the avoidance of doubt, any Indebtedness incurred under the Exit Facilities or Refinancing Indebtedness in respect thereof shall not constitute Consolidated Vehicle Indebtedness.

 

Consolidated Vehicle Interest Expense” means the aggregate interest expense for such period on any Consolidated Vehicle Indebtedness, as determined in good faith by the OpCo Borrower.

 

Consolidation” means, as the context may require, the consolidation of the accounts of each of the Subsidiaries of the Company with those of the Company or, if applicable, the consolidation of the accounts of each of the Restricted Subsidiaries of the OpCo Borrower with those of the OpCo Borrower, in each case in accordance with GAAP; provided that “Consolidation” will not include consolidation of the accounts of any Unrestricted Subsidiary, but the interest of the OpCo Borrower or any Restricted Subsidiary in any Unrestricted Subsidiary will be accounted for as an investment. The term “Consolidated” has a correlative meaning.

 

Contractual Obligation” means, as to any Person, any provision of any material security issued by such Person or of any material agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

Contribution Indebtedness” means Indebtedness of the OpCo Borrower or any Restricted Subsidiary in an aggregate principal amount not greater than twice the aggregate amount of cash contributions (other than amounts to cure any breaches of financial covenants with respect to any funded Indebtedness, proceeds from the issuance of Disqualified Stock or any other Capital Stock not permitted hereunder or contributions from any member of the Restricted Group) made to the capital of the Company after the Closing Date (whether through the issuance or sale of Equity Capital Stock or otherwise), and contributed by the Company, directly or indirectly, to the OpCo Borrower or any of its Restricted Subsidiaries in the form of common equity.

 

Controlled Investment Affiliate” means as to any person, any other person which directly or indirectly is in control of, is controlled by, or is under common control with, such person and is organized by such person (or any person controlling such person) primarily for making equity or debt investments in the OpCo Borrower or its direct or indirect parent company or other portfolio companies of such person.

 

Core Intellectual Property” means any U.S. federal, state or common law trademarks or service marks or other indicia of origin that are comprised of or include any of the words “Hertz,” “Dollar,” or “Thrifty,” in each case, whether alone, as part of a composite mark or logo, or otherwise in combination with any other words, designs or marks, together with any U.S. registrations of or other U.S. applications to register any of the foregoing, in each case, owned by the Company, any Subsidiary of the Company (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any Subsidiary of the OpCo Borrower that is an obligor in respect of the Exit Facilities or any Refinancing Indebtedness in respect thereof.

 

13

 

 

Corporate Indebtedness” means any Indebtedness of a member of the Restricted Group that does not constitute Consolidated Vehicle Indebtedness.

 

Credit Facilities” means one or more of (i) the Exit Facilities and (ii) any other facilities or arrangements designated by the OpCo Borrower, in each case with one or more banks or other lenders or institutions providing for revolving credit loans, term loans, receivables, fleet, inventory, real estate or other financings (including through the sale of receivables, fleet, inventory, real estate and/or other assets to such institutions or to special purpose entities formed to borrow from such institutions against such receivables, fleet, inventory, real estate and/or other assets or the creation of any Liens in respect of such receivables, fleet, inventory, real estate and/ or other assets in favor of such institutions), letters of credit or other Indebtedness, in each case, including all agreements, instruments and documents executed and delivered pursuant to or in connection with any of the foregoing, including any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent, trademark or copyright security agreement, mortgages or letter of credit applications and other guarantees, pledge agreements, security agreements and collateral documents, in each case as the same may be amended, supplemented, waived or otherwise modified from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased, decreased or extended from time to time (whether in whole or in part, whether with the original banks, lenders or institutions or other banks, lenders or institutions or otherwise, and whether provided under any original Credit Facility or one or more other credit agreements, indentures, financing agreements or other Credit Facilities or otherwise). Without limiting the generality of the foregoing, the term “Credit Facility” shall include any agreement (1) changing the maturity of any Indebtedness Incurred thereunder or contemplated thereby, (2) adding Subsidiaries as additional borrowers or guarantors thereunder, (3) increasing or decreasing the amount of Indebtedness Incurred thereunder or available to be borrowed thereunder or (4) otherwise altering the terms and conditions thereof.

 

Currency Agreement” means, in respect of a Person, any foreign exchange contract, currency swap agreement or other similar agreement or arrangements (including derivative agreements or arrangements), as to which such Person is a party or a beneficiary.

 

Customer Receivable” means any Receivable relating to rental of Vehicles by the rental car business to customers; provided for the avoidance of doubt that Customer Receivables shall not include Receivables arising from or otherwise relating to fleet leasing services or fleet management services.

 

Designated Noncash Consideration” means the Fair Market Value of non-cash consideration received by the OpCo Borrower or any of its Restricted Subsidiaries in connection with an Asset Disposition that is so designated as Designated Noncash Consideration pursuant to a certificate signed by a Responsible Officer of the Company setting forth the basis of such valuation.

 

Designated Preferred Stock” means Preferred Stock of the OpCo Borrower (other than Disqualified Stock) that is issued after the Closing Date for cash (other than to any other member of the Restricted Group) and is so designated as Designated Preferred Stock pursuant to a certificate signed by a Responsible Officer of the OpCo Borrower.

 

Discharge” means any repayment, repurchase, redemption, defeasance or other acquisition, retirement or discharge of any Indebtedness or (without limiting the provisions hereof restricting any such issuance) any Designated Preferred Stock of the OpCo Borrower that is no longer outstanding on such date of determination. Without limiting the foregoing, the issuance of an irrevocable notice of repayment, repurchase or redemption and deposit of related funds with a trustee, agent or other representative of the applicable creditor shall be deemed a Discharge.

 

14

 

 

Disinterested Directors” means, with respect to any Affiliate Transaction, one or more members of the Board of Directors (or one or more members of the Board of Directors of the OpCo Borrower) having no material direct or indirect financial interest in or with respect to such Affiliate Transaction. A member of the Board of Directors shall not be deemed to have such a financial interest solely by reason of such member’s holding Equity Capital Stock of the Company, or any options, warrants or other rights in respect of such Equity Capital Stock or solely by reason of such member receiving any compensation in respect of such member’s role as director.

 

Disqualified Stock” means, with respect to any Person, any Equity Capital Stock (other than Management Stock) that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event (other than following the occurrence of a Change of Control or other similar event described under such terms as a “change of control,” or an “asset sale” or other disposition) (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof (other than following the occurrence of a Change of Control or other similar event described under such terms as a “change of control,” or an “asset sale” or other disposition), in whole or in part; provided that Equity Capital Stock issued to any employee benefit plan, or by any such plan to any employees of the Company, the OpCo Borrower or any Subsidiary, shall not constitute Disqualified Stock solely because it may be required to be repurchased or otherwise acquired or retired in order to satisfy applicable statutory or regulatory obligations.

 

Dividend Accrual” has the meaning set forth in Section 4(c).

 

Dividend Payment Date” means June 30 and December 31 of each year, commencing on December 31, 2021 (the “Initial Dividend Payment Date”); provided that if any such Dividend Payment Date is not a Business Day, then the applicable Dividend shall be payable on the Business Day immediately preceding such Dividend Payment Date.

 

Dividend Payment Period” means the period from and including the applicable Issuance Date to, but excluding, the applicable Initial Dividend Payment Date and, subsequent to such Initial Dividend Payment Date, the period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date.

 

Dividend Rate” means (i) with respect to a Dividend accrued prior to the second anniversary of the Closing Date, 9.00% per annum, (ii) with respect to a Dividend accrued from and after the second anniversary of the Closing Date and prior to the third anniversary of the Closing Date, (1) for any portion of such Dividend paid in cash, 7.00% per annum, and (2) for any portion of such Dividend paid as a Dividend Accrual, 9.00% per annum, (iii) with respect to a Dividend accrued from and after the third anniversary of the Closing Date and prior to the 42-month anniversary of the Closing Date, (1) for any portion of such Dividend paid in cash, 8.00% per annum, and (2) for any portion of such Dividend paid as a Dividend Accrual, 10.00% per annum, (iv) with respect to a Dividend accrued from and after the 42- month anniversary of the Closing Date and prior to the fourth anniversary of the Closing Date, 9.00% per annum, (v) with respect to a Dividend accrued from and after the fourth anniversary of the Closing Date and prior to the 54-month anniversary of the Closing Date, 10.00% per annum, (vi) with respect to a Dividend accrued from and after the 54-month anniversary of the Closing Date and prior to the fifth anniversary of the Closing Date, 11.00% per annum and (vii) with respect to a Dividend accrued from and after the fifth anniversary of the Closing Date, an amount equal to the sum of (1) 13.00% per annum and (2) the product of (A) 2.00% per annum multiplied by (B) the number of whole years elapsed since the fifth anniversary of the Closing Date through and including such Dividend Payment Date; provided that each of the foregoing rates shall be increased by 6,00% per annum at any time that the funded Corporate Indebtedness of the Restricted Group (including any Preferred Stock issued by Subsidiaries of the Company that are members of the Restricted Group and any undrawn and unexpired letters of credit, bankers’ acceptances or other similar instruments, but, for the avoidance of doubt, excluding the Series A Preferred Stock) exceeds $3,300,000,000 at such time (the “Indebtedness Step-Up”).

 

15

 

 

Dividend Record Date” has the meaning set forth in Section 4(d).

 

Dividends” has the meaning set forth in Section 4(a).

 

Dollar Equivalent” means, with respect to any amount denominated in Dollars, the amount thereof and, with respect to any amount denominated in any currency other than Dollars, at any date of determination thereof, an amount in Dollars equivalent to such principal amount or such other amount calculated on the basis of the spot rate of exchange in London that appears on the display page applicable to such currency on the Reuters System (or any other page as may replace such page for the purpose of displaying the spot rate of exchange in London); provided that if there shall at any time no longer exist such a page, the spot rate of exchange shall be determined by reference to another similar rate publishing service selected by the Preferred Majority Holders and reasonably satisfactory to the Company.

 

Environmental Costs” means any and all costs or expenses (including attorney’s and consultant’s fees, investigation and laboratory fees, response costs, court costs and litigation expenses, fines, penalties, damages, settlement payments, judgments and awards), of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way relating to, any actual or alleged violation of, noncompliance with or liability under any Environmental Laws. Environmental Costs include any and all of the foregoing, without regard to whether they arise out of or are related to any past, pending or threatened proceeding of any kind.

 

Environmental Laws” means any and all U.S. or foreign federal, state, provincial, territorial, local or municipal laws, rules, orders, enforceable guidelines, orders-in-council, regulations, statutes, ordinances, codes, decrees, and such requirements of any Governmental Authority properly promulgated and having the force and effect of law or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health (as it relates to exposure to Materials of Environmental Concern) or the environment, as have been, or now or at any relevant time hereafter are, in effect.

 

Equity Capital Stock” means Capital Stock other than any debt securities convertible into equity interests.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time; provided that for purposes of the definitions of Change of Control and Permitted Holders, “Exchange Act” means the Securities Exchange Act of 1934 as in effect on the Closing Date.

 

Existing DIP Credit Agreement” means that certain Senior Secured Superpriority Debtor- In-Possession Credit Agreement, dated as of October 30, 2020, by and among the OpCo Borrower, Barclays Bank PLC, as administrative agent, and the lending institutions from time to time parties thereto.

 

Existing HIL Credit Agreement” means that certain Credit Agreement, dated as of May 19, 2021, by and among Hertz International Ltd., Wilmington Trust, National Association, as administrative agent, and the lenders from time to time parties thereto.

 

Exit Facilities” means the facilities evidenced by that certain Credit Agreement dated as of the Closing Date (as amended, supplemented or otherwise modified from time to time), by and among the OpCo Borrower, the Subsidiaries of the OpCo Borrower from time to time party thereto, the lenders from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent for the lenders.

 

16

 

 

Fair Market Value” means, with respect to any asset or property, the fair market value of such asset or property as determined in good faith by the Company (with respect to the assets or property of the Company and its Subsidiaries (other than the OpCo Borrower and its Subsidiaries)) or the OpCo Borrower (with respect to the assets or property of the OpCo Borrower and its Restricted Subsidiaries), as applicable.

 

Financial Model” means the financial model delivered to ACM on June 7, 2021 (together with any updates or modifications thereto reasonably agreed between the OpCo Borrower and ACM).

 

Financing Disposition” means any sale, transfer, conveyance or other disposition of, or creation or incurrence of any Lien on, property or assets by the OpCo Borrower or any Subsidiary thereof to or in favor of any Special Purpose Entity, or by any Special Purpose Subsidiary, in each case in connection with the Incurrence by a Special Purpose Entity of Indebtedness, or obligations to make payments to the obligor on Indebtedness, which may be secured by a Lien in respect of such property or assets.

 

Fixed Dollar Basket” means the greater of (x) $635,000,000 and (y) 100% of the LTM Consolidated EBITDA at any date of determination (less any amount previously Incurred in reliance on the Fixed Dollar Basket pursuant to subclause (B) of clause (i) of the definition of “Permitted Corporate Indebtedness”).

 

Fixed GAAP Date” means December 31, 2020, provided that at any time after the Closing Date, the Company may by written notice to the Holders elect to change the Fixed GAAP Date to be the date specified in such notice, and upon such notice, the Fixed GAAP Date shall be such date for all periods beginning on and after the date specified in such notice.

 

Fixed GAAP Terms” means (a) the definitions of the terms “Borrowing Base,” “Capitalized Lease Obligation” (subject to the terms thereof), “Consolidated EBITDA,” “Consolidated First Lien Indebtedness,” “Consolidated First Lien Leverage Ratio,” “Consolidated Interest Expense,” “Consolidated Net Income,” “Consolidated Total Secured Indebtedness,” “Consolidated Total Secured Leverage Ratio,” “Consolidated Total Corporate Indebtedness,” “Consolidated Total Net Corporate Leverage Ratio,” “Consolidated Vehicle Depreciation,” “Consolidated Vehicle Indebtedness,” “Consolidated Vehicle Interest Expense,” “Fleet Receivable,” “Inventory” and “Receivable,” (b) all defined terms in this Certificate of Designation to the extent used in or relating to any of the foregoing definitions, and all ratios and computations based on any of the foregoing definitions, and (c) any other term or provision of this Certificate of Designation that, at the Company’s election, may be specified by the Company by written notice to the Holders from time to time.

 

Fleet Receivables” means Receivables of the OpCo Borrower and its Subsidiaries consisting of original equipment manufacturer program Receivables, original equipment manufacturer incentive Receivables, Receivables arising from or otherwise relating to fleet leasing services and, at the election of the OpCo Borrower, Receivables arising from or otherwise relating to fleet management services.

 

Foreign Pension Plan” means a registered pension plan which is subject to applicable pension legislation other than ERISA or the Code, which a Restricted Subsidiary sponsors or maintains, or to which it makes or is obligated to make contributions.

 

Foreign Plan” means each Foreign Pension Plan, deferred compensation or other retirement or superannuation plan, fund, program, agreement, commitment or arrangement whether oral or written, funded or unfunded, sponsored, established, maintained or contributed to, or required to be contributed to, or with respect to which any liability is borne, outside the United States of America, by the OpCo Borrower or any of its Restricted Subsidiaries, other than any such plan, fund, program, agreement or arrangement sponsored by a Governmental Authority.

 

17

 

 

Foreign Subsidiary” means any Restricted Subsidiary of the OpCo Borrower that is organized and existing under the laws of any jurisdiction outside of the United States of America or that is a Foreign Subsidiary Holdco. For the avoidance of doubt, any Restricted Subsidiary of the OpCo Borrower that is organized and existing under the laws of Puerto Rico or any other territory of the United States of America shall be a Foreign Subsidiary.

 

Foreign Subsidiary Holdco” means any direct or indirect Subsidiary of the OpCo Borrower substantially all the assets of which directly or indirectly consist of the stock, or the stock and indebtedness (including, for this purpose, any indebtedness or other instrument treated as equity for U.S. federal income tax purposes), of one or more Foreign Subsidiaries or one or more Foreign Subsidiary Holdcos, and cash or Cash Equivalents from distributions and payments on such stock and indebtedness.

 

Franchise Lease Obligation” means any Capitalized Lease Obligation, and any other lease, of any Franchisee relating to any property used, occupied or held for use or occupation by any Franchisee in connection with any of its Franchise Vehicle operations.

 

Franchise Special Purpose Entity” means any Person (a) that is engaged in the business of (i) acquiring, selling, collecting, financing or refinancing Receivables, accounts (as defined in the Uniform Commercial Code as in effect in any jurisdiction from time to time), other accounts and/or other receivables, and/or related assets and/or (ii) acquiring, selling, leasing, financing or refinancing Franchise Vehicles and/or related rights (including under leases, manufacturer warranties and buy-back programs, and insurance policies) and/or assets (including managing, exercising and disposing of any such rights and/or assets) and (b) is designated as a “Franchise Special Purpose Entity” by the OpCo Borrower.

 

Franchise Vehicle Indebtedness” means as of any date of determination, (a) Indebtedness of any Franchise Special Purpose Entity directly or indirectly Incurred to acquire, sell, lease, finance or refinance, or secured by, Franchise Vehicles and/or related rights and/or assets, (b) Indebtedness of any Franchisee or any Affiliate thereof that is attributable to the acquisition, sale, leasing, financing or refinancing of, or secured by, Franchise Vehicles and/or related rights and/or assets, as determined in good faith by the OpCo Borrower and (c) Indebtedness of any Franchisee.

 

Franchise Vehicles” means vehicles owned or operated by, or leased or rented to or by, any Franchisee, including automobiles, trucks, tractors, trailers, vans, sport utility vehicles, buses, campers, motor homes, motorcycles and other motor vehicles.

 

Franchisee” means any Person that is a franchisee or licensee of the OpCo Borrower or any of its Subsidiaries (or of any other Franchisee), or any Affiliate of such Person.

 

GAAP” means generally accepted accounting principles in the United States of America as in effect on the Fixed GAAP Date (for purposes of the Fixed GAAP Terms) and as in effect from time to time (for all other purposes of this Certificate of Designation), as set forth in the Financial Accounting Standards Board Accounting Standards Codification and subject to the following: if at any time the SEC permits or requires U.S.-domiciled companies subject to the reporting requirements of the Exchange Act to use IFRS in lieu of GAAP for financial reporting purposes, the Company may elect by written notice to the Holders to so use IFRS in lieu of GAAP and, upon any such notice, references herein to GAAP shall thereafter be construed to mean (a) for periods beginning on and after the date specified in such notice, IFRS as in effect on the date specified in such notice (for purposes of the Fixed GAAP Terms) and as in effect from time to time (for all other purposes of this Certificate of Designation) and (b) for prior periods, GAAP as defined in the first sentence of this definition.

 

18

 

 

Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the European Union.

 

Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person; provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

 

Hedge Agreements” means, collectively, Interest Rate Agreements, Currency Agreements and Commodities Agreements.

 

Hedging Obligations” means, with respect to any Person, the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodities Agreement.

 

Holder” means a Person in whose name the shares of the Series A Preferred Stock are registered, which Person shall be treated by the Company and Transfer Agent as the absolute owner of the shares of Series A Preferred Stock for the purpose of making payment and for all other purposes; provided that, to the fullest extent permitted by Requirements of Law, no Person that has received shares of Series A Preferred Stock in violation of the Purchase Agreement or this Certificate of Designation shall be a Holder and the Transfer Agent shall not, unless directed otherwise by the Company, recognize any such Person as a Holder and the Person in whose name the shares of the Series A Preferred Stock were registered immediately prior to such transfer shall remain the Holder of such shares.

 

Incur” means issue, assume, enter into any Guarantee of, incur or otherwise become liable for; and the terms “Incurs”. “Incurred” and “Incurrence” shall have a correlative meaning; provided, that any Indebtedness or Equity Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. Accrual of interest, the accretion of accreted value, the payment of interest in the form of additional Indebtedness, and the payment of dividends on Equity Capital Stock constituting Indebtedness in the form of additional shares of the same class of Equity Capital Stock, will be deemed not to be an Incurrence of Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on which interest is payable through the issuance of additional Indebtedness) shall be deemed Incurred at the time of original issuance of the Indebtedness at the initial accreted amount thereof.

 

Indebtedness” means with respect to any Person on any date of determination (without duplication):

 

(i)          the principal of indebtedness of such Person for borrowed money,

 

(ii)         the principal of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments,

 

(iii)        all reimbursement obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (the amount of such obligations being equal at any time to the aggregate then undrawn and unexpired amount of such letters of credit, bankers’ acceptances or other instruments plus the aggregate amount of drawings thereunder that have not then been reimbursed) (except to the extent such reimbursement obligations relate to Trade Payables and such obligations are expected to be satisfied within 30 days of becoming due and payable),

 

19

 

 

(iv)        all obligations of such Person to pay the deferred and unpaid purchase price of property, which purchase price is due more than one year after the date of placing such property in final service or taking final delivery and title thereto (in each case, except (x) Trade Payables and (y) any earn-out obligations until such obligation is reflected as a liability on the balance sheet of such Person in accordance with GAAP and if not expected to be paid within 60 days after becoming due and payable),

 

(v)         all Capitalized Lease Obligations of such Person,

 

(vi)        the redemption, repayment or other repurchase amount of such Person with respect to any Disqualified Stock of such Person or (if such Person is a Subsidiary of the Company) any Preferred Stock of such Subsidiary, but excluding, in each case, any accrued dividends (the amount of such obligation to be equal at any time to the maximum fixed involuntary redemption, repayment or repurchase price for such Equity Capital Stock, or if less (or if such Equity Capital Stock has no such fixed price), to the involuntary redemption, repayment or repurchase price therefor calculated in accordance with the terms thereof as if then redeemed, repaid or repurchased, and if such price is based upon or measured by the fair market value of such Equity Capital Stock, such fair market value shall be as determined in good faith by the OpCo Borrower),

 

(vii)       all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of Indebtedness of such Person shall be the lesser of (A) the Fair Market Value of such asset at such date of determination and (B) the amount of such Indebtedness of such other Persons,

 

(viii)      all Guarantees by such Person of Indebtedness of other Persons, to the extent so Guaranteed by such Person, and

 

(ix)         to the extent not otherwise included in this definition, net Hedging Obligations of such Person (the amount of any such obligation to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such time),

 

provided that Indebtedness of any Person shall exclude any Indebtedness of another Person appearing on the balance sheet of such first Person solely by reason of push-down accounting under GAAP.

 

The amount of Indebtedness of any Person at any date shall be determined as set forth above or as otherwise provided for in this Certificate of Designation, or otherwise shall equal the amount thereof that would appear as a liability on a balance sheet of such Person (excluding any notes thereto) prepared in accordance with GAAP.

 

Insolvency” means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

 

Interest Coverage Ratio” means as of any date of determination, the ratio of (a) the aggregate amount of Consolidated EBITDA for the period of the Most Recent Four Quarter Period ending prior to the date of such determination for which consolidated financial statements of the OpCo Borrower are available to (b) Consolidated Cash Interest Expense for the period of the Most Recent Four Quarter Period ending prior to the date of such determination for which consolidated financial statements of the OpCo Borrower are available.

 

Interest Rate Agreement” means, with respect to any Person, any interest rate protection agreement, future agreement, option agreement, swap agreement, cap agreement, collar agreement, hedge agreement or other similar agreement or arrangement (including derivative agreements or arrangements), as to which such Person is a party or a beneficiary.

 

20

 

 

Inventory” means goods held for sale, lease or use by a Person in the ordinary course of business, net of any reserve for goods that have been segregated by such Person to be returned to the applicable vendor for credit, as determined in accordance with GAAP.

 

Investment” means in any Person by any other Person, any direct or indirect advance, loan or other extension of credit (other than to customers, dealers, licensees, franchisees, suppliers, consultants, directors, officers or employees of any Person in the ordinary course of business) or capital contribution (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others) to, or any purchase or acquisition of Equity Capital Stock, Indebtedness or other similar instruments issued by, such Person. For purposes of the definition of “Unrestricted Subsidiary” and Section 8(b)(ix) only, (i) “Investment” shall include the portion (proportionate to the OpCo Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the OpCo Borrower at the time that such Subsidiary is designated an Unrestricted Subsidiary, provided that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the OpCo Borrower shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (x) the OpCo Borrower’s “Investment” in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the OpCo Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer. Guarantees shall not be deemed to be Investments. The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced (at the Company’s option) by any dividend, distribution, interest payment, return of capital, repayment or other amount or value received in respect of such Investment; provided, that to the extent that the amount of Investments outstanding at any time is so reduced by any portion of any such amount or value that would otherwise be included in the calculation of Consolidated Net Income, such portion of such amount or value shall not be so included for purposes of calculating the amount of Investments that may be made pursuant to clause (xxv)(y) of the definition of “Permitted Investment”.

