As filed with the Securities and Exchange Commission on August 11, 1997.
File No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AARON RENTS, INC.
(Exact Name of Issuer as Specified in its Charter)
Georgia 58-0687630
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification
Number)
309 E. Paces Ferry Road
Atlanta, Georgia 30305-2377
(Address and Zip Code of Principal Executive Offices)
AARON RENTS, INC. 1996 STOCK OPTION AND INCENTIVE AWARD PLAN
(Full Title of the Plan)
Keith C. Groen, Esquire
Vice President, Legal and Secretary
AARON RENTS, INC.
309 E. Paces Ferry Road
Atlanta, Georgia 30305-2377
(404) 231-0011
(Name, Address and Telephone Number, Including Area Code, of
Agent for Service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================
Title of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities Registered Offering Price Per Aggregate Offering Registration Fee
to be Registered Unit Price
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,500,000 shares $14.9375<F1> $22,406,250.00<F1> $6,789.77
$.50 par value
- --------------------------------------------------------------------------------------------------------------
<FN>
<F1> Determined in accordance with Rule 457(h) under the
Securities Act of 1933, based on $14.9375, the average of the
high and low sale prices quoted on the NASDAQ National Market
System on August 5, 1997.
/TABLE
<PAGE>
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated by reference into
this Registration Statement and are deemed to be a part hereof
from the date of the filing of such documents:
(1) The Registrant's Annual Report on Form 10-K for its
fiscal year ended December 31, 1996.
(2) All other reports of the Registrant filed pursuant to
Section 13(a) or 15(d) of the Exchange Act since December 31,
1996.
(3) The description of Common Stock contained in the
Registrant's Registration Statements filed under Section 12 of
the Exchange Act, including all amendments or reports filed for
the purpose of updating such description.
(4) All other documents subsequently filed by the
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act, prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or
which deregisters all securities that remain unsold.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the Common Stock registered hereby has been
passed upon by Keith C. Groen, Vice President, Legal and
Secretary of the Registrant.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As provided under Georgia law, the Registrant's Amended and
Restated Articles of Incorporation provide that a director shall
not be personally liable to the Registrant or its shareholders
for monetary damages for breach of duty of care or any other duty
owed to the Registrant as a director. Georgia law provides that
no provision in articles of incorporation or by-laws shall
eliminate or limit the liability of a director (a) for any
appropriation, in violation of the director's duties, of any
business opportunity of the Registrant, (b) for acts or omissions
which involve intentional misconduct or a knowing violation of
law, (c) for unlawful corporate distributions, or (d) for any
transaction from which the director received an improper benefit.
Under Article VII of the Registrant's Amended By-laws, the
Registrant is authorized to indemnify its officers and directors
for any liability and expense incurred by them in connection with
or resulting from any threatened, pending or completed legal
action or other proceeding or investigation by reason of his
being or having been an officer or director. An officer or
director may only be indemnified if he acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the
best interests of the Registrant, and, with respect to a criminal
matter, he did not have reasonable cause to believe that his
conduct was unlawful. No officer or director who has been
adjudged liable for the improper receipt of a personal benefit is
entitled to indemnification.
<PAGE>
Any officer or director who has been wholly successful on
the merits or otherwise in an action or proceeding in his
official capacity is entitled to indemnification as to expenses
by the Registrant as of right. All other determinations in
respect of indemnification shall be made by either: (i) a
majority vote of a quorum of disinterested directors; (ii)
independent legal counsel selected in accordance with the By-laws
and at the request of the Board; or (iii) the holders of a
majority of the Registrant's stock who at such time are entitled
to vote for the election of directors.
The provisions of the Registrant's Bylaws on indemnification
are consistent in all material respects with the laws of the
State of Georgia, which authorize indemnification of corporate
officers and directors.
In the event any payments are made to an officer or director
by way of indemnity, other than by court order, action of the
shareholders or by an insurance carrier, the Registrant must
notify its shareholders of such payment and all relevant details
in a timely manner and in no event later than 15 months after the
date of such payment.
The Registrant's directors and officers are insured against
losses arising from any claim against them as such for wrongful
acts or omissions, subject to certain limitations.
ITEM 8. EXHIBITS
The exhibits included as part of this Registration Statement
are as follows:
Exhibit Number Description
4(a) Aaron Rents, Inc. 1996 Stock Option and
Incentive Award Plan
4(b) Amended and Restated Articles of
Incorporation of the Registrant
(included as Exhibit 3 to the
Registrant's Quarterly report on Form
10-Q filed with the Securities and
Exchange Commission on March 31, 1996
and incorporated herein by reference)
4(c) By-laws of the Registrant (included as
Exhibit 2.2 to the Registrant's
registration statement on Form 8-A filed
with the Securities and Exchange
Commission on October 22, 1992 and
incorporated herein by reference)
5(a) Opinion of Keith C. Groen, Vice
President, Legal of Aaron Rents, Inc.
23(a) Consent of Keith C. Groen (Included in
Exhibit 5)
23(b) Consent of Ernst & Young LLP
24 Power of Attorney (See Signature Page)
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes: (1) to
file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement, to
include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; (2) that, for the purpose of determining
any liability under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof; and (3) to remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes to deliver
or cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person
to whom the prospectus is sent or given, the latest quarterly
report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Atlanta, State of Georgia, on August 5, 1997.
AARON RENTS, INC.
By:/s/ R. Charles Loudermilk
R. Charles Loudermilk, Sr., Chairman of
the Board and President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes
and appoints R. Charles Loudermilk, Sr. and Gilbert L. Danielson,
and either of them, his true and lawful attorneys-in-fact with
full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
Registration Statement and to cause the same to be filed, with
all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby granting to
said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing whatsoever requisite and
desirable to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all acts and things that
said attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons, in the capacities, on August 5, 1997.
Signature Title
/s/ R. Charles Loudermilk, Sr. Chairman of the Board, Chief
R. Charles Loudermilk, Sr. Executive Officer and President
(Principal Executive Officer)
/s/ Gilbert L. Danielson Vice President, Finance, Chief
Gilbert L. Danielson Financial Officer and Director
(Principal Financial Officer)
/s/ Robert P. Sinclair, Jr. Controller (Principal
Robert P. Sinclair, Jr. Accounting Officer)
/s/ Keith C. Groen Director
Keith C. Groen
/s/ Robert C. Loudermilk, Jr. Director
Robert C. Loudermilk, Jr.
