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EXHIBIT A
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of September 28, 1997 (this
"Agreement"), by and between ALRENCO, INC., an Indiana corporation ("Issuer"),
and RTO, INC., a Delaware corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee and Issuer propose to enter into an Agreement
and Plan of Merger dated as of September 28, 1997 (the "Merger Agreement";
capitalized terms not defined herein shall have the meanings set forth in the
Merger Agreement), providing for, among other things, the merger of Grantee with
and into Issuer with Issuer as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's
willingness to enter into the Merger Agreement, Grantee has requested that
Issuer agree, and Issuer has agreed, to grant Grantee the Option (as defined
below).
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and in
the Merger Agreement, and for other good and valuable consideration, the receipt
of which is hereby acknowledged, Issuer and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 600,000 (as adjusted as set forth herein) shares
(the "Option Shares") of Common Stock, no par value ("Issuer Common Stock"), of
Issuer at a purchase price of $15.50 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) Grantee may exercise the Option, in
whole or in part, at any time and from time to time following the occurrence of
a Purchase Event (as defined below); provided that, except as provided in the
last sentence of this Section 2(a), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (i) the Effective Time,
(ii) twelve (12) months after the first occurrence of a Purchase Event or (iii)
termination of this Option Agreement in accordance with Section 11(k) hereof;
and provided, further that any purchase of shares upon exercise of the Option
shall be subject to compliance with Applicable Law. The rights set forth in
Sections 7 and 8 shall not terminate when the right to exercise the Option
terminates as set forth herein, but shall extend to such time as is provided in
Sections 7 and 8 respectively. Notwithstanding the termination of the Option,
Grantee shall be entitled to purchase those Option Shares with respect to which
it has exercised the Option in accordance with the terms hereof prior to the
termination of the Option.
(b) As used herein, a "Purchase Event" means any of the
following events:
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(i) any person (other than Grantee or any subsidiary
of Grantee) shall have commenced (as such term is defined in
Rule l4d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), or shall have filed a
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to, a tender
offer or exchange offer to purchase any shares of Issuer
Common Stock such that, upon consummation of such offer, such
person would own or control 10% or more of the then
outstanding Issuer Common Stock;
(ii) Issuer or any subsidiary of Issuer, without
having received Grantee's prior written consent or except as
permitted by the Merger Agreement, shall have authorized,
recommended, proposed or publicly announced an intention to
authorize, recommend or propose, or entered into, an agreement
with any person (other than Grantee or any subsidiary of
Grantee) to (A) effect a merger, consolidation or similar
transaction involving Issuer or any subsidiary of Issuer, (B)
sell, lease or otherwise dispose of assets of Issuer or its
subsidiaries representing 15% or more of the consolidated
assets of Issuer and its subsidiaries or (C) issue, sell or
otherwise dispose of (including by way of merger,
consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of
Issuer or any of its Significant Subsidiaries (any of the
foregoing an "Acquisition Transaction");
(iii) any person (other than Xxxxxxx X. Xxxxx,
Grantee, any subsidiary of Grantee or Issuer or any of its
subsidiaries in a fiduciary capacity) shall have acquired
beneficial ownership (as such term is defined in Rule l3d-3
under the Exchange Act) or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially
owns or has the right to acquire beneficial ownership of, 10%
or more of the then outstanding Issuer Common Stock; or
(iv) the holders of Issuer Common Stock shall not
have approved and adopted the Merger Agreement at the meeting
of such stockholders held for the purpose of voting on the
Merger Agreement, such meeting shall not have been held or
shall have been canceled prior to termination of the Merger
Agreement or Issuer's Board of Directors shall have withdrawn
or modified in a manner adverse to Grantee the recommendation
of Issuer's Board of Directors with respect to the Merger
Agreement, in each case after any person (other than Grantee
or any subsidiary of Grantee) shall have publicly announced a
proposal, or publicly disclosed an intention to make a
proposal, to engage in an Acquisition Transaction. As used in
this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total
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number of Option Shares it intends to purchase pursuant to such exercise and
(ii) a place and date not earlier than three (3) business days nor later than
fifteen (15) business days from the Notice Date for the closing of such purchase
(the "Closing Date"); provided that if the closing of the purchase and sale
pursuant to the Option cannot be consummated by reason of any Applicable Law,
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which such restriction on consummation has expired or
been terminated.
(d) Notwithstanding Section 2(c), in no event shall any
Closing Date be more than eighteen (18) months after the related Notice Date,
and if the Closing Date shall not have occurred within eighteen (18) months
after the related Notice Date the exercise of the Option effected on the Notice
Date shall be deemed to have expired. The provisions of this Section 2 and
Section 3 shall apply with appropriate adjustments to any such exercise.