 

Investment Company Act” means the Investment Company Act of 1940, as amended from time to time.

 

Investment Grade Rating” means a rating equal to or higher than Baa3 (or, in the case of short-term obligations, P-3) (or the equivalent) by Moody’s and BBB- (or, in the case of short-term obligations, A-3) (or the equivalent) by S&P, or any equivalent rating by any other rating agency recognized internationally or in the United States of America.

 

Investment Grade Securities” means (i) securities issued or directly and fully guaranteed or insured by the United States of America government or any agency or instrumentality thereof (other than Cash Equivalents); (ii) debt securities or debt instruments with an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries; (iii) investments in any fund that invests exclusively in investments of the type described in clauses (i) and (ii) above, which fund may also hold immaterial amounts of cash pending investment or distribution; and (iv) corresponding instruments in countries other than the United States of America customarily utilized for high quality investments.

 

Issuance Date” means, with respect to any share of Series A Preferred Stock, the date of issuance of such share.

 

Junior Stock” has the meaning set forth in Section 2(c).

 

21

 

 

Lien” means any mortgage, pledge, hypothecation, security deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any Capitalized Lease Obligation having substantially the same economic effect as any of the foregoing).

 

Limited Condition Transaction” means (i) any acquisition, including by way of merger, amalgamation, consolidation or other business combination or the acquisition of Equity Capital Stock or otherwise, by one or more of the OpCo Borrower and its Restricted Subsidiaries of any assets, business or Person or any other Investment permitted by this Certificate of Designation whose consummation is not conditioned on the availability of, or on obtaining, third party financing or (ii) any redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock requiring irrevocable notice in advance of such redemption, repurchase, defeasance, satisfaction and discharge or prepayment.

 

Liquidation Preference” means, with respect to any share of Series A Preferred Stock, as of any date, $1,000 per share.

 

LTM Consolidated EBITDA” means, as of any date of determination, the aggregate amount of Consolidated EBITDA for the Most Recent Four Quarter Period (determined for any fiscal quarter (or portion thereof) ending prior to the Closing Date, on a pro forma basis to give effect to the Transactions as if they had occurred at the beginning of such four quarter period), provided that:

 

(i)            if since the beginning of such period, the OpCo Borrower or any Restricted Subsidiary shall have made a Sale (including any Sale occurring in connection with a transaction causing a calculation to be made hereunder), the Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets that are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period;

 

(ii)           if since the beginning of such period, the OpCo Borrower or any Restricted Subsidiary (by merger, consolidation or otherwise) shall have made a Purchase (including any Purchase occurring in connection with a transaction causing a calculation to be made hereunder), Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Purchase occurred on the first day of such period; and

 

(iii)          if since the beginning of such period, any Person became a Restricted Subsidiary or was merged or consolidated with or into the OpCo Borrower or any Restricted Subsidiary, and since the beginning of such period such Person shall have made any Sale or Purchase that would have required an adjustment pursuant to clause (i) or (ii) above if made by the OpCo Borrower or a Restricted Subsidiary since the beginning of such period, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Sale or Purchase occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to any Sale, Purchase or other transaction, or the amount of income or earnings relating thereto, the pro forma calculations in respect thereof (including in respect of anticipated cost savings or synergies relating to any such Sale, Purchase or other related transaction (subject, in each case, to the provisions and limitations set forth in the definition of “Consolidated EBITDA”)) shall be as determined in good faith by the OpCo Borrower.

 

Majority Board Proposal Right” has the meaning set forth in Section 11(a)(iv)(1).

 

22

 

 

Majority Voting Right” has the meaning set forth in Section 11(a)(iv)(3).

 

Management Advances” means (i) loans or advances made to directors, officers, employees or consultants of a member of the Restricted Group (1) in respect of travel, entertainment or moving-related expenses incurred in the ordinary course of business, (2) in respect of moving-related expenses incurred in connection with any closing or consolidation of any facility, or (3) in the ordinary course of business and (in the case of this clause (3)) not exceeding the greater of $65,000,000 and 10.0% of LTM Consolidated EBITDA in the aggregate outstanding at any time, (ii) promissory notes of Management Investors acquired in connection with the issuance of Management Stock to such Management Investors, (iii) Management Guarantees, or (iv) other Guarantees of borrowings by Management Investors in connection with the purchase of Management Stock.

 

Management Guarantees” means guarantees (i) of up to an aggregate principal amount outstanding at any time of the greater of $65,000,000 and 10.0% of LTM Consolidated EBITDA of borrowings by Management Investors in connection with their purchase of Management Stock or (ii) made on behalf of, or in respect of loans or advances made to, directors, officers, employees or consultants of a member of the Restricted Group (1) in respect of travel, entertainment and moving-related expenses incurred in the ordinary course of business, or (2) in the ordinary course of business and (in the case of this clause (2)) not exceeding the greater of $65,000,000 and 10.0% of LTM Consolidated EBITDA in the aggregate outstanding at any time.

 

Management Investors” means the officers, directors, employees and other members of the management of the Company or any of its Subsidiaries, or family members or relatives of any thereof (provided that, solely for purposes of the definition of “Permitted Holders”, such relatives shall include only those Persons who are or become Management Investors in connection with estate planning for or inheritance from other Management Investors, as determined in good faith by the OpCo Borrower), or trusts, partnerships or limited liability companies for the benefit of any of the foregoing, or any of their heirs, executors, successors and legal representatives, who at any date beneficially own or have the right to acquire, directly or indirectly, Equity Capital Stock of the Company.

 

Management Stock” means Equity Capital Stock of the Company (including any options, warrants or other rights in respect thereof) held by any of the Management Investors.

 

Material Adverse Effect” means any circumstance or condition (excluding any matters publicly disclosed prior to May 2, 2021 (i) in connection with the Case and the events and conditions related and/or leading up to the Case, and the effects thereof or (ii) in the annual report on Form 10-K of the Company and/or the OpCo Borrower, and/or any quarterly or periodic report of the Company and/or the OpCo Borrower, publicly filed thereafter and prior to May 2, 2021) that would materially adversely affect (1) the business, operations, property or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole, (2) the validity or enforceability as to the Company of this Certificate of Designation, (3) the ability of the Company to perform its payment obligations under this Certificate of Designation or (4) the material rights or remedies (taken as a whole) of ACM and the Holders under this Certificate of Designation.

 

Material Restricted Subsidiary” means any Restricted Subsidiary other than one or more Restricted Subsidiaries designated by the OpCo Borrower that individually or in the aggregate do not constitute Material Subsidiaries.

 

Material Subsidiaries” means Subsidiaries of the OpCo Borrower constituting, individually or in the aggregate (as if such Subsidiaries constituted a single Subsidiary), a “significant subsidiary” in accordance with Rule 1-02 under Regulation S-X.

 

23

 

 

Material Vehicle Lease Obligation” means any lease by any Special Purpose Subsidiary to the OpCo Borrower or any of its Subsidiaries (other than any Special Purpose Subsidiary) of Rental Car Vehicles the aggregate net book value of which exceeds $150,000,000, entered into in connection with any Special Purpose Financing.

 

Materials of Environmental Concern” means any hazardous or toxic substances or materials or wastes defined, listed, or regulated as such in or under, or which may give rise to liability under, any applicable Environmental Law, including gasoline, petroleum (including crude oil or any fraction thereof), petroleum products or by-products, asbestos, polychlorinated biphenyls and ureaformaldehyde insulation.

 

MOIC” means, with respect to a share of Series A Preferred Stock, a multiple on invested capital equal to the quotient determined by dividing (A) the sum of (v) the aggregate amount of all Dividends made in cash with respect to such share of Series A Preferred Stock on or prior to the applicable date of determination (other than any Dividends paid in cash in respect of any Step-Up) plus (w) the ratable portion of any original issue discount or upfront fees paid to Holders on the Closing Date (but excluding, for the avoidance of doubt, the advisory fee payable pursuant to that certain Engagement Letter between Apollo Global Securities, LLC and the OpCo Borrower dated May 15, 2021) allocable to such share of Series A Preferred Stock plus (x) 100% of the Liquidation Preference and Accrued Dividends with respect to such share of Series A Preferred Stock (other than any portion of the Accrued Dividends attributable to any Step-Up) plus (y) 100% of the accrued but unpaid dividends as of such date with respect to such share of Series A Preferred Stock (other than any accrued but unpaid dividends attributable to any Step-Up), plus (z) the applicable premium paid in accordance with Section 6(a) with respect to such share of Series A Preferred Stock by (B) $ 1,000.

 

Most Recent Four Quarter Period” means the four fiscal quarter period of the Company ending on the last date of the most recently completed fiscal year or quarter for which financial statements of the Company have been (or have been required to be) delivered under Section 12; provided that, at the election of the Company, the Company may for any four fiscal quarter period ended at the fiscal year end, deliver internal unaudited financial statements of the Company for the last quarter of such four fiscal quarter period.

 

Multiemployer Plan” means a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

Net Available Cash” means, from an Asset Disposition or Recovery Event, cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or Recovery Event or received in any other noncash form) therefrom, in each case net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all federal, state, provincial, foreign and local taxes required to be paid or to be accrued as a liability under GAAP, in each case as a consequence of, or in respect of, such Asset Disposition or Recovery Event (including as a consequence of any transfer of funds in connection with the application thereof in accordance with Section 10), (ii) all payments made, and all installment payments required to be made, on any Indebtedness that is secured by any assets subject to such Asset Disposition or involved in such Recovery Event, in accordance with the terms of any Lien upon such assets, or that must by its terms, or, in the case of any Asset Disposition, in order to obtain a necessary consent to such Asset Disposition, or by Requirements of Law, be repaid out of the proceeds from such Asset Disposition or Recovery Event, including any payments required to be made to increase borrowing availability under any revolving credit facility, (iii) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition or Recovery Event, or to any other Person (other than a member of the Restricted Group) owning a beneficial interest in the assets disposed of in such Asset Disposition or involved in such Recovery Event, (iv) any liabilities or obligations associated with the assets disposed of in such Asset Disposition or involved in such Recovery Event and retained, indemnified or insured by a member of the Restricted Group after such Asset Disposition or Recovery Event, including pension and other post-employment benefit liabilities, liabilities related to environmental matters, and liabilities relating to any indemnification obligations associated with such Asset Disposition or Recovery Event, (v) in the case of an Asset Disposition, the amount of any purchase price or similar adjustment (x) claimed by any Person to be owed by a member of the Restricted Group, until such time as such claim shall have been settled or otherwise finally resolved, or (y) paid or payable by a member of the Restricted Group, in each case in respect of such Asset Disposition and (vi) in the case of any Recovery Event, any amount thereof that constitutes or represents reimbursement or compensation for any amount previously paid or to be paid by a member of the Restricted Group.

 

24

 

 

Net Proceeds” means, with respect to any issuance or sale of any securities of the Company or any Subsidiary by the Company or any Subsidiary, or any capital contribution, or any incurrence of Indebtedness, the cash proceeds of such issuance, sale, contribution or incurrence net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance, sale, contribution or incurrence and net of taxes paid or payable as a result, or in respect, thereof.

 

Non-Compliance Event” shall mean:

 

(i)           failure to pay (a) each Dividend in cash following the 42-month anniversary of the Closing Date, or (b) any Dividend, redemption premium or other amount, in each case within five Business Days after such Dividend, premium or other amount becomes due in accordance with the terms hereof;

 

(ii)          any representation or warranty made by the Company or any of its Subsidiaries in the Restricted Group in the Purchase Agreement (or in any amendment, modification or supplement thereto) or which is contained in any certificate furnished at any time by or on behalf of the Company or any of its Subsidiaries in the Restricted Group pursuant to the Purchase Agreement or this Certificate of Designation shall prove to have been incorrect in any material respect on or as of the date made or deemed made and the circumstances giving rise to such misrepresentation, if capable of alteration, are not altered so as to make such representation or warranty correct in all material respects by the date falling 30 days after the date on which written notice thereof shall have been given to the Company by the Preferred Majority Holders;

 

(iii)         failure by the Company and its Subsidiaries to comply with Section 8 hereof;

 

(iv)        the Company or any Subsidiary shall default in the observance or performance of any other agreement contained in this Certificate of Designation (other than as provided in clauses (i) through (iii) above), and such default shall continue unremedied for a period of 30 days after the date on which written notice thereof shall have been given to the Company by the Preferred Majority Holders;

 

(v)         the Company, any of its Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any of its Material Restricted Subsidiaries shall (1)(A) default in any payment of principal of or interest on any Indebtedness (excluding any Material Vehicle Lease Obligation) in excess of the greater of $100,000,000 and 15.0% of LTM Consolidated EBITDA beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness was created; or (B) default in the observance or performance of any other agreement or condition relating to any such Indebtedness referred to in clause (A) above (excluding any Material Vehicle Lease Obligation) contained in any instrument or agreement evidencing, securing or relating thereto (other than the failure to provide notice of a default or an event of default under such instrument or agreement or default in the observance of or compliance with any financial maintenance covenant), the effect of which default is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice or lapse of time if required, such Indebtedness to become due prior to its stated maturity (an “Acceleration”), and (x) such time shall have lapsed and, if any notice (a “Default Notice”) shall be required to commence a grace period or declare the occurrence of an event of default before notice of Acceleration may be delivered, such Default Notice shall have been given, (y) such default shall not have been remedied or waived by or on behalf of such holder or holders, and (z) in the case of any such Indebtedness of any Foreign Subsidiary, such Indebtedness shall have been Accelerated and such Acceleration shall not have been rescinded (provided that clause (B) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder) or (2) default in the observance or performance of any agreement or condition relating to any Material Vehicle Lease Obligation beyond the period of grace, and the lessor thereunder or its permitted assignee shall have terminated such Material Vehicle Lease Obligation, and such termination shall have caused an “amortization event” (or similar event however denominated) under all Special Purpose Financings to which such Material Vehicle Lease Obligation relates, and neither the OpCo Borrower nor any of its Subsidiaries shall have entered into a replacement Special Purpose Financing with respect to such terminated Material Vehicle Lease Obligation within a period of 60 days after the date of the termination of such Material Vehicle Lease Obligation;

 

25

 

 

(vi)        (1) the commencement by the Company, any of its Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any of its Material Restricted Subsidiaries of any case, proceeding or other action (A) under any existing or fixture law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts (excluding, in each case, the reorganization, winding-up, liquidation or dissolution of any Subsidiary of the OpCo Borrower that is not an obligor under the Exit Facilities or any Refinancing Indebtedness in respect thereof), or (B) seeking appointment of a receiver, interim receiver, receivers, receiver and manager, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Company, any of its Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any of its Material Restricted Subsidiaries shall make a general assignment for the benefit of its creditors; or (2) the commencement against the Company, any of its Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any of its Material Restricted Subsidiaries of any case, proceeding or other action of a nature referred to in clause (1) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged, unstayed or unbonded for a period of, in the case of any Material Restricted Subsidiaries that are Foreign Subsidiaries, 90 days, and otherwise, 60 days; or (3) the commencement against the Company, any of its Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any of its Material Restricted Subsidiaries of any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, stayed or bonded pending appeal within, in the case of any Material Restricted Subsidiaries that are Foreign Subsidiaries, 90 days, and otherwise, 60 days from the entry thereof; or (4) the Company, any of its Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any of its Material Restricted Subsidiaries shall take any corporate or other organizational action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (1), (2), or (3) above; or (5) the Company, any of its Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any of its Material Restricted Subsidiaries shall be generally unable to, or shall admit in writing its general inability to, pay its debts as they become due (other than in connection with any reorganization, winding-up, liquidation or dissolution of any Subsidiary of the OpCo Borrower that is not an obligor under the Exit Facilities or any Refinancing Indebtedness in respect thereof referred to in the parenthetical exclusion contained in clause (1)(A) above);

 

26

 

 

(vii)       (1) any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (2) (A) any failure to satisfy minimum funding standards (as defined in Section 302 or 303 of ERISA or Section 412 or 430 of the Code), whether or not waived, shall exist with respect to any Plan or (B) any Lien in favor of the PBGC or a Plan shall arise on the assets of either of the OpCo Borrower or any Commonly Controlled Entity, (3) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is in the reasonable opinion of the Preferred Majority Holders likely to result in the termination of such Plan for purposes of Title IV of ERISA, (4) any Single Employer Plan shall terminate for purposes of Title IV of ERISA other than a standard termination pursuant to Section 4041(b) of ERISA, (5) either of the OpCo Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Preferred Majority Holders is reasonably likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan, or (6) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (1) through (6) of this clause (vii), such event or condition, either individually or together with all other such events or conditions, if any, would be reasonably expected to result in a Material Adverse Effect;

 

(viii)      the entry of one or more judgments or decrees against the Company, any of its Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any of its Material Restricted Subsidiaries involving in the aggregate at any time a liability (net of any insurance or indemnity payments actually received in respect thereof prior to or within 60 days from the entry thereof, or to be received in respect thereof in the event any appeal thereof shall be unsuccessful) in excess of the greater of $100,000,000 and 15.0% of LTM Consolidated EBITDA, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or

 

(ix)         the occurrence of a Change of Control.

 

Non-Compliance Step-Up” has the meaning set forth in Section 11 (a)(i).

 

Notice of Optional Redemption” has the meaning set forth in Section 6(b).

 

OpCo Borrower” means The Hertz Corporation, a Delaware corporation, or any successor in interest thereto.

 

Optional Redemption” has the meaning set forth in Section 6(a).

 

Parity Stock” has the meaning set forth in Section 2(a).

 

Paying Agent” means the paying agent of the Company with respect to the Series A Preferred Stock duly appointed from time to time.

 

27

 

 

PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor thereto).

 

Permitted Affiliate Transaction” means:

 

(i)           any Restricted Payment Transaction;

 

(ii)          (1) the entering into, maintaining or performance of any employment or consulting contract, collective bargaining agreement, benefit plan, program or arrangement, related trust agreement or any other similar arrangement for or with any current or former employee, officer or director or consultant of or to a member of the Restricted Group heretofore or hereafter entered into in the ordinary course of business, including vacation, health, insurance, deferred compensation, severance, retirement, savings or other similar plans, programs or arrangements, (2) payments, compensation, performance of indemnification or contribution obligations, the making or cancellation of loans or any issuance, grant or award of stock, options, other equity-related interests or other securities, to any such employees, officers, directors or consultants in the ordinary course of business, (3) the payment of reasonable fees to directors of the Company or any of its Subsidiaries (as determined in good faith by the Company or such Subsidiary), (4) any transaction with an officer or director of the Company or any of its Subsidiaries in the ordinary course of business (x) not involving more than $1,000,000 in any one case or (y) approved by a majority of the Board of Directors, or (5) Management Advances and payments in respect thereof (or in reimbursement of any expenses referred to in the definition of such term);

 

(iii)        any transaction between or among any of the members of the Restricted Group or one or more Special Purpose Subsidiaries;

 

(iv)        any transaction arising out of agreements or instruments in existence on the Closing Date, in each case to the extent disclosed in writing to ACM on or prior to the Closing Date, and any payments made pursuant thereto;

 

(v)         any transaction in the ordinary course of business on terms that are fair to the Restricted Group as determined in good faith by the Company, or are not materially less favorable to the Company or the relevant Subsidiary than those that could be obtained at the time in a transaction with a Person who is not an Affiliate of the Company;

 

(vi)        any transaction in the ordinary course of business, or approved by a majority of the Disinterested Directors, between a member of the Restricted Group and any Affiliate of the Company controlled by the Company that is a Franchisee, a Franchise Special Purpose Entity, a joint venture or similar entity;

 

(vii)       any issuance or sale of Common Stock or any capital contribution to the Company; and

 

(viii)      transactions between the OpCo Borrower and its Restricted Subsidiaries, on the one hand, and the Plan Sponsors, on the other hand, with respect to the Amex GBT Contracts as in effect on the Closing Date.

 

Permitted Consolidated Vehicle Indebtedness” means:

 

(i)           Consolidated Vehicle Indebtedness of the OpCo Borrower and its Restricted Subsidiaries in a maximum principal amount at any time outstanding not exceeding in the aggregate the amount equal to the sum of (A) an amount equal to the Borrowing Base, plus (B) in the event of any refinancing of any such Indebtedness, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing;

 

28

 

 

(ii)         Consolidated Vehicle Indebtedness (A) of any Restricted Subsidiary to the OpCo Borrower or (B) of the OpCo Borrower or any Restricted Subsidiary to any Restricted Subsidiary; provided, that any subsequent issuance or transfer of any Equity Capital Stock of such Restricted Subsidiary to which such Indebtedness is owed, or other event, that results in such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of such Indebtedness (except to the OpCo Borrower or a Restricted Subsidiary) will be deemed, in each case, an Incurrence of such Indebtedness by the issuer thereof not permitted by this clause (ii);

 

(iii)        Consolidated Vehicle Indebtedness consisting of accommodation guarantees for the benefit of trade creditors of the OpCo Borrower or any of its Restricted Subsidiaries; and

 

(iv)        Guarantees by the OpCo Borrower or any of its Restricted Subsidiaries of Consolidated Vehicle Indebtedness or any other obligation or liability of the OpCo Borrower or any of its Restricted Subsidiaries (other than any Indebtedness Incurred by the OpCo Borrower or a Restricted Subsidiary, as the case may be, in violation of Section 8(b)(x)), or (B) Indebtedness of the OpCo Borrower or any of its Restricted Subsidiaries arising by reason of any Lien granted by or applicable to such Person securing Consolidated Vehicle Indebtedness of the OpCo Borrower or any of its Restricted Subsidiaries (other than any Consolidated Vehicle Indebtedness Incurred by the OpCo Borrower or a Restricted Subsidiary, as the case may be, in violation of Section 8(b)(x)).

 

For purposes of determining compliance with, and the outstanding principal amount of, any particular Indebtedness Incurred pursuant to and in compliance with, Section 8(b)(x)(A), (1) any other obligation of the obligor on such Indebtedness (or of any other Person who could have Incurred such Indebtedness under Section 8(b)(x)(A)) arising under any Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness; (2) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this definition of “Permitted Consolidated Vehicle Indebtedness”, the Company, in its sole discretion, shall classify such item of Indebtedness and may include the amount and type of such Indebtedness in one or more of the clauses above (including in part under one such clause and in part under another such clause); and (3) the amount of Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

 

For purposes of determining compliance with any Dollar-denominated restriction on the Incurrence of Indebtedness denominated in a foreign currency, the Dollar Equivalent principal amount of such Indebtedness Incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit or deferred draw Indebtedness, provided that (A) the Dollar Equivalent principal amount of any such Indebtedness outstanding on the Closing Date shall be calculated based on the relevant currency exchange rate in effect on the Closing Date, (B) if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency (or in a different currency from such Indebtedness so being Incurred), and such refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed (x) the outstanding or committed principal amount (whichever is higher) of such Indebtedness being refinanced plus (y) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses (including accrued and unpaid interest) incurred or payable in connection with such refinancing and (C) the Dollar Equivalent principal amount of Indebtedness denominated in a foreign currency and Incurred pursuant to the Exit Facilities shall be calculated based on the relevant currency exchange rate in effect on, at the OpCo Borrower’s option, (aa) the Closing Date, (bb) any date on which any of the respective commitments under such Exit Facility shall be reallocated between or among facilities or subfacilities thereunder, or on which such rate is otherwise calculated for any purpose thereunder, or (cc) the date of such Incurrence. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.

