EXHIBIT 10.1

 

CONFIDENTIAL MEMORANDUM

 

TO: R. Charles Loudermilk, Sr.     FROM: Aaron’s, Inc.     DATE: August 20, 2012

 

The attached Retirement Agreement (the “Agreement”) has been prepared as a
legally enforceable document governing your retirement and the end of your
employment relationship with Aaron’s, Inc. (“Aaron’s”). Among other things, the
Agreement includes a release of any and all claims (except claims for workers’
compensation, unemployment compensation, and pension and welfare benefits)
arising out of any alleged violation of your rights while employed by Aaron’s.
Because the Agreement affects important rights, you have been advised to consult
with an attorney of your choosing before you sign it, and we have shared the
Agreement with your chosen attorney.

 

You have twenty-one (21) days to review and sign the Agreement. Of course, you
need not take the entire twenty-one-day period to review and sign the Agreement.
If you decide to sign the Agreement, please promptly return the executed
Agreement by facsimile to Aaron’s, Inc., 309 E. Paces Ferry Road, N.E., Atlanta,
Georgia 30305, Attn.: Ray Robinson; Facsimile: 404-240-6520. You have the right
to revoke the Agreement during the seven (7) calendar days immediately following
the date you executed it, and you may exercise this right by delivering, via
facsimile, a written notice of revocation to Ray Robinson at the above
referenced contact information at any time during that seven-day period. If you
execute and do not revoke the Agreement, it shall become effective on the eighth
day following the date you executed the Agreement.

 

Please note that the offer reflected in the Agreement is contingent on your
maintaining this matter in confidence until publicly disclosed by Aaron’s.
Although you are free to discuss the offer with your attorney and tax advisor,
you must otherwise keep the existence and terms of the Agreement confidential
and may not discuss the offer or Agreement with any other person until publicly
disclosed by Aaron’s.

 

  I hereby acknowledge receipt of a copy of this document and the attached
Retirement Agreement.       /s/ R. Charles Loudermilk, Sr   R. Charles
Loudermilk, Sr.       8/23/2012   Date

 

 

 

 

RETIREMENT AGREEMENT

 

Aaron’s, Inc. (“Aaron’s”) and R. Charles Loudermilk, Sr. (“Loudermilk”) agree as
follows:

 

1.          Retirement; Chairman Emeritus Position. Loudermilk’s retirement date
and last day of employment with Aaron’s and all affiliated entities will be
September 14, 2012 (the “Retirement Date”). As of the Retirement Date, the Board
of Directors will give Loudermilk the newly created honorary title of “Chairman
Emeritus.” As Chairman Emeritus, Loudermilk will have no official required
responsibilities or duties, and will not be a member of the Aaron’s Board of
Directors. It is contemplated that Loudermilk will make himself available to
provide guidance and advice to the Board of Directors and senior management team
from time to time upon request, but the benefits described in this Agreement are
not conditioned upon any minimum amount of time for such activities; however,
Loudermilk agrees to be available to respond to future inquiries or reasonable
requests for assistance from Aaron’s and its affiliated entities and successors
related to matters arising during Loudermilk’s employment with Aaron’s or its
affiliates or predecessors. As of the Retirement Date, Loudermilk will be
relieved of all further duties and responsibilities and will no longer be
authorized to transact business or incur any expenses, obligations, or
liabilities on behalf of Aaron’s. Loudermilk will also resign from Aaron’s Board
of Directors, and the Boards of Directors of all subsidiaries of Aaron’s,
effective as of the Retirement Date.

 

2.          Consideration. In consideration for Loudermilk’s signing this
Agreement and complying with the promises made herein, Aaron’s will provide the
following payments and benefits:

 

a.          Retirement Pay. For a period of five years from the Retirement Date,
Aaron’s will pay Loudermilk annually the amount of One Million Five Hundred
Thousand Dollars and no/100 cents ($1,500,000.00) as retirement pay (“Retirement
Pay”). The Retirement Pay will be paid twice monthly in equal installments on
Aaron’s normal payroll dates, commencing (subject to delay as provided in
Section 5) on the first normal payroll date after the Retirement Date, less any
payroll withholdings Aaron’s is required by law to withhold. In the event
Aaron’s is informed of Loudermilk’s death prior to the end of such five-year
period, Aaron’s will remit any remaining Retirement Pay payments as they become
due to his estate or other beneficiary he has during his lifetime directed
Aaron’s in writing to pay such payments, or as otherwise directed by the
appropriate probate court upon evidence reasonably satisfactory to Aaron’s as to
the proper party to receive such payments.

 

b.          2012 Prorated Bonus. Aaron’s will pay Loudermilk a prorated 2012
annual bonus based on Loudermilk’s term of employment in 2012 through the
Retirement Date. The bonus payment will be calculated in accordance with Aaron’s
Executive Bonus Plan and then prorated for Loudermilk’s partial year of
employment and will be paid without regard to any requirement under the plan
that Loudermilk be employed on the date the bonus is paid. The bonus amount,
less legally required deductions, will be paid at the same time and in the same
form as bonus awards for other executive officers under the Executive Bonus
Plan, but in no event later than March 15, 2013.

 

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c.          Health Insurance. Loudermilk’s health insurance has been paid
through the Retirement Date. Thereafter, Loudermilk will be eligible to continue
his group health insurance coverage at his own expense for up to eighteen months
in accordance with the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).
Loudermilk will be provided with information regarding COBRA. In addition, if
Loudermilk signs and does not revoke this Agreement, Aaron’s will pay Loudermilk
a gross amount equal to $1,000.00 per month, less legally required deductions,
to assist Loudermilk in the payment of his COBRA premiums under the plan,
premiums for Medicare and/or premiums for a Medicare supplement or Medigap
policy. This payment will be made monthly on Aaron’s normal payroll dates,
commencing (subject to delay as provided in Section 5) on the first normal
payroll date after the Retirement Date, less any payroll withholdings Aaron’s is
required by law to withhold, and thereafter will continue for the remainder of
Loudermilk’s life.

 

d.          Equity Awards. Effective as of the Effective Date, Aaron’s will vest
all outstanding stock options and restricted stock units (“RSUs”) that are
unvested as of the Retirement Date. Under the terms of various award agreements
pursuant to which such options were granted, such options will remain
exercisable following Loudermilk’s Retirement Date for the respective periods
specified in such award agreements. All shares payable upon settlement of the
RSUs shall be delivered (including through a certificateless book-entry
issuance) promptly following the Effective Date of this Agreement. Unless, prior
to the Effective Date of this Agreement, Loudermilk delivers a check to Aaron’s
sufficient to satisfy required tax withholding, Aaron’s shall withhold and
cancel a number of shares having a market value equal to the minimum amount of
taxes required to be withheld.

 

e.          Split-Dollar Life Policies. Loudermilk and Aaron’s are currently
parties to various agreements relating to “split-dollar” life insurance
policies. The parties respective rights under such agreements, as amended to
date, will continue to be governed by such agreements after the Retirement Date.

 

f.          Company Airplanes. For a period of five years from the Retirement
Date, Loudermilk will be permitted reasonable access upon reasonable advance
request to the use of Aaron’s owned airplanes for personal travel, provided that
the requested plane is available for use as requested, and provided that such
use does not exceed forty hours in any calendar year. Loudermilk’s use of
Aaron’s airplanes will be subject to reasonable rules of use adopted by Aaron’s
from time to time during such period applicable to Aaron’s executive officers.
If during such five-year period Aaron’s no longer owns any airplanes, Aaron’s
will use its commercially reasonable efforts to substitute comparable hours of
usage on NetJets or a comparable service. Loudermilk will not be charged for the
air travel benefits provided to him pursuant to this paragraph, but understands
that such benefits may be taxable to him and that any such taxes will be his
personal obligation.

 

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g.          Office Space and Administrative Support. For a period of five years
from the Retirement Date, Aaron’s will pay Loudermilk on a monthly basis the
amount of $2,500.00 to reduce Loudermilk’s cost of maintaining his personal
office in an office space of his choosing (other than Aaron’s corporate
offices). Loudermilk shall also be entitled to keep and move to such personal
office furniture chosen by him for such purpose currently in his office at
Aaron’s. During such period while such personal office is maintained, Aaron’s
will provide Loudermilk with the services of an administrative assistant
providing support to him consistent with his current level of needs. The
administrative assistant will be a full-time employee of Aaron’s and be paid by
and receive her customary benefits through Aaron’s payroll, and it is
anticipated that such assistant will devote approximately 50% of a full time
schedule to providing such services to Loudermilk, if such level is required by
Loudermilk. The assistant will split her time between Loudermilk’s office and
Aaron’s corporate headquarters on a schedule approved by Aaron’s from time to
time upon consultation with Loudermilk. Pam Black will initially serve as such
assistant and will continue to serve as such assistant for such five-year period
until her employment with Aaron’s is terminated or Loudermilk requests that she
no longer provide such services; provided, however, that Aaron’s agrees with
Loudermilk that Aaron’s will not terminate Ms. Black’s employment during such
time except for good cause after prior notice to Loudermilk. If Loudermilk
determines that he no longer has need for office space or for such
administrative support, he will notify Aaron’s that such benefits may be
discontinued, and Aaron’s will have no further obligation to make any further
monthly payments for office space or to make available an administrative
assistant.