3. Payment and Delivery of Certificates. (a) On each Closing
Date, Grantee shall pay to Issuer in immediately available funds by wire
transfer to a bank account designated by Issuer an amount equal to the Purchase
Price multiplied by the Option Shares to be purchased on such Closing Date.
(b) At each closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer shall deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such closing, which Option Shares shall be free and clear of all
liens, claims, charges and encumbrances of any kind whatsoever, and Grantee
shall deliver to Issuer a letter agreeing that Grantee shall not offer to sell
or otherwise dispose of such Option Shares in violation of Applicable Law or the
provisions of this Agreement.
(c) Certificates for the Option Shares delivered at each
closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION
AGREEMENT DATED AS OF SEPTEMBER 28, 1997. A COPY OF SUCH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE
UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
4. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
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(a) Due Authorization. Issuer has all requisite corporate
power and authority to enter into this Agreement and, subject to any approvals
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly executed
and delivered by Issuer and constitutes a valid and binding obligation of
Issuer, enforceable in accordance with its terms.
(b) Authorized Stock. Issuer has taken all necessary corporate
and other action to authorize and reserve and, subject to obtaining the
governmental and other approvals and consents referred to herein, to permit it
to issue, and, at all times from the date hereof until the obligation to deliver
Issuer Common Stock upon the exercise of the Option terminates, will have
reserved for issuance, upon exercise of the Option, shares of Issuer Common
Stock necessary for Grantee to exercise the Option, and Issuer will take all
necessary corporate action to authorize and reserve for issuance all additional
shares of Issuer Common Stock or other securities which may be issued pursuant
to Section 6 upon exercise of the Option. The shares of Issuer Common Stock to
be issued upon due exercise of the Option, including all additional shares of
Issuer Common Stock or other securities which may be issuable pursuant to
Section 6, upon issuance pursuant hereto, shall be duly and validly issued,
fully paid and nonassessable, and shall be delivered free and clear of all
liens, claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Issuer.
(c) No Conflicts. Except as disclosed pursuant to the Merger
Agreement, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation pursuant to any provision of the Articles of
Incorporation or By-laws of Issuer or any subsidiary of Issuer or, subject to
obtaining any approvals or consents contemplated hereby, result in any violation
of any loan or credit agreement, note, mortgage, indenture, lease or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Issuer or any subsidiary of Issuer or their respective properties or assets
which violation would have an Alrenco Material Adverse Effect (as defined in the
Merger Agreement).
(d) Board Action. The Board of Directors of Issuer has taken
all necessary action to approve this Agreement and the consummation of the
transactions contemplated hereby and the provisions of Chapters 42 and 43 of the
Indiana Business Corporation Law will not apply to this Agreement or the
purchase of shares of Issuer Common Stock pursuant to this Agreement.
5. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate
power and authority to enter into this Agreement and, subject to any approvals
or consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
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consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee and constitutes a valid and binding
obligation of Grantee, enforceable in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not
result in any violation pursuant to any provision of the Certificate of
Incorporation or By-laws of Grantee or any subsidiary of Grantee or, subject to
obtaining any approvals or consents contemplated hereby, result in any violation
of any loan or credit agreement, note, mortgage, indenture, lease or other
agreement, obligation, instrument permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Grantee or any subsidiary of Grantee or their respective properties or assets
which violation would have an RTO Material Adverse Effect (as defined in the
Merger Agreement).
(c) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be taken
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In the
event of any change in Issuer Common Stock by reason of a stock dividend,
split-up, recapitalization, combination, exchange of shares or similar
transaction, the type and number of shares or securities subject to the Option
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Grantee shall receive upon
exercise of the Option and payment of the aggregate Purchase Price hereunder the
number and class of shares or other securities or property that Grantee would
have received in respect of Issuer Common Stock if the Option had been exercised
in full immediately prior to such event, or the record date therefor, as
applicable. Whenever the number of shares of Issuer Common Stock purchasable
upon exercise of the Option is adjusted as provided in this Section 6, the
Purchase Price shall be adjusted by multiplying the Purchase Price by a
fraction, the numerator of which shall be equal to the number of shares of
Issuer Common Stock purchasable prior to the adjustment and the denominator of
which shall be equal to the number of shares of Issuer Common Stock purchasable
after the adjustment. If any additional shares of Issuer Common Stock are issued
after the date of this Agreement (other than pursuant to an event described in
the first sentence of this Section 6(a) and other than in connection with the
exercise of stock options of Issuer outstanding on the date hereof), the number
of shares of Issuer Common Stock subject to the Option shall be adjusted so
that, after such issuance, it equals 9.9% of the number of shares of Issuer
Common Stock then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than Grantee or one of the
subsidiaries of Grantee, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than Grantee or one of the RTO Subsidiaries, to merge into Issuer and Issuer
shall be the continuing
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or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property or then outstanding shares of Issuer Common Stock shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (X) the Acquiring Corporation
(as defined below) or (Y) any person that controls the Acquiring Corporation.