 

29

 

 

Permitted Corporate Indebtedness” means:

 

(i)           Indebtedness Incurred by OpCo Holdings (solely as guarantor), the OpCo Borrower and its Restricted Subsidiaries pursuant to any Credit Facility (including but not limited to in respect of letters of credit or bankers’ acceptances issued or created thereunder) and Indebtedness Incurred other than under any Credit Facility, and (without limiting the foregoing), in each case, any Refinancing Indebtedness in respect thereof, in each case under this clause (i) in a maximum principal amount at any time outstanding not exceeding in the aggregate the amount equal to (A) $2,800,000,000 plus (B) the Fixed Dollar Basket (to the extent not otherwise utilized), plus (C) without duplication of capacity available under the foregoing clauses (A) and (B), the Voluntary Prepayment Basket (to the extent not otherwise utilized), plus (D) in the event of any refinancing of any such Indebtedness, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing;

 

(ii)          Indebtedness (A) of any Restricted Subsidiary to the OpCo Borrower or (B) of the OpCo Borrower or any Restricted Subsidiary to any Restricted Subsidiary; provided, that any subsequent issuance or transfer of any Equity Capital Stock of such Restricted Subsidiary to which such Indebtedness is owed, or other event, that results in such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of such Indebtedness (except to the OpCo Borrower or a Restricted Subsidiary) will be deemed, in each case, an Incurrence of such Indebtedness by the issuer thereof not permitted by this clause (ii);

 

(iii)         any Indebtedness (other than the Indebtedness described in clause (i) or clause (ii) above) outstanding on the Closing Date and any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (iii);

 

(iv)        (A) Capitalized Lease Obligations of the OpCo Borrower and its Restricted Subsidiaries in an aggregate principal amount at any time outstanding not exceeding the greater of $50,000,000 and 10.0% of LTM Consolidated EBITDA and (B) Purchase Money Obligations of the OpCo Borrower and its Restricted Subsidiaries, and in each case any Refinancing Indebtedness with respect thereto;

 

(v)         Indebtedness consisting of accommodation guarantees for the benefit of trade creditors of the OpCo Borrower or any of its Restricted Subsidiaries;

 

(vi)        (A) Guarantees by the OpCo Borrower or any of its Restricted Subsidiaries of Corporate Indebtedness or any other obligation or liability of the OpCo Borrower or any of its Restricted Subsidiaries (other than any Corporate Indebtedness Incurred by the OpCo Borrower or a Restricted Subsidiary, as the case may be, in violation of Section 8(b)(x)), or (B) Indebtedness of the OpCo Borrower or any of its Restricted Subsidiaries arising by reason of any Lien granted by or applicable to such Person securing Corporate Indebtedness of the OpCo Borrower or any of its Restricted Subsidiaries (other than any Corporate Indebtedness Incurred by the OpCo Borrower or a Restricted Subsidiary, as the case may be, in violation of Section 8(b)(x));

 

30

 

 

(vii)            Indebtedness of a member of the Restricted Group (A) arising from the honoring of a check, draft or similar instrument of such Person drawn against insufficient funds, provided that such Indebtedness is extinguished within five Business Days of its Incurrence, or (B) consisting of guarantees, indemnities, obligations in respect of earnouts or other purchase price adjustments, or similar obligations, Incurred in connection with the acquisition or disposition of any business, assets or Person;

 

(viii)           Indebtedness of a member of the Restricted Group in respect of (A) letters of credit, bankers’ acceptances or other similar instruments or obligations issued, or relating to liabilities or obligations incurred, in the ordinary course of business (including those issued to governmental entities in connection with self-insurance under applicable workers’ compensation statutes), (B) completion guarantees, surety, judgment, appeal or performance bonds, or other similar bonds, instruments or obligations, provided, or relating to liabilities or obligations incurred, in the ordinary course of business, (C) in the case of the OpCo Borrower and its Restricted Subsidiaries, Hedging Obligations, entered into for bona fide hedging purposes, (D) Management Guarantees, (E) the financing of insurance premiums in the ordinary course of business, (F) in the case of the OpCo Borrower and its Restricted Subsidiaries, take-or-pay obligations under supply arrangements incurred in the ordinary course of business, (G) netting, overdraft protection and other arrangements arising under standard business terms of any bank at which a member of the Restricted Group maintains an overdraft, cash pooling or other similar facility or arrangement or (H) Bank Products Obligations;

 

(ix)             Indebtedness of the OpCo Borrower and its Restricted Subsidiaries issuable upon the conversion or exchange of shares of Disqualified Stock issued by Restricted Subsidiaries of the OpCo Borrower in accordance with clause (x) below, and any Refinancing Indebtedness with respect thereto;

 

(x)              unlimited additional (1) Corporate Indebtedness of OpCo Holdings (solely as guarantor), the OpCo Borrower and its Restricted Subsidiaries, if on the date of the Incurrence of such Corporate Indebtedness, after giving effect to the Incurrence thereof, the (A) Consolidated Total Net Corporate Leverage Ratio would be (x) equal to or less than 5.25 to 1.00 or (y) if Incurred to finance a Permitted Acquisition or Permitted Investment, no greater than the Consolidated Total Net Corporate Leverage Ratio immediately prior to such transaction or (B) Interest Coverage Ratio would be (x) equal to or greater than 2.00 to 1.00 or (y) if Incurred to finance a Permitted Acquisition or Permitted Investment, no less than the Interest Coverage Ratio immediately prior to such transaction, (2) Corporate Indebtedness constituting Consolidated Total Secured Indebtedness of OpCo Holdings (solely as guarantor), the OpCo Borrower and its Restricted Subsidiaries, if on the date of the Incurrence of such Corporate Indebtedness, after giving effect to the Incurrence thereof, the Consolidated Total Secured Leverage Ratio would be (x) equal to or less than 4.25 to 1.00 or (y) if Incurred to finance a Permitted Acquisition or Permitted Investment, no greater than the Consolidated Total Secured Leverage Ratio immediately prior to such transaction or (3) Corporate Indebtedness constituting Consolidated First Lien Indebtedness of OpCo Holdings (solely as guarantor), the OpCo Borrower and its Restricted Subsidiaries, if on the date of the Incurrence of such Corporate Indebtedness, after giving effect to the Incurrence thereof, the Consolidated First Lien Leverage Ratio would be (x) equal to or less than 3.00 to 1.00 or (y) if Incurred to finance a Permitted Acquisition or Permitted Investment, no greater than the Consolidated First Lien Leverage Ratio immediately prior to such transaction (provided that, for the avoidance of doubt, in each case of this clause (x), any cash proceeds of any such Indebtedness then being incurred shall not be netted from Indebtedness for purposes of calculating compliance with the applicable ratio);

 

31

 

 

(xi)             Indebtedness of the OpCo Borrower or any of its Restricted Subsidiaries in an aggregate principal amount at any time outstanding not exceeding the greater of $317,500,000 and 50.0% of LTM Consolidated EBITDA;

 

(xii)            Indebtedness of Restricted Subsidiaries of the OpCo Borrower that are not obligors under the Exit Facilities or any Refinancing Indebtedness in respect thereof and of joint ventures of the OpCo Borrower or any of its Restricted Subsidiaries in an aggregate principal amount at any time outstanding not exceeding the greater of $317,500,000 and 50.0% of LTM Consolidated EBITDA;

 

(xiii)            Acquired Indebtedness of the OpCo Borrower or any of its Restricted Subsidiaries and any Refinancing Indebtedness with respect thereto;

 

(xiv)           Contribution Indebtedness of the OpCo Borrower or any of its Restricted Subsidiaries and any Refinancing Indebtedness with respect thereto; and

 

(xv)            to the extent constituting Indebtedness, the Series A Preferred Stock issued on the Closing Date.

 

Permitted Holders” means (a) any of the Management Investors; (b) the Plan Sponsors; (c) any “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) of which any of the Persons specified in clause (a) or (b) above is a member (provided that (without giving effect to the existence of such “group” or any other “group”) one or more of such Persons collectively have beneficial ownership of more than 50% of the total voting power of the Voting Stock of the Company held by such “group”), and any other Person that is a member of such “group” and (d) any Person acting in the capacity of an underwriter in connection with a public or private offering of Equity Capital Stock of the Company.

 

Permitted Investment” means an Investment in, or consisting of:

 

(i)               (1) in the case of Investments made by the Company and any Subsidiary of the Company (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower and any Subsidiary of the Company that has no material assets other than a direct or indirect ownership interest in the OpCo Borrower, and (2) in the case of Investments made by the OpCo Borrower and its Restricted Subsidiaries, (A) a Restricted Subsidiary, (B) the OpCo Borrower, or (C) a Person that will, upon the making of such Investment, become a Restricted Subsidiary (and any Investment held by such Person that was not acquired by such Person in contemplation of so becoming a Restricted Subsidiary) (such Investment pursuant to this clause (i)(2)(C), a “Permitted Acquisition”);

 

(ii)              another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, or is liquidated into, the OpCo Borrower or a Restricted Subsidiary (and, in each case, any Investment held by such other Person that was not acquired by such Person in contemplation of such merger, consolidation or transfer);

 

(iii)             Temporary Cash Investments, Investment Grade Securities or Cash Equivalents;

 

(iv)             receivables owing to a member of the Restricted Group, if created or acquired in the ordinary course of business;

 

32

 

 

(v)             any securities or other Investments received as consideration in, or retained in connection with, sales or other dispositions of property or assets, including Asset Dispositions made in compliance with Section 8(b)(iv);

 

(vi)            securities or other Investments received in settlement of debts created in the ordinary course of business and owing to, or of other claims asserted by, the OpCo Borrower or any Restricted Subsidiary, or as a result of foreclosure, perfection or enforcement of any Lien, or in satisfaction of judgments, including in connection with any bankruptcy proceeding or other reorganization of another Person;

 

(vii)            Investments in existence or made pursuant to legally binding written commitments in existence on the Closing Date, in each case to the extent disclosed in writing to ACM on or prior to the Closing Date;

 

(viii)           in the case of the OpCo Borrower and its Restricted Subsidiaries, Hedge Agreements and related Hedging Obligations;

 

(ix)             pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course of business;

 

(x)              (1) in the case of the OpCo Borrower and its Restricted Subsidiaries, Investments in or by any Special Purpose Subsidiary, or in connection with a Financing Disposition by, to, in or in favor of any Special Purpose Entity, including Investments of funds held in accounts permitted or required by the arrangements governing such Financing Disposition or any related Indebtedness, or (2) any promissory note issued by the Company or the OpCo Borrower to any Special Purpose Entity;

 

(xi)             bonds secured by assets leased to and operated by the OpCo Borrower or any Restricted Subsidiary that were issued in connection with the financing of such assets so long as the OpCo Borrower or any Restricted Subsidiary may obtain title to such assets at any time by paying a nominal fee, canceling such bonds and terminating the transaction;

 

(xii)            any Investment to the extent made using Common Stock of the Company as consideration;

 

(xiii)           Management Advances;

 

(xiv)           Investments by the OpCo Borrower and its Restricted Subsidiaries consisting of, or arising out of or related to, Vehicle Rental Concession Rights, including any Investments referred to in the definition of “Vehicle Rental Concession Rights”, and any Investments by the OpCo Borrower and its Restricted Subsidiaries in Franchisees arising as a result of the OpCo Borrower or any Restricted Subsidiary being party to any Vehicle Rental Concession or any related agreement jointly with any Franchisee, or leasing or subleasing any part of a Public Facility or other property to any Franchisee, or guaranteeing any obligation of any Franchisee in respect of any Vehicle Rental Concession or any related agreement;

 

(xv)            any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of Section 8(b)(vi) (except transactions described in clauses (i), (v) and (vi) of the definition of “Permitted Affiliate Transactions”), including any Investment pursuant to any transaction described in clause (ii) of the definition of “Permitted Affiliate Transactions” (whether or not any Person party thereto is at any time an Affiliate of the Company);

 

33

 

 

(xvi)           Investments by the OpCo Borrower and its Restricted Subsidiaries in Related Businesses in an aggregate outstanding amount not to exceed the greater of $225,000,000 and 35.0% of LTM Consolidated EBITDA;

 

(xvii)          (A) Investments by the OpCo Borrower and its Restricted Subsidiaries in Franchise Special Purpose Entities directly or indirectly to finance or refinance the acquisition of Franchise Vehicles and/or related rights and/or assets, (B) Investments by the OpCo Borrower and its Restricted Subsidiaries in Franchisees attributable to the acquisition, sale, leasing, financing or refinancing of Franchise Vehicles and/or related rights and/or assets, as determined in good faith by the OpCo Borrower, (C) Investments by the OpCo Borrower and its Restricted Subsidiaries in Franchisees, (D) Investments by the OpCo Borrower and its Restricted Subsidiaries in Equity Capital Stock of Franchisees and Franchise Special Purpose Entities (including pursuant to capital contributions), and (E) Investments by the OpCo Borrower and its Restricted Subsidiaries in Franchisees arising as the result of Guarantees of Franchise Vehicle Indebtedness or Franchise Lease Obligations;

 

(xviii)         any Investment by any Captive Insurance Subsidiary in connection with the provision of insurance to the Company or any of its Subsidiaries, which Investment is made in the ordinary course of business of such Captive Insurance Subsidiary, or by reason of applicable law, rule, regulation or order, or that is required or approved by any regulatory authority having jurisdiction over such Captive Insurance Subsidiary or its business, as applicable;

 

(xix)            any Investment by the OpCo Borrower and its Restricted Subsidiaries pursuant to an agreement entered into in connection with any securities lending or other securities financing transaction to the extent such securities lending or other securities financing transaction is otherwise permitted by the provisions of Section 8(b)(iv);

 

(xx)             Investments by the OpCo Borrower and its Restricted Subsidiaries made as part of an Islamic financing arrangement, including Sukuk, if such arrangement, if structured as Indebtedness, would be permitted hereunder, provided that, the amount that would constitute Indebtedness if such arrangement were structured as Indebtedness, as determined in good faith by the OpCo Borrower, shall be treated by the OpCo Borrower as Indebtedness (including, to the extent applicable, with respect to the calculation of any amounts of Indebtedness outstanding thereunder);

 

(xxi)            Investments for bona fide tax (or similar) planning activities; provided that such Investments do not materially impair the rights or remedies (taken as a whole) of ACM and the Holders under this Certificate of Designation;

 

(xxii)           Investments by the OpCo Borrower and its Restricted Subsidiaries in an aggregate amount not to exceed the greater of $317,500,000 and 50.0% of LTM Consolidated EBITDA;

 

(xxiii)          after the expiration of the Relief Period, Investments by the OpCo Borrower and its Restricted Subsidiaries in Unrestricted Subsidiaries in an aggregate amount not to exceed the greater of $160,000,000 and 25.0% of LTM Consolidated EBITDA;

 

(xxiv)         after the expiration of the Relief Period, Investments by the OpCo Borrower and its Restricted Subsidiaries in joint ventures in an aggregate amount not to exceed the greater of $160,000,000 and 25.0% of LTM Consolidated EBITDA; and

 

34

 

 

(xxv)          Investments by the OpCo Borrower and its Restricted Subsidiaries in an aggregate amount outstanding at any time not to exceed an amount (net of returns, if any, on any such Investments) equal to the sum of (x) the greater of $500,000,000 and 80.0% of LTM Consolidated EBITDA plus (y) 50% of the Consolidated Net Income (which shall not be less than zero) accrued during the period (treated as one accounting period) beginning on July 1, 2021, to the end of the most recent fiscal quarter ending prior to the date of such Investment for which consolidated financial statements of the OpCo Borrower are available; provided that (x) at the time the OpCo Borrower or such Restricted Subsidiary makes such Investment after giving effect thereto on a pro forma basis, no Non-Compliance Event under clauses (i) or (vi) of the definition thereof shall have occurred and be continuing (or would result therefrom) and (y) this clause (xxv) shall not be available for Investments in Unrestricted Subsidiaries prior to the expiration of the Relief Period.

 

If any Investment pursuant to clause (xxv) is made in any Person that is not a Restricted Subsidiary and such Person thereafter (A) becomes a Restricted Subsidiary or (B) is merged or consolidated into, or transfers or conveys all or substantially all its assets to, or is liquidated into, the OpCo Borrower or a Restricted Subsidiary, then such Investment shall thereafter be deemed to have been made pursuant to clause (i) or (ii) above, respectively, and not clause (xxv).

 

The Company, in its sole discretion, may classify any Investment as being made in part under one of the clauses of Permitted Investments and in part under one or more other such clauses.

 

Permitted Payment” means:

 

(i)               any purchase, redemption, repurchase, defeasance or other acquisition or retirement of Common Stock of the Company made by exchange (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the issuance or sale of, Common Stock of the Company (other than Common Stock issued or sold to a Subsidiary of the Company) or a capital contribution in the form of Common Stock to the Company;

 

(ii)              any dividend paid or redemption made within 60 days after the date of declaration thereof or of the giving of notice thereof, as applicable, if at such date of declaration or notice, such dividend or redemption would have complied with Section 8(b)(viii);

 

(iii)             repurchases or other acquisitions of Equity Capital Stock (including any options, warrants or other rights in respect thereof) of the Company, or payments to repurchase or otherwise acquire Equity Capital Stock of the Company (including any options, warrants or other rights in respect thereof), in each case, from Management Investors (including any repurchase or acquisition by reason of the Company retaining any Equity Capital Stock, option, warrant or other right in respect of tax withholding obligations, and any related payment in respect of any such obligation), such payments, loans, advances, dividends or distributions not to exceed an amount (net of repayments of any such loans or advances and net of any amount thereof repurchased or otherwise acquired due to death, termination, retirement or disability or the terms of any stockholder incentive plan) equal to (x) the greater of $65,000,000 and 10.0% of LTM Consolidated EBITDA, plus (y) the Net Proceeds received by the Company since the Closing Date from, or as a capital contribution from, the issuance or sale to Management Investors of Equity Capital Stock permitted to be issued hereunder (including any options, warrants or other rights in respect thereof), plus (z) the cash proceeds of key man life insurance policies received by a member of the Restricted Group since the Closing Date;

 

(iv)             [reserved];

 

(v)              payments by the Company to holders of Equity Capital Stock of the Company in lieu of issuance of fractional shares of such Equity Capital Stock; and

 

35

 

 

(vi)             payments in respect of the Series A Preferred Stock in accordance with this Certificate of Designation;

 

provided, that in the case of clause (ii), the amounts of any such Permitted Payment shall be included in subsequent calculations of the amount of Permitted Payments.

 

The Company, in its sole discretion, may classify any Restricted Payment as being made in part under one of the clauses of Permitted Payments and in part under one or more other such clauses.

 

Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

 

Plan” means, at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the OpCo Borrower or a Commonly Controlled Entity is an “employer” as defined in Section 3(5) of ERISA.

 

Plan Sponsors” means, collectively, (i) certain funds and accounts managed or advised by Knighthead Capital Management, LLC or one of its Controlled Investment Affiliates (“Knighthead”) and certain funds and accounts managed or advised by Certares Opportunities LLC or one of its Controlled Investment Affiliates (“Certares”), and CK Amarillo LP, a Delaware limited partnership formed by Certares and Knighthead (“Amarillo LP”), and (ii) each of, and any fund, partnership, co-investment vehicles and/or similar vehicles or accounts, in each case managed, advised or controlled by, Apollo Global Management, Inc. and any of their respective Affiliates, and any of their respective successors, but not including any portfolio operating companies.

 

Preferred Majority Holders” has the meaning set forth in Section 8(a).

 

Preferred Stock” means, as applied to the Equity Capital Stock of any corporation or company, Equity Capital Stock of any class or classes (however designated) that by its terms is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation or company, over shares of Equity Capital Stock of any other class of such corporation or company.

 

Prohibited Transferees” means (i) the persons identified as “Prohibited Transferees” in writing to ACM by the Company on or prior to May 12, 2021 or as the Company and ACM shall mutually agree prior to the Closing Date, or to any affiliates of such persons identified by the Company in writing or that are clearly identifiable as Affiliates solely on the basis of the similarity of their name and (ii) any competitor of the Company and its Subsidiaries that is in the same or a similar line of business as the Company and its Subsidiaries or any controlled Affiliate of such competitor, in each case designated in writing by the Company to the Holders from time to time or that are clearly identifiable as Affiliates solely on the basis of the similarity of their name; provided, that no such updates pursuant to this clause (ii) shall apply retroactively to disqualify any Transfer to the extent such Transfer was made to a party (or its Affiliates) that was not a Prohibited Transferee at the time of such Transfer.

 

Public Company Costs” means any costs, fees and expenses associated with, in anticipation of, or in preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and costs, fees and expenses relating to compliance with the provisions of the Securities Act of 1933, as amended from time to time, and the Exchange Act (as applicable to companies with equity or debt securities held by the public), the rules of national securities exchanges for companies with listed equity or debt securities, directors’ or managers’ compensation, fees and expense reimbursements, charges relating to investor relations, shareholder meetings and reports to shareholders and debtholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees and listing fees.

 

36

 

 

Public Facility” means (i) any airport; marine port; rail, subway, bus or other transit stop, station or terminal; stadium; convention center; or military camp, fort, post or base; or (ii) any other facility owned or operated by any nation or government or political subdivision thereof, or agency, authority or other instrumentality of any thereof, or other entity exercising regulatory, administrative or other functions of or pertaining to government, or any organization of nations (including the United Nations, the European Union and the North Atlantic Treaty Organization).

 

Public Facility Operator” means a Person that grants or has the power to grant a Vehicle Rental Concession.

 

Purchase” means any Investment in any Person that thereby becomes a Restricted Subsidiary, or any other acquisition by the OpCo Borrower or any Restricted Subsidiary of any company, any business or any group of assets constituting an operating unit of a business, including any such Investment or acquisition occurring in connection with a transaction causing a calculation to be made hereunder, or any designation of any Unrestricted Subsidiary as a Restricted Subsidiary.

 

Purchase Agreement” means that certain Equity Purchase and Commitment Agreement dated as of May 14, 2021, among the Company and the equity commitment parties party thereto.

 

Purchase Money Obligations” means any Indebtedness Incurred to finance or refinance the acquisition, leasing, construction or improvement of property (real or personal) or assets, and whether acquired through the direct acquisition of such property or assets or the acquisition of the Equity Capital Stock of any Person owning such property or assets, or otherwise; provided that for purposes of the definition of “Consolidated Total Corporate Indebtedness”, the term “Purchase Money Obligations” shall not include Indebtedness to the extent Incurred to finance or refinance the direct acquisition of Inventory or Vehicles (not acquired through the acquisition of Equity Capital Stock of any Person owning property or assets, or through the acquisition of property or assets, that include Inventory or Vehicles).

 

Receivable” means a right to receive payment pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay, as determined in accordance with GAAP.

 

Recovery Event” means any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of any member of the Restricted Group giving rise to Net Available Cash to a member of the Restricted Group, as the case may be, in excess of $25,000,000, to the extent that such settlement or payment does not constitute reimbursement or compensation for amounts previously paid by such member of the Restricted Group in respect of such casualty or condemnation.

 

Redemption Date” means with respect to the redemption of shares of Series A Preferred Stock pursuant to this Certificate of Designation, the date set forth in the applicable Notice of Optional Redemption in accordance with Section 6(b).

 

Redemption Price” has the meaning set forth in Section 6(a).

 

37

 

 

Refinancing Indebtedness” means Indebtedness that is Incurred to refinance any Indebtedness (or unutilized commitment in respect of Indebtedness) existing on the Closing Date or Incurred (or established) in compliance with this Certificate of Designation (including Indebtedness of the OpCo Borrower that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, and Indebtedness Incurred pursuant to a commitment that refinances any Indebtedness or unutilized commitment; provided, that (1) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of (x) the aggregate principal amount then outstanding of the Indebtedness being refinanced, plus (y) an amount equal to any unutilized commitment relating to the Indebtedness being refinanced or otherwise then outstanding under the financing arrangement being refinanced to the extent the unutilized commitment being refinanced could be drawn in compliance with this Certificate of Designation immediately prior to such refinancing plus (z) fees, underwriting discounts, premiums and other costs and expenses (including accrued and unpaid interest) incurred in connection with such Refinancing Indebtedness, (2) Refinancing Indebtedness shall not include Indebtedness of the OpCo Borrower or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary and (3) Refinancing Indebtedness shall not include Indebtedness of the Company or a Subsidiary (other than the OpCo Borrower and its Subsidiaries) that refinances Indebtedness of the OpCo Borrower and its Subsidiaries.

 

Regulation S-X” means Regulation S-X promulgated by the SEC as in effect on the Closing Date.

 

Related Business” means those businesses in which the OpCo Borrower or any of its Subsidiaries is engaged on the Closing Date, or that are related, complementary, incidental or ancillary thereto or extensions, developments or expansions thereof.

 

ReliefPeriod” means the period commencing on the Closing Date and ending on the earlier to occur of (1) the first day of the fiscal quarter of the OpCo Borrower ended March 31, 2023 and (2) the date as of which LTM Consolidated EBITDA, as reflected in a certificate delivered by a Responsible Officer of the Company to the Holders, is not less than $650,000,000.

 

Rental Car LKE Account” means any deposit, trust, investment or similar account maintained by, for the benefit of, or under the control of, the “qualified intermediary” in connection with the Rental Car LKE Program.

 

Rental Car LKE Program” means a “like-kind-exchange program” with respect to certain of the Vehicles of the OpCo Borrower and its Subsidiaries, under which such Vehicles will be disposed from time to time and proceeds of such dispositions will be held in a Rental Car LKE Account and used to acquire replacement Vehicles and/or repay indebtedness secured by such Vehicles, in a series of transactions intended to qualify as a “like-kind-exchange” within the meaning of the Code.

 

Rental Car Vehicles” means all Vehicles owned by or leased to the OpCo Borrower or a Restricted Subsidiary that are or have been offered for lease or rental by any of the OpCo Borrower and its Restricted Subsidiaries in their vehicle rental operations, including any such Vehicles being held for sale.