/s/ J. Rex Fuqua Director
J. Rex Fuqua
/s/ Earl Dolive Director
Earl Dolive
/s/ M. Collier Ross Director
M. Collier Ross
/s/ R. K. Sehgal Director
R. K. Sehgal
______________________________ Director
Leo Benatar
/s/ Ingrid Saunders Jones Director
Ingrid Saunders Jones
<PAGE>
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM S-8
Exhibit Number Description
4(a) Aaron Rents, Inc. 1996 Stock Option and
Incentive Award Plan
5(a) Opinion of Keith C. Groen, Vice
President, Legal of Aaron Rents, Inc.
23(a) Consent of Keith C. Groen (Included in
Exhibit 5)
23(b) Consent of Ernst & Young LLP
24 Power of Attorney (See Signature Page)
EXHIBIT 4 (a)
AARON RENTS, INC.
1996 STOCK OPTION AND INCENTIVE
AWARD PLAN
April 1, 1996
<PAGE>
AARON RENTS, INC.
1996 STOCK OPTION AND INCENTIVE AWARD PLAN
------------------------------------------
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Aaron Rents, Inc., a
Georgia corporation (hereinafter referred to as the "Company"),
hereby establishes a stock option and incentive award plan known
as the "Aaron Rents, Inc. 1996 Stock Option and Incentive Award
Plan" (the "Plan"), as set forth in this document. The Plan
permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Performance Shares and Restricted Stock.
Subject to the approval of the Plan by the Company's
shareholders, the Plan shall become effective on April 1, 1996,
(the "Effective Date") and shall remain in effect as provided in
Section 1.3. Any Award made under this Plan prior to shareholder
approval of the Plan shall be void unless the Plan is approved by
shareholders at the next meeting of shareholders of the Company.
1.2 PURPOSES OF THE PLAN. The purposes of the Plan are to
promote greater stock ownership in the Company by those
Participants who are principally responsible for its future
growth and continued success; to more closely link the personal
interests of Participants to those of the Company's shareholders;
and to provide flexibility to the Company in its ability to
motivate, attract and retain the services of Participants upon
whose judgment, initiative and special effort the continued
success of the Company depends.
1.3 DURATION OF THE PLAN. The Plan shall commence on the
Effective Date, and shall remain in effect, subject to the right
of the Board of Directors to amend or terminate the Plan at any
time pursuant to Article 13, until the day prior to the fifth
(5th) anniversary of the Effective Date.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan the following terms shall have the
meanings set forth below and, when the meaning is intended, the
initial letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant
under this Plan of Nonqualified Stock Options or
Incentive Stock Options, or an award of Performance
Shares or Restricted Stock.
(b) "Award Agreement" means an agreement entered into by
each Participant and the Company, setting forth as
applicable, the terms and provisions applicable to
Awards made to Participants under this Plan.
(c) "Beneficial Owner" or "Beneficial Ownership" shall have
the meaning ascribed to such term in Rule 13d-3 under
the Exchange Act.
(d) "Board" or "Board of Directors" means the Board of
Directors of the Company.
<PAGE>
(e) "Cause" means: (i) with respect to the Company or any
Subsidiary which employs the Participant or for which
the Participant primarily performs services, the
commission by the Participant of an act of fraud,
embezzlement, theft or proven dishonesty, or any other
illegal act or practice (whether or not resulting in
criminal prosecution or conviction); (ii) the willful
engaging by the Participant in misconduct which is
deemed by the Committee, in good faith, to be
materially injurious to the Company or any Subsidiary,
monetarily or otherwise; or (iii) the willful and
continued failure or habitual neglect by the
Participant to perform his duties with the Company or
the Subsidiary substantially in accordance with the
operating and personnel policies and procedures of the
Company or the Subsidiary generally applicable to all
their employees. For purposes of this Plan, no act or
failure to act by the Participant shall be deemed to be
"willful" unless done or omitted to be done by the
Participant not in good faith and without reasonable
belief that the Participant's action or omission was in
the best interest of the Company and/or the Subsidiary.
Notwithstanding the foregoing, if the Participant has
entered into an employment agreement that is binding as
of the date of employment termination, and if such
employment agreement defines "Cause," then the
definition of "Cause" in such agreement shall apply to
the Participant in this Plan. "Cause" under either
(i), (ii) or (iii) shall be determined by the
Committee.
(f ) A "Change in Control" shall be deemed to have occurred
if:
(i) the Company consolidates or merges with or into
another corporation, or is otherwise reorganized,
and the Company is not the surviving corporation
in such transaction or if after such transaction
any other corporation, association or other
person, entity or group or the shareholders
thereof own, directly and/or indirectly, more than
50% of the then outstanding shares of Class A
Common Stock or more than 50% of the assets of the
Company; or
(ii) more than 50% of the then outstanding shares of
Class A Common Stock of the Company are, in a
single transaction or in a series of related
transactions, sold or otherwise transferred to or
are acquired by (except as collateral security
for a loan) any other corporation, association or
other person, entity or group, whether or not any
such shareholder or any shareholders included in
such group were shareholders of the Company prior
to the Change in Control; or
(iii) all or substantially all of the assets of the
Company are sold or otherwise transferred to or
otherwise acquired by any other corporation,
association or other person, entity or group; or
(iv) the occurrence of any other event or circumstance
which is not covered by (i) through (iii) above
-2-<PAGE>
which the Committee determines affects control of
the Company and constitutes a Change in Control
for purposes of the Plan.
(g) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(h) "Committee" means the Stock Option Committee appointed
by the Board to administer the Plan with respect to
grants of Awards, as specified in Article 3.
(i) "Company" means Aaron Rents, Inc., a Georgia
corporation, or any successor thereto, as provided in
Article 16.
(j) "Director" means any individual who is a member of the
Board of Directors of the Company.