(c) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (B) Issuer in a
merger in which Issuer is the continuing or surviving person,
and (C) the transferee of all or substantially all of Issuer's
assets.
(ii) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(iii) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one
year immediately preceding the consolidation, merger or sale
in question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by
the person merging into Issuer or by any company which
controls or is controlled by such person, as the Grantee may
elect.
(d) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Grantee. The issuer of the Substitute
Option shall also enter into an agreement with the Grantee of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option. Without limiting the generality of the
foregoing, the provisions of Sections 7, 8, 9 and 10 shall apply with respect to
the Substitute Option and any securities for which the Substitute Option becomes
exercisable with the same effect as if all references to "Issuer" in such
Sections were references to the "Substitute Option Issuer," all references to
"Issuer Common Stock" were references to "Substitute Common Stock," and all
references to the "Option" were references to the "Substitute Option."
(e) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Applicable Price (as
defined below) multiplied by the
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number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Purchase Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 9.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 9.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (f), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Grantee equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (f) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (f). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Grantee.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 6 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
7. Repurchase at the Option of Grantee. (a) At the request of
Grantee at any time during the period commencing upon the first occurrence of a
Repurchase Event (as defined below) and ending twelve (12) months immediately
thereafter, Issuer (or any successor entity thereof) shall repurchase from
Grantee (x) the Option, unless the Option shall have expired or been terminated
in accordance with the terms hereof, and (y) all shares of Issuer Common Stock
purchased by Grantee pursuant hereto with respect to which Grantee then has
beneficial ownership. The date on which Grantee exercises its rights under this
Section 7 is referred to as the "Request Date". Such repurchase shall be at an
aggregate price (the "Section 7 Repurchase Consideration") equal to the sum of:
(i) the aggregate exercise price paid by Grantee for
any shares of Issuer Common Stock acquired pursuant to the
Option with respect to which Grantee then has beneficial
ownership;
(ii) the excess, if any, of (x) the Applicable Price
(as defined below) for each share of Issuer Common Stock over
(y) the Purchase Price (subject to adjustment pursuant to
Section 6), multiplied by the number of shares of Issuer
Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price
over the Purchase Price (subject to adjustment pursuant to
Section 6) paid (or, in the case of Option Shares with respect
to which the Option has been exercised but the Closing Date
has not occurred, payable) by Grantee for each share of Issuer
Common Stock with respect to
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which the Option has been exercised and with respect to which
Grantee then has beneficial ownership, multiplied by the
number of such shares.
(b) If Grantee exercises its rights under this Section 7,
Issuer shall, within ten (10) business days after the Request Date, pay the
Section 7 Repurchase Consideration to Grantee in immediately available funds,
and Grantee shall surrender to Issuer the Option and the certificates evidencing
the shares of Issuer Common Stock purchased thereunder with respect to which
Grantee then has beneficial ownership, and Grantee shall warrant that it has
sole record and beneficial ownership of such shares and that the same are then
free and clear of all liens, claims, charges and encumbrances of any kind
whatsoever. If any regulatory authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 7, Issuer shall promptly give
notice of such fact to Grantee and redeliver to Grantee the Option Shares it is
then prohibited from repurchasing, and Grantee shall have the right to exercise
the Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the number of shares as to which payment
has been made pursuant to Section 7(a)(ii); provided that if the Option shall
have terminated prior to the date of such notice or shall be scheduled to
terminate at any time before the expiration of a period ending on the thirtieth
business day after such date, Grantee shall nonetheless have the right so to
exercise the Option or exercise its rights under Section 8 until the expiration
of such period of thirty (30) business days.
(c) For purposes of this Agreement, the "Applicable Price"
means the highest of (i) the highest price per share at which a tender or
exchange offer has been made for shares of Issuer Common Stock after the date
hereof and on or prior to the Request Date, (ii) the price per share to be paid
by any third party for shares of Issuer Common Stock or the consideration per
share to be received by holders of Issuer Common Stock, in each case pursuant to
an agreement for a merger or other business combination transaction with Issuer
entered into on or prior to the Request Date or (iii) the highest closing sales
price per share of Issuer Common Stock quoted on the New York Stock Exchange
(or, if Issuer Common Stock is not quoted on the New York Stock Exchange, the
highest bid price per share as quoted on the National Association of Securities
Dealers Automated Quotations System or, if the shares of Issuer Common Stock are
not quoted thereon, on the principal trading market on which such shares are
traded as reported by a recognized source) during the sixty (60) business days
preceding the Request Date. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall be other than in
cash, the value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm selected by Grantee
and reasonably acceptable to Issuer, which determination shall be conclusive for
all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" means any of the
following events:
(i) the occurrence of any of the Purchase Events
specified in Section 2(b)(ii), (iii) or (iv); or
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(ii) there shall have occurred any of the Purchase
Events specified in Section 2(b)(i) and thereafter the holders
of Issuer Common Stock shall not have approved the Merger
Agreement at the meeting of such stockholders held for the
purpose of voting on the Merger Agreement or such meeting
shall not have been held or shall have been canceled prior to
termination of the Merger Agreement.