 

Reorganization” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty (30) day notice period is waived under subsections .21, .22, .23, .24, .25, 27, .28 or .33 of PBGC Regulation Section 4043 or any successor regulation thereto.

 

Requirement of Law” means, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, statute, ordinance, code, decree, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its material property or to which such Person or any of its material property is subject, including laws, ordinances and regulations pertaining to zoning, occupancy and subdivision of real properties; provided that the foregoing shall not apply to any non-binding recommendation of any Governmental Authority.

 

38

 

 

Responsible Officer” means, as to any Person, any of the following officers of such Person: (a) the chief executive officer or the president and, with respect to financial matters, the chief financial officer, the treasurer or the controller, (b) any vice president or, with respect to financial matters, any assistant treasurer or assistant controller, who has been designated in writing to the Holders as a Responsible Officer by such chief executive officer or president or, with respect to financial matters, such chief financial officer, treasurer or controller, (c) with respect to Section 12 and without limiting the foregoing, the general counsel, (d) with respect to ERISA matters, the senior vice president - human resources (or substantial equivalent) and (e) any other individual designated as a “Responsible Officer” for the purposes of this Certificate of Designation by the Board of Directors or by the board of directors of the OpCo Borrower with respect to such officers of the OpCo Borrower, as applicable.

 

Restricted Fleet Cash” means cash, Cash Equivalents, Investment Grade Securities and Temporary Cash Investments of the OpCo Borrower and its Subsidiaries that are classified as “restricted” for financial statement purposes to be used for the purchase of revenue earning vehicles and other specified uses under the OpCo Borrower’s and its Subsidiaries’ fleet financing facilities, including any Rental Car LKE Program.

 

Restricted Group” means the Company, the Company’s Subsidiaries (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower and any Restricted Subsidiaries.

 

Restricted Payment” means (i) the declaration or payment of any dividend or making of any distribution on or in respect of the Equity Capital Stock of a Person (including any such payment in connection with any merger or consolidation to which such Person is a party) except (x) dividends or distributions payable by a member of the Restricted Group (other than the Company) solely in Equity Capital Stock (other than Disqualified Stock) of such Person, (y) dividends or distributions payable by the Company solely in additional Common Stock, and (z) dividends or distributions payable to a member of the Restricted Group (and, in the case of any Restricted Subsidiary making such dividend or distribution, to other holders of its Equity Capital Stock on no more than a pro rata basis, measured by value) or (ii) the purchase, redemption, retirement or other acquisition for value of any Junior Stock (including, for the avoidance of doubt, Common Stock) held by Persons other than a member of the Restricted Group (other than any acquisition of Equity Capital Stock deemed to occur upon the exercise of options if such Equity Capital Stock represents a portion of the exercise price thereof).

 

Restricted Payment Transaction” means any Restricted Payment permitted pursuant to Section 8(b)(viii), any Permitted Payment, any Investment permitted pursuant to Section 8(b)(ix), any Permitted Investment, or any transaction specifically excluded from the definition of “Restricted Payment” (including pursuant to clauses (x), (y) and (z) of such definition).

 

Restricted Subsidiary” means any Subsidiary of the OpCo Borrower other than an Unrestricted Subsidiary.

 

Sale” means any disposition by the OpCo Borrower or a Restricted Subsidiary of any company, any business or any group of assets constituting an operating unit of a business, including any such disposition occurring in connection with a transaction causing a calculation to be made hereunder, or any designation of any Restricted Subsidiary as an Unrestricted Subsidiary.

 

SEC” means the Securities and Exchange Commission.

 

Senior Stock” has the meaning set forth in Section 2(b).

 

Series A Preferred Stock” has the meaning set forth in Section 1.

 

Service Vehicles” means all Vehicles owned by the OpCo Borrower or a Subsidiary of OpCo Borrower that are classified as “plant, property and equipment” in the consolidated financial statements of the OpCo Borrower that are not rented or offered for rental by the OpCo Borrower or any of its Subsidiaries, including any such Vehicles being held for sale.

 

39

 

 

Single Employer Plan” means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

 

Special Purpose Entity” means (x) any Special Purpose Subsidiary or (y) any other Person that is engaged in the business of (i) acquiring, selling, collecting, financing or refinancing Receivables, accounts (as defined in the Uniform Commercial Code as in effect in any jurisdiction from time to time), other accounts and/or other receivables, and/or related assets and/or (ii) acquiring, selling, leasing, financing or refinancing Vehicles and/or related rights (including under leases, manufacturer warranties and buy-back programs, and insurance policies) and/or assets (including managing, exercising and disposing of any such rights and/or assets).

 

Special Purpose Financing” means any financing or refinancing of assets consisting of or including Receivables and/or Vehicles of the OpCo Borrower or any Subsidiary that have been transferred to a Special Purpose Entity or made subject to a Lien in a Financing Disposition.

 

Special Purpose Financing Fees” means distributions or payments made by the OpCo Borrower or its Restricted Subsidiaries directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a member of the Restricted Group in connection with, any Special Purpose Financing.

 

Special Purpose Financing Undertakings” means representations, warranties, covenants, indemnities, guarantees of performance and (subject to clause (y) of the proviso below) other agreements and undertakings entered into or provided by the OpCo Borrower or any of its Restricted Subsidiaries that the OpCo Borrower determines in good faith are customary or otherwise necessary or advisable in connection with a Special Purpose Financing or a Financing Disposition; provided that (x) it is understood that Special Purpose Financing Undertakings may consist of or include (i) reimbursement and other obligations in respect of notes, letters of credit, surety bonds and similar instruments provided for credit enhancement purposes or (ii) Hedging Obligations, or other obligations relating to Interest Rate Agreements, Currency Agreements or Commodities Agreements entered into by the OpCo Borrower or any Restricted Subsidiary, in respect of any Special Purpose Financing or Financing Disposition, and (y) subject to the preceding clause (x), any such other agreements and undertakings shall not include any Guarantee of Indebtedness of a Special Purpose Subsidiary by the OpCo Borrower or a Restricted Subsidiary that is not a Special Purpose Subsidiary.

 

Special Purpose Subsidiary” means a Subsidiary of the OpCo Borrower that (a) is engaged solely in (x) the business of (i) acquiring, selling, collecting, financing or refinancing Receivables, accounts (as defined in the Uniform Commercial Code as in effect in any jurisdiction from time to time) and other accounts and receivables (including any thereof constituting or evidenced by chattel paper, instruments or general intangibles), all proceeds thereof and all rights (contractual and other), collateral and other assets relating thereto and/or (ii) acquiring, selling, leasing, financing or refinancing Vehicles and/or related rights (including under leases, manufacturer warranties, and buy-back programs, and insurance policies) and/or assets (including managing, exercising and disposing of any such rights and/or assets), all proceeds thereof and all rights (contractual and other), collateral and other assets relating thereto and (y) any business or activities incidental or related to such business and (b) is designated as a “Special Purpose Subsidiary” by the OpCo Borrower.

 

Step-Up” means any Indebtedness Step-Up or Non-Compliance Step-Up.

 

40

 

 

Subsidiary” means, as to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Equity Capital Stock or other equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person or (ii) one or more Subsidiaries of such Person.

 

Temporary Cash Investments” means any of the following: (i) any investment in (x) direct obligations of the United States of America, Canada, a member state of the European Union or any country in whose currency funds are being held pending their application in the making of an investment or capital expenditure by a member of the Restricted Group in that country or with such funds, or any agency or instrumentality of any thereof or obligations Guaranteed by the United States of America, Canada or a member state of the European Union or any country in whose currency funds are being held pending their application in the making of an investment or capital expenditure by a member of the Restricted Group in that country or with such funds, or any agency or instrumentality of any of the foregoing, or obligations guaranteed by any of the foregoing or (y) direct obligations of any foreign country recognized by the United States of America rated at least “A” by S&P or “A-1” by Moody’s (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody’s then exists, the equivalent of such rating by any nationally recognized rating organization), (ii) overnight bank deposits, and investments in time deposit accounts, certificates of deposit, bankers’ acceptances and money market deposits (or, with respect to foreign banks, similar instruments) maturing not more than one year after the date of acquisition thereof issued by (x) any bank or other institutional lender under a Credit Facility or any affiliate thereof or (y) a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital and surplus aggregating in excess of $250,000,000 (or the foreign currency equivalent thereof), (iii) repurchase obligations with a term of not more than 30 days for underlying securities or instruments of the types described in clause (i) or (ii) above entered into with a bank meeting the qualifications described in clause (ii) above, (iv) Investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a Person (other than that of the Company or any of its Subsidiaries), with a rating at the time as of which any Investment therein is made of “P-2” (or higher) according to Moody’s or “A-2” (or higher) according to S&P (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody’s then exists, the equivalent of such rating by any nationally recognized rating organization), (y) Investments in securities maturing not more than one year after the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A-2” by S&P or “P-2” by Moody’s (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody’s then exists, the equivalent of such rating by any nationally recognized rating organization), (vi) Indebtedness or Preferred Stock (other than of the Company or any of its Subsidiaries) having a rating of “A” or higher by S&P or “A2” or higher by Moody’s (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody’s then exists, the equivalent of such rating by any nationally recognized rating organization), (vii) investment funds investing 95% of their assets in securities of the type described in clauses (i) through (vi) above (which funds may also hold reasonable amounts of cash pending investment and/or distribution), (viii) any money market deposit accounts issued or offered by a domestic commercial bank or a commercial bank organized and located in a country recognized by the United States of America, in each case, having capital and surplus in excess of $250,000,000 (or the foreign currency equivalent thereof), or investments in money market funds subject to the risk limiting conditions of Rule 2a-7 (or any successor rule) of the SEC under the Investment Company Act, and (ix) similar investments approved by the Board of Directors in the ordinary course of business. For the avoidance of doubt, for purposes of this definition and the definitions of “Cash Equivalents” and “Investment Grade Rating”, rating identifiers, watches and outlooks will be disregarded in determining whether any obligations satisfy the rating requirement therein.

 

41

 

 

Term C Loan Collateral Accounts” means the cash collateral accounts or securities accounts established pursuant to, and subject to the terms of, the Exit Facilities or any Refinancing Indebtedness in respect thereof for the purpose of cash collateralizing the obligations in respect of letters of credit issued pursuant to the Exit Facilities or any Refinancing Indebtedness in respect thereof and designed as a “Term Letter of Credit” or “Term L/C” thereunder.

 

Trade Payables” means with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services.

 

Transaction Costs” mean fees, expenses and costs relating to the consummation of the Plan of Reorganization and funding the transactions contemplated by the Plan of Reorganization.

 

Transactions” means the consummation of the Plan of Reorganization, the Closing Date Refinancing, the Incurrence of the Closing Date ABS Facilities and the Exit Facilities, the issuance of the Series A Preferred Stock and the payment of the Transaction Costs.

 

Transfer” has the meaning set forth in the Purchase Agreement.

 

Transfer Agent” means the transfer agent and registrar of the Company with respect to the Series A Preferred Stock duly appointed from time to time.

 

Underfunding” means the excess of the present value of all accrued benefits under a Plan (based on those assumptions used to fund such Plan), determined as of the most recent annual valuation date, over the value of the assets of such Plan, determined as of such valuation date, allocable to such accrued benefits.

 

Unrestricted Cash” means as at any date of determination, the aggregate amount of cash, Cash Equivalents and Temporary Cash Investments included in the cash accounts listed on the consolidated balance sheet of the OpCo Borrower and its consolidated Subsidiaries as of the last day of the OpCo Borrower’s fiscal month ending immediately prior to such date of determination for which a consolidated balance sheet is available to the extent such cash is not classified as “restricted” for financial statement purposes (unless so classified solely (w) because of any provision under the Exit Facilities or any other Credit Facilities or (x) because they are subject to a Lien securing the Exit Facilities or any other Credit Facilities or (y) because they are (or will be) used to cash collateralize or otherwise support any funded letter of credit facility or (z) because they are to be used for specified purposes in connection with a Special Purpose Financing relating to, or other financing secured by, Customer Receivables); provided that (i) Unrestricted Cash shall not include any amounts on deposit in or credited to any Term C Loan Collateral Account and (ii) for purposes of any calculation of any financial leverage ratio made to determine whether any Corporate Indebtedness is permitted to be Incurred, “Unrestricted Cash” shall not include any proceeds of such Indebtedness borrowed at the time of determination of such ratio.

 

Unrestricted Subsidiary” means (i) any Subsidiary of the OpCo Borrower that at the time of determination is an Unrestricted Subsidiary, as designated by the Board of Directors of the OpCo Borrower in the manner provided below, and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the OpCo Borrower may designate any Subsidiary of the OpCo Borrower (including any newly acquired or newly formed Subsidiary of the OpCo Borrower) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, any member of the Restricted Group that is not a Subsidiary of the Subsidiary to be so designated; provided, that (A) the Subsidiary to be so designated has total consolidated assets (inclusive of assets of any Subsidiaries of such Subsidiary) of $1,000 or less or (B) if such Subsidiary has consolidated assets (inclusive of assets of any Subsidiaries of such Subsidiary) greater than $1,000, then such designation would be permitted under Section 8(b)(ix). The Board of Directors of the OpCo Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, that immediately after giving effect to such designation, (x) the OpCo Borrower shall be in compliance with the financial covenants under the Exit Facilities or any Refinancing Indebtedness in respect thereof or (y) such Subsidiary shall be a Special Purpose Subsidiary with no Indebtedness outstanding other than Indebtedness that is not recourse to any member of the Restricted Group that is not a Special Purpose Subsidiary (other than with respect to Special Purpose Financing Undertakings). Any such designation by the Board of Directors of the OpCo Borrower shall be evidenced to the Holders by promptly delivering to the Holders a copy of the resolution of the OpCo Borrower’s Board of Directors giving effect to such designation and a certificate signed by a Responsible Officer of the OpCo Borrower certifying that such designation complied with the foregoing provisions.

 

42

 

 

VAT” means (a) any tax imposed in compliance with (but subject to the derogations from) the council directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112) and Sixth Council directive of 17 May 1977 on the harmonization of the laws of member states relating to turnover taxes-common system of value added tax: uniform basis of assessment (EC Directive 77/388); and (b) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) or elsewhere.

 

VAT Receivables” means, with respect to any Person, the net position of VAT receivables (less VAT payables) such Person is entitled to credit or repayment from the relevant tax authority.

 

Vehicle Rental Concession” means any right, whether or not exclusive, to conduct a Vehicle rental business at a Public Facility, or to pick up or discharge persons or otherwise to possess or use all or part of a Public Facility in connection with such a business, and any related rights or interests.

 

Vehicle Rental Concession Rights” means all of the following: (a) any Vehicle Rental Concession, (b) any rights of the OpCo Borrower, any Subsidiary thereof or any Franchisee under or relating to (i) any law, regulation, license, permit, request for proposals, invitation to bid, lease, agreement or understanding with a Public Facility Operator in connection with which a Vehicle Rental Concession has been or may be granted to the OpCo Borrower, any Subsidiary or any Franchisee and (ii) any agreement with, or Investment or other interest or participation in, any Person, property or asset required (x) by any such law, ordinance, regulation, license, permit, request for proposals, invitation to bid, lease, agreement or understanding or (y) by any Public Facility Operator as a condition to obtaining or maintaining a Vehicle Rental Concession and (c) any liabilities or obligations relating to or arising in connection with any of the foregoing.

 

Vehicles” means vehicles owned or operated by, or leased or rented to or by, the OpCo Borrower or any of its Subsidiaries, including automobiles, trucks, tractors, trailers, vans, sport utility vehicles, buses, campers, motor homes, motorcycles and other motor vehicles.

 

Voluntary Prepayment Basket” means, in the case of any secured Indebtedness incurred in reliance on subclauses (B) or (C) of clause (i) of the definition of “Permitted Corporate Indebtedness”, all voluntary prepayments, redemptions or repurchases of any such Indebtedness, except to the extent funded with proceeds of long term Indebtedness (less any amount previously Incurred in reliance on the Voluntary Prepayment Basket pursuant to subclause (C) of clause (i) of the definition of “Permitted Corporate Indebtedness”).

 

Voting Stock” means, in relation to a Person, shares of Equity Capital Stock entitled to vote generally in the election of directors to the board of directors or equivalent governing body of such Person.

 

SECTION 4.           Dividends.

 

(a)            Dividends. Holders shall be entitled to receive dividends of the type and in the amount determined as set forth in this Section 4 (such dividends, “Dividends”).

 

43

 

 

(b)            Accrual of Dividends. Dividends on each share of Series A Preferred Stock shall accrue at a rate equal to the Dividend Rate on the then-applicable Liquidation Preference thereof and on any Accrued Dividends, on a daily basis from and including the Issuance Date of such share, whether or not declared and whether or not the Company has assets legally available to make payment thereof, as further specified below. Dividends on the Series A Preferred Stock shall accrue on the basis of a 365-day year based on actual days elapsed. The amount of Dividends payable with respect to any share of Series A Preferred Stock for any Dividend Payment Period shall equal the sum of the daily Dividend amounts accrued in accordance with the prior sentence of this Section 4(b) with respect to such share during such Dividend Payment Period.

 

(c)            Arrearages; Payment of Dividends.

  

(i)               Except as described in this Section 4(c), Dividends shall be payable in cash.

 

(ii)              Dividends shall be payable semi-annually in arrears on each Dividend Payment Date, commencing on the first Dividend Payment Date following the Issuance Date of such share, and shall be paid in cash if, as and when authorized by the Board, or any duly authorized committee thereof, and declared by the Company, to the extent not prohibited by Requirements of Law.

 

(iii)             If the Company fails to declare and pay pursuant to this Section 4(c) a full Dividend in cash on the Series A Preferred Stock on any Dividend Payment Date, then the amount of the unpaid portion of such Dividend shall automatically be added to the amount of Accrued Dividends on such share on the applicable Dividend Payment Date without any action on the part of the Company or any other Person (such increase, a “Dividend Accrual”). For the avoidance of doubt, failure to pay any Dividend in cash after the 42-month anniversary of the Closing Date shall constitute a “Non-Compliance Event” and shall be subject to the provisions of Section 11.

 

(d)           Record Date. The record date for payment of Dividends on any relevant Dividend Payment Date will be the close of business on the fifteenth (15th) day of the calendar month that contains the relevant Dividend Payment Date (each, a “Dividend Record Date”), whether or not such day is a Business Day.

 

SECTION 5.           Liquidation Rights.

 

(a)            Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Holders shall be entitled, out of assets legally available therefor, before any distribution or payment out of the assets of the Company may be made to or set aside for the holders of any Junior Stock, and subject to the rights of the holders of any Senior Stock or Parity Stock issued in accordance with this Certificate of Designation and the rights of the Company’s existing and future creditors, to receive in full a liquidating distribution in cash and in the amount per share of Series A Preferred Stock equal to the Redemption Price as of the date of such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. Holders shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company after receiving in full what is expressly provided for in this Section 5, and will have no right or claim to any of the Company’s remaining assets.

 

(b)            Partial Payment. If in connection with any distribution described in Section 5(a) above, the assets of the Company or proceeds therefrom are not sufficient to pay in full the aggregate liquidating distributions required to be paid pursuant to Section 5(a) to all Holders and the liquidating distributions payable to all holders of any Parity Stock issued in accordance with this Certificate of Designation, the amounts distributed to the Holders and to the holders of all such Parity Stock shall be paid pro rata in proportion to the respective aggregate liquidating distributions to which they would otherwise be entitled if all amounts payable with respect thereto were paid in full.

 

44

 

 

SECTION 6.          Redemption at the Option of the Company; Other Repurchases.

 

(a)            Optional Redemption. Subject to the provisions of this Section 6, the Company, at its option, may redeem for cash, in whole or in part, from time to time, the outstanding shares of Series A Preferred Stock (each, an “Optional Redemption”) at a price per share of Series A Preferred Stock (the “Redemption Price”) equal to the greater of (x) the sum of (A) the Liquidation Preference per share of Series A Preferred Stock to be redeemed plus (B) an amount equal to the Accrued Dividends with respect to such share plus (C) accrued and unpaid dividends since the most recent Dividend Payment Date with respect to such share as of the applicable Redemption Date and (y) the amount necessary, if any, to result in a MOIC equal to the product of 1.30 times the Liquidation Preference with respect to such share of Series A Preferred Stock. The Company shall not be required to redeem any shares of Series A Preferred Stock at any time.

 

(b)            Exercise of Optional Redemption. If the Company elects to effect an Optional Redemption, the Company shall send to the Holders a written notice in accordance with Section 16 (i) notifying the Holders of the election of the Company to redeem such shares of Series A Preferred Stock, the number of shares of Series A Preferred Stock to be redeemed from each Holder, and the Redemption Date, and (ii) stating the place or places at which the shares of Series A Preferred Stock called for redemption shall, upon presentation and surrender of the certificates evidencing such shares of Series A Preferred Stock, be redeemed (and other instructions a Holder must follow to receive payment), and the Redemption Price therefor (such notice, a “Notice of Optional Redemption”). The Redemption Date selected by the Company shall be no less than ten (10) Business Days and no more than thirty (30) Business Days after the date on which the Company provides the Notice of Optional Redemption to the Holders. The Notice of Optional Redemption shall state the Redemption Date selected by the Company.

 

(c)            Partial Redemption. In case of any redemption of a portion of the shares of Series A Preferred Stock at the time outstanding (a “Partial Redemption”), each Holder’s shares shall be redeemed by the Company at the Redemption Price, on a pro rata basis proportionate to the aggregate number of shares of Series A Preferred Stock held by such Holder as of the Redemption Date, with the shares to be redeemed rounded down to the nearest full share. Subject to the provisions hereof, the Company shall have full power and authority to prescribe the terms and conditions upon which shares of Series A Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, the Company shall issue, or shall cause to be issued, new certificates representing the unredeemed shares without charge to the Holder thereof. No Partial Redemption shall be consummated unless the aggregate Redemption Price of the shares to be redeemed pursuant to such Partial Redemption shall equal at least $250,000,000 (for the avoidance of doubt, if the aggregate Redemption Price of all shares of Series A Preferred Stock then outstanding is equal to or less than $250,000,000, the Company may redeem all, but not fewer than all, shares of Series A Preferred Stock then outstanding).

 

(d)            Effect of Redemption. If notice has been mailed in accordance with Section 6(b) above and if on or before the Redemption Date specified in such notice, all funds necessary for such redemption shall have been segregated and irrevocably set apart by the Company and deposited with the Paying Agent in trust for the pro rata benefit of the Holders of the shares of Series A Preferred Stock so called for redemption, so as to be, and to continue to be available therefor, then, on and after the Redemption Date, unless the Company defaults in the payment of the applicable Redemption Price, Dividends on the shares of the Series A Preferred Stock so called for redemption shall cease to accumulate and all rights of the Holders of such shares shall terminate except for the right to receive from the Company the Redemption Price, without interest; provided that if a Notice of Optional Redemption shall have been given and the funds necessary for redemption (including an amount in respect of all Dividends that will accrue to the Redemption Date) shall have been segregated and irrevocably set apart by the Company and deposited with the Paying Agent in trust for the pro rata benefit of the Holders of the shares called for redemption, Dividends shall cease to accumulate on the Redemption Date on the shares to be redeemed and, at the close of business on the day on which such funds are segregated and set apart, such shares of Series A Preferred Stock shall no longer be deemed to be outstanding and the Holders of the shares to be redeemed shall cease to be stockholders of the Company and shall be entitled only to receive the Redemption Price for such shares. Upon surrender, in accordance with said notice, of the certificates, if any, for any shares so redeemed (to the extent applicable, properly endorsed or assigned for transfer, if the Company shall so require and the notice shall so state), such shares shall be redeemed by the Company at the applicable Redemption Price.

 

45

 

 

(e)            Repurchases or Other Acquisitions. The Company and its Subsidiaries shall not redeem, repurchase or otherwise acquire any shares of Series A Preferred Stock other than through procedures open to all Holders on a pro rata basis in accordance with customary procedures to be agreed between the Company and the Preferred Majority Holders.

 

(f)            Status of Shares. Shares of Series A Preferred Stock redeemed, repurchased or otherwise acquired in accordance with this Section 6, shall return to the status of and constitute authorized but unissued shares of Preferred Stock, without classification as to series until such shares are once more classified as a particular series by the Board pursuant to the provisions of the Certificate.

 

SECTION 7.           Transfer of Preferred Stock.

 

(a)            Subject to compliance with applicable U.S. federal and state Requirements of Law governing the Transfer of securities, shares of the Series A Preferred Stock shall be transferable by the Holders to any person other than a Prohibited Transferee and the Company shall recognize and register any such Transfer on its books; provided that the aggregate amount of the Series A Preferred Stock held at any one time by Common Sponsor Affiliated Purchasers may not exceed 25% of the then outstanding shares of Series A Preferred Stock. The Company shall not recognize any Transfer to a Prohibited Transferee or that would result in Common Sponsor Affiliated Purchasers holding in excess of 25% of the then outstanding shares of Series A Preferred Stock or register any such Transfer on its books (which Transfer shall be void ab initio).

 

(b)            The Company shall use its commercially reasonable efforts to cooperate with the Holders of the Series A Preferred Stock in connection with any Transfer to be consummated in accordance with this Section 7, including providing reasonable and customary information (i) in connection with any such Holder’s marketing efforts or any such potential transferee’s due diligence (subject to customary confidentiality restrictions) or (ii) in order to comply with applicable U.S. federal and state Requirements of Law governing the Transfer of securities.

 

SECTION 8.           Voting; Protective Provisions; Limited Condition Transactions.

 

(a)            Voting. Except as expressly set forth herein or required by applicable law, the Series A Preferred Stock shall be non-voting. On any matter on which holders of Series A Preferred Stock are entitled to vote, the Holders shall vote separately as a single class with respect to the Series A Preferred Stock, in person or by proxy, at a meeting called for such purpose or by written consent without a meeting. The approval of any matter or action shall require the affirmative vote or consent of the Holders of a majority of the shares of Series A Preferred Stock outstanding at such time (the “Preferred Majority Holders”).

 

46

 

 

(b)          Protective Provisions. Notwithstanding anything to the contrary contained herein, the affirmative vote or consent of the Preferred Majority Holders will be necessary for effecting any of the following actions, whether or not such approval is required pursuant to the DGCL:

 

(i)               any amendment, alteration or repeal of any provision of the Certificate (including this Certificate of Designation) or Bylaws (by merger, consolidation, division or reorganization of the Company, or otherwise) in a manner that adversely affects the rights, preferences or privileges of the Series A Preferred Stock, unless such amendment, alteration or repeal is effectuated at the time of consummation of a transaction, the proceeds of which are to be applied substantially contemporaneously to the redemption in full in cash of the Series A Preferred Stock at the Redemption Price in accordance with the terms hereof such that all shares of Series A Preferred Stock shall be redeemed in connection therewith, and the effectiveness of such amendment, alteration or repeal occurs substantially contemporaneously with such redemption;

 

(ii)              any liquidation, dissolution or winding up of the Company or its business and affairs;

 

(iii)             any creation, authorization or issuance (by reclassification or otherwise) of additional shares of Series A Preferred Stock, any Parity Stock, any Junior Stock (other than Common Stock), or any Senior Stock or any securities or rights convertible or exchangeable into, or exercisable for the foregoing; provided the Company shall be permitted to issue such Parity Stock, Junior Stock and/or Senior Stock to the extent the proceeds thereof are to be applied substantially contemporaneously to the redemption in full in cash of the Series A Preferred Stock at the Redemption Price in accordance with the terms hereof and provided that all shares of Series A Preferred Stock shall be redeemed in connection therewith;

 

(iv)             any Asset Disposition by a member of the Restricted Group, unless:

 

(1)           such member of the Restricted Group receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the fair market value of the shares and assets subject to such Asset Disposition, as such fair market value (as of the date a legally binding commitment for such Asset Disposition was entered into) shall be determined (including as to the value of all non-cash consideration) in good faith by the Company (with respect to Asset Dispositions by the Company and its Subsidiaries (other than the OpCo Borrower and its Subsidiaries)) or the OpCo Borrower (with respect to Asset Dispositions by the OpCo Borrower and its Restricted Subsidiaries),

 

(2)            in the case of any Asset Disposition (or series of related Asset Dispositions) having a Fair Market Value (as of the date a legally binding commitment for such Asset Disposition was entered into) in excess of the greater of $65,000,000 and 10.0% of LTM Consolidated EBITDA, at least 75% of the consideration (excluding, in the case of each Asset Disposition (or series of related Asset Dispositions), any consideration by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, that are not Indebtedness) for such Asset Disposition, together with all other Asset Dispositions since the Closing Date (on a cumulative basis), received by such member of the Restricted Group is in the form of cash (determined in the manner set forth in Section 10(c) below), and

 

(3)           to the extent required by Section 10(a), an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied as provided in such Section;

 

47

 

 

(v)             any direct or indirect sale, lease, transfer or other disposition by a member of the Restricted Group of Core Intellectual Property, other than (i) any license, sublicense or other grant of rights in or to, or covenant not to sue with respect to, any Core Intellectual Property (x) in the ordinary course of business or (y) in connection with any franchise, joint venture or other similar arrangement or (ii) the abandonment, lapse or other disposition of any trademark, service mark or other intellectual property (x) in the ordinary course of business or (y) that are, in the good faith determination of the Company (with respect to Core Intellectual Property of the Company and its Subsidiaries (other than the OpCo Borrower and its Subsidiaries)) or the OpCo Borrower (with respect to Core Intellectual Property the OpCo Borrower and its Restricted Subsidiaries), no longer economically practicable to maintain or useful in the conduct of the business of the Company and its Subsidiaries taken as a whole;

 

(vi)             a member of the Restricted Group, directly or indirectly, entering into or conducting any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”) involving aggregate consideration in excess of $50,000,000, other than a Permitted Affiliate Transaction, unless (i) (A) the terms of such Affiliate Transaction are not materially less favorable to such member of the Restricted Group than those that could be obtained at the time in a transaction with a Person who is not such an Affiliate and (B) if such Affiliate Transaction involves aggregate consideration in excess of $50,000,000, the terms of such Affiliate Transaction have been approved by a majority of the Board of Directors. For purposes of this Section 8(b)(vi), an Affiliate Transaction shall be deemed to have satisfied the requirements of this Section if (x) such Affiliate Transaction is approved by a majority of the Disinterested Directors or (y) in the event there are no Disinterested Directors, a fairness opinion is provided by a nationally recognized appraisal or investment banking firm with respect to such Affiliate Transaction;

 

(vii)            any sale, conveyance or transfer of all or substantially all of the property and assets of the members of the Restricted Group, taken as a whole, or any merger, consolidation, statutory exchange or any other business combination transaction of the Company into or with any other Person (for the avoidance of doubt, other than any internal reorganization among the members of the Restricted Group, so long as the Company is the surviving entity in any merger, consolidation, statutory exchange or other business combination transaction involving the Company);

 

(viii)           any (A) Restricted Payment by a member of the Restricted Group, other than a Permitted Payment, or (B) payment by any Unrestricted Subsidiary of any amounts in respect of Junior Stock (including, for the avoidance of doubt, Common Stock), including any purchase thereof or other acquisition thereof for value;

 

(ix)             any Investment by a member of the Restricted Group, other than a Permitted Investment;

 

(x)              any Incurrence by a member of the Restricted Group of (A) Consolidated Vehicle Indebtedness, other than Permitted Consolidated Vehicle Indebtedness, or (B) Corporate Indebtedness, other than Permitted Corporate Indebtedness;

 

(xi)             any failure by the OpCo Borrower and its Restricted Subsidiaries to engage in business of the same general type as conducted by the OpCo Borrower and its Restricted Subsidiaries on the Closing Date, taken as a whole, or any failure by the Company to preserve, renew and keep in full force and effect its corporate existence;

 

48

 

 

(xii)            the Company or any Subsidiary of the Company (other than OpCo Borrower and its Subsidiaries) conducting, transacting or otherwise engaging, or committing to conduct, transact or otherwise engage, in any business or operations other than (i) the issuance of the Series A Preferred Stock contemplated by this Certificate of Designation or the provision of administrative, legal, accounting and management services to, or on behalf of, its Subsidiaries, (ii) the acquisition and ownership of the Equity Capital Stock of any of its Subsidiaries and the exercise of rights and performance of obligations in connection therewith, (iii) the entry into, and exercise of rights and performance of obligations in respect of (A) (x) in the case of OpCo Holdings, the Exit Facilities and any other guarantee of Indebtedness or other obligations of any of its Subsidiaries permitted hereunder; in each case as amended, supplemented, waived or otherwise modified from time to time, and any refinancings, refundings, renewals or extensions thereof, in each case to the extent permitted hereunder, and (y) any agreement to which it is a party on the Closing Date, to the extent disclosed in writing to ACM on or prior to the Closing Date, (B) contracts and agreements with officers, directors and employees of it or any Subsidiary thereof relating to their employment or directorships, (C) insurance policies and related contracts and agreements and (D) equity subscription agreements, registration rights agreements, voting and other stockholder agreements, engagement letters, underwriting agreements and other agreements in respect of its equity securities or any offering, issuance or sale thereof permitted by the terms of this Certificate of Designation, (iv) (x) the offering, issuance, sale and repurchase or redemption of its Equity Capital Stock permitted by the terms of this Certificate of Designation, and (y) dividends or distributions on its Equity Capital Stock permitted by the terms of this Certificate of Designation, (v) the filing of registration statements, and compliance with applicable reporting and other obligations, under federal, state or other securities laws, (vi) the listing of its equity securities and compliance with applicable reporting and other obligations in connection therewith, (vii) in the case of the Company, the retention of (and the entry into, and exercise of rights and performance of obligations in respect of, contracts and agreements with) transfer agents, private placement agents, underwriters, counsel, accountants and other advisors and consultants, (viii) the performance of obligations under and compliance with its certificate of incorporation and by-laws, or any applicable law, ordinance, regulation, rule, order, judgment, decree or permit, including as a result of or in connection with the activities of its Subsidiaries, (ix) the incurrence and payment of its operating and business expenses and any taxes for which it may be liable, (x) making loans to or other Investments in its Subsidiaries as and to the extent not prohibited by this Certificate of Designation, and (xi) other activities incidental or related to the foregoing; or

 

(xiii)           any agreement or commitment to do or take any action described in this Section 8(b).

 

For purposes of this Section 8(b), the filing in accordance with applicable law of a certificate of designations or any similar document setting forth or changing the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications or other terms of any class or series of stock of the Company shall be deemed an amendment to the Certificate.

 

49

 

 

If at any time any action or transaction meets the criteria of one or more than one of the categories of exceptions, thresholds or baskets set forth within a protective provision set forth in Section 8(b) or any definition used therein, the Company or the OpCo Borrower may divide, classify and/or designate such action or transaction (or any portion thereof), and later (on one or more occasions) may re-divide, re-classify and/or re-designate such action or transaction (or any portion thereof), as consummated in reliance on one or more of such exceptions, thresholds and baskets as within such protective provision or definition (but not, for the avoidance of doubt, as consummated in reliance on one or more exception, threshold or basket within any other protective provision or definition) as the Company or OpCo Borrower may determine in its sole discretion from time to time, including by re-dividing, re-classifying and/or re-designating any action or transaction originally consummated in reliance on one or more fixed exceptions, thresholds or baskets (“fixed baskets”.) as consummated in reliance on any available incurrence-based exception, threshold or basket (“incurrence-based baskets”) within the same protective provision (but not, for the avoidance of doubt, within any other protective provision) that is available at the time of such re-division, re-classification and/or re-designation (for the avoidance of doubt, which determination shall be made without duplication of such applicable action or transaction to be re-divided, re-classified and/or re-designated) and if any ratio or financial test set forth in any applicable incurrence-based basket would be satisfied at any time after consummation of such action or transaction, such re-division, re-classification and/or re-designation within such protective provision (but not, for the avoidance of doubt, within any other protective provision) shall be deemed to have automatically occurred if not elected by the Borrower (provided that all Indebtedness under the Exit Facilities (or any Refinancing Indebtedness in respect thereof) Incurred on or after the Closing Date shall be deemed to have been Incurred pursuant to clause (i) of the definition of “Permitted Corporate Indebtedness” and the OpCo Borrower shall not be permitted to reclassify all or any portion of Indebtedness Incurred pursuant to clause (i) of the definition of “Permitted Corporate Indebtedness”). Notwithstanding anything herein to the contrary, clause (i) of the definition of “Permitted Affiliate Transaction” shall not permit any Investments in Affiliates of the Plan Sponsors, other than the Company and its Subsidiaries, and the preceding clause (b)(viii) shall apply to any direct or indirect Restricted Payments or payments (as applicable).

 

If any fixed baskets are intended to be utilized together with any incurrence-based baskets in any action or transaction, (i) compliance with or satisfaction of any applicable financial ratios or tests for such action or transaction (or any portion thereof) to be consummated under any incurrence-based baskets shall first be calculated without giving effect to amounts being utilized pursuant to any fixed baskets or any substantially concurrent revolving credit loans incurrence, but giving full pro forma effect to all applicable and related transactions (including, subject to the foregoing with respect to fixed baskets, any incurrence and repayments of Indebtedness) and all other permitted pro forma adjustments, and (ii) thereafter, incurrence of the portion of such action or transaction to be consummated under any fixed baskets or revolving loan incurrence shall be calculated.

 

(c)           Voting. Each Holder of Series A Preferred Stock will have one vote per share on any matter on which Holders of Series A Preferred Stock are entitled to vote.

 

(d)           Limited Condition Transactions.

 

(i)             In connection with any action being taken in connection with a Limited Condition Transaction, for purposes of determining compliance with any provision of this Certificate of Designation which requires that no Non-Compliance Event (or, as applicable, no specified Non-Compliance Event) has occurred, is continuing or would result from any such action, as applicable, such condition shall, at the option of the Company, be deemed satisfied, so long as no Non-Compliance Event exists on the date the definitive agreements for such Limited Condition Transaction are entered into or irrevocable notice of redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given. For the avoidance of doubt, if the Company has exercised its option under the first sentence of this Section 8(d), and any Non-Compliance Event (or, as applicable, any specified Non-Compliance Event) occurs following the date the definitive agreements for the applicable Limited Condition Transaction were entered into or irrevocable notice of redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given and prior to the consummation of such Limited Condition Transaction, any such Non-Compliance Event (or specified Non-Compliance Event, as applicable) shall be deemed to not have occurred or be continuing for purposes of determining whether any action being taken in connection with such Limited Condition Transaction is permitted hereunder.

 

50

 

 

(ii)            In connection with any action being taken in connection with a Limited Condition Transaction, for purposes of:

 

(1)           determining compliance with any provision of this Certificate of Designation which requires the calculation of the Consolidated First Lien Leverage Ratio, the Consolidated Total Secured Leverage Ratio or the Consolidated Total Net Corporate Leverage Ratio; or

 

(2)            testing baskets set forth in this Certificate of Designation;

 

in each case, at the option of the Company (the Company’s election to exercise such option in connection with any Limited Condition Transaction, an “LCA Election”), the date of determination of whether any such action is permitted hereunder, shall be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into or irrevocable notice of redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given, as applicable (the “LCA Test Date”), and if, after giving pro forma effect to the Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any Incurrence or Discharge of Indebtedness and the use of proceeds of such Incurrence) as if they had occurred at the beginning of the most recent four consecutive fiscal quarters ending prior to the LCA Test Date for which consolidated financial statements of the Company are available, the Company could have taken such action on the relevant LCA Test Date in compliance with such ratio or basket, such ratio or basket shall be deemed to have been complied with. For the avoidance of doubt, if the Company has made an LCA Election and any of the ratios, baskets or amounts for which compliance was determined or tested as of the LCA Test Date are exceeded as a result of fluctuations in any such ratio, basket or amount, including due to fluctuations in Consolidated EBITDA of the OpCo Borrower or the Person subject to such Limited Condition Transaction or any applicable currency exchange rate, at or prior to the consummation of the relevant transaction or action, such baskets, ratios or amounts will not be deemed to have been exceeded as a result of such fluctuations. If the Company has made an LCA Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or basket availability with respect to the Incurrence of Indebtedness, or the making of Restricted Payments, Asset Dispositions, (without limiting the provisions hereof restricting any such issuance) mergers, the conveyance, lease or other transfer of all or substantially all of the assets of the OpCo Borrower or the designation of an Unrestricted Subsidiary on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or basket shall be calculated on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any Incurrence or Discharge of Indebtedness and the use of proceeds of such Incurrence) have been consummated; provided that, with respect to the making of Restricted Payments on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio shall also be calculated on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any Incurrence or Discharge of Indebtedness and the use of proceeds of such Incurrence) have not been consummated. Any LCA Election with respect to a transaction involving the OpCo Borrower or its Subsidiaries may be made by the OpCo Borrower in lieu of the Company.

 

51

 

 

Any reference in this Certificate of Designation to a merger, consolidation, amalgamation, conveyance, disposal, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, corporation or partnership, or an allocation of assets to a series of or one or more limited liability companies, partnerships or corporations, or the unwinding of such a division or allocation, as if it were a merger, consolidation, amalgamation conveyance, disposal, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company, corporation or partnership shall be deemed to constitute the formation of a separate Person, and any such division shall constitute a separate Person hereunder (and each division of any limited liability company, corporation or partnership that is a subsidiary, joint venture or any other like term shall also constitute such a Person or entity).

 

SECTION 9.           Board Designation Rights.

 

(a)            Without limitation of the rights of the Holders under Section 11 hereof, for so long as ACM and its Affiliates own at least 50% of the shares of Series A Preferred Stock then outstanding, ACM shall have the right to appoint (i) one observer (the “ACM Observer”) to the Board (but, for the avoidance of doubt, not to any committee thereof), subject to the execution by the ACM Observer of a customary confidentiality agreement with the Company, and (ii) one director to the Board and any committee thereof to which the Board has delegated substantially all of its authority (the “ACM Director”). The rights of ACM and its Affiliates pursuant to this Section 9(a) may not be Transferred without the consent of the Company. The ACM Director and the ACM Observer shall each serve in such capacity until such individual’s earlier death, disability, resignation or removal by ACM and shall be subject to all obligations, policies and codes of conduct applicable to the directors of the Company.

 

(b)            The ACM Observer (i) shall be entitled to attend (in person or, at his/her election, telephonically) all in-person meetings and to listen to the entirety of all telephonic meetings of the Board in a nonvoting observer capacity and (ii) shall receive all information, notices, reports, written consents, meeting minutes and other materials (collectively, the “Board Information”) provided to the members of the Board in respect of such meeting (the “Board Members”), in each case, substantially simultaneously with, and in the same manner and to the same extent as, such Board Information is given to such Board Members. Notwithstanding the foregoing, the Company may withhold any information and exclude the ACM Observer from any meeting or portion thereof, including closed or executive sessions, if the Board determines in good faith, based on the advice of counsel, that such exclusion is reasonably necessary to preserve the attorney-client privilege or under circumstances that present a conflict of interest with respect to the applicable matter under consideration. The Company shall provide the ACM Observer with reimbursement for reasonable and documented out-of-pocket costs and expenses incurred by the ACM Observer in connection with the exercise of its rights and roles hereunder.

 

(c)            The ACM Director and the ACM Observer may each be removed at any time without cause by ACM, and any vacancy with respect to the ACM Director or ACM Observer may be filled by ACM. In the event that ACM and its Affiliates no longer own at least 50% of the shares of Series A Preferred Stock then outstanding, the term of office of each of the ACM Director and the ACM Observer shall immediately terminate, and the Board may remove the ACM Director from the Board.

 

SECTION 10.         Net Available Cash from Asset Sales.

 

(a)           Subject to paragraph (b) below, in the event that on or after the Closing Date, a member of the Restricted Group shall make an Asset Disposition or a Recovery Event shall occur, an amount equal to 100% of the Net Available Cash from such Asset Disposition or Recovery Event shall be applied as follows:

 

(i)              first, to the extent such member of the Restricted Group elects, to reinvest or commit to reinvest in the business of the OpCo Borrower and its Restricted Subsidiaries (including any investment in Additional Assets) within 18 months from the later of the date of such Asset Disposition or Recovery Event and the date of receipt of such Net Available Cash (or if later, 6 months following the date on which a reinvestment commitment or letter of intent is entered into (so long as such reinvestment commitment or letter of intent was entered into during such 18-month period)); and

 

52

 

 

(ii)            second, to the extent of the balance of such Net Available Cash or equivalent amount after application in accordance with clause (i) above, within the longest of (1) 10 Business Days of determination of such balance, (2) the time required under any Indebtedness prepaid, repaid or purchased pursuant to this clause (ii), and (3) the time required by applicable law, toward (x) the prepayment, repayment or purchase of Indebtedness for borrowed money or cash collateralization of letters of credit, bankers’ acceptances or other similar instruments (in each case, other than Indebtedness owed to a member of the Restricted Group) or (y) to the extent permitted by the terms of the Exit Facilities or any Refinancing Indebtedness in respect thereof, to the redemption of the Series A Preferred Stock in accordance with the terms of this Certificate of Designation.

 

provided that (1) the member of the Restricted Group that received Net Available Cash from such Asset Disposition may elect to invest in Additional Assets prior to receiving the Net Available Cash attributable to any given Asset Disposition (provided that, such investment shall be made no earlier than the earliest of notice of the relevant Asset Disposition to the Holders, execution of a definitive agreement for the relevant Asset Disposition, and consummation of the relevant Asset Disposition) and deem the amount so invested to be applied pursuant to and in accordance with Section 10(a)(i) above with respect to such Asset Disposition and (2) the foregoing percentage in this Section 10(a) shall be reduced to (x) 50% if, on a pro forma basis after giving effect to such Asset Disposition and the use of proceeds therefrom, the Consolidated Total Net Corporate Leverage Ratio would be equal to or less than 3.50 to 1.00, but greater than 2.50 to 1.00 and (y) 0% if, on a pro forma basis after giving effect to such Asset Disposition and the use of proceeds therefrom, the Consolidated Total Net Corporate Leverage Ratio would be equal to or less than 2.50 to 1.00 (any Net Available Cash in respect of Asset Dispositions not required to be applied in accordance herewith as a result of the application of one or more of the stepdowns in this clause (2) of this proviso shall collectively constitute “Total Leverage Excess Proceeds”).

 

(b)           Notwithstanding the foregoing provisions of this Section 10, the Company and its Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section 10 (i) except to the extent that the aggregate Net Available Cash from all Asset Dispositions and Recovery Events not applied in accordance with this Section 10 (excluding all Total Leverage Excess Proceeds) exceeds (x) the greater of $75,000,000 and 12.5% of LTM Consolidated EBITDA, individually, and (y) the greater of $150,000,000 and 25.0% of LTM Consolidated EBITDA, in the aggregate on an annual basis and (ii) to the extent that (x) any Net Available Cash from such Asset Disposition or Recovery Event is subject to any restriction on the transfer of all or any portion thereof directly or indirectly to the Company, including by reason of applicable law or agreement (other than any agreement entered into primarily for the purpose of imposing such a restriction) or (y) in the good faith determination of the Company (with respect to itself and its Subsidiaries (other than the OpCo Borrower and its Subsidiaries)) or the OpCo Borrower (with respect to itself and its Restricted Subsidiaries) the transfer of all or any portion of any Net Available Cash from such Asset Disposition directly or indirectly to the Company could reasonably be expected to give rise to or result in (A) any violation of applicable law, (B) any liability (criminal, civil, administrative or other) for any of the officers, directors or shareholders of a member of the Restricted Group, (C) any violation of the provisions of any joint venture or other material agreement governing or binding upon any member of the Restricted Group, (D) any material risk of any such violation or liability referred to in any of the preceding clauses (A), (B) and (C), (E) any material adverse tax consequence for a member of the Restricted Group, or (F) any cost, expense, liability or obligation (including any tax) other than routine and immaterial out-of-pocket expenses.

 

53

 

 

(c)            For the purposes of Section 8(b)(iv), the following are deemed to be cash: (1) Cash Equivalents and Temporary Cash Investments, (2) the assumption of Indebtedness of the Company (other than Disqualified Stock), any Subsidiary of the Company (other than the OpCo Borrower and its Subsidiaries), the OpCo Borrower or any Restricted Subsidiary and the release of such Person from all liability on payment of the principal amount of such Indebtedness in connection with such Asset Disposition, (3) securities received by a member of the Restricted Group from the transferee that are converted by such Person into cash within 180 days, (4) consideration consisting of Indebtedness of a member of the Restricted Group, (5) Additional Assets, (6) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Disposition, to the extent that each member of the Restricted Group is released from any Guarantee of payment of the principal amount of such Indebtedness in connection with such Asset Disposition and (7) any Designated Noncash Consideration received by the OpCo Borrower or any of its Restricted Subsidiaries in an Asset Disposition having an aggregate Fair Market Value, taken together with all other Designated Noncash Consideration received pursuant to this clause, not to exceed when received an aggregate amount equal to the greater of $160,000,000 and 25.0% of LTM Consolidated EBITDA (with the Fair Market Value of each item of Designated Noncash Consideration being measured as of the date a legally binding commitment for such Asset Disposition (or, if later, for the payment of such item) was entered into and without giving effect to subsequent changes in value).

 

SECTION 11.        Non-Compliance Events.

 

(a)           Following the occurrence and during the continuance of any Non-Compliance Event:

 

(i)             The Liquidation Preference and the Accrued Dividends shall each accrete by an additional 0.50% each month during the continuance of such Non-Compliance Event (on each one-month month anniversary of the occurrence thereof), which accreted amounts shall thereafter constitute “Accrued Dividends” for purposes hereof (a “Non-Compliance Step-Up”);

 

(ii)            Commencing on the 30th consecutive day of a continuing Non-Compliance Event, upon the written request of the Preferred Majority Holders, the size of the Board shall be automatically increased by 50% (rounded upward, if necessary, due to an odd number of initial directors), and the newly created vacancies shall be filled by the Board as promptly as practicable thereafter from nominees proposed by the Preferred Majority Holders (which shall propose two nominees for each such vacancy);

 

(iii)           Commencing on the later to occur of the (x) 60th consecutive day of a continuing Non-Compliance Event and (y) the end of the Relief Period, upon the written request of the Preferred Majority Holders, the Company will initiate a process to consummate (each, a “Forced Exit Transaction” ):

 

(1)            an underwritten public offering of shares of Common Stock, or other capital raise by the Company or its Subsidiaries, in each case the net cash proceeds of which shall be used to redeem the Series A Preferred Stock at the Redemption Price in accordance with the terms hereof; or

 

(2)            a sale as a result of which the Company shall have sufficient cash on hand to redeem the Series A Preferred Stock at the Redemption Price in accordance with the terms hereof (and the net cash proceeds of which shall be so applied);

 

provided that the Company shall not be permitted to consummate any Forced Exit Transaction without the consent of the Preferred Majority Holders to the extent that the net cash proceeds thereof would be insufficient to redeem the Series A Preferred Stock in full in cash at the Redemption Price in accordance with the terms hereof;

 

54

 

 

(iv)          Commencing on the 270th consecutive day of a continuing Non- Compliance Event, upon the written request of the Preferred Majority Holders:

 

(1)            The size of the Board shall be expanded to such a size that the directors to be appointed pursuant to this clause 11(a)(iv)(1) (together with the directors, if any, appointed pursuant to clause (ii) above) shall constitute a majority of the Board by one director, and the newly created vacancies shall be filled by the Board as promptly as practicable thereafter from nominees proposed by the Preferred Majority Holders (which shall propose two nominees for each such vacancy) (the “Majority Board Proposal Right”);

 

(2)            The Board, as reconstituted pursuant to clause (1) above, shall, to the extent the Relief Period is no longer in effect, pursue (or continue to pursue, as applicable) a Forced Exit Transaction and shall take all actions consistent with their fiduciary duties necessary to consummate such a transaction (provided that the Company shall not be permitted to consummate any Forced Exit Transaction without the consent of the Preferred Majority Holders to the extent that the net cash proceeds thereof would be insufficient to redeem the Series A Preferred Stock in full in cash at the Redemption Price in accordance with the terms hereof); and

 

(3)            The shares of Series A Preferred Stock shall be entitled to vote with the shares of Common Stock on an “as-if” converted basis, and shall be treated by the Certificate and Bylaws as holding 51% of the then-outstanding voting Capital Stock of the Company; provided that, to the extent such voting of shares of Preferred Stock is not permitted by applicable rules of the stock exchange on which the Common Stock of the Company is listed, the Company and the Preferred Majority Holders shall cooperate reasonably and in good faith to implement an alternate arrangement that most closely approximates the foregoing (collectively, the “Majority Voting Right”).

 

To the extent that more than one Non-Compliance Event shall be continuing at any time, the above described periods shall commence on the date of the first Non-Compliance Event and shall continue until such time as all Non-Compliance Events have been cured or waived.

 

In addition to the foregoing, each Holder shall have all rights which such Holder has under applicable law or in equity. Any Holder having any rights under the Certificate (including this Certificate of Designation) or under law or in equity shall be entitled to seek enforcement of such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Certificate (including this Certificate of Designation) and to exercise all other rights granted by applicable law or in equity.

 

(b)           From and after the 87-month anniversary of the Closing Date, to the extent any shares of Series A Preferred Stock remain outstanding and irrespective of whether a Non-Compliance Event shall have occurred and be continuing, (i) Holders shall be entitled to the Non-Compliance Step-Up and (ii) upon the written request of the Preferred Majority Holders, the Preferred Majority Holders shall be entitled to exercise the Majority Board Proposal Right and the Majority Voting Right, and the Company shall initiate a process to promptly consummate a Forced Exit Transaction.

 

55

 

 

(c)            Each director appointed to the Board by the Preferred Majority Holders in accordance with this Section 11 shall serve in such capacity until such individual’s earlier death, disability, resignation or removal by the Preferred Majority Holders, shall be subject to all obligations, policies and codes of conduct applicable to the directors of the Company. Any director appointed to the Board by the Preferred Majority Holders in accordance with this Section 11 may be removed at any time without cause by the Preferred Majority Holders, and any vacancy with respect to any directors so appointed to the Board may be filled by a vote of the Preferred Majority Holders. Following the redemption in full in cash of the Series A Preferred Stock, the term of office of the directors appointed to the Board in accordance with this Section 11 shall terminate and the number of directors on the Board shall automatically decrease by the number of directors whose term of office has so terminated.

 

SECTION 12.         Information Rights and Inspection Rights.

 

(a)           The Company shall provide to the Holders:

 

(i)             not later than the fifth Business Day after the 105th day following the end of each fiscal year of the Company (or such longer period as may be permitted by the SEC for the filing of annual reports on Form 10-K) ending on or after December 31, 2021, a copy of the consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of operations, changes in common stockholders’ equity and cash flows for such year, setting forth in each case, in unaudited pro forma comparative form the figures for and as of the end of the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by Ernst & Young LLP or other independent certified public accountants of nationally recognized standing (it being agreed that the furnishing of the Company’s annual report on Form 10-K for such year, as filed with the SEC, will satisfy the Company’s obligation under this Section 12(a)(i) with respect to such year including with respect to the requirement that such financial statements be reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, so long as the report included in such Form 10-K does not contain any “going concern” or like qualification or exception) (except to the extent such qualification results solely from (i) the impending maturity of any Indebtedness or (ii) any potential or actual inability to satisfy any financial maintenance covenant under the Exit Facilities or any Refinancing Indebtedness in respect thereof (it being understood, for the avoidance of doubt, that any “emphasis of matter” or explanatory paragraph shall not constitute a breach of this Section));

 

(ii)            not later than the fifth Business Day after the 50th day following the end of each of the first three quarterly periods of each fiscal year of the Company (or such longer period as may be permitted by the SEC for the filing of quarterly reports on Form 10-Q), the unaudited consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of operations and cash flows of the Company and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case, in comparative form the figures for and as of the corresponding periods of the previous year, certified by a Responsible Officer of the Company as fairly presenting in all material respects the financial condition of the Company and its Subsidiaries in conformity with GAAP and prepared in reasonable detail in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods that began on or after the Closing Date (except as disclosed therein, and except for the absence of certain notes) (it being agreed that the furnishing of the Company’s quarterly report on Form 10-Q for such quarter, as filed with the SEC, will satisfy the Company’s obligations under this Section 12(a)(ii) with respect to such quarter);

 

(iii)           within five Business Days after the same are filed, copies of all financial statements and periodic reports which the Company may file with the SEC or any successor or analogous Governmental Authority;

 

56

 

 

(iv)           within five Business Days after the same are filed, copies of all registration statements and any amendments and exhibits thereto, which the Company may file with the SEC or any successor or analogous Governmental Authority;

 

(v)            a copy of any material notice provided to the lenders or any other creditors under the Exit Facilities or any Refinancing Indebtedness in respect thereof at the same time as such lenders or other creditors receive such notice;

 

(vi)           subject to a customary confidentiality agreement, promptly upon request by ACM, any information regarding the Company provided to the Board;

 

(vii)          as soon as possible after a Responsible Officer of the Company knows thereof, the occurrence of any Non-Compliance Event;

 

(viii)         as soon as possible after a Responsible Officer of the Company knows thereof, any (i) default or event of default under any Contractual Obligation (including with respect to lease obligations in connection with Special Purpose Financings) of a member of the Restricted Group, other than as previously disclosed in writing to the Holders, or (ii) litigation, investigation or proceeding which may exist at any time, in the case of either clause (i) or (ii) that would reasonably be expected to have a Material Adverse Effect;

 

(ix)            the following events, as soon as possible and in any event within 30 days after a Responsible Officer of the Company knows thereof: (i) the occurrence or expected occurrence of any Reportable Event (or similar event) with respect to any Single Employer Plan (or Foreign Plan), a failure to make any required contribution to a Single Employer Plan, Multiemployer Plan or Foreign Plan, the creation of any Lien on the property of a member of the Restricted Group in favor of the PBGC, a Plan or a Foreign Plan or any withdrawal from, or the full or partial termination, Reorganization or Insolvency of, any Multiemployer Plan or Foreign Plan; (ii) the institution of proceedings or the taking of any other formal action by the PBGC or a member of the Restricted Group or any Commonly Controlled Entity or any Multiemployer Plan which would reasonably be expected to result in the withdrawal from, or the termination, Reorganization or Insolvency of, any Single Employer Plan, Multiemployer Plan or Foreign Plan; provided, however, that no such notice will be required under clause (i) or (ii) above unless the event giving rise to such notice, when aggregated with all other such events under clause (i) or (ii) above, would be reasonably expected to result in a Material Adverse Effect; or (iii) the first occurrence after the Closing Date of an Underfunding under a Single Employer Plan or Foreign Plan that exceeds 10% of the value of the assets of such Single Employer Plan or Foreign Plan, in each case, determined as of the most recent annual valuation date of such Single Employer Plan or Foreign Plan on the basis of the actuarial assumptions used to determine the funding requirements of such Single Employer Plan or Foreign Plan as of such date;

 

(x)             as soon as possible after a Responsible Officer of the Company knows thereof, (i) any release or discharge by the OpCo Borrower or any of its Restricted Subsidiaries of any Materials of Environmental Concern required to be reported under applicable Environmental Laws to any Governmental Authority, unless the OpCo Borrower reasonably determines that the total Environmental Costs arising out of such release or discharge would not reasonably be expected to have a Material Adverse Effect; (ii) any condition, circumstance, occurrence or event not previously disclosed in writing to the Holders that would reasonably be expected to result in liability or expense under applicable Environmental Laws, unless the OpCo Borrower reasonably determines that the total Environmental Costs arising out of such condition, circumstance, occurrence or event would not reasonably be expected to have a Material Adverse Effect, or would not reasonably be expected to result in the imposition of any lien or other material restriction on the title, ownership or transferability of any facilities and properties owned, leased or operated by the OpCo Borrower or any of its Restricted Subsidiaries that would reasonably be expected to result in a Material Adverse Effect; and (iii) any proposed action to be taken by the OpCo Borrower or any of its Restricted Subsidiaries that would reasonably be expected to subject the OpCo Borrower or any of its Restricted Subsidiaries to any material additional or different requirements or liabilities under Environmental Laws, unless the OpCo Borrower reasonably determines that the total Environmental Costs arising out of such proposed action would not reasonably be expected to have a Material Adverse Effect; and

 

57

 

 

(xi)            subject to clause (b) below, such additional financial and other information regarding the Company as ACM may from time to time reasonably request.

 

(b)           The Company shall permit ACM and its Affiliates (and their respective representatives) to visit and inspect any of its properties and examine and, to the extent reasonable, make abstracts from any of its books and records (other than (i) all data and information used to calculate any “measurement month average” or (ii) any “market value average” or any similar amount, however designated, under or in connection with any financing of Vehicles and/or other property or assets) and to discuss the business, operations, properties and financial and other condition of the Restricted Group with officers of such Persons and with the Company’s independent certified public accountants, in each case at any reasonable time, upon reasonable notice, and as often as may reasonably be desired; provided that representatives of the Company may be present during any such visits, discussions and inspections.

 

(c)            Notwithstanding anything to the contrary in this Section 12, no member of the Restricted Group will be required by the terms of this Section 12 to disclose or permit the inspection or discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Holders or ACM (or their respective representatives) is prohibited by Requirement of Law or any binding agreement or (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product.

 

(d)            Documents required to be delivered pursuant to this Section 12 may at the Company’s option be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto on the Company’s website on the Internet at the website address specified by written notice to the Holders from time to time; or (ii) on which such documents are posted on the Company’s behalf on an Internet or intranet website to which each Holder has access (whether a commercial or third-party website).

 

SECTION 13.         Transfer Agent, Conversion Agent, Registrar and Paying Agent. The Transfer Agent and the Paying Agent shall initially be Computershare Trust Company, N.A. The Company may, in its sole discretion, appoint any other Person to serve as Transfer Agent or Paying Agent for the Series A Preferred Stock and thereafter may remove or replace such other Person at any time. Upon any such appointment or removal, the Company shall send notice thereof to the Holders.

 

SECTION 14.         Replacement Certificates. If physical certificates evidencing the Series A Preferred Stock are issued, the Company shall replace any mutilated certificate at the Holder’s expense upon surrender of that certificate to the Transfer Agent. The Company shall replace certificates that become destroyed, stolen or lost at the Holder’s expense upon delivery to the Company and the Transfer Agent of evidence satisfactory to the Company and the Transfer Agent that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by the Transfer Agent and the Company.

 

58

 

 

SECTION 15.         Taxes.

 

(a)            Withholding. The Company and its Paying Agent shall be entitled to deduct and withhold taxes on all payments and distributions (or deemed distributions) on the Series A Preferred Stock to the extent required by applicable law. To the extent that any amounts are so deducted or withheld, such deducted or withheld amounts shall be treated for all purposes of this Certificate of Designation as having been paid to the Person in respect of which such deduction or withholding was made. In the event the Company previously remitted any amounts to a Governmental Authority on account of taxes required to be deducted or withheld in respect of any payment or distribution (or deemed distribution) with respect to a share of Series A Preferred Stock, the Company shall be entitled (i) to offset any such amounts against any amounts otherwise payable in respect of such share of Series A Preferred Stock or (ii) to require the Person in respect of whom such deduction or withholding was made to reimburse the Company for such amounts (and such Person shall promptly so reimburse the Company upon demand).

 

(b)            Transfer Taxes. The Company shall pay any and all documentary, stamp and similar issue or transfer tax (“Transfer Tax”) due on the issue of shares of Series A Preferred Stock or certificates representing such shares or securities. However, the Company shall not be required to pay any Transfer Tax that may be payable in respect of the issue or delivery (or any transfer involved in the issue or delivery) of Series A Preferred Stock to a beneficial owner other than the beneficial owner of the Series A Preferred Stock immediately prior to the event pursuant to which such issue or delivery is required, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such Transfer Tax or has established to the satisfaction of the Company that such Transfer Tax has been paid or is not payable.

 

SECTION 16.         Notices. All notices referred to herein shall be in writing and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail (unless first class mail shall be specifically permitted for such notice under the terms of this Certificate of Designation) with postage prepaid, addressed: (i) if to the Company, (a) if sent by mail, to its office at Hertz Global Holdings, Inc., 8501 Williams Road, Estero, Florida 33928, Attention: General Counsel, or (b) if sent by electronic mail, to such electronic mail address as the Company shall have designated in writing to the Holders, (ii) if to any Holder, to such Holder at the address and electronic mail address of such Holder as listed in the stock record books of the Company (which, for all purposes hereunder, may include the records of the Transfer Agent) or (iii) to such other address as the Company or any such Holder, as the case may be, shall have designated by notice similarly given.

 

SECTION 17.         Facts Ascertainable. When the terms of this Certificate of Designation refer to a specific agreement or other document to determine the meaning or operation of a provision hereof, the Company shall maintain a copy of such agreement or document at the principal executive offices of the Company and a copy thereof shall be provided free of charge to any Holder who makes a request therefor. The Company shall also maintain a written record of the Issuance Date, the number of shares of Series A Preferred Stock issued to a Holder and the date of each such issuance, the Liquidation Preference and Accrued Dividends per share of Series A Preferred Stock and the Dividend Rate in effect from time to time and shall furnish such written record free of charge to any Holder who makes a request therefor.

 

SECTION 18.         Amendment; Waiver. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the Holders of Series A Preferred Stock granted hereunder may be amended or waived as to all shares of Series A Preferred Stock (and the Holders thereof) upon the written consent of the Preferred Majority Holders; provided that (i) any amendment, modification or waiver that, by its terms, would adversely and uniquely affect a Holder (in its capacity as such) relative to other Holders without similarly affecting all of the Holders shall require the prior written consent of such adversely and uniquely affected Holder, and (ii) other than ministerial changes, without the written consent of each Holder adversely affected thereby, no amendment, modification or waiver (whether by merger, consolidation, division or reorganization of the Company) shall:

 

(a)reduce the Dividend Rate, extend any Dividend Payment Date (except in accordance with the proviso to such definition as in effect on the Closing Date) or amend Section 4 (including any other defined term used in such section, to the extent relating thereto);

 

59

 

 

(b)reduce the Liquidation Preference or the Accrued Dividend or amend Section 5 (including any other defined term used in such section, to the extent relating thereto); provided that the Preferred Majority Holders shall be permitted to amend, modify or waive Non-Compliance Events and the effects thereof without the written consent of each adversely affected Holder;

 

(c)reduce the Redemption Price (other than as a result of any amendment, modification or waiver of the effect of a Non-Compliance Event in accordance with clause (b) above) or amend Section 6 (including any other defined term used in such section, to the extent relating thereto), other than (x) the penultimate and final sentences of Section 6(b) and (y) the final sentence of Section 6(c) (each of which may be amended, modified or waived with the consent of the Preferred Majority Holders and will not require the consent of each adversely affected Holder);

 

(d)amend Section 7(a) (including any defined term used in such section to the extent relating thereto); provided that the definition of “Prohibited Transferee” may be amended, modified or waived with the consent of the Preferred Majority Holders and will not require the consent of each adversely affected Holder;

 

(e)amend Section 2 (including any defined term used in such section to the extent relating thereto); provided that the Company shall be permitted to issue Parity Stock, Senior Stock and Junior Stock in accordance with Section 8 without the consent of each adversely affected Holder; or

 

(f)amend the foregoing clauses (a) through (e) or this clause (f).

 

SECTION 19.         Severability. If any term of the Series A Preferred Stock set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms set forth herein which can be given effect without the invalid, unlawful or unenforceable term will, nevertheless, remain in full force and effect, and no term herein set forth will be deemed dependent upon any other such term unless so expressed herein.

 

SECTION 20.         Interpretation. When a reference is made in this Certificate of Designation to an Article, a Section, Exhibit or Schedule, such reference shall be to an Article of, a Section of, or an Exhibit or Schedule to this Certificate of Designation unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Certificate of Designation, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Certificate of Designation shall refer to this Certificate of Designation as a whole and not to any particular provision of this Certificate of Designation unless the context requires otherwise. The terms “or,” “any” and “either” are not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” All terms defined in this Certificate of Designation shall have the defined meanings when used in any document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Certificate of Designation are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means, unless otherwise specified, such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Unless otherwise specifically indicated, all references to “dollars” or “$” shall refer to the lawful money of the United States. When calculating the period of time between which, within which or following which any act is to be done or step taken pursuant to this Certificate of Designation, the date that is the reference date in calculating such period shall be excluded (unless otherwise required by law or specified herein, if the last day of such period is not a Business Day, the period in question shall end on the next succeeding Business Day). For purposes of determining the Consolidated First Lien Leverage Ratio, the Consolidated Total Secured Leverage Ratio or the Consolidated Total Net Corporate Leverage Ratio, amounts denominated in a currency other than Dollars will be converted to Dollars for the purposes of such calculation at the exchange rate as of the date of determination, and will, in the case of Indebtedness, be the weighted average exchange rates used for determining Consolidated EBITDA for the relevant period; provided that if the OpCo Borrower or any of its Restricted Subsidiaries has entered into any currency swaps in respect of any borrowings, the Dollar amount of such borrowings shall be determined by first taking into account the effects of that currency swap. If (a) any of the baskets set forth in Section 8(b) or any definition used therein are exceeded solely as a result of fluctuations to LTM Consolidated EBITDA for the most recently completed fiscal quarter after the last time such baskets were calculated for any purpose hereunder, such baskets will not be deemed to have been exceeded solely as a result of such fluctuations, or (b) any baskets are exceeded, any representation or warranty would be untrue or inaccurate, any undertaking would be breached, or any event that would constitute a Non-Compliance Event, in each case, solely as a result of fluctuations in applicable currency exchange rates, any such basket, representation or warranty, undertaking or event shall not be deemed to be exceeded, untrue, inaccurate, breached, exceeded or so constituted, as applicable, solely as a result of such fluctuations in currency exchange rates.

 

60

 

 

SECTION 21.         Expenses; Indemnity.

 

(a)            For so long as the Series A Preferred Stock remains outstanding, the Company shall reimburse the Holders for each of their documented reasonable out-of-pocket costs, fees and expenses from time to time in responding to any request for approval under the Certificate (including this Certificate of Designation), enforcing their rights under the Certificate (including this Certificate of Designation), and/or amending the Certificate (including this Certificate of Designation); provided, that, the Company shall not be obligated to reimburse the expenses of more than one single counsel for all Holders taken as a whole (such counsel to be selected by the Preferred Majority Holders in their sole discretion) and to the extent reasonably necessary, regulatory counsel and a single local counsel in each relevant jurisdiction.

 

(b)            The Company shall indemnify and hold harmless the Holders, each of their respective Affiliates and controlling persons and each of their respective directors, officers, employees, partners, agents, advisors and other representatives (each, an “Indemnified Person”) from and against any and all losses, claims, damages and liabilities to which any such Indemnified Person may become subject arising out of or in connection with any claim, litigation, investigation or proceeding relating to the Certificate (including this Certificate of Designation) (a “Proceeding”), regardless of whether any Indemnified Person is a party thereto or whether such Proceeding is brought by the Company, any of its Affiliates or any third party, and to reimburse each Indemnified Person within thirty (30) days following written demand therefor (together with reasonably detailed backup documentation supporting such reimbursement request) for any reasonable and documented legal or other out-of-pocket expenses incurred in connection with investigating or defending any Proceeding; provided, that the foregoing indemnity will not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or related expenses to the extent they arise from the willful misconduct, bad faith or gross negligence of, or material breach of the Certificate (including this Certificate of Designation) or the Purchase Agreement by, such Indemnified Person, in each case as determined by a final non-appealable judgment of a court of competent jurisdiction.

 

[Signature Page Follows]

 

61

 

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation this        30th         day of         June       2021.

 

By: /s/ M. David Galainena  
Name: M. David Galainena  
Title: Executive Vice President, General Counsel and Secretary  

 

[Signature Page to Certificate of Designations]

 

 

 

 

Exhibit 10.1

 

Execution Version

 

 

 

WARRANT AGREEMENT

 

BETWEEN

 

HERTZ GLOBAL HOLDINGS, INC.

 

AND

 

COMPUTERSHARE INC. AND COMPUTERSHARE TRUST COMPANY, N.A.,

 

COLLECTIVELY AS WARRANT AGENT

 

JUNE 30, 2021

 

 

 

 

 

 

TABLE OF CONTENTS
   
SECTION 1. Appointment of Warrant Agent 1
SECTION 2. Issuances; Exercise Price 1
SECTION 3. Form of Warrants 2
SECTION 4. Execution of Global Warrant Certificates 2
SECTION 5. Registration and Countersignature 3
SECTION 6. Registration of Transfers and Exchanges 3
SECTION 7. Duration and Exercise of Warrants 7
SECTION 8. Cancellation of Warrants 10
SECTION 9. Mutilated or Missing Global Warrant Certificates 10
SECTION 10. Reservation of Warrant Shares 10
SECTION 11. Stock Exchange Listings 10
SECTION 12. Adjustments and Other Rights 11
SECTION 13. No Fractional Shares 21
SECTION 14. Redemption 21
SECTION 15. Notices to Warrantholders 22
SECTION 16. Merger, Consolidation or Change of Name of Warrant Agent 22
SECTION 17. Warrant Agent 23
SECTION 18. Change of Warrant Agent 26
SECTION 19. Warrantholder Not Deemed a Stockholder 27
SECTION 20. Notices to Company and Warrant Agent 27
SECTION 21. Withholding and Reporting Requirements 28
SECTION 22. Exercise of Warrants and Beneficial Ownership Limitations 28
SECTION 23. Supplements and Amendments 29
SECTION 24. Related Party Transactions 29
SECTION 25. Successors 29
SECTION 26. Termination 29
SECTION 27. Governing Law Venue and Jurisdiction; Trial By Jury 30
SECTION 28. Benefits of this Agreement 30
SECTION 29. Counterparts 30
SECTION 30. Headings 30
SECTION 31. Severability 30
SECTION 32. Meaning of Terms Used in Agreement 30
   
SCHEDULES AND EXHIBITS  
   
Exhibit A                       Form of Global Warrant Certificate  
Exhibit B-1                    Form of Election to Exercise Book-Entry Warrants  
Exhibit B-2                    Form of Election to Exercise Direct Registration Warrants  
Exhibit C                       Form of Assignment  

 

 

 

 

WARRANT AGREEMENT

 

This WARRANT AGREEMENT (this “Agreement”), dated as of June 30, 2021 by and between HERTZ GLOBAL HOLDINGS, INC., a Delaware corporation (the “Company”) and COMPUTERSHARE INC., a Delaware corporation, and its wholly-owned subsidiary, COMPUTERSHARE TRUST COMPANY, N.A., a federally chartered trust company, collectively as Warrant Agent (the “Warrant Agent”) (each a “Party” and collectively, the “Parties”).

 

Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings assigned to them in the Plan (as defined below).

 

PRELIMINARY STATEMENTS

 

WHEREAS, on May 22, 2020, the Company, The Hertz Corporation and certain of their direct and indirect subsidiaries in the U.S. and Canada (collectively the “Debtors”) commenced voluntary cases under chapter 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), which cases are being jointly administered before the Bankruptcy Court under the caption In re The Hertz Corporation, et al., Case No. 20-11218 (MFW) (the “Chapter 11 Cases”);

 

WHEREAS, pursuant to the First Modified Third Amended Joint Chapter 11 Plan of Reorganization of the Debtors filed with the Bankruptcy Court on May 14, 2021, [D.I. 4754], (together with all exhibits, appendices, and schedules thereto, and as may be amended, modified, or supplemented from time to time, the “Plan”), the Company will issue or cause to be issued, on or as soon as reasonably practicable after the Effective Date, warrants (the “Warrants”) entitling holders thereof to purchase initially an aggregate of up to 89,049,029 shares of common stock, par value $0.01 per share (the “Common Stock”) of the Company, on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, the Warrants are being issued pursuant to, and on the terms and subject to the conditions set forth in, the Plan in an offering in reliance on the exemption afforded by section 1145 of the Bankruptcy Code from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and of any applicable state securities or “blue sky” laws; and

 

WHEREAS, the Warrant Agent, at the request of the Company, has agreed to act as the agent of the Company in connection with the issuance, registration, transfer, exchange and exercise of the Warrants.

 

NOW, THEREFORE, in consideration of the premises and mutual agreements herein set forth, the parties hereto agree as follows:

 

SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the instructions hereinafter set forth in this Agreement (and no implied terms); and the Warrant Agent hereby accepts such appointment, on the terms and subject to the conditions hereinafter set forth.

 

SECTION 2. Issuances; Exercise Price. On the terms and subject to the conditions of this Agreement, in accordance with the terms of the Plan, on or as soon as reasonably practicable after the Effective Date, the Company will issue the Warrants in the amounts and to the recipients specified in the Plan. On such date, the Company will deliver, or cause to be delivered, to the Depository (as defined below), one or more Global Warrant Certificates (as defined below) evidencing a portion of the Warrants. The remainder of the Warrants shall be issued by book-entry registration on the books of the Warrant Agent (“Book-Entry Warrants”) and shall be evidenced by statements issued by the Warrant Agent from time to time to the registered holder of Book-Entry Warrants reflecting such book-entry position (the “Warrant Statement”). Each Warrant evidenced thereby entitles the holder, upon proper exercise and payment of the applicable Exercise Price (as defined herein), to receive from the Company, as adjusted as provided herein, one fully-paid, non-assessable share of Common Stock (the “Warrant Number”) at a price equal to $13.80 per share (as the same may be hereafter adjusted pursuant to Section 12, the “Exercise Price”). The shares of Common Stock or (as provided pursuant to Section 12 hereof) securities, Cash or other property deliverable upon proper exercise of the Warrants are referred to herein as the “Warrant Shares.” The maximum number of shares of Common Stock issuable pursuant to the Warrants shall initially be 89,049,029, as such number is adjusted from time to time pursuant to this Agreement.

 

1

 

SECTION 3. Form of Warrants. Subject to Section 6 of this Agreement, the Warrants shall be issued (1) via book-entry registration on the books and records of the Warrant Agent and evidenced by Warrant Statements, in customary form and substance and/or (2) in the form of one or more global certificates (the “Global Warrant Certificates”), the forms of election to exercise and of assignment to be printed on the reverse thereof, in substantially the form set forth in Exhibit A attached hereto. The Warrant Statements and Global Warrant Certificates may bear such appropriate insertions, omissions, legends, substitutions and other variations as are required or permitted by this Agreement, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any law or with any rules made pursuant thereto or with any rules of any securities exchange or as may, consistently herewith, be determined by (i) in the case of Global Warrant Certificates, the Appropriate Officers (as defined herein) executing such Global Warrant Certificates, as evidenced by their execution of the Global Warrant Certificates, or (ii) in the case of a Warrant Statement, any Appropriate Officer (as defined herein), and all of which shall be acceptable to the Warrant Agent.

 

The Global Warrant Certificates shall be deposited on or after the Effective Date or a date that is as soon as reasonably practicable after the Effective Date with, or with the Warrant Agent as custodian for, The Depository Trust Company (the “Depository”) and registered in the name of Cede & Co., or such other entity designated by the Depository, as the Depository’s nominee. Each Global Warrant Certificate shall represent such number of the outstanding Warrants as specified therein, and each shall provide that it shall represent the aggregate amount of outstanding Warrants from time to time endorsed thereon and that the aggregate amount of outstanding Warrants represented thereby may from time to time be reduced or increased, as appropriate, in accordance with the terms of this Agreement.

 

SECTION 4. Execution of Global Warrant Certificates. Global Warrant Certificates shall be signed on behalf of the Company by its Chief Executive Officer, its President, its General Counsel, a Vice President, its Secretary, an Assistant Secretary or any other authorized person appointed by the board of directors of the Company from time to time (each, an “Appropriate Officer”). Each such signature upon the Global Warrant Certificates may be in the form of a facsimile or electronic signature of any such Appropriate Officer and may be imprinted or otherwise reproduced on the Global Warrant Certificates and for that purpose the Company may adopt and use the facsimile or electronic signature of any Appropriate Officer.

 

If any Appropriate Officer who shall have signed any of the Global Warrant Certificates shall cease to be an Appropriate Officer before the Global Warrant Certificates so signed shall have been countersigned by the Warrant Agent or disposed of by the Company, such Global Warrant Certificates nevertheless may be countersigned and delivered or disposed of as though such Appropriate Officer had not ceased to be an Appropriate Officer of the Company, and any Global Warrant Certificate may be signed on behalf of the Company by any Person who, at the actual date of the execution of such Global Warrant Certificate, shall be an Appropriate Officer, although at the date of the execution of this Agreement such Person was not an Appropriate Officer.

 

2

 

Global Warrant Certificates shall be dated the date of countersignature by the Warrant Agent and shall represent one or more whole Warrants.

 

SECTION 5. Registration and Countersignature. Upon written order of the Company, the Warrant Agent shall (i) register in the Warrant Register (as defined below) the Book-Entry Warrants as well as any Global Warrant Certificates and exchanges and transfers of outstanding Warrants in accordance with the procedures set forth in this Agreement and (ii) upon receipt of the Global Warrant Certificates duly executed on behalf of the Company, countersign by either manual or facsimile signature one or more Global Warrant Certificates evidencing Warrants and shall deliver such Global Warrant Certificates to or upon the written order of the Company. Such written order of the Company shall specifically state the number of Warrants that are to be issued as Book-Entry Warrants and the number of Warrants that are to be issued as a Global Warrant Certificate. A Global Warrant Certificate shall be, and shall remain, subject to the provisions of this Agreement until such time as all of the Warrants evidenced thereby shall have been duly exercised or shall have expired or been canceled in accordance with the terms hereof. Each Person in whose name any Warrant is registered (each such registered holder, a “Warrantholder”) shall be bound by all of the terms and provisions of this Agreement (a copy of which is available on request to the Secretary of the Company) as fully and effectively as if such Warrantholder had signed the same.

 

No Global Warrant Certificate shall be valid for any purpose, and no Warrant evidenced thereby shall be exercisable, until such Global Warrant Certificate has been countersigned by the manual or facsimile signature of the Warrant Agent. Such signature by the Warrant Agent upon any Global Warrant Certificate executed by the Company shall be conclusive evidence that such Global Warrant Certificate so countersigned has been duly issued hereunder.

 

The Warrant Agent shall keep, at an office designated for such purpose, books (the “Warrant Register”) in which, subject to such reasonable regulations as it may prescribe, it shall register the Book-Entry Warrants as well as any Global Warrant Certificates and exchanges and transfers of outstanding Warrants in accordance with the procedures set forth in Section 6 of this Agreement, all in form satisfactory to the Company and the Warrant Agent. No service charge shall be made for any exchange or registration of transfer of the Warrants, but the Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed on the Warrantholder in connection with any such exchange or registration of transfer. The Warrant Agent shall have no obligation to effect an exchange or register a transfer unless and until any payments required by the immediately preceding sentence have been made.

 

Prior to due presentment for registration of transfer or exchange of any Warrant in accordance with the procedures set forth in this Agreement, the Warrant Agent and the Company may deem and treat the Warrantholder as the absolute owner of such Warrant (notwithstanding any notation of ownership or other writing made in a Global Warrant Certificate by anyone), for the purpose of any exercise thereof, any distribution to the Warrantholder thereof and for all other purposes, and neither the Warrant Agent nor the Company shall be affected by notice to the contrary.

 

SECTION 6. Registration of Transfers and Exchanges.

 

(a)            Transfer and Exchange of Global Warrant Certificates or Beneficial Interests Therein. The transfer and exchange of Global Warrant Certificates or beneficial interests therein shall be effected through the Depository, in accordance with this Agreement and the procedures of the Depository therefor.

 

(b)            Exchange of a Beneficial Interest in a Global Warrant Certificate for a Book-Entry Warrant.

 

3

 

(i)            Any Warrantholder of a beneficial interest in a Global Warrant Certificate may, upon request, exchange such beneficial interest for a Book-Entry Warrant. Upon receipt by the Warrant Agent from the Depository or its nominee of written instructions or such other form of instructions as is customary for the Depository on behalf of any Person having a beneficial interest in a Global Warrant Certificate, the Warrant Agent shall cause, in accordance with the standing instructions and procedures existing between the Depository and Warrant Agent, the number of Warrants represented by the Global Warrant Certificate to be reduced by the number of Warrants to be represented by the Book-Entry Warrants to be issued in exchange for the beneficial interest of such Person in the Global Warrant Certificate and, following such reduction, the Warrant Agent shall register in the name of the Warrantholder a Book-Entry Warrant and deliver to said Warrantholder a Warrant Statement.

 

(ii)            Book-Entry Warrants issued in exchange for a beneficial interest in a Global Warrant Certificate pursuant to this Section 6(b) shall be registered in such names as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Warrant Agent. The Warrant Agent shall deliver such Warrant Statements to the Persons in whose names such Warrants are so registered.

 

(c)            Transfer and Exchange of Book-Entry Warrants. Book-Entry Warrants surrendered for exchange or for registration of transfer pursuant to clause (i) of this Section 6(c) or Section 6(i)(v), shall be cancelled by the Warrant Agent. Such cancelled Book-Entry Warrants shall then be disposed of by or at the direction of the Company in accordance with applicable law. When Book-Entry Warrants are presented to or deposited with the Warrant Agent with a written request:

 

(i)             to register the transfer of the Book-Entry Warrants; or

 

(ii)            to exchange such Book-Entry Warrants for an equal number of Book-Entry Warrants of other authorized denominations;

 

then in each case the Warrant Agent shall register the transfer or make the exchange as requested if its requirements for such transactions are met; provided, however, that the Warrant Agent has received a written instruction of transfer in a form satisfactory to the Warrant Agent, duly executed by the Warrantholder thereof or by his attorney, duly authorized in writing.

 

(d)            Restrictions on Exchange or Transfer of a Book-Entry Warrant for a Beneficial Interest in a Global Warrant Certificate. A Book-Entry Warrant may not be exchanged for a beneficial interest in a Global Warrant Certificate except upon satisfaction of the requirements set forth below. Upon receipt by the Warrant Agent of appropriate instruments of transfer with respect to a Book-Entry Warrant, in a form satisfactory to the Warrant Agent, together with written instructions directing the Warrant Agent to make, or to direct the Depository to make, an endorsement on the Global Warrant Certificate to reflect an increase in the number of Warrants represented by the Global Warrant Certificate equal to the number of Warrants represented by such Book-Entry Warrant (such instruments of transfer and instructions to be duly executed by the holder thereof or the duly appointed legal representative thereof or by his attorney, duly authorized in writing, such signatures to be guaranteed by an eligible guarantor institution to the extent required by the Warrant Agent or the Depository), then the Warrant Agent shall cancel such Book-Entry Warrant on the Warrant Register and cause, or direct the Depository to cause, in accordance with the standing instructions and procedures existing between the Depository and the Warrant Agent, the number of Warrants represented by the Global Warrant Certificate to be increased accordingly. If no Global Warrant Certificates are then outstanding, the Company shall issue and the Warrant Agent shall countersign a new Global Warrant Certificate representing the appropriate number of Warrants.

 

4

 

(e)            Restrictions on Exchange or Transfer of Global Warrant Certificates. Notwithstanding any other provisions of this Agreement (other than the provisions set forth in Section 6(f)), unless and until it is exchanged in whole for a Book-Entry Warrant, a Global Warrant Certificate may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.

 

(f)            Book-Entry Warrants. If at any time:

 

(i)            the Depository for the Global Warrant Certificates notifies the Company that the Depository is unwilling or unable to continue as Depository for the Global Warrant Certificates and a successor Depository for the Global Warrant Certificates is not appointed by the Company within ninety (90) days after delivery of such notice; or

 

(ii)            the Company, in its sole discretion, notifies the Warrant Agent in writing that all Warrants shall be exclusively in the form of Book-Entry Warrants;

 

then the Warrant Agent, upon written instructions signed by an Appropriate Officer of the Company and all other necessary information, shall register Book-Entry Warrants, in an aggregate number equal to the number of Warrants represented by the Global Warrant Certificates, in exchange for such Global Warrant Certificates, in such names and in such amounts as directed by the Depository or, in the absence of instructions from the Depository, the Company.

 

(g)            Restrictions on Transfers of Warrants.

 

No Warrants shall be sold, exchanged or otherwise transferred in violation of the Securities Act or applicable state securities laws. Each Warrantholder, by its acceptance of any Warrant under this Agreement, acknowledges and agrees that the Warrants (including any Warrant Shares issued upon exercise thereof) were issued pursuant to an exemption from the registration requirement of Section 5 of the Securities Act provided by Section 1145 of the Bankruptcy Code, and to the extent that a Warrantholder is an “underwriter” as defined in Section 1145(b)(1) of the Bankruptcy Code, such Warrantholder may not be able to sell or transfer any Warrant Shares in the absence of an effective registration statement under the Securities Act or an exemption from registration thereunder.

 

(h)            Cancellation of Global Warrant Certificate. At such time as all beneficial interests in Global Warrant Certificates have either been exchanged for Book-Entry Warrants, redeemed, repurchased or cancelled, all Global Warrant Certificates shall be returned to, or retained and cancelled by, the Warrant Agent, upon written instructions from the Company satisfactory to the Warrant Agent.

 

(i)            Obligations with Respect to Transfers and Exchanges of Warrants.

 

(i)            To permit registrations of transfers and exchanges, the Company shall execute Global Warrant Certificates, if applicable, and the Warrant Agent is hereby authorized, in accordance with the provisions of Section 5 and this Section 6, to countersign such Global Warrant Certificates, if applicable, or register Book-Entry Warrants, if applicable, as required pursuant to the provisions of this Section 6 and for the purpose of any distribution of new Global Warrant Certificates contemplated by Section 9 or additional Global Warrant Certificates contemplated by Section 12.

 

(ii)            All Book-Entry Warrants and Global Warrant Certificates issued upon any registration of transfer or exchange of Book-Entry Warrants or Global Warrant Certificates shall be the valid obligations of the Company, entitled to the same benefits under this Agreement as the Book-Entry Warrants or Global Warrant Certificates surrendered upon such registration of transfer or exchange.

 

5

 

(iii)            No service charge shall be made to a Warrantholder for any registration, transfer or exchange but the Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed on the Warrantholder in connection with any such exchange or registration of transfer. Neither the Company nor the Warrant Agent shall be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance of Warrants or any certificates for Warrant Shares in a name other than that of the Warrantholder of the surrendered Warrants, and the Company shall not be required to issue or deliver such Warrants or the certificates representing the Warrant Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Warrant Agent shall have no duty to deliver such Warrants or the certificates representing such Warrant Shares unless and until it is satisfied that all such taxes and charges have been paid.

 

(iv)            So long as the Depository, or its nominee, is the registered owner of a Global Warrant Certificate, the Depository or such nominee, as the case may be, will be considered the sole owner or Warrantholder of the Warrants represented by such Global Warrant Certificate for all purposes under this Agreement. Except as provided in Sections 6(b) and (f) upon the exchange of a beneficial interest in a Global Warrant Certificate for Book-Entry Warrants, owners of beneficial interests in a Global Warrant Certificate will not be entitled to have any Warrants registered in their names, and will under no circumstances be entitled to receive physical delivery of any such Warrants and will not be considered the owners or Warrantholders thereof under the Warrants or this Agreement. Neither the Company nor the Warrant Agent, in its capacity as registrar for such Warrants, will have any responsibility or liability for any aspect of the records relating to beneficial interests in a Global Warrant Certificate or for maintaining, supervising or reviewing any records relating to such beneficial interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair the operations of customary practices of the Depository governing the exercise of the rights of a holder of a beneficial interest in a Global Warrant Certificate.

 

(v)            Subject to Sections 6(b), (c) and (d), and this Section 6(i), the Warrant Agent shall, upon receipt of all information required to be delivered hereunder and any evidence of authority that may be reasonably required by the Warrant Agent, from time to time register the transfer of any outstanding Warrants in the Warrant Register, upon surrender of Global Warrant Certificates, if applicable, representing such Warrants at the Warrant Agent Office (as defined below), duly endorsed, and accompanied by a completed form of assignment substantially in the form of Exhibit C hereto (or with respect to a Book-Entry Warrant, only such completed form of assignment substantially in the form of Exhibit C hereto), duly signed by the Warrantholder thereof or by the duly appointed legal representative thereof or by a duly authorized attorney, such signature to be guaranteed by a participant in the Securities Transfer Agent Medallion Program, the Stock Exchanges Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program. Upon any such registration of transfer, a new Global Warrant Certificate or a Warrant Statement, as the case may be, shall be issued to the transferee.

 

6

 

SECTION 7. Duration and Exercise of Warrants.

 

(a)            Subject to the terms of this Agreement, each Warrant shall be exercisable, in whole or in part, at any time and from time to time beginning after the Effective Date and ending at 5:00 p.m., New York City time, on June 30, 2051 or, if such date is not a Business Day, the next subsequent Business Day (such date, the “Expiration Date”). The Company shall promptly provide the Warrant Agent written notice of the Expiration Date. After 5:00 p.m. New York City time on the Expiration Date, the Warrants will become void and of no value, and may not be exercised.

 

(b)            Subject to the provisions of this Agreement, the Warrantholder may exercise the warrants as follows:

 

(i)            registered holders of Book-Entry Warrants must provide written notice of such election (“Warrant Exercise Notice”) to exercise the Warrant to the Company and the Warrant Agent at the addresses set forth in Section 20 no later than 5:00 p.m., New York City time, on the Expiration Date, which Warrant Exercise Notice shall be substantially in the form set forth in Exhibit B-1 hereto, properly completed and executed by the registered holder of the Book-Entry Warrant and paying (x) the applicable Exercise Price multiplied by the number of Warrant Shares in respect of which any Warrants are being exercised on the date the notice is provide to the Warrant Agent or (y) in the case of a Cashless Exercise, paying the required consideration in the manner set forth in Section 7(d), in each case, together with any applicable taxes and governmental charges;

 

(ii)            or, with respect to Warrants held through the book-entry facilities of the Depository, (x) a Warrant Exercise Notice to exercise the Warrant must be sent to the Company and the Warrant Agent at the addresses set forth in Section 20 no later than 5:00 p.m., New York City time, on the Expiration Date, which Warrant Exercise Notice shall be substantially in the form set forth in Exhibit B-2 hereto, properly completed and executed by the Warrantholder; provided that such written notice may only be submitted with respect to Warrants held through the book-entry facilities of the Depository, by or through Persons that are direct participants in the Depository; (y) such Warrants shall be delivered no later than 5:00 p.m., New York City time, on the Settlement Date, to the Warrant Agent by book-entry transfer through the facilities of the Depository, if such Warrants are represented by a Global Warrant Certificate; and (z) a payment must be made, of (A) the applicable Exercise Price multiplied by the number of Warrant Shares in respect of which any Warrants are being exercised or (B) in the case of a Cashless Exercise (as defined below), the required consideration in the manner set forth in Section 7(d), in each case, together with any applicable taxes and governmental charges. The date that is three (3) Business Days after a Warrant Exercise Notice is delivered is referred to for all purposes under this Agreement as the “Settlement Date.”

 

To the extent a Warrant Exercise Notice (as defined below) is delivered in respect of a Warrant no later than 5:00 p.m., New York City time, on the Expiration Date, but the deliveries and payments specified in clause (ii) and (iii) above are effected thereafter but no later than 5:00 p.m., New York City time, on the Business Day immediately preceding the Settlement Date, the Warrants shall nonetheless be deemed exercised prior to the Expiration Date for the purposes of this Agreement.

 

(c)            The aggregate Exercise Price shall be payable in lawful money of the United States of America either by certified or official bank or bank cashier’s check payable to the order of the Company.

 

(d)            In lieu of paying the aggregate Exercise Price as set forth in Section 7(c), provided the Common Stock is listed or admitted for trading on a national securities exchange or an over-the-counter market or comparable system, subject to the provisions of this Agreement, each Warrant shall entitle the Warrantholder, at the election of such Warrantholder, to exercise the Warrant by authorizing the Company to withhold from issuance a number of Warrant Shares issuable upon exercise of all Warrants being exercised by such Warrantholder at such time which, when multiplied by the Current Market Price of the Warrant Shares, is equal to the aggregate Exercise Price, and such withheld Warrant Shares shall no longer be issuable under such Warrants (a “Cashless Exercise”). The formula for determining the number of Warrant Shares to be issued in a Cashless Exercise is as follows:

 

7

 

X =  (A-B) x C   
       A   

 

where:

 

X = the number of Warrant Shares issuable upon exercise pursuant to this subsection (d).

 

A = the Current Market Price of a Warrant Share on the Business Day immediately preceding the date on which the Warrantholder delivers the Warrant Exercise Notice pursuant to subsection (e) below.

 

B = the Exercise Price.

 

C = the number of Warrant Shares as to which a Warrant is then being exercised including the withheld Warrant Shares.

 

If the foregoing calculation results in a negative number, then no Warrant Shares shall be issuable via a Cashless Exercise. The number of Warrant Shares to be issued on such exercise will be determined by the Company (with written notice thereof to the Warrant Agent) using the formula set forth in this Section 7(d). The Warrant Agent shall have no duty or obligation to investigate or confirm whether the Company’s determination of the number of Warrant Shares to be issued on such exercise, pursuant to this Section 7(d), is accurate or correct.

 

Notwithstanding the foregoing, no Cashless Exercise shall be permitted if, as the result of any adjustment made pursuant to Section 12, at the time of such Cashless Exercise, Warrant Shares include a Cash component and the Company would be required to pay Cash to a Warrantholder upon an exercise of Warrants.

 

(e)            Any exercise of a Warrant pursuant to the terms of this Agreement shall be irrevocable and shall constitute a binding agreement between the Warrantholder and the Company, enforceable in accordance with its terms.

 

(f)            The Warrant Agent shall:

 

(i)            examine all Warrant Exercise Notices and all other documents delivered to it by or on behalf of the Warrantholders as contemplated hereunder to ascertain whether or not, on their face, such Warrant Exercise Notices and any such other documents have been executed and completed in accordance with their terms and the terms hereof;

 

(ii)            where a Warrant Exercise Notice or other document appears on its face to have been improperly completed or executed or some other irregularity in connection with the exercise of the Warrants exists, the Warrant Agent shall endeavor to inform the appropriate parties (including the Person submitting such instrument) of the need for fulfillment of all requirements, specifying those requirements which appear to be unfulfilled;

 

(iii)            inform the Company of and cooperate with and assist the Company in resolving any discrepancies between Warrant Exercise Notices received and delivery of Warrants to the Warrant Agent’s account;

 

(iv)            advise the Company no later than three (3) Business Days after receipt of a Warrant Exercise Notice, of (i) the receipt of such Warrant Exercise Notice and the number of Warrants exercised in accordance with the terms and conditions of this Agreement, (ii) the instructions with respect to delivery of the shares of Common Stock of the Company deliverable upon such exercise, subject to timely receipt from the Depository of the necessary information, and (iii) such other information as the Company shall reasonably require; and

 

8

 

 

(v)           subject to Common Stock being made available to the Warrant Agent by or on behalf of the Company for delivery to the Depository, liaise with the Depository and endeavor to effect such delivery to the relevant accounts at the Depository in accordance with its requirements.

 

(g)          All questions as to the validity, form and sufficiency (including time of receipt) of a Warrant Exercise Notice will be determined by the Company in its sole discretion, which determination shall be final and binding. The Warrant Agent shall incur no liability for or in respect of such determination by the Company. The Company reserves the right to reject any and all Warrant Exercise Notices not in proper form or for which any corresponding agreement by the Company to exchange would, in the opinion of the Company, be unlawful. Such determination by the Company shall be final and binding on the Warrantholders, absent manifest error. Moreover, the Company reserves the absolute right to waive any of the conditions to the exercise of Warrants or defects in Warrant Exercise Notices with regard to any particular exercise of Warrants. Neither the Company nor the Warrant Agent shall be under any duty to give notice to the Warrantholders of the Warrants of any irregularities in any exercise of Warrants, nor shall it incur any liability for the failure to give such notice.

 

(h)          As soon as practicable after the exercise of any Warrant as set forth in subsection (e), the Company shall issue, or otherwise deliver, or cause to be issued or delivered, in authorized denominations to or upon the order of the Warrantholder of the Warrants, either:

 

(i)            if such Warrantholder holds the Warrants being exercised through the Depository’s book-entry transfer facilities, by same-day or next-day credit to the Depository for the account of such Warrantholder or for the account of a participant in the Depository the number of Warrant Shares to which such Warrantholder is entitled, in each case registered in such name and delivered to such account as directed in the Warrant Exercise Notice by such Warrantholder or by the direct participant in the Depository through which such Warrantholder is acting, or

 

(ii)            if such Warrantholder holds the Warrants being exercised in the form of Book-Entry Warrants, a book-entry interest in the Warrant Shares registered on the books of the Company’s transfer agent or, at the Company’s option, by delivery to the address designated by such Warrantholder in its Warrant Exercise Notice of a physical certificate representing the number of Warrant Shares to which such Warrantholder is entitled, in fully registered form, registered in such name or names as may be directed by such Warrantholder. Such Warrant Shares shall be deemed to have been issued and any Person so designated to be named therein shall be deemed to have become a Warrantholder as of the Close of Business on the date of the delivery thereof.

 

If less than all of the Warrants evidenced by a Global Warrant Certificate surrendered upon the exercise of Warrants are exercised at any time prior to the date of expiration for the Warrants, a new Global Warrant Certificate or Certificates shall be issued for the remaining number of Warrants evidenced by the Global Warrant Certificate so surrendered, and the Warrant Agent is hereby authorized to countersign the required new Global Warrant Certificate or Certificates pursuant to the provisions of Section 5 and this Section 6. The Person in whose name any certificate or certificates for the Warrant Shares are to be issued (or such Warrant Shares are to be registered, in the case of a book-entry transfer) upon exercise of a Warrant shall be deemed to have become the Warrantholder of such Warrant Shares on the date such Warrant Exercise Notice is delivered.

 

9

 

SECTION 8. Cancellation of Warrants. Upon the Expiration Date (if not already properly exercised), or if the Company shall purchase or otherwise acquire Warrants, the Global Warrant Certificates and the Book-Entry Warrants representing such Warrants shall thereupon be delivered to the Warrant Agent, if applicable, and be cancelled by it and retired. The Warrant Agent shall cancel all Global Warrant Certificates surrendered for exchange, substitution, transfer or exercise in whole or in part. Such cancelled Global Warrant Certificates shall thereafter be disposed of in a manner satisfactory to the Company provided in writing to the Warrant Agent. The Warrant Agent shall (x) advise an authorized representative of the Company as directed by the Company by the end of each day or on the next Business Day following each day on which Warrants were exercised, of (i) the number of shares of Common Stock issued upon exercise of a Warrant, (ii) the delivery of Global Warrant Certificates evidencing the balance, if any, of the shares of Common Stock issuable after such exercise of the Warrant and (iii) such other information as the Company shall reasonably require and (y) forward funds received for warrant exercises in a given month by the fifth (5th) Business Day of the following month by wire transfer to an account designated by the Company. The Warrant Agent promptly shall confirm such information to the Company in writing. The Warrant Agent shall keep copies of this Agreement and any notices given or received hereunder.

 

SECTION 9. Mutilated or Missing Global Warrant Certificates. If any of the Global Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company shall issue, and the Warrant Agent shall countersign by either manual, electronic or facsimile signature and deliver, in exchange and substitution for and upon cancellation of the mutilated Global Warrant Certificate, or in lieu of and substitution for the Global Warrant Certificate lost, stolen or destroyed, a new Global Warrant Certificate of like tenor and representing an equivalent number of Warrants, but only upon receipt of (i) evidence reasonably satisfactory to the Company and the Warrant Agent of the loss, theft or destruction of such Global Warrant Certificate; (ii) an open penalty surety bond and holding it and Company harmless , if requested by either the Company or the Warrant Agent, also satisfactory to them; and (iii) absent notice to the Warrant Agent that such certificates have been acquired by a bona fide purchaser. Applicants for such substitute Global Warrant Certificates shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company or the Warrant Agent may prescribe and as required by Section 8-405 of the Uniform Commercial Code as in effect in the State Delaware.

 

SECTION 10. Reservation of Warrant Shares. For the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the Company will, at all times through the Expiration Date, reserve and keep available, free from preemptive rights and out of its aggregate authorized but unissued or treasury shares of Common Stock, shares of Common Stock equal to the number of Warrant Shares deliverable upon the exercise of all outstanding Warrants, and the transfer agent for the Company’s Common Stock (such agent, in such capacity, as may from time to time be appointed by the Company, the “Transfer Agent”) is hereby irrevocably authorized and directed at all times to reserve such number of authorized and unissued or treasury shares of Common Stock as shall be required for such purpose. The Company covenants that all shares of Common Stock that shall be so issuable shall be duly and validly issued, fully paid and non-assessable. The Company will keep a copy of this Agreement on file with such Transfer Agent and with every transfer agent for any Warrant Shares issuable upon the exercise of Warrants pursuant to Section 7. The Warrant Agent is hereby irrevocably authorized to requisition from time to time from such Transfer Agent stock certificates issuable upon exercise of outstanding Warrants, and the Company will supply such Transfer Agent with duly executed stock certificates for such purpose.

 

The Company covenants that all Warrant Shares issued upon exercise of the Warrants will, upon issuance in accordance with the terms of this Agreement, be fully paid and nonassessable and free from all taxes, liens, charges and security interests created by or imposed upon the Company with respect to the issuance and holding thereof.

 

SECTION 11. Stock Exchange Listings. So long as any Warrants remain outstanding and the Common Stock is listed on a national securities exchange or over-the-counter market, the Company will use reasonable best efforts to list the Warrants on the same securities exchange or over-the-counter market as the Common Stock, or if the Warrants cannot be listed on such securities exchange or over-the-counter market, any other securities exchange or over-the-counter market acceptable to the Company’s Board of Directors (including OTCQX).

 

10

 

SECTION 12. Adjustments and Other Rights. The applicable Exercise Price, the number of Warrant Shares issuable upon the exercise of each Warrant and the number of Warrants outstanding are subject to adjustment from time to time upon the occurrence of the events enumerated in this Section 12.

 

(a)           The issuance of Common Stock as a dividend or distribution to all holders of Common Stock, or a subdivision or combination of Common Stock, in which event the Exercise Price shall be adjusted based on the following formula:

 

EP1 = EP0 x  
OS0
OS1

 

where:

 

EP0 = the Exercise Price in effect immediately prior to the Close of Business on the Record Date for such dividend or distribution, or immediately prior to the Open of Business on the effective date for such subdivision or combination, as the case may be;

 

EP1 = the Exercise Price in effect immediately after the Close of Business on the Record Date for such dividend or distribution, or immediately after the Open of Business on the effective date for such subdivision or combination, as the case may be;

 

OS0 = the number of shares of Common Stock outstanding immediately prior to the Close of Business on the Record Date for such dividend, distribution, subdivision or combination, or immediately prior to the Open of Business on the effective date for such subdivision or combination, as the case may be; and

 

OS1 = the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such dividend, distribution, subdivision or combination.

 

Such adjustment shall become effective immediately after the Close of Business on the Record Date for such dividend or distribution, or immediately after the Open of Business on the effective date for such subdivision or combination, as the case may be. If any dividend or distribution or subdivision or combination of the type described in this Section 12(a) is declared or announced but not so paid or made, the Exercise Price shall again be adjusted to be the Exercise Price that would then be in effect if the distribution or subdivision or combination had not been declared or announced, as the case may be.

 

(b)            The issuance to all holders of Common Stock of rights or warrants entitling them for a period expiring 60 days or less from the date of issuance of such rights or warrants to purchase shares of Common Stock (or securities convertible into Common Stock) at less than (or having a conversion price per share less than) the Current Market Price of Common Stock, in which event the Exercise Price will be adjusted based on the following formula:

 

11

 

EP1 = EP0 x OS0 + Y
OS0 + X

 

where:

 

EP0 = the Exercise Price in effect immediately prior to the Close of Business on the Record Date for such issuance;

 

EP1 = the Exercise Price in effect immediately after the Close of Business on the Record Date for such issuance;

 

OS0 = the number of shares of Common Stock outstanding immediately prior to the Close of Business on the Record Date for such issuance;

 

X = the total number of shares of Common Stock issuable pursuant to such rights, warrants or convertible securities; and

 

Y = the aggregate price payable to exercise such rights, warrants or convertible securities divided by the Current Market Price.

 

Such adjustment shall become effective immediately after the Close of Business on the Record Date for such issuance. In the event that the issuance of such rights, warrants or convertible securities is announced but such rights, warrants or convertible securities are not so issued, the Exercise Price shall again be adjusted to be the Exercise Price that would then be in effect if the Record Date for such issuance had not occurred. To the extent that such rights or warrants are not exercised prior to their expiration or shares of Common Stock are otherwise not delivered pursuant to such rights, warrants or convertible securities, upon the expiration, termination or maturity of such rights, warrants or convertible securities, the Exercise Price shall be readjusted to the Exercise Price that would then be in effect had the adjustments made upon the issuance of such rights, warrants or convertible securities been made on the basis of the delivery of only the number of shares of Common Stock actually delivered. In determining the aggregate price payable for such shares of Common Stock, there shall be taken into account any consideration received for such rights or warrants, as well as any consideration received in connection with the conversion of any convertible securities issued upon exercise of such rights or warrants, and the value of such consideration, if other than Cash, shall be determined in good faith by the Board of Directors.

 

(c)            The dividend or distribution to all holders of Common Stock of (i) shares of the Company’s Capital Stock (other than Common Stock), (ii) evidences of the Company’s indebtedness, (iii) rights or warrants to purchase the Company’s securities (other than Common Stock) or the Company’s assets or (iv) property or Cash, in which event the Exercise Price will be adjusted based on the following formula:

 

EP1 = EP0 x SP0 – FMV
SP0

 

12

 

where:

 

EP0 = the Exercise Price in effect immediately prior to the Close of Business on the Record Date for such dividend or distribution;

 

EP1 = the Exercise Price in effect immediately after the Close of Business on the Record Date for such dividend or distribution;

 

SP0 = the Current Market Price; and

 

FMV = the Market Price, on the Record Date for such dividend or distribution, of the shares of Capital Stock, evidences of indebtedness or property, rights or warrants so distributed or the amount of Cash expressed as an amount per share of outstanding Common Stock.

 

However, if the transaction that gives rise to an adjustment pursuant to this clause (c) is one pursuant to which the payment of a dividend or other distribution on Common Stock consists of shares of capital stock of, or similar equity interests in, a Subsidiary of the Company or other business unit of the Company (i.e., a spin-off) that are, or, when issued, will be, traded or quoted on any national or regional securities exchange or market, then the Exercise Price will instead be adjusted based on the following formula:

 

EP1 = EP0 x MP0
MP0 + FMV0

 

where:

 

EP0 = the Exercise Price in effect immediately prior to the Close of Business on the Record Date for such dividend or distribution;

 

EP1 = the Exercise Price in effect immediately after the Close of Business on the Record Date for such dividend or distribution;

 

FMV0 = the average of the Closing Sale Prices of the Capital Stock or similar equity interests distributed to holders of Common Stock applicable to one share of Common Stock over the 10 consecutive Trading Days commencing on, and including, the third Trading Day after the Ex-Date for such dividend or distribution; and

 

MP0 = the average of the Closing Sale Prices of the Common Stock over the 10 consecutive Trading Days commencing on, and including, the third Trading Day after the Ex-Date for such dividend or distribution.

 

Such decrease shall become effective immediately after the Ex-Date for such dividend or distribution. In the event that such dividend or distribution is declared or announced but not so paid or made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such distribution had not been declared or announced.

 

13

 

(d)           For the purposes of Section 12(a), (b) and (c), any dividend or distribution to which Section 12(c) is applicable that also includes shares of Common Stock, or rights or warrants to subscribe for or purchase shares of Common Stock (or both) to which Section 12(a) and/or (b) is applicable, shall be deemed instead to be (i) a dividend or distribution of the indebtedness, assets or shares or other property to which Section 12(c) applies (and any Exercise Price adjustment required by Section 12(c) with respect to such dividend or distribution shall be made in respect of such dividend or distribution) immediately followed (ii) by a dividend or distribution of the shares of Common Stock or such rights or warrants to which Section 12(a) and/or (b), as applicable, applies (and any further Exercise Price adjustment required by Section 12(a) and/or (b) with respect to such dividend or distribution shall then be made), except, for purposes of such adjustment, any shares of Common Stock included in such dividend or distribution shall not be deemed “outstanding immediately prior to the Close of Business on the Record Date.”

 

(e)            If the Company or any of its Subsidiaries makes a payment in respect of a tender or exchange offer for the Common Stock (other than an odd-lot tender offer), to the extent that the Cash and value of any other consideration included in the payment per share of the Common Stock exceeds the average of the Closing Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Exercise Price shall be reduced based on the following formula

 

                             
    EP1   =   EP0    x   OS0 x SP1        
  AC + (SP1 x OS1)        

 

where,

 

     
EP0 =   the Exercise Price in effect immediately prior to the Close of Business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
   
EP1 =   the Exercise Price in effect immediately after the Close of Business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
   
AC =   the aggregate value of all Cash and any other consideration (as determined by the Board of Directors in good faith) paid or payable for shares of Common Stock purchased in such tender or exchange offer;
   
OS0 =   the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer);
   
OS1 =   the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); and
   
SP1 =   the average of the Closing Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires.

 

(f)            If the Company issues (other than in a transaction covered by Section 12(a)) any shares of Common Stock, or options or warrants to purchase or rights to subscribe for Common Stock, or securities by their terms convertible into or exchangeable for such Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities (all of the foregoing, “Convertible Securities”) at a price per share less than Current Market Price immediately prior to the issuance of such security, other than securities issued pursuant to the Management Incentive Plan, then the Exercise Price in effect immediately prior to each such issuance shall be reduced, effective as of the date of such issuance, to a price equal to the product obtained by multiplying the Exercise Price in effect immediately prior to such issuance by the quotient obtained by dividing:

 

14

 

(A)          an amount equal to the sum of (x) the total number of shares of Common Stock on a fully diluted basis immediately prior to such issuance, multiplied by the Current Market Price of one share of Common Stock immediately prior to such issuance of such shares of Common Stock or Convertible Securities, and (y) the consideration received by the Company upon such issuance of such shares of Common Stock or Convertible Securities; by

 

(B)          the total number of shares of Common Stock on a fully diluted basis immediately after such issuance of such Common Stock or Convertible Securities multiplied by the Current Market Price of one share of Common Stock immediately prior to such issuance of such shares of Common Stock or Convertible Securities.

 

(g)          Recapitalizations, Reclassifications and Other Changes.

 

(i)            If any of the following events occur:

 

(A)           any recapitalization;

 

(B)           any reclassification or change of the outstanding shares of Common Stock (other than changes resulting from a subdivision or combination to which Section 12(a) applies);

 

(C)           any consolidation, merger or combination involving the Company;

 

(D)           any sale or conveyance to a third party of all or substantially all of the Company’s assets; or

 

(E)           any statutory share exchange,

 

(each such event a “Reorganization Event”), in each case as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including Cash or any combination thereof) (the “Reference Property”), then following the effective time of the transaction, the right to receive shares of Common Stock upon exercise of a Warrant shall be changed to a right to receive, upon exercise of such Warrant, the kind and amount of shares of stock, other securities or other property or assets (including Cash or any combination thereof) that a holder of one share of Common Stock would have owned or been entitled to receive in connection with such Reorganization Event (such kind and amount of Reference Property per share of Common Stock, a “Unit of Reference Property”); provided in the event of a Change of Control Event, the Warrants shall be treated solely in accordance with Section 12(g)(v). In the event holders of Common Stock have the opportunity to elect the form of consideration to be received in a Reorganization Event, other than with respect to a Change of Control Event, the type and amount of consideration into which the Warrants shall be exercisable from and after the effective time of such Reorganization Event shall be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock in such Reorganization Event.

 

15

 

(ii)           At any time from, and including, the effective time of a Reorganization Event:

 

(A)          if Cashless Exercise does not apply or is not elected upon exercise of a Warrant, each share of Common Stock per Warrant shall be equal to a single Unit of Reference Property;

  

(B)            if Cashless Exercise applies upon exercise of a Warrant, the number of Warrant Shares issuable upon a Cashless Exercise per Warrant shall be a number of Units of Reference Property calculated as set forth in Section 7(d), except that the Market Price used to determine the number of Units of Reference Property issuable upon a Cashless Exercise on any Trading Day shall be the Unit Value for such Trading Day; and

 

(C)            the Closing Sale Price and the Current Market Price shall be calculated with respect to a Unit of Reference Property.

 

(iii)          The value of a Unit of Reference Property (the “Unit Value”) shall be determined as follows:

 

(A)            any shares of common stock of the successor or purchasing corporation or any other corporation that are traded on a national or regional stock exchange included in such Unit of Reference Property shall be valued as if such shares were “Common Stock” using procedures set forth in the definition of “Closing Sale Price”;

 

(B)            any other property (other than Cash) included in such Unit of Reference Property shall be valued in good faith by the Board of Directors (in a manner not materially inconsistent with the manner the Board of Directors valued such property for purposes of the Reorganization Event, if applicable) or by a firm selected by the Board of Directors; and

 

(C)            any Cash included in such Unit of Reference Property shall be valued at the amount thereof.

 

(iv)          On or prior to the effective time of any Reorganization Event, the Company or the successor or purchasing Person, as the case may be, shall execute an amendment to this Warrant Agreement providing that the Warrants shall be exercisable for Units of Reference Property in accordance with the terms of this Section 12(g). If the Reference Property in connection with any Reorganization Event includes shares of stock or other securities and assets of a Person other than the successor or purchasing Person, as the case may be, in such Reorganization Event, then the Company shall cause such amendment to this Warrant Agreement to be executed by such other Person and such amendment shall contain such additional provisions to protect the interests of the Warrantholders as the Board of Directors shall reasonably consider necessary by reason of the foregoing. Any such amendment to this Warrant Agreement shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 12. In the event the Company shall execute an amendment to this Warrant Agreement pursuant to this Section 12(g), the Company shall promptly file with the Warrant Agent a certificate executed by a duly authorized officer of the Company briefly stating the reasons therefor, the kind or amount of Cash, securities or property or asset that will comprise a Unit of Reference Property after the relevant Reorganization Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with. The Company shall cause notice of the execution of amendment to be mailed to each Warrantholder, at its address appearing on the Warrant Register, within 20 Business Days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such amendment.

 

16

 

(v)          Change of Control Event:

 

(A)          No less than 15 Business Days prior to the scheduled closing of a Change of Control Event (or, to the extent such Change of Control Event does not permit 15 Business Days’ notice, the earliest date that is reasonably practicable under the circumstances), the Company shall:

 

(1)               deliver to the Warrant Agent a notice of redemption, which shall be binding on the Company and on all Warrantholders (unless such a Change of Control Event does not actually occur), stating that all Warrants (other than Carryover Warrants, if any, to be issued in connection with such Change of Control Event in accordance with this Section 12(g)(v)) that have not been exercised prior to the Cut-Off Time shall be redeemed on the Change of Control Payment Date at a price equal to the Change of Control Payment Amount (the “Redemption”);

 

(2)               cause a notice of the Redemption to be sent at least once to the Dow Jones News Service or similar business news service in the United States; and

 

(3)               cause the Warrant Agent to send by first-class mail, postage prepaid to each Warrantholder, at the address appearing in the Warrant Register, a notice provided by the Company to the Warrant Agent stating:

 

(I)                that the Redemption is being made pursuant to this Section 12(g) and that all Warrants (other than Carryover Warrants, if any, to be issued in connection with such Change of Control Event in accordance with this Section 12(g)(v)) that have not been exercised prior to the Cut-Off Time will be redeemed on the Change of Control Payment Date for payment of the Change of Control Payment Amount;

 

(II)               the formula for calculating the Black Scholes Value and the Change of Control Payment Amount;

 

(III)             the date of the Redemption (which shall be a Business Day no later than five (5) Business Days following the Change of Control Date (the “Change of Control Payment Date”));

 

(IV)             that no outstanding Warrant may be exercised after the Close of Business on the Business Day prior to the Change of Control Date (the “Cut-Off Time”);

 

(V)               if applicable, that New Warrants will be issued to the Warrantholders on the Change of Control Payment Date in accordance with the terms of this Warrant Agreement and the Warrants (as the same may have been amended in connection with such Change of Control Event pursuant to Section 12(g));

 

(VI)             any other reasonable procedures that a Warrantholder must follow (to the extent consistent with the terms and conditions set forth herein) in connection with such Redemption; and

 

(VII)            the name and address of the Warrant Agent.

 

17

 

(B)           Within two (2) Business Days prior to the Change of Control Payment Date, the Company or the surviving Person (if other than the Company) shall (A) deliver to the Warrant Agent the calculation of the Change of Control Payment Amount and (B) deposit with the Warrant Agent money sufficient to pay the Change of Control Payment Amount for all outstanding Warrants (other than the Carryover Warrants, if any).

 

(C)           On the Change of Control Payment Date, (A) the Company or the surviving Person (if other than the Company) shall redeem all outstanding Warrants (other than Carryover Warrants, if any) pursuant to the Redemption, (B) the Warrant Agent shall mail (or otherwise cause to be paid or provide for payment to (or on behalf of)) each holder of Warrants so redeemed payment in Cash in an amount equal to the aggregate Change of Control Payment Amount in respect of such redeemed Warrants, and (C) the Company or the surviving Person (if other than the Company) shall execute and issue to the Warrantholders, and the Warrant Agent shall authenticate, new Warrants representing the Carryover Warrants (if any) exercisable for Registered and Listed Shares (the “New Warrants”); provided that such New Warrants shall be issued in denominations of one Warrant and integral multiples thereof and the terms thereof shall, subject to Section 12(g)(v)(E), be substantially consistent with the terms of this Warrant Agreement and the Warrants (and all references herein to Warrants shall thereafter be deemed to be references to such New Warrants).

 

(D)           No Warrant (which for the avoidance of doubt does not include New Warrants to be issued in connection with such Change of Control Event) may be exercised after the Cut-Off Time.

 

(E)           Following the Change of Control Payment Date, any holder of New Warrants issued in connection with such Change of Control Event shall have the right to exercise such New Warrant and to receive, upon such exercise, the Reference Property in accordance with Section 12(g)(i), subject to Section 12(g)(ii) and Section 12(g)(iii) and the remaining terms of this Warrant Agreement and the Warrants (as the same may have been amended in connection with such Change of Control Event pursuant to Section 12(g)); provided that, for purposes of this Section 12(g)(v)(E), (x) each Unit of Reference Pro