(k) "Employee" means any full-time, salaried employee of
the Company, or of any of the Company's Subsidiaries.
(l) "Effective Date" shall have the meaning ascribed to
such term in Section 1.1.
(m) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor
act thereto.
(n) "Fair Market Value" shall be determined as follows:
(i) If, on the relevant date, the Shares are traded on
a national or regional securities exchange or on
The Nasdaq Stock Market ("Nasdaq") and closing
sale prices for the Shares are customarily quoted,
on the basis of the closing sale price on the
principal securities exchange (or Nasdaq) on which
the Shares may then be traded or, if there is no
such sale on the relevant date, then on the
immediately preceding day on which a sale was
reported;
(ii) If, on the relevant date, the Shares are not
listed on any securities exchange or traded on the
Nasdaq, but nevertheless are publicly traded and
reported on Nasdaq without closing sale prices for
the Shares being customarily quoted, on the basis
of the mean between the closing bid and asked
quotations in such other over-the-counter market
as reported by Nasdaq; but if there are no bid and
asked quotations in the over-the-counter market as
reported by Nasdaq on that date, then the mean
between the closing bid and asked quotations in
the over-the-counter market as reported by Nasdaq
on the immediately preceding day such bid and
asked prices were quoted; and
(iii) If, on the relevant date, the Shares are not
publicly traded as described in (i) or (ii), on
the basis of the good faith determination of the
Committee.
(o) "Final Award" means the actual award earned during a
performance period by a Participant, as determined by
-3-<PAGE>
the Committee at the end of the performance period
pursuant to Article 7.
(p) "Incentive Payment Date" means the seventy-fifth day
following the last day of the performance period during
which the Final Award under Article 7 was earned, or
such earlier date upon which Final Awards are paid to
Participants.
(q) "Incentive Stock Option" or "ISO" means an option to
purchase Shares granted under Article 6 which is
designated as an Incentive Stock Option and is intended
to meet the requirements of Section 422 of the Code.
(r) "Insider" shall mean an Employee who is, on the
relevant date, an officer or a director, or a ten
percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant
to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.
(s) "Named Executive Officer" means a Participant who, as
of the date of vesting and/or payout of an Award, is
one of the group of "covered employees," as defined in
the regulations promulgated under Code Section 162(m),
or any successor statute.
(t) "Non-qualified Stock Option" or "NQSO" means an option
to purchase Shares granted under Article 6, and which
is not intended to meet the requirements of Code
Section 422.
(u) "Option" means an Incentive Stock Option or a
Non-qualified Stock Option.
(v) "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as
determined by the Committee.
(w) "Participant" means an Employee who has been granted an
Award which is outstanding.
(x) "Performance Share" means an Award granted to an
Employee, as described in Article 7 hereof.
(y) "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and used in
Section 13(d) and 14(d) thereof, including a "group" as
defined in Section 13(d) thereof.
(z) "Retirement" shall mean retiring from employment with
the Company or any Subsidiary upon attaining the age of
65.
(aa) "Restricted Stock" means restricted Shares awarded in
accordance with the terms of Article 8 and the other
provisions of the Plan.
(ab) "Shares" means the shares of Class B Common Stock of
the Company, par value $.50 per share.
(ac) "Subsidiary" means any corporation, partnership, joint
venture or other entity in which the Company has a
-4-<PAGE>
majority voting interest, either direct or indirect.
With respect to a Participant, the term shall refer to
the Subsidiary for which the Participant primarily
performs services.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the
Stock Option Committee of the Board, or by any substitute
Committee appointed by the Board that is granted authority to
administer the Plan, said Committee or substitute Committee
consisting of two or more Directors who meet the "disinterested
administration" requirements of Rule 16b-3 under the Exchange Act
and the "outside director" requirements of Code Section 162(m).
The members of the Committee shall be appointed from time to time
by, and shall serve at the discretion of, the Board of Directors.
The Committee shall be comprised solely of Directors
who are eligible to administer the Plan pursuant to Rule 16b-
3(c)(2) or any successor thereto under the Exchange Act.
However, if for any reason any member of the Committee does not
qualify to administer the Plan, as contemplated by Rule 16b-
3(c)(2) of the Exchange Act, the Board of Directors may appoint a
new Committee member who complies with Rule 16b-3(c)(2).
3.2 AUTHORITY OF THE COMMITTEE. Subject to the provisions
of the Plan, the Committee shall have full power to select
Employees who shall participate in the Plan (who may change from
year to year); determine the size and types of Awards; determine
the terms and conditions of Awards in a manner consistent with
the Plan (including vesting provisions and the duration of the
Awards); construe and interpret the Plan and any agreement or
instrument entered into under the Plan; establish, amend or waive
rules and regulations for the Plan's administration; and (subject
to the provisions of Article 13) amend the terms and conditions
of any outstanding Award to the extent such terms and conditions
are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations
which may be necessary or advisable in the Committee's opinion
for the administration of the Plan.
3.3 COMMITTEE DECISIONS BINDING. All determinations and
decisions made by the Committee pursuant to the provisions of the
Plan and all related orders and resolutions of the Board shall be
final, conclusive and binding on all Persons, including the
Company, the shareholders, Employees, Participants and their
estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as
provided in Section 4.3, the total number of Shares available for
grant of Awards under the Plan shall be an aggregate of seven
hundred fifty thousand (750,000). These Shares may, in the
discretion of the Company, be either authorized but unissued
Shares or Shares held as treasury shares, including Shares
purchased by the Company on the open market.
The following rules shall apply for purposes of the
determination of the number of Shares available for grant under
the Plan;
-5-<PAGE>
(a) The grant of an Option or Restricted Stock shall
reduce the Shares available for grant hereunder by the
number of Shares subject to such Award.
(b) The Committee shall in each case determine the
appropriate number of Shares to deduct from the authorized
pool in connection with the grant of Performance Shares.
(c) While an Option, Restricted Stock or Performance
Share is outstanding, it shall be counted against the
authorized pool of Shares, regardless of its vested status.
(d) In the event an Award is paid in the form of
Shares or derivatives of Shares, the authorized pool shall
be reduced by the number of Shares or Share derivatives paid
to the Participant, as determined by the Committee.
(e) To the extent that an Award is settled in cash
rather than in Shares, the authorized Share pool shall be
credited with the appropriate number of Shares represented
by the cash settlement of the Award, as determined at the
sole discretion of the Committee (subject to the limitation
set forth in Section 4.2).
4.2 LAPSED AWARDS. If any Award granted under this
Plan is canceled, terminates, expires or lapses for any reason,
any Shares subject to such Award shall again be available for the
grant of an Award under the Plan. However, in the event that
prior to the Award's cancellation, termination, expiration or
lapse, the holder of the Award at any time received one or more
"benefits of ownership" pursuant to such Award (as defined by the
Securities and Exchange Commission, pursuant to any rule or
interpretation promulgated under Section 16 of the Exchange Act),
the Shares subject to such Award shall not again be made
available for regrant under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of
any change in corporate capitalization, such as a stock split, or
a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock
or property of the Company, any reorganization (whether or not
such reorganization comes within the definition of such term in
Code Section 368) or any partial or complete liquidation of the
Company, such adjustment shall be made in the number and class of
Shares which may be delivered under the Plan, and in the number
and class of and/or price of Shares subject to outstanding Awards
granted under the Plan, as may be determined to be appropriate
and equitable by the Committee, in its sole discretion, to
prevent dilution or enlargement of rights; provided, however,
that the number of Shares subject to any Award shall always be a
whole number and the Committee shall make such adjustments as are
necessary to insure Awards of whole Shares.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
Any key Employee of the Company, or of any Subsidiary,
including any such Employee who is also a director of the
Company, or of any Subsidiary, whose judgment, initiative and
efforts contribute or may be expected to contribute materially to
the successful performance of the Company or any Subsidiary shall
be eligible to receive an Award under the Plan. In determining
the Employees and other Persons to whom an Award shall be granted
and the number of Shares which may be granted pursuant to that
-6-<PAGE>
Award, the Committee shall take into account the duties of the
respective Person, their present and potential contributions to
the success of the Company or any Subsidiary, and such other
factors as the Committee shall deem relevant in connection with
accomplishing the purpose of the Plan.
No person who is a member of the Committee shall be
eligible to be granted any Award under the Plan while so serving.
Any Person who is a Director of the Company but who is not an
Employee of the Company or a Subsidiary of the Company shall not
be eligible to receive Awards under the Plan.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and
provisions of the Plan, Options may be granted to Employees at
any time and from time to time as shall be determined by the
Committee. The Committee shall have discretion in determining
the number of Shares subject to Option granted to each
Participant; provided, however, that in the case of any ISO
granted under the Plan, only an Employee may receive such grant
and the aggregate Fair Market Value (determined at the time such
Option is granted) of the Shares to which ISOs are exercisable
for the first time by the Optionee during any calendar year
(under the Plan and under all other incentive stock option plans
of the Company and any Subsidiary) shall not exceed $100,000.
The Committee may grant a Participant ISOs, NQSOs or a
combination thereof, and may vary such Awards among Participants.
The maximum number of Options that a Named Executive
Officer can be granted hereunder during any twelve month period
is 150,000.
6.2 AWARD AGREEMENT. Each Option grant shall be
evidenced by an Award Agreement that shall specify the Option
Price, the duration of the Option, the number of Shares to which
the Option pertains and such other provisions as the Committee
shall determine. The Award Agreement shall further specify
whether the Award is intended to be an ISO or an NQSO. Any
portion of an Option that is not designated as an ISO or
otherwise fails or is not qualified to be treated as an ISO (even
if designated as an ISO) shall be an NQSO.
6.3 OPTION PRICE. The Option Price for each grant of
an ISO shall be not less than the Fair Market Value of a Share on
the date the ISO is granted. In no event, however, shall any
Participant who, at any time would otherwise be granted an
Option, owns (within the meaning of Section 424(d) of the Code)
stock of the Company possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the
Company be eligible to receive an ISO at an Option Price less
than one hundred ten percent (110%) of the Fair Market Value of a
Share on the date the ISO is granted. The price at which each
Share covered by each NQSO shall be purchased by an Optionee
shall be established by the Committee, but in no event shall such
price be less than eighty-five percent (85%) of the Fair Market
Value (or such lower percentage of Fair Market Value as may be
established by Internal Revenue Service rules or regulations as
the limit for granting discounted stock options without causing
immediate tax consequences to the Participant) of a Share on the
date the Option is granted.
-7-<PAGE>
6.4 DURATION OF OPTIONS. Each Option shall expire at
such time as the Committee shall determine at the time of grant;
provided, however, that no Option shall be exercisable later than
the tenth (10th) anniversary date of its grant.
6.5 EXERCISE OF OPTIONS. Options granted under the
Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each
instance approve, which need not be the same for each grant or
for each Participant. Except as the Committee may otherwise
provide, Options granted under the Plan shall not generally be
exercisable prior to six (6) months following the date of grant.
Each Option shall be exercisable for such number of Shares and at
such time or times, including periodic installments, as may be
determined by the Committee at the time of the grant. Except as
otherwise provided in the Award Agreement and Article 12, the
right to purchase Shares that are exercisable in periodic
installments shall be cumulative so that when the right to
purchase any Shares has accrued, such Shares or any part thereof
may be purchased at any time thereafter until the expiration or
termination of the Option.
6.6 PAYMENT. Options shall be exercised by the
delivery of a written notice of exercise to the Company, setting
forth the number of Shares with respect to which the Option is to
be exercised, accompanied by full payment for the Shares. The
Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash, or (b) if approved by the
Committee, by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the
total Option Price (provided that the Shares which are tendered
must have been held by the Participant for the period required by
law, if any, prior to their tender to satisfy the Option Price),
or (c) by a combination of (a) and (b). The Committee also may
allow cashless exercises as permitted under Federal Reserve
Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee
determines to be consistent with the Plan's purpose and
applicable law.
As soon as practicable after receipt of a written
notification of exercise and full payment, the Company shall
deliver to the Participant, in the Participant's name, Share
certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).
6.7 TERMINATION OF EMPLOYMENT DUE TO DEATH OR
RETIREMENT. Unless otherwise provided by the Committee in an
Award Agreement, the following rules shall apply in the event of
the Participant's termination of employment due to death or
Retirement:
(a) TERMINATION BY DEATH. In the event the
Participant dies while actively employed, all outstanding
unvested Options granted to that Participant shall
immediately vest, and thereafter all vested Options shall
remain exercisable at any time prior to their expiration
date, or for two (2) years after the date of death,
whichever period is shorter, by (i) such person(s) as shall
have been named as the Participant's beneficiary, (ii) such
person(s) that have acquired the Participant's rights under
such Options by will or by the laws of descent and
distribution, (iii) the Participant's estate or
-8-<PAGE>
representative of the Participant's estate or (iv) by a
transferee of the Option who has acquired the Option in a
transaction that is permitted by Section 6.9.
(b) TERMINATION BY RETIREMENT. In the event the
employment of the Participant is terminated by reason of
Retirement, (i) with respect to all ISO's held by the
Participant, all outstanding unvested Options granted to
that Participant shall immediately vest, and thereafter all
vested Options shall remain exercisable at any time prior to
their expiration date, or for three (3) months after the
effective date of Retirement, whichever period is shorter,
and (ii) with respect to all NQSO's held by the Participant,
all outstanding Options shall continue to be exercisable in
accordance with the vesting schedule in effect for such
Options as if the Participant's employment had not
terminated.
(c) EMPLOYMENT TERMINATION FOLLOWED BY DEATH. In the
event that a Participant's employment terminates by reason
of Retirement, and within the exercise period following such
termination the Participant dies, then the remaining
exercise period for outstanding Options shall be one (1)
year following death. Such Options shall be exercisable by
the persons specified in subsection (a) above.
6.8 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. If
the employment of a Participant shall terminate for any reason
other than the reasons set forth in Section 6.7, and subject to
the provisions of Article 12 hereof, all Options held by the
Participant which are not vested as of the effective date of
employment termination immediately shall be forfeited to the
Company (and shall, subject to Section 4.2, once again become
available for grant under the Plan). However, the Committee, in
its sole discretion, shall have the right to immediately vest all
or any portion of such Options, subject to such terms as the
Committee, in its sole discretion, deems appropriate; provided,
however, that the foregoing discretion shall not be applicable
with regard to Awards to Named Executive Officers except to the
extent permitted under Code Section 162(m).
In the event an Employee's employment is terminated by
the Company or a Subsidiary for Cause, or an Employee voluntarily
terminates his employment (other than upon Retirement), the
Participant's right to exercise any then vested outstanding
Options shall terminate immediately upon such termination of
employment. If the Employee's employment is terminated by the
Company or Subsidiary without Cause, any Options vested as of
such Employee's date of termination shall remain exercisable at
any time prior to their expiration date or for two months after
such Employee's date of termination of employment, whichever
period is shorter.
6.9 LIMITED TRANSFERABILITY. A Participant may
transfer an Option granted under the Plan to members of his or
her Immediate Family (as defined below), to one or more trusts
for the benefit of such Immediate Family members, or to one or
more partnerships where such Immediate Family members are the
only partners, if (i) the Award Agreement evidencing such Option
expressly provides that the Option may be transferred and (ii)
the Participant does not receive any consideration in any form
whatsoever for such transfer. Any Option so transferred shall
-9-
<PAGE>
continue to be subject to the same terms and conditions in the
hands of the transferee as were applicable to said Option
immediately prior to the transfer thereof. Any reference in any
such Award Agreement to the employment by or performance of
services for the Company by the Participant shall continue to
refer to the employment of or performance by the transferring
Participant. For purposes hereof, "Immediate Family" shall mean
the Participant and the Participant's spouse, and their
respective ancestors and descendants. Any Option that is granted
pursuant to any Award Agreement that did not initially expressly
allow the transfer of said Option and that has not been amended
to expressly permit such transfer, shall not be transferable by
the Participant otherwise than by will or by the laws of descent
and distribution and such Option thus shall be exercisable in the
Participant's lifetime only by the Participant.
ARTICLE 7. PERFORMANCE SHARES
7.1 GRANT OF PERFORMANCE SHARES. Subject to the terms
hereof, Performance Shares may be granted to eligible Employees
at any time and from time to time for no consideration, as shall
be determined by the Committee. The Committee shall have
complete discretion in determining the number of Performance
Shares granted to each Participant; provided, however, that
unless and until the Company's shareholders vote to change the
maximum number of Performance Shares that may be earned by any
one Named Executive Officer (subject to the provisions of Article
13), none of the Named Executive Officers may earn more than
150,000 Performance Shares with respect to any performance
Period.
7.2 VALUE OF PERFORMANCE SHARES. Each Performance
Share shall have a value equal to the Fair Market Value of a
Share on the date the Performance Share is earned. The Committee
shall set performance goals in its discretion which, depending on
the extent to which they are met, will determine the number of
Performance Shares that will be earned by the Participants. The
time period during which the performance goals must be met shall
be called a "performance period." Performance periods shall, in
all cases, equal or exceed two (2) years in length. The
performance goals shall be established at the beginning of the
performance period (or within such time period as is permitted by
Code Section 162(m) and the regulations thereunder).
Unless and until the Company's shareholders vote to
change the general performance measures (subject to the
provisions of Article 13), the attainment of which shall
determine the number of Performance Shares earned hereunder, the
Committee will use one or more of the following performance
measures for purposes of Awards under the Plan to Named Executive
Officers: total shareholder return, return on assets, return on
equity, earnings per share, revenue growth and pre-tax profit
performance. Each fiscal year of the Company, the Committee, in
its sole discretion, may select among the performance measures
specified in this Section 7.2 and set the relative weights to be
given to such performance measures. However, in the case of
Participants who are not Named Executive Officers, the Committee
in its sole discretion may approve performance measures that are
not specified in this Section 7.2 without obtaining shareholder
approval of such measures.
In the event that applicable tax and/or securities laws
(including, but not limited to, Code Section 162(m) and Section
16 of the Exchange Act) change to permit Committee discretion to
-10-<PAGE>
alter the governing performance measures without obtaining
shareholder approval of such changes, the Committee shall have
sole discretion to make such changes without obtaining
shareholder approval.
7.3 EARNING OF PERFORMANCE SHARES. After the
applicable performance period has ended, the Committee shall
certify the extent to which the established performance goals
have been achieved. Subsequently, each holder of Performance
Shares shall be entitled to receive payout on the number of
Performance Shares earned by the Participant over the performance
period, to be determined as a function of the extent to which the
corresponding performance goals have been achieved. The
Committee may, in its sole discretion, increase or decrease the
amount of a Final Award otherwise payable to a Participant under
this Article 7 if, in the Committee's view, the Company's
financial performance during the relevant period justifies such
adjustment, whether or not any one or more of the established
performance goals has been achieved; provided, however, that the
Committee shall have no discretion to increase the amount of a
Final Award otherwise payable to a Named Executive Officer under
this Article 7.
7.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE SHARES.
Except as otherwise provided in Article 12 hereof, payment of
earned Performance Shares shall be made, in a single lump sum,
promptly but in no event later than the Incentive Payment Date.
The Committee, in its sole discretion, may pay earned Performance
Shares in the form of cash or in Shares (or in a combination
thereof) which have, as of the close of the applicable
performance period, an aggregate Fair Market Value equal to the
value of the earned Performance Shares.
7.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, RETIREMENT
OR AT THE REQUEST OF THE COMPANY WITHOUT CAUSE. Unless the Award
Agreement provides otherwise, in the event the employment of a
Participant is terminated by reason of death, Retirement or by
the Company without Cause during a performance period, the
Participant shall receive a prorated payout with respect to the
unearned Performance Shares. The prorated payout shall be
determined by the Committee, in its sole discretion, and shall be
based upon the length of time that the Participant held the
unearned Performance Shares during the performance period
relative to the length of the performance period, and shall be
the greater of the target award prorated for the applicable time
period, or the payout earned on the basis of actual performance
measured by the achievement of the established performance goals
prorated to the time of his termination due to death, Retirement
or by the Company without Cause.
Payment of earned Performance Shares to Participants
whose termination is due to Retirement or by the Company without
Cause shall be made at the same time payments are made to
Participants who did not terminate employment during the
applicable performance period.
7.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS.
Except as provided in Article 12 and in the Award Agreement, in
the event that a Participant's employment terminates during a
performance period for any reason other than those reasons set
forth in Section 7.5, all unearned Performance Shares shall be
forfeited by the Participant to the Company.
-11-<PAGE>
7.7 NONTRANSFERABILITY. Unless the Committee provides
otherwise in the Award Agreement, Performance Shares may not be
sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, a Participant's Performance Share rights
under the Plan shall be exercisable during the Participant's
lifetime only by the Participant or the Participant's legal
representative.
ARTICLE 8. RESTRICTED STOCK
8.1 GRANTS. The Committee may from time to time in
its discretion grant Restricted Stock to Employees and may
determine the number of Shares of Restricted Stock to be granted
and the terms and conditions of, and the amount of payment, if
any, to be made by the Employee for, such Restricted Stock. A
grant of Restricted Stock may require the Employee to pay for
such Shares of Restricted Stock, but the Committee may establish
a price below Fair Market Value at which the Employee can
purchase the Shares of Restricted Stock. Each grant of
Restricted Stock shall be evidenced by an Award Agreement
containing terms and conditions not inconsistent with the Plan as
the Committee shall determine to be appropriate in its sole
discretion. Such Restricted Stock shall be granted subject to
the restrictions prescribed pursuant to the Plan and the Award
Agreement. The maximum number of Shares that may be awarded as
Restricted Stock to a Named Executive Officer during any 12-month
period is 150,000 Shares.
8.2 RESTRICTED PERIOD, LAPSE OF RESTRICTIONS. At the
time a grant of Restricted Stock is made, the Committee shall
establish a period or periods of time (the "Restricted Period")
applicable to such grant which, unless the Committee otherwise
provides, shall not be less than six months. Subject to the
other provisions of this Article 8, at the end of the Restricted
Period all restrictions shall lapse and the Restricted Stock
shall vest in the Participant. At the time a grant is made, the
Committee may, in its discretion, prescribe conditions for the
incremental lapse of restrictions during the Restricted Period
and for the lapse or termination of restrictions upon the
occurrence of other conditions in addition to or other than the
expiration of the Restricted Period with respect to all or any
portion of the Restricted Stock. Such conditions may, but need
not, include without limitation, (a) the death or Retirement of
the Employee to whom Restricted Stock is granted or (b) the
occurrence of a Change in Control. The Committee may also, in
its discretion, shorten or terminate the Restricted Period, or
waive any conditions for the lapse or termination of restrictions
with respect to all or any portion of the Restricted Stock at any
time after the date the grant is made.
8.3 RIGHTS OF HOLDER, LIMITATIONS THEREON. Upon a
grant of Restricted Stock, a stock certificate (or certificates)
representing the number of Shares of Restricted Stock granted to
the Employee shall be registered in the Employee's name and shall
be held in custody by the Company or a bank selected by the
Committee for the Employee's account. Following such
registration, the Employee shall have the rights and privileges
of a shareholder as to such Restricted Stock, including the right
to receive dividends and to vote such Restricted Stock, except
that, the right to receive cash dividends shall be the right to
receive such dividends either in cash currently or by payment in
-12-
<PAGE>
Restricted Stock, as the Committee shall determine, and except
further that the following restrictions shall apply:
(a) The Employee shall not be entitled to delivery of
a certificate until the expiration or termination of the
Restricted Period for the Shares represented by such certificate
and the satisfaction of any and all other conditions prescribed
by the Committee;
(b) None of the Shares of Restricted Stock may be
sold, transferred, assigned, pledged, or otherwise encumbered or
disposed of during the Restricted Period and until the
satisfaction of any and all other conditions prescribed by the
Committee; and
(c) All of the Shares of Restricted Stock that have
not vested shall be forfeited and all rights of the Employee to
such Shares of Restricted Stock shall terminate without further
obligation on the part of the Company unless the Employee has
remained a full-time employee of the Company or any of its
Subsidiaries until the expiration or termination of the
Restricted Period and the satisfaction of any and all other
conditions prescribed by the Committee applicable to such Shares
of Restricted Stock. Upon the forfeiture of any Shares of
Restricted Stock, such forfeited Shares shall be transferred to
the Company without further action by the Employee, and shall, in
accordance with Section 4.2, again be available for grant
hereunder.
With respect to any Shares received as a result of
adjustments under Section 4.3 and any Shares received with
respect to cash dividends declared on Restricted Stock, the
Participant shall have the same rights and privileges, and be
subject to the same restrictions, as are set forth in this
Article 8.
8.4 DELIVERY OF UNRESTRICTED SHARES. Upon the
expiration or termination of the Restricted Period for any Shares
of Restricted Stock and the satisfaction of any and all other
conditions prescribed by the Committee, the restrictions
applicable to such Shares of Restricted Stock shall lapse and a
stock certificate for the number of Shares of Restricted Stock
with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions except any that may be
imposed by law, to the holder of the Restricted Stock. The
Company shall not be required to deliver any fractional Share but
will pay, in lieu thereof, the Fair Market Value (determined as
of the date the restrictions lapse) of such fractional share to
the holder thereof. Prior to or concurrently with the delivery of
a certificate for Restricted Stock, the holder shall be required
to pay an amount necessary to satisfy any applicable federal,
state and local tax requirements as set out in Article 14.
8.5 NONASSIGNABILITY OF RESTRICTED STOCK. Unless the
Committee provides otherwise in the Award Agreement, no grant of,
nor any right or interest of a Participant in or to any
Restricted Stock, or in any instrument evidencing any Award of
Restricted Stock under the Plan, may be assigned, encumbered or
transferred except, in the event of the death of a Participant,
by will or the laws of descent and distribution.
-13-
<PAGE>
ARTICLE 9. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time,
name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan
is to be paid in case of his or her death before he or she
receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be
in a form prescribed by the Company and shall be effective only
when filed by the Participant, in writing, with the Company
during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death
shall be paid to the Participant's estate.
The spouse of a married Participant domiciled in a
community property jurisdiction shall join in any designation of
beneficiary or beneficiaries other than the spouse.
ARTICLE 10. DEFERRALS
The Committee may permit a Participant to defer to
another plan or program such Participant's receipt of the payment
of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise of an Option, the
satisfaction of any requirements or goals with respect to
Performance Shares or the vesting of Restricted Stock. If any
such deferral election is required or permitted, the Committee
shall, in its sole discretion, establish rules and procedures for
such payment deferrals.
ARTICLE 11. RIGHTS OF EMPLOYEES
11.1 EMPLOYMENT. Nothing in the Plan shall interfere
with or limit in any way the right of the Company or a Subsidiary
to terminate any Participant's employment by the Company at any
time, nor confer upon any Participant any right to continue in
the employ of the Company or a Subsidiary. For purpose of the
Plan, transfer of employment of a Participant between the Company
and any one of its Subsidiaries (or between Subsidiaries) shall
not be deemed a termination of employment.
11.2 PARTICIPATION. No Employee shall have the right
to be selected to receive an Award under the Plan, or, having
been so selected, to be selected to receive a future Award.
ARTICLE 12. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, except as
provided in the Award Agreement or unless otherwise specifically
prohibited by the terms of Article 17:
(a) Any and all Options granted to Participants under
the Plan shall become fully vested and immediately
exercisable;
(b) To the extent provided by the Committee in the
Award Agreement, the earning of unearned
Performance Shares will be based upon the target
award levels or the actual performance compared
with goals prorated to the date of the Change in
Control. Unearned Performance Shares outstanding
at the time of a Change in Control will be fully
-14-
<PAGE>
vested (subject to the employment requirements in
the next sentence) and will be payable in Common
Stock or cash, or a combination thereof as
determined by the Committee. The Participant will
be entitled to payment of vested Performance
Shares for a performance period only if (i) he
remains employed by the Company or Subsidiary (or
their respective successors) until the date that
would have been the last day of the performance
period, at which time the payment of the
Performance Shares shall be made, or (ii) prior to
the end of the performance period, his employment
is terminated by the Company or Subsidiary without
Cause, he terminates employment for a reason other
than Cause or he retires as permitted by any
retirement plan of the Company then in effect, or
he dies. In any of these cases, payment of vested
Performance Shares shall be made as soon as
possible after the Participant ceases active
employment.
(c) Unless otherwise provided in the Award Agreement,
all restrictions on an Award of Restricted Stock
shall lapse and such Restricted Stock shall be
delivered to the Participant in accordance with
Section 8.4; and
(d) Subject to Article 13 hereof the Committee shall
have the authority to make any modifications to
the Awards as determined by the Committee to be
appropriate before the effective date of the
Change in Control.
ARTICLE 13. AMENDMENT, MODIFICATION AND TERMINATION
13.1 AMENDMENT, MODIFICATION AND TERMINATION. The
Board may, at any time and from time to time, alter, amend,
suspend or terminate the Plan in whole or in part; provided,
that, unless approved by the holders of a majority of the total
number of Shares of the Company represented and entitled to vote
at a meeting at which a quorum is present, no amendment shall be
made to the Plan if such amendment would (a) materially modify
the eligibility requirements provided in Article 5; (b) increase
the total number of Shares (except as provided in Section 4.3)
which may be granted under the Plan, as provided in Section 4.1;
(c) extend the term of the Plan; or (d) amend the Plan in any
other manner which the Board, in its discretion, determines
should become effective only if approved by the shareholders even
though such shareholder approval is not expressly required by the
Plan or by law. No amendment which requires shareholder approval
in order for the Plan to continue to comply with Rule 16b-3 under
the Exchange Act, including any successor to such Rule, shall be
effective unless such amendment shall be approved by the
requisite vote of shareholders.
13.2 AWARDS PREVIOUSLY GRANTED. No termination,
amendment or modification of the Plan shall adversely affect in
any material way any Award previously made under the Plan,
without the written consent of the Participant holding such
Award. The Committee shall, with the written consent of the
Participant holding such Award, have the authority to cancel
Awards outstanding and grant replacement Awards therefor.
-15-<PAGE>
13.3 Compliance With Code Section 162(m). At all times
when the Committee determines that compliance with Code Section
162(m) is desired, all Awards granted under this Plan shall
comply with the requirements of Code Section 162(m). In the
event that changes are made to Code Section 162(m) to permit
greater flexibility with respect to any Award or Awards, the
Committee may, subject to this Article 13, make any adjustments
it deems appropriate in such Award.
ARTICLE 14. WITHHOLDING
14.1 TAX WITHHOLDING. The Company shall have the power
and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal,
state and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to any
taxable event arising in connection with an Award under the Plan.
14.2 SHARE WITHHOLDING. With respect to withholding
required upon the exercise of Options, or upon any other taxable
event arising as a result of Awards granted hereunder which are
to be paid in the form of Shares, Participants may elect, subject
to the approval of the Committee, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could
be imposed on the transaction. All elections shall be
irrevocable, made in writing, signed by the Participant, and
elections by Insiders shall additionally comply with all legal
requirements applicable to Share transactions by such
Participants.
ARTICLE 15. INDEMNIFICATION
Each person who is or shall have been a member of the
Committee, or the Board, shall be indemnified and held harmless
by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit
or proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid
by him or her in settlement thereof, with the Company's approval,
or paid by him in satisfaction of any judgment in any such
action, suit or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf. The foregoing right of
indemnification shall be in addition to any other rights of
indemnification to which such persons may be entitled under the
Company's articles of incorporation or bylaws, as a matter of
law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
ARTICLE 16. SUCCESSORS
All obligations of the Company under the Plan with
respect to Awards shall be binding on any successor to the
Company, whether the existence of such successor is the result of
a direct or indirect purchase, merger, consolidation or
otherwise, of all or substantially all of the business and/or
assets of the Company.
-16-<PAGE>
ARTICLE 17. Legal Construction
17.1 GENDER AND NUMBER. Except where otherwise
indicated by the context, any masculine term used herein also
shall include the feminine; the plural shall include the singular
and the singular shall include the plural.
17.2 SEVERABILITY. In the event any provision of the
Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
17.3 REQUIREMENTS OF LAW. The granting of Awards and
the issuance of Shares under the Plan shall be subject to all
applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may
be required.
17.4 REGULATORY APPROVALS AND LISTING. The Company
shall not be required to issue any certificate or certificates
for Shares under the Plan prior to (i) obtaining any approval
from any governmental agency which the Company shall, in its
discretion, determine to be necessary or advisable, (ii) the
admission of such Shares to listing on any national securities
exchange or Nasdaq on which the Company's Shares may be listed
and (iii) the completion of any registration or other
qualification of such Shares under any state or federal law or
ruling or regulations of any governmental body which the Company
shall, in its sole discretion, determine to be necessary or
advisable.
Notwithstanding any other provision set forth in the
Plan, if required by the then-current Section 16 of the Exchange
Act, any "derivative security" or "equity security" offered
pursuant to the Plan to any Insider may not be sold or
transferred for at least six (6) months after the date of grant
of such Award. The terms "equity security" and "derivative
security" shall have the meanings ascribed to them in the then-
current rules promulgated under Section 16(a) of the Exchange
Act.
The Committee may impose such restrictions on any
Shares acquired pursuant to the Plan as it may deem advisable,
including, without limitation, restrictions under applicable
federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or
traded and under any blue sky or state securities laws applicable
to such Shares.
17.5 SECURITIES LAW COMPLIANCE. With respect to
Insiders, transactions under the Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under
the Exchange Act. To the extent any provisions of the Plan or
action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed
advisable by the Committee.
17.6 GOVERNING LAW. To the extent not preempted by
federal law, the Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the
State of Georgia.
-17-<PAGE>
AS APPROVED BY THE BOARD OF DIRECTORS OF AARON RENTS, INC.
ON ________ ___, 1996.
AARON RENTS, INC.
By: R. Charles Loudermilk
Title: Chairman
ATTEST:
By: /s/ Keith C. Groen
Secretary
Exhibit 5(a) and 23(a)
August 11, 1997
Aaron Rents, Inc.
309 E. Paces Ferry Road, N.E.
Atlanta, Georgia 30305-2377
Re: Form S-8 Registration -- Aaron Rents, Inc. 1996
Stock Option Plan and Incentive Award Plan (1996)
Gentlemen:
The undersigned has acted as counsel for Aaron Rents, Inc.,
a Georgia corporation (the "Company"), in the preparation of the
referenced Form S-8 Registration Statement relating to the
Company's 1996 Stock Option and Incentive Award Plan (the "Plan")
and the proposed offer and sale of up to 1,500,000 shares of the
Company's Common Stock, $.50 par value (the "Common Stock"). In
connection with the preparation of said Registration Statement, I
have examined originals or copies of such corporate records,
documents and other instruments relating to the authorization and
issuance of such shares of Common Stock as I have deemed relevant
under the circumstances.
On the basis of the foregoing, it is my opinion that:
1. The Company was duly organized and incorporated and is
validly existing under the laws of the State of Georgia, with an
authorized capitalization consisting of 25,000,000 shares of
Class A Stock, par value $.50 per share, 25,000,000 shares of
Common Stock, par value $.50 per share and 1,000,000 shares of
Preferred Stock, par value $1.00 per share.
2. The Plan and the proposed offer and sale thereunder of
up to 1,500,000 shares of Common Stock have been duly authorized
by the Board of Directors of the Company, and the shares, when
issued in accordance with the terms and conditions of the Plan,
will be legally issued, fully paid and nonassessable.
The undersigned hereby consents to the filing of this
opinion as an exhibit to said Registration Statement.
Sincerely,
/s/ Keith C. Groen
Keith C. Groen,
Vice President, Legal and
Secretary
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 pertaining to the Aaron Rents, inc. 1996 Stock
Option and Incentive Award Plan of our report dated March 14, 1997, with
respect to the consolidated financial statements of Aaron Rents, Inc.
incorporated by reference in its Annual Report (Form 10-K) for the year
ended December 31, 1996, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
August 11, 1997