8. Registration Rights. Issuer shall, if requested by Grantee
at any time and from time to time within three (3) years of the first exercise
of the Option, as expeditiously as possible prepare and file up to two
registration statements under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all shares
of Issuer Common Stock or other securities that have been acquired by or are
issuable to Grantee upon exercise of the Option in accordance with the intended
method of sale or other disposition stated by Grantee, including a "shelf"
registration statement under Rule 415 under the Securities Act or any successor
provision, and Issuer shall use its best efforts to qualify such shares or other
securities under any applicable state securities laws. Grantee agrees to use all
reasonable efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis so that upon
consummation thereof no purchaser or transferee shall own beneficially more than
2% of the then outstanding voting power of Issuer. Issuer shall use all
reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective for such period not
in excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. The obligations of Issuer hereunder to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding sixty (60) days in the aggregate if the Board of
Directors of Issuer shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would require disclosure of
nonpublic information that would materially and adversely affect Issuer. Any
registration statement prepared and filed under this Section 8, and any sale
covered thereby, shall be at Issuer's expense except for underwriting discounts
or commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If during the time period referred to in the first sentence of this
Section 8 Issuer effects a registration under the Securities Act of Issuer
Common Stock for its own account or for any other stockholders of Issuer (other
than on Form S-4 or Form S-8, or any successor form), it shall allow Grantee the
right to participate in such registration, and such participation shall not
affect the obligation of Issuer to effect two registration statements for
Grantee under this Section 8; provided that, if the managing underwriters of
such offering advise Issuer in writing that in their opinion the number of
shares of Issuer Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering, Issuer shall include the
shares requested to be included therein by Grantee pro rata with the shares
intended to be included therein by Issuer. In connection with any registration
pursuant to this Section 8, Issuer and Grantee shall provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification and contribution in connection with such
registration.
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9. Listing. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then listed on the New York Stock
Exchange or the National Association of Securities Dealers Automated Quotation
System, Issuer, upon the request of Grantee, will promptly file an application
to list the shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the New York Stock Exchange or the National
Association of Securities Dealers Automated Quotation System, as applicable, and
will use its best efforts to obtain approval of such listing as soon as
practicable.
10. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
11. Miscellaneous. (a) Expenses. Except as otherwise provided
in Sections 7 and 8, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary;
Severability, Etc. Except as otherwise set forth in the Merger Agreement, this
Agreement (including the Merger Agreement and the other documents and
instruments referred to herein and therein) (a) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (b) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or a Federal or state
regulatory agency to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
If for any reason such court or regulatory agency determines that the Option
does not permit Grantee to acquire, or does not require Issuer to repurchase,
the full number of shares of Issuer Common Stock
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as provided in Sections 2 and 7 (as adjusted pursuant to Section 6), it is the
express intention of Issuer to allow Grantee to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Indiana without regard to
any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Grantee to: RTO, Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: K. Xxxxx Xxxx
with copies to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Xx., Esq.
If to Issuer to: Alrenco, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
with a copy to: Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: C. Xxxxx Xxxxxxx, Jr., Esq.
(g) Counterparts. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by
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operation of law or otherwise) without the prior written consent of the other
party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee. Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by Grantee, Issuer and Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
(k) Termination. This Agreement and all rights and obligations
hereunder shall terminate upon the termination of the Merger Agreement in
accordance with Section 9.1, 9.2, 9.3(a) (but not in the event of termination by
RTO under such Section 9.3(a) because of a breach by Issuer of Section 7.2 of
the Merger Agreement), 9.3(b) (but only in the event that the Merger Agreement
and the Merger shall not have been approved and adopted under circumstances that
would not constitute a Purchase Event under Section 2(b)(iv) of this Agreement),
9.3(c), 9.4(a), 9.4(b) or 9.4(c) thereof; provided, however, that
nothwithstanding the foregoing, this Agreement shall not terminate as provided
in this Section 11(k) if a Purchase Event occurs prior to or concurrently with
the occurrence of the event that under this Section 11(k) would have caused a
termination of this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
ALRENCO, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman and President
RTO, INC.
By: /s/ Xxxxx X. Xxxxx, Xx.
-------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: President and Chief
Executive Officer
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