 

h.          Registration Rights. In order to help facilitate orderly sales of
shares of Common Stock owned by Loudermilk, for a period of five years from the
Retirement Date, upon Loudermilk’s request Aaron’s will register such shares for
resale to the public on the terms and subject to the conditions described in
Appendix A to this Agreement.

 

i.          Motor Vehicle. Promptly following the Effective Date, Aarons will
assign to Loudermilk legal title to the Mercedes van currently used by
Loudermilk, free and clear of all liens and encumbrances.

 

3.          No Consideration Absent Execution of this Agreement. Loudermilk
understands and agrees that Loudermilk will not receive the monies and/or
benefits specified in Section 2 above, except for Loudermilk’s execution of this
Agreement and it becoming effective pursuant to Section 5 and the fulfillment of
the promises contained herein. Loudermilk acknowledges and agrees that the
payments described above are in full satisfaction of all amounts payable to
Loudermilk, and that Loudermilk is entitled to no other severance payments or
benefits under any other employment or severance plan, agreement or arrangement.
Loudermilk further acknowledges that the payments described above are not
required by Aaron’s policies and procedures and constitute value to which
Loudermilk is not already entitled.

 

Regardless of whether Loudermilk signs this Agreement, Aaron’s will pay
Loudermilk the compensation that Loudermilk earns through the Retirement Date.
Similarly, even if Loudermilk does not sign this Agreement, Loudermilk will be
offered any benefits to which Loudermilk is entitled under COBRA, and will
retain any vested benefits under Aaron’s 401(k) Plan.

 

4.          Consideration Period. Because the arrangements discussed in this
Agreement affect important rights and obligations, Loudermilk is advised to
consult with an attorney before agreeing to the terms set forth herein.
Loudermilk has twenty-one (21) days from August 20, 2012 within which to
consider this Agreement, and Loudermilk may take as much of that time as
Loudermilk wishes before signing. If Loudermilk decides to accept the benefits
offered herein, Loudermilk must sign this Agreement on or before the expiration
of the 21-day period and return it promptly to the attention of Ray Robinson at
Aaron’s address provided above. Loudermilk and Aaron’s agree that any changes
negotiated by the parties shall not re-start the consideration period.

 

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5.          Revocation. Loudermilk may revoke this Agreement for a period of
seven (7) calendar days following the day Loudermilk signs this Agreement. If
Loudermilk decides to revoke this Agreement, Loudermilk must deliver to Aaron’s
a signed notice of revocation stating Loudermilk’s intention to revoke the
Agreement (faxed to the Attention of: Ray Robinson, Aaron’s, Inc., 309 E. Paces
Ferry Road, N.E., Atlanta, Georgia 30305, Facsimile: 404-240-6520) on or before
the last day of this seven-day period. Such revocation may also be sent by
certified mail, return receipt requested, postmarked on or before the seventh
day. No rights or obligations contained in this Agreement shall become
enforceable before the end of the seven-day revocation period. Upon delivery of
a timely notice of revocation to Aaron’s, this Agreement shall be canceled and
void, and neither Loudermilk nor Aaron’s shall have any rights or obligations
arising under it. This Agreement shall become effective on the eighth day after
it is signed (the “Effective Date”) if it has not been timely revoked by
Loudermilk as described above. No payments under Section 2 shall be payable
prior to the Effective Date. Any payments that become due and would have been
paid between Loudermilk’s Retirement Date and the Effective Date shall be paid
on the first normal payroll date after the Effective Date.

 

6.          General Release of Claims. Except for any claims Loudermilk may have
for workers’ compensation benefits, unemployment compensation benefits, vested
pension benefits (including vested benefits under Aaron’s nonqualified deferred
compensation plan), or health care, disability, or other similar welfare
benefits (which are not released by this Agreement), Loudermilk, for himself and
on behalf of his heirs, executors, administrators, successors, and assigns
(collectively referred to throughout the remainder of this Agreement as
“Loudermilk”) knowingly and voluntarily releases and forever discharges Aaron’s,
its subsidiaries, affiliates, related entities, divisions, predecessors,
successors and assigns, their benefits plans and programs and their current and
former employees, attorneys, officers, directors and agents thereof
(collectively referred to throughout the remainder of this Agreement as
“Releasees”), of and from any and all controversies, claims, demands, promises,
actions, suits, grievances, proceedings, complaints, charges, liabilities,
damages, debts, allowances, costs, expenses, attorneys’ fees, and remedies of
any type that Loudermilk may have by reason of any matter, cause, act, or
omission that has occurred before the date on which Loudermilk signs this
Agreement (individually and collectively, “Claims”), including, but not limited
to, those Claims arising out of or in connection with Loudermilk’s employment
with or separation from employment with Aaron’s. This release of Claims
includes, but is not limited to, a release of all Claims against the Releasees
under:

 

·Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et
seq. (which prohibits discrimination based on race, color, national origin,
religion, or sex);

·Sections 1981 through 1988 of Title 42 of the United States Code, as amended;

·The Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §
1001 et seq.;

·The Immigration Reform and Control Act, as amended;

·The Americans with Disabilities Act of 1990, as amended, 42 U.S.C. § 12101 et
seq. (which prohibits discrimination based on a disability);

 

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·The Age Discrimination in Employment Act (“the ADEA”), 29 U.S.C. § 621 et seq.
(which prohibits discrimination based on age);

·The Older Workers Benefit Protection Act of 1990, as amended;

·The Genetic Information Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et
seq. (which prohibits discrimination based on genetic information);

·The Workers Adjustment and Retraining Notification Act, as amended, 29 U.S.C. §
2101 et seq.;

·The Uniformed Services Employment and Reemployment Rights Act of 1994, 38
U.S.C. § 4301 et seq.;

·The Equal Pay Act of 1963;

·The Occupational Safety and Health Act, as amended;

·The Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq.;

·The Sarbanes-Oxley Act of 2002;

·The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and

·Any other federal, state or local civil or human rights law or any other local,
state or federal law, regulation or ordinance, including those relating to
employment and including but not limited to the Georgia Equal Employment for
Persons with Disabilities Code, Ga. Code Ann. § 34-6A-1 et seq.; the Georgia Sex
Discrimination in Employment Law, Ga. Code Ann. § 34-5-1 et seq.; and the City
of Atlanta Fair Private Employment Ordinance, Atlanta, Ga., Code of Ordinances §
94-110 et seq.

 

This release of Claims also includes a release of any Claims against the
Releasees for breach or violation of any public policy, contract, tort, or
common law, including but not limited to claims for wrongful discharge, physical
or personal injury, emotional distress, fraud, defamation, invasion of privacy,
interference with contract or with prospective economic advantage, breach of
express or implied contract, breach of covenants of good faith and fair dealing,
and similar or related claims.

 

For the purpose of implementing a full and complete release and discharge of the
Releasees, Loudermilk expressly acknowledges that this Agreement is intended to
include in its effect, without limitation, all Claims that Loudermilk does not
know or suspect to exist in Loudermilk’s favor at the time of execution hereof,
and that this Agreement contemplates the extinguishment of any such Claim or
Claims. Loudermilk expressly waives and relinquishes all rights and benefits
that Loudermilk may have under any state or federal statute or common law
principle that would otherwise limit the effect of this Agreement to Claims
known or suspected prior to the date Loudermilk executes this Agreement, and
does so understanding and acknowledging the significance and consequences of
such specific waiver. This Agreement does not, however, waive rights or claims
that may arise after the date Loudermilk signs it below.

 

Furthermore, Loudermilk agrees that, except to the extent such right may not be
waived by law, Loudermilk will not commence any legal action or lawsuit or
otherwise assert any legal claim seeking relief for any Claim released or waived
under the Release of Claims provision above. This “agreement not to sue” does
not, however, prevent or prohibit Loudermilk from seeking a judicial
determination of the validity of Loudermilk’s release of claims under the ADEA.
In addition, this “covenant not to sue” does not prevent or prohibit Loudermilk
from filing any administrative complaint or charge against the Releasees (or any
of them) with any federal, state, or local agency, including, for instance, the
U.S. Equal Employment Opportunity Commission or the U.S. Department of Labor,
but Loudermilk understands that by signing this Agreement, Loudermilk will have
no right to recover monetary damages or obtain individual relief of any kind in
such proceeding with respect to Claims released or waived by this Agreement.

 

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7.          Affirmations. Loudermilk affirms that Loudermilk has not filed,
caused to be filed, or is not presently a party to any claim, complaint, or
action against Aaron’s in any forum or form. Loudermilk furthermore affirms that
Loudermilk has no known workplace injuries or occupational diseases and has been
provided and/or has not been denied any leave requested under the Family and
Medical Leave Act.

 

Loudermilk represents and warrants that to the best of his knowledge, he is not
aware of any facts that would (a) establish, (b) tend to establish, or (c) in
any way support an allegation that any Releasee has engaged in conduct that he
believes to constitute a violation of any rule or regulation of the Securities
and Exchange Commission, or any provision of federal law relating to fraud
against shareholders pursuant to the Sarbanes-Oxley Act and/or any state or
local counterpart.

 

Loudermilk represents and warrants that to the best of his knowledge, he is not
aware of any facts that would (a) establish, (b) tend to establish, or (c) in
any way support an allegation of a potential violation by any Releasee of the
federal False Claims Act (and/or any state or local qui tam counterpart) or that
to the extent Loudermilk has or ever had any such information, Loudermilk has
reported the information to Aaron’s in accordance with Aaron’s policy. The term
“potential violation” includes the presentation by any Releasee of false claims
and statements or the creation of false records or statements in order to obtain
payment of federal, state, county or municipal funds, or to avoid refunds of
such government funds, with the presentation or creation being made with actual
knowledge by any Releasee of the falsity, or with deliberate ignorance or
reckless disregard of the falsity.

 

8.          Restrictive Covenants.

 

a.          Definition of “Confidential Information”. “Confidential Information”
is defined as data and information, without regard to form and whether or not in
writing, relating to Aaron’s customers, operations, finances, and business that
derives value, actual or potential, from not being generally known to
competitors, including, but not limited to, technical or non-technical data
(including personnel data relating to Aaron’s employees), formulas, patterns,
compilations (including compilations of customer information), programs,
devices, methods of operation, techniques (including rental, leasing, and sales
techniques and methods), processes, financial data and projections (including
rate and price information concerning products and services provided by
Aaron’s), or lists of actual or potential customers (including identifying
information about customers). Such information and compilations of information
shall be contractually subject to protection under this Agreement whether or not
such information constitutes a trade secret and is separately protectable at law
or in equity as a trade secret. Confidential Information includes information
disclosed to Aaron’s by third parties that Aaron’s is obligated to maintain as
confidential. Confidential Information does not include data or information that
has been voluntarily disclosed by Aaron’s except where such public disclosure
has been made by Loudermilk without Aaron’s authorization, which has been
independently developed and disclosed by others or which has otherwise entered
the public domain through lawful means.

 

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b.          Protection of Confidential Information. Loudermilk agrees to use his
best efforts to protect Confidential Information. Loudermilk will not use, and
will not disclose Aaron’s Confidential Information.

 

c.          Non-competition. For a period of three years after Loudermilk’s
Retirement Date, Loudermilk agrees that he shall not, within the Territory, own
in any interest in, be a franchisee of, or perform Services for any person or
entity that engages in sales or lease ownership of new, rental, or reconditioned
residential furniture, consumer electronics, home appliances and accessories,
which are competitive with the products and services offered by Aaron’s;
provided, however, that a passive investment by Loudermilk in no more than two
percent of any class of stock or securities of a publicly traded corporation
shall not be deemed to be a violation of this subparagraph. The “Territory” is
defined as the United States with the exception of Minnesota and Wisconsin,
which is the geographic area in which Aaron’s does business. “Services” is
defined as providing executive-level management and strategic guidance for the
overall operations of the business and implementing the policies of the
governing board.

 

d.          Non-Solicitation of Customers. For a period of three years following
the Retirement Date, Loudermilk will not solicit or attempt to solicit, directly
or by assisting others, Aaron’s customers or prospective customers for the
purpose of providing goods or services that are competitive with those provided
by Aaron’s business. Notwithstanding the foregoing, nothing in this Section
shall prohibit (i) providing such goods or services through general
solicitations and advertisements that are not specifically targeted towards
customers of Aaron’s, or (ii) providing such goods or services to Aaron’s
customers or prospective customers who initiated contact with Loudermilk.

 

e.          Non-Solicitation of Employees. For a period of three years following
the Retirement Date, Loudermilk will not solicit or attempt to solicit, directly
or by assisting others, any employee, franchisee, or independent contractor to
terminate his or her employment or other relationship with Aaron’s.
Notwithstanding the foregoing, nothing in this Section shall prohibit (i)
general solicitations for employment and advertisements that are not
specifically targeted towards employees of Aaron’s, (ii) using search firms that
are not instructed to target employees of Aaron’s, or (iii) hiring or soliciting
any employee whose employment with Aaron’s is terminated by Aaron’s or who
initiated contact with Loudermilk.

 

f.          Non-Disparagement. Loudermilk understands and agrees that his
entitlement to the benefits agreed to above is conditioned on his continued
support of Aaron’s. Loudermilk agrees not to make any oral or written statement
or take any other action that disparages or criticizes Aaron’s, its Board of
Directors (including individual Directors), its management (including individual
executives or managers), or its practices; that harms Aaron’s good reputation;
or that disrupts or impairs its normal, ongoing business operations. Loudermilk
understands that this nondisparagement provision does not apply on occasions
when he is subpoenaed or ordered by a court or other governmental authority to
testify or give evidence and that he must, of course, respond truthfully, to
conduct otherwise protected by the Sarbanes-Oxley Act, or to conduct or
testimony in the context of enforcing the terms of this Agreement or other
rights, powers, privileges, or claims not released by this Agreement. Loudermilk
also understands that the foregoing nondisparagement provision does not apply on
occasions when he provides truthful information in good faith to any federal,
state, or local governmental body, agency, or official investigating an alleged
violation of any antidiscrimination or other employment-related law or otherwise
gathering information or evidence pursuant to any official investigation,
hearing, trial, or proceeding. Nothing in this nondisparagement provision is
intended in any way to intimidate, coerce, deter, persuade, or compensate
Loudermilk with respect to providing, withholding, or restricting any
communication whatsoever to the extent prohibited under 18 U.S.C. §§ 201, 1503,
or 1512 or under any similar or related provision of state or federal law.

 

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g.          Standstilll. Loudermilk agrees that, for a period of five years from
the Retirement Date, neither Loudermilk, his agents or affiliates nor anyone
acting on his behalf, will, without the prior written consent of the Board of
Directors of Aaron’s, directly or indirectly, alone or in concert with others:
(i) seek or propose to influence or control the Board of Directors or the
management or policies of Aaron’s, make or in any way participate, directly or
indirectly, in any “solicitation” of “proxies” or “consents” (as such terms are
used in the rules of the Securities and Exchange Commission) to vote any voting
securities of Aaron’s, or seek to advise or influence any person or entity with
respect to the voting of any voting securities of Aaron’s; (ii) make, effect,
initiate, cause or participate in, or make any public announcement with respect
to or in support of, or allow his name to be used in support of, or submit a
proposal for or offer of (with or without conditions), any merger,
restructuring, recapitalization, reorganization, consolidation, tender or
exchange offer, business combination or other extraordinary transaction of or
involving Aaron’s or any of its securities, subsidiaries, affiliates or assets;
(iii) enter into any discussions, negotiations, arrangements, agreements or
understandings (whether written or oral) with or advise, assist or encourage any
third party with respect to any of the foregoing, or otherwise form, join or in
any way engage in discussions relating to the formation of, or participate in, a
“group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended), in connection with any of the foregoing; or (iv) make any
proposal, statement or inquiry, or disclose any intention, plan or arrangement,
whether written or oral, inconsistent with the foregoing, or publicly request
that Aaron’s amend, waive or terminate any provision of this paragraph. For
purpose of this Section 8(g), an “other extraordinary transaction” shall not be
deemed to include a sale of any ROFR Shares by Loudermilk pursuant to Section
10.

 

h.          Modification. Aaron’s and Loudermilk both acknowledge that it is
intended that, to the extent any restriction in this Section 8 is found to be
overbroad, a court may modify it and enforce it to the fullest extent allowed by
law.

 

i.          Injunctive Relief. Loudermilk acknowledges he has rendered services
to Aaron’s that are of a special and unusual character and that have a unique
value to Aaron’s, the loss of which cannot adequately be compensated by damages
in an action at law. Loudermilk further acknowledges that any breach of the
terms of this Section 8 would result in material damage to Aaron’s, although it
might be difficult to establish the monetary value of the damage. Loudermilk
therefore agrees that Aaron’s, in addition to any other rights and remedies
available to it, shall be entitled to obtain an immediate injunction (whether
temporary or permanent) from any court of appropriate jurisdiction in the event
of any such breach thereof by Loudermilk, or threatened breach which Aaron’s in
good faith believes will or is likely to result in irreparable harm to Aaron’s.
The existence of any claim or cause of action by Loudermilk against Aaron’s,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Aaron’s of Loudermilk's agreement under this
Section 8 and Section 6 above.

 

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9.          Indemnification. From and for a period of five years following the
Retirement Date, Aaron’s will indemnify and hold harmless and advance expenses
to Loudermilk in his capacity as a former director and officer of Aaron’s if he
is a party or is threatened to be made a party to any threatened, pending or
completed claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, by reason of the fact that Loudermilk
was a director, officer, employee or agent of Aaron’s, or is or was serving or
agreed to serve at the request of Aaron’s, as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, to the
same extent Loudermilk is indemnified or has the right to advancement of
expenses as of the date of this Agreement by Aaron’s pursuant to its articles of
incorporation and bylaws. For a period of five years following the Retirement
Date, Aaron’s will, at its expense maintain in effect directors’ and officers’
liability insurance or obtain a “tail policy” covering Loudermilk on terms not
less favorable than the terms of such current insurance coverage.

 

10.          Right of First Refusal.

 

a.          As used in this Section 10, “ROFR Shares” means Registrable
Securities (as defined in Appendix A) held of record or beneficially by
Loudermilk, other than Registrable Securities transferred in an Excluded
Transfer. “Excluded Transfer” means the assignment, transfer, conveyance or sale
of less than $10 million (valued at the closing price reported by the New York
Stock Exchange for the immediately preceding trading day) of Registrable
Securities in any single transaction or series of related transactions to a
single purchaser, a “group” (as such term is used in Section 8(g)) or to
multiple affiliated purchasers, provided that Loudermilk notifies Aaron’s of the
Excluded Transfer and the transferee(s) within seven days of the completion of
transaction.

 

b.           Loudermilk agrees that he will not assign, transfer, convey or sell
all or any portion of his ROFR Shares, or enter into any agreement or make any
commitment to assign, transfer, convey or sell any of such ROFR Shares, unless
he shall first submit an irrevocable offer in writing (“ROFR Notice”) to sell
the ROFR Shares specified in such ROFR Notice to Aaron’s, which ROFR Notice
shall specify the number of ROFR Shares being offered and the price per share
(or mechanism for determining such price). Upon receipt of such ROFR Notice,
Aaron’s shall have the applicable ROFR Period within which to accept such offer
in whole to purchase such number of ROFR Shares on the terms contained in such
ROFR Notice. If Aaron’s accepts the offer to purchase specified in the ROFR
Notice, closing of the purchase shall occur within 3 business days unless
Aaron’s and Loudermilk agree on a different closing date. To the extent Aaron’s
declines to purchase such ROFR Shares, or if Aaron’s fails to accept such offer
within the applicable ROFR Period, Loudermilk shall be free to sell the ROFR
Shares specified in such ROFR Notice (but no more and no fewer than the number
specified in such ROFR Notice) at the same price (or higher) specified in or
determined pursuant to such ROFR Notice; provided, however, if such ROFR Shares
are not sold on such terms during the 60 days following the date on which
Aaron’s declines such offer or, if later, such last day of the applicable ROFR
Period, then such ROFR Shares will again be subject to this Section 10 as
described above.

 

9

 

 

c.          The applicable “ROFR Period” shall be five days from delivery of the
ROFR Notice if the aggregate dollar value of the ROFR Shares specified in the
ROFR Notice is at least $10 million but less than $25 million, and shall be 10
days from delivery of the ROFR Notice if the aggregate dollar value of the ROFR
Shares specified in the ROFR Notice is more than $25 million. Solely for
purposes of calculating such amounts, the applicable ROFR Shares shall be valued
as provided in paragraph (a) above, and all ROFR Shares on any ROFR Notice
delivered within 30 days of another ROFR Notice shall be aggregated.

 

d.          This Section 10 shall not apply to (A) any Registrable Securities
sold in the public markets through a broker-dealer or registered pursuant to
Appendix A hereto, (B) any bona fide pledge of Registrable Securities, or (C)
any bona fide gift or transfer of Registrable Securities for estate planning
purposes or transfer upon the death of Loudermilk by will or applicable law.

 

11.          Public Filings and Publicity. Aaron’s shall make such filings with
the Securities and Exchange Commission as shall be required by law, and shall
issue a press release announcing Loudermilk’s retirement and his new role as
Chairman Emeritus. The form of such filings and any press releases shall be
determined by Aaron’s in its reasonable discretion, but Aaron’s will consult
with Loudermilk and share any applicable filings or releases related to the
announcement of his retirement with him prior to their filing or release.

 

12.          Governing Law and Interpretation. This Agreement shall be governed
and conformed in accordance with the laws of the State of Georgia without regard
to its conflict of laws provision. In the event Loudermilk breaches any
provision of this Agreement, Loudermilk and Aaron’s affirm that Aaron’s may
institute an action to specifically enforce any term or terms of this Agreement.
Should any provision of this Agreement be declared illegal or unenforceable by
any court of competent jurisdiction and cannot be modified to be enforceable,
excluding the general release language, such provision shall immediately become
null and void, leaving the remainder of this Agreement in full force and effect.

 

13.          Return of Aaron’s Property. On or before the Retirement Date,
Loudermilk will return to Aaron’s all of Aaron’s property in Loudermilk’s
possession including, but not limited to, materials, such as customer lists,
pricing information, any keys, credit cards, phone cards, cellular phone,
computer and all of the tangible and intangible property belonging to Aaron’s
and relating to Loudermilk’s employment with Aaron’s. Loudermilk further
represents and warrants that Loudermilk has not retained any copies, electronic
or otherwise, of such property. All outstanding obligations to Aaron’s, such as
cash advances, will be deducted from the Retirement Pay. Loudermilk’s signature
hereto serves as written authorization for this deduction in compliance with
applicable law.

 

14.          No Admission of Wrongdoing. The parties agree that neither this
Agreement nor the furnishing of the consideration for this Release shall be
deemed or construed at any time for any purpose as an admission by either party
of any liability or unlawful conduct of any kind.

 

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15.          Amendment. This Agreement may not be modified, altered or changed
except upon express written consent of both parties wherein specific reference
is made to this Agreement.

 

16.          Section 409A. In order to ensure compliance with Section 409A of
the Internal Revenue Code of 1986, and the regulations and guidance promulgated
thereunder (“Section 409A”), the provisions of this Section 16 will in all cases
govern over any contrary or conflicting provision in this Agreement.

 

It is the intent of this Agreement to comply with the requirements of Section
409A. This Agreement and any ambiguities in this Agreement will be interpreted
and administered to comply with these requirements. The parties intend that no
payment pursuant to this Agreement shall give rise to any adverse tax
consequences to either party pursuant to Section 409A; however, Loudermilk
acknowledges that Aaron’s does not guarantee any particular tax treatment and
that he is solely responsible for any taxes owed as a result of this Agreement.

 

Consistent with the requirements of Section 409A, to the extent that any
reimbursement or in-kind benefit provided to Loudermilk under Section 2 is
taxable, unless stated otherwise – (i) reimbursements and in-kind benefits will
be provided only for the periods expressly provided in Section 2; (ii) the
expenses eligible for reimbursement or the in-kind benefits provided in any
given calendar year will not affect the expenses eligible for reimbursement or
the in-kind benefits provided in any other calendar year; (iii) the
reimbursement of an eligible expense must be made no later than the last day of
the calendar year following the calendar year in which the expense was incurred;
and (iv) the right to reimbursements or in-kind benefits cannot be liquidated or
exchanged for any other benefit.

 

With respect to payments payable under Section 2, each such payment is a
separate payment within the meaning of the final regulations under Section 409A.
Each such payment that is made on or prior to March 15, 2013 is intended to be
exempt from Section 409A as a short-term deferral within the meaning of the
final regulations under Section 409A (and, thus, is not subject to a six-month
delay under Section 409A).

 

17.          Entire Agreement. This Agreement sets forth the entire agreement
between the parties hereto, and fully supersedes any prior agreements or
understandings between the parties. Loudermilk acknowledges that he has not
relied on any representations, promises, or agreements of any kind made to him
in connection with his decision to accept this Agreement, except for those set
forth in this Agreement. No provisions of this Agreement are intended, nor shall
be interpreted, to provide or create any third party beneficiary rights or any
other rights of any kind in any person or entity not a party hereto unless
specifically provided otherwise herein.

 

LOUDERMILK HAS BEEN ADVISED THAT HE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO
REVIEW THIS AGREEMENT AND HAS BEEN ADVISED IN WRITING TO CONSULT WITH AN
ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT. LOUDERMILK AGREES THAT HE HAS
READ THIS AGREEMENT, UNDERSTANDS IT, AND AGREES TO ITS TERMS AND CONDITIONS
FREELY AND VOLUNTARILY.

 

11

 

 

HAVING ELECTED TO EXECUