Exhibit 10(w)

 

AMENDMENT NO. 1 TO

SERVICING AGREEMENT

 

THIS AMENDMENT NO. 1 TO SERVICING AGREEMENT (this “Amendment”) dated as of April
30, 2003, by and between AARON RENTS, INC., a Georgia corporation (“Sponsor”)
and SUNTRUST BANK, a banking corporation organized and existing under the laws
of the State of Georgia having its principal office in Atlanta, Georgia (the
“Servicer”).

 

W I T N E S S E T H:

 

WHEREAS,  in order to make available a loan facility to certain franchisees of
Sponsor, the Sponsor, Servicer, and each of the other lending institutions
listed on the signature pages thereto (the “Participants”), entered into that
certain Loan Facility Agreement and Guaranty, dated as of dated as of March 30,
2001, as amended by that certain Amendment No. 1 to Loan Facility Agreement and
Guaranty dated as of October 31, 2002  and as amended by that certain Amendment
No. 2 to Loan Facility Agreement and Guaranty dated as of the date hereof (as
amended or modified, the “Loan Facility Agreement”);

 

WHEREAS, in order to expedite the ongoing operations of the loan facility,
Sponsor and the Servicer entered into that certain Servicing Agreement, dated as
of March 30, 2001 (as amended or modified, the “Servicing Agreement”) to set
forth certain agreements regarding fees and operations;

 

WHEREAS, the Sponsor has requested, and the Servicer and the Participants have
agreed, to enter into certain amendments to the Loan Facility Agreement;

 

WHEREAS, the Sponsor, the Participants and the Servicer wish to enter into this
Amendment to set forth their understandings regarding the amendments;

 

NOW, THEREFORE, for and in consideration of the mutual premises contained herein
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

 

1.               Definitions.  All terms used herein without definition shall
have the meanings set forth for such terms in the Servicing Agreement.

 

2.             Amendments

 

(a)           Section 2.1(a) of the Servicing Agreement is hereby amended by
deleting such subsection in its entirety and substituting the following in lieu
thereof:

 

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(a)           Approval Process.

 

In the event that Sponsor desires that Servicer establish a Loan Commitment
under the Operative Documents, Sponsor shall forward to Servicer an appropriate
Funding Approval Notice no later than thirty (30) days prior to the anticipated
Closing Date of such Loan Commitment.  Such Funding Approval Notice shall
indicate whether the requested Loan Commitment is a Startup Franchisee Loan
Commitment or an Established Franchisee Loan Commitment and shall contain the
following information:

 

(i)  the Franchisee’s legal name and State of organization;

 

(ii) the amount of the Revolving Loan Commitment if applicable;

 

(iii) the amount of the Term Loan Commitment if applicable;

 

(iv) the applicable interest rate for such Loan;

 

(v)  the amount of the Commitment Fee, which shall not exceed 100 basis points;

 

(vi)  a copy of the Franchisee’s executed franchise application authorizing
release of all information set forth therein or delivered in connection
therewith to Servicer;

 

(vii) the amortization period with respect to any Established Franchisee Term
Loan;

 

(viii)  the Franchisee’s federal tax identification number or social security
number;

 

(ix)  the legal address(es) (including county) of the Franchisee’s residence or
principal place of business, each store location, and the site(s) where any
Collateral to be pledged as security for the Loan is stored, together with any
other corporate or tradenames used by the Franchisee in the last five (5) years;

 

(x)  if the Franchisee is a corporation, copies of the Franchisee’s Articles or
Certificate of Incorporation, certified by the Secretary of State of its
incorporation, copies of the Franchisee’s by-laws and current incumbency
certificate, if the Franchisee is a partnership, a copy of the current
partnership agreement, if the Franchisee is a limited liability company, a copy
of the current

 

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operating or limited liability company agreement and if the Franchisee is a sole
proprietor, a Statement of Sole Proprietorship in the form provided by Servicer;

 

(xi)   good standing certificate from the Secretary of State in which the
Franchisee is organized or formed;

 

(xii)  for any Established Franchisee Loan Commitment, a detailed description of
the financial covenants to be included in the Established Franchisee Loan
Agreement, including any defined terms used in such financial covenants; and

 

(xiii) such other information as Servicer shall reasonably request, including,
without limitation, a listing of all Subsidiaries of the Franchisee, a listing
of all Guarantors and a listing of all Permitted Liens.

 

The Funding Approval Notice shall contain a statement that Sponsor has approved
the Franchisee for a franchise license and for participation in the Franchisee
Loan Program and shall also state that the Sponsor consents to the liens in
favor of Servicer provided for therein.

 

(b)  the last three unnumbered paragraphs of Section 2.2 of the Servicing
Agreement are hereby amended by deleting such unnumbered paragraphs in their
entirety and substituting the following in lieu thereof:

 

To the extent that any of the foregoing items (other than the Loan Agreement or
Master Note) have been provided by the relevant Franchisee in connection with a
prior Loan, Sponsor may waive the requirement that such documents be prepared by
the Servicer or executed by the Franchisee.  If the Franchisee is a Startup
Franchisee, at the request of the Sponsor set forth in the Funding Approval
Notice, the Servicer will prepare a Commitment Letter and forward such
Commitment Letter with the Legal Forms to the Franchisee.

 

In addition, Servicer shall engage a nationally recognized service to perform
searches of the Uniform Commercial Code jurisdictions listed by the Sponsor in
the Funding Approval Notice.  Prior to the Closing Date, Servicer shall prepare
appropriate UCC financing statements to be filed in connection with the Loan and
will arrange for them to be filed in the appropriate filing offices.

 

Servicer shall prepare and shall execute the Loan Documents where required and
forward copies of the executed documents to the Franchisee and, if requested by
the Sponsor, to the Sponsor.  Franchisee shall execute and deliver to the
Servicer  prior to the funding of the initial Advance to such Borrower the Loan
Documents and the Sponsor shall provide the Servicer with either (1) the name,
address and telephone number of the representative

 

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of Sponsor who will be closing the Loan, or (2) if no such representative is to
be present, an authorization for the Servicer to close the Loan without any
further authorization from Sponsor upon receipt of signed, notarized Loan
Documents for such Loan.  If requested in writing by the Sponsor, the Servicer
shall give copies of the executed Loan Documents to Sponsor.  In addition,
Sponsor shall cause the Borrower to forward or to have forwarded to Servicer a
Certificate of Insurance evidencing the Borrower’s ownership of liability
insurance and of property and casualty insurance in an amount not less than the
greater of (i) the Loan Commitment, or (ii) the full replacement cost of the
Collateral, which certificate shall name Servicer as sole loss payee and
additional insured and shall also provide that Servicer shall receive thirty
(30) days’ prior written notice at

 

SunTrust Bank

Strategic Partners Program

Attn: Aaron Rents Program Manager

PO Box 4418

Mail Code 1923

Atlanta, GA 30302

 

of any lapse, termination or cancellation of the insurance policies referenced
on such certificate.  The Servicer shall have no obligation to obtain such
Certificate of Insurance or to notify Sponsor of any Borrower’s failure to
deliver such Certificate of Insurance or to notify Sponsor of the contents
thereof.

 

(c)  The Servicing Agreement is hereby amended by deleting third paragraph of
Section 2.3(c) in its entirety and substituting the following in lieu thereof:

 

In addition, each Established Franchisee Loan Agreement shall provide that the
aggregate outstanding principal amount of all Advances made by Servicer to the
relevant Established Franchisee shall not at any time exceed an amount equal to
the relevant Established Franchisee Borrowing Base.

 

(d) The Servicing Agreement is hereby amended by deleting Section 2.8(b) in its
entirety and substituting the following in lieu thereof:

 

(b)           Upon establishment of the above-referenced accounts and receipt of
the above-referenced Loan Documents, duly executed by the Established Franchisee
Borrower and each Guarantor, and if requested by Sponsor, confirmation by
Servicer of its first-priority security interest in the Collateral, Servicer
shall notify the relevant Established Franchisee Borrower and Sponsor that the
Established Franchisee Borrower may request Advances pursuant to the Established
Franchisee Line of Credit Commitment and its Term Loan; provided, however, that
the minimum amount of each Advance shall be $500.  Each Advance made pursuant to
the Established Franchisee Line of Credit

 

4

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Commitment shall be made by Servicer for the sole purposes of (i) honoring
requests from the Established Franchisee Borrower, made through the Aaron’s
Proprietary System, for ACH transfers to suppliers of Merchandise in payment of
Approved Invoices, and (ii) honoring requests from the Established Franchisee
Borrower for such Advances made via ACH transfers to an operating account or
other location specified by such Established Franchisee Borrower (and granted a
vendor identification number by Sponsor) for working capital purposes.  The
Established Franchisee Borrowers shall not be authorized to use the DDA Account
for any other purpose.  The proceeds of each Term Loan will be used for such
purposes as have been approved by the Sponsor.

 

(e) The Servicing Agreement is hereby amended by deleting Section 2.10 in its
entirety and substituting the following in lieu thereof:

 

(a)           All outstanding Advances made pursuant to the Established
Franchisee Line of Credit Commitment with respect to each Established Franchisee
Line of Credit Loan shall be due and payable in full on the Maturity Date of
such Loan, if not sooner accelerated in accordance with the terms of the
applicable Loan Documents.  In addition, the outstanding Advances made pursuant
to the Established Franchisee Line of Credit Commitment pursuant to each
Established Franchisee Line of Credit Loan shall not exceed the sum of the
Established Franchisee Borrowing Base for such Established Franchisee Borrower,
minus the outstanding principal amount of such Established Franchisee Borrower
Term Loan, as determined by Sponsor on the fifth Business Day of each month (as
determined on the last day of the preceding calendar month) and reported to
Servicer on such date.  Servicer shall be entitled to rely upon the calculation
of the Established Franchisee Borrowing Base for each Established Franchisee
Borrower submitted by Sponsor for all purposes hereunder.  Upon receipt of the
Established Franchisee Borrowing Base, Servicer shall input such information
into Servicer’s loan records to be effective as of the date which is two
Business Days after receipt of such information. The statements prepared to be
delivered to each Established Franchisee Borrower with respect to the next
Payment Date shall be prepared requiring a repayment of any Advances outstanding
on the fifth Business Day of such month in excess of relevant Established
Franchisee Borrowing Base as delivered to Servicer by Sponsor on such date.  In
addition, however, Servicer, on the date which is two Business Days after
receipt of such calculation from Sponsor, shall notify the Established
Franchisee Borrowers in writing (including facsimile) of the new Established
Franchisee Borrowing Base for such Borrower and shall require that such
Established Franchisee Borrower repay on the next Payment Date any additional
Advances made pursuant to the Established Franchisee Line of Credit Commitment
made since the date of the preparation of the statement for such Payment Date if
necessary to avoid any overadvance as of such date.  Upon the earlier of one (1)
Business Day after notice from the Sponsor to the Servicer or

 

5

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the next Payment Date, each Established Franchisee Borrower shall prepay its
outstanding Advances made pursuant to the Established Franchisee Line of Credit
Commitment in excess of the relevant Established Franchisee Borrowing Base.

 

(b)           Each Established Franchisee Term Loan shall have a term of no
longer than 4 years and shall be repaid in equal monthly installments of
principal with an amortization period of not more than seven (7) years as
specified by Sponsor in its Funding Approval Notice, with the final installment
being due and payable on the Maturity Date in an amount equal to the entire
outstanding principal balance of the Term Loan.

 

(f)            The Servicing Agreement is hereby amended by replacing Exhibit E
thereto with Exhibit E attached hereto.

 

3.             Conditions of Effectiveness.  This Amendment shall become
effective as of the date first above written (the “Effective Date”) when (i)
this Amendment shall have been executed and delivered by Sponsor to the Servicer
and Servicer shall have executed the same, and (ii) Amendment No. 2 to Loan
Facility Agreement and Guaranty described in the preamble hereto shall have been
executed and delivered by the parties thereto.

 

4.             Representations and Warranties of Sponsor.  Sponsor, without
limiting the representations and warranties provided in the Servicing Agreement,
represents and warrants to the Servicer as follows:

 

(a)           The execution, delivery and performance by Sponsor of this
Amendment are within Sponsor’s corporate powers, have been duly authorized by
all necessary corporate action (including any necessary shareholder action) and
do not and will not (a) violate any provision of any law, rule or regulation,
any judgment, order or ruling of any court or governmental agency, the articles
of incorporation or by-laws of Sponsor or any indenture, agreement or other
instrument to which Sponsor is a party or by which Sponsor or any of its
properties is bound or (b) be in conflict with, result in a breach of, or
constitute with notice or lapse of time or both a default under any such
indenture, agreement or other instrument.

 

(b)           This Amendment constitutes the legal, valid and binding
obligations of Sponsor, enforceable against Sponsor in accordance with their
respective terms.

 

(c)           No Unmatured Credit Event or Credit Event has occurred and is
continuing as of the Effective Date.

 

5.               Survival.  Each of the foregoing representa­tions and
warranties and each of the representations and warranties made in the Servicing
Agreement shall be made at and as of the Effective Date.  Each of the foregoing
representations and warranties shall constitute a representation and warranty of
Sponsor under the Servicing Agreement, and it shall be a Credit

 

6

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Event if any such representation and warranty shall prove to have been incorrect
or false in any material respect at the time when made.  Each of the
representations and warranties made under the Servicing Agreement (including
those made herein) shall survive and not be waived by the execution and delivery
of this Amendment or any investigation by the Servicer.

 

6.               No Waiver, Etc.  Sponsor hereby agrees that nothing herein
shall constitute a waiver by the Servicer of any  Credit Event, whether known or
unknown, which may exist under the Servicing Agreement.  Sponsor hereby further
agrees that no action, inaction or agreement by the Servicer, including without
limitation, any indulgence, waiver, consent or agreement altering the provisions
of the Servicing Agreement which may have occurred with respect to any
obligation during the terms of the Servicing Agreement or any portion thereof,
or any other matter relating to the Servicing Agreement, shall require or imply
any future indulgence, waiver, or agreement by the Servicer. In addition,
Sponsor acknowledges and agrees that it has no knowledge of any defenses,
counterclaims, offsets or objections in its favor against the Servicer with
regard to any of the obligations due under the terms of the Servicing Agreement
as of the date of this Amendment.

 

7.               Ratification of Servicing Agreement.  Except as expressly
amended herein, all terms, covenants and conditions of the Servicing Agreement
and the other Operative Documents shall remain in full force and effect, and the
parties hereto do expressly ratify and confirm the Servicing Agreement as
amended herein.  All future references to the Servicing Agreement shall be
deemed to refer to the Servicing Agreement as amended hereby.

 

8.               Binding Nature.  This Amendment shall be binding upon and inure
to the benefit of the parties hereto, their respective heirs, successors,
successors-in-titles, and assigns.

 

9.               Costs, Expenses and Taxes.  Sponsor agrees to pay on demand all
reasonable costs and expenses of the Servicer in connection with the
preparation, execution and delivery of this Amendment and the other instruments
and documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Servicer with
respect thereto and with respect to advising the Servicer as to its rights and
responsibilities hereunder and thereunder.  In addition, Sponsor shall pay any
and all stamp and other taxes payable or determined to be payable in connection
with the execution and delivery of this Amendment and the other instruments and
documents to be delivered hereunder, and agrees to save the harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.

 

10.             Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.

 

11.             Entire Understanding.  This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotia­tions or agreements, whether written or oral,
with respect thereto.

 

7

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12.             Counterparts.  This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts and may be
delivered by telecopier.  Each counterpart so executed and delivered shall be
deemed an original and all of which taken together shall constitute but one and
the same instrument.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment through
their authorized officers as of the date first above written.

 

 

 

AARON RENTS, INC.

 

 

 

By:

/s/ Gilbert L. Danielson

 

 

 

Name: Gilbert L. Danielson

 

 

Title: Executive VP and CFO

 

 

 

 

 

SUNTRUST BANK, as Servicer

 

 

 

 

 

By:

/s/ Donald M. Thompson

 

 

 

Name: Donald M. Thompson

 

 

Title: Director

 

 

[SIGNATURE PAGE TO AMENDMENT NO. 1

TO SERVICING AGREEMENT]

 

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EXHIBIT E

TO

SERVICING AGREEMENT

 

 

AARON RENTS, INC. FRANCHISEE

LOAN PROGRAM

 

FORM OF FUNDING APPROVAL NOTICE

 

Type of Borrower

 

[   ]

 

Startup Franchisee

 

[   ]

Established Franchisee

 

 

 

 

 

 

 

 

 

Legal Name of Franchisee:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Place of Business:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State of Organization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal Entity Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Tax Identification

 

 

 

 

 

 

 

 

Number (if corporation) or

 

 

 

 

 

 

 

 

Social Security Number (if

 

 

 

 

 

 

 

 

individual):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Type of Loan Commitment:

 

[   ]

 

Startup Franchisee

 

 

 

 

 

 

[   ]

 

Established Franchisee Line of Credit

 

 

 

 

Commitment

 

 

 

 

 

 

[   ]

 

Established Franchisee Term Loan

 

 

 

 

 

Commitment

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of Term Loan Commitment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of Revolving Loan Commitment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitment Fee(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Closing Fees(2):

 

 

 

 

 

 

 

 

 

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(1)  Not to exceed 100 basis points

(2)  [$500 per store location] [$5,000 in the case of Established Franchisee
Borrowers that have customized financial covenants as specified by Sponsor in
accordance with Section 6 of the Servicing Agreement]

 

10

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Proceeds of Term Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Closing Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate:

 

Prime Rate plus        %

 

 

 

 

 

 

 

 

 

 

 

 

 

Term Loan Amortization(3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Locations of Collateral:

 

 

 

 

 

 

 

 

(if different from principal

 

Complete address and county

 

 

 

place of business)

 

 

 

 

 

 

 

 

 

 

Complete address and county

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Complete address and county

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guarantor(s):

 

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Social Security Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Complete Address

 

 

 

 

 

 

 

 

 

 

 

 

 

Guarantor(s) (Continued):

 

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Social Security Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Complete Address

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Social Security Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Complete Address

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Guaranteeing Spouse(s):

 

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Complete Address

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Complete Address

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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(3)  Not to exceed 4 years.

 

11

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Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Complete Address

 

 

 

 

 

 

 

 

 

 

 

 

 

Individual/Entity Subordinating:

 

 

 

 

 

 

Name

 

 

 

 

Any corporate trade names

 

 

 

 

 

 

 

 

used in the last 5 years:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permitted Liens

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Copy of Franchisee

 

 

 

 

 

 

 

 

Application Executed by

 

 

 

 

 

 

 

 

Franchisee Attached

 

[   ]

 

YES

 

[   ]

 

NO

 

 

 

 

 

 

 

 

 

[Copy of Franchise

 

 

 

 

 

 

 

 

Agreement Executed by

 

 

 

 

 

 

 

 

Franchisee Attached

 

[   ]

 

YES

 

[   ]

 

NO]

 

 

 

 

 

 

 

 

 

Copy of Corporate Documents

 

 

 

 

 

 

 

 

Attached

 

[   ]

 

YES

 

[   ]

 

NO

 

 

 

 

 

 

 

 

 

Copy of Good Standing Certificate

 

 

 

 

 

 

 

 

from State in which the Franchisee is

 

 

 

 

 

 

 

 

organized or formed Attached

 

[   ]

 

YES

 

[   ]

 

NO

 

 

FOR ESTABLISHED FRANCHISEE ONLY:  [  ] See attached spreadsheet for non-standard
financial covenants.

 

Pursuant to Section 2.1 of that certain Servicing Agreement executed in
connection with that certain Loan Facility Agreement and Guaranty dated as of
March 30, 2001 (as amended, the “Agreement”) by and between SunTrust Bank (“ST”)
and each of the other lending institutions party thereto (ST, such lenders,
together with any assignees thereof becoming “Participants”), and SunTrust Bank,
as servicer and agent for the Participants (in such capacity, the “Servicer”),
and Aaron Rents, Inc. (“Aaron”), Aaron hereby certifies to the Servicer that it
has approved the Dealer for a franchise license and for participation in the
Program and directs the Servicer to establish a Loan Commitment to the
above-referenced Dealer in accordance with the terms set forth herein and
pursuant to the terms and subject to the further conditions of the Agreement and
the Servicing Agreement.  Sponsor hereby expressly consents to the liens granted
by the above-referenced Dealer, in favor of the Servicer. 

 

AARON RENTS, INC.

                                                              ,           

 

 

 

 

By:

 

 

Title:

 

 

 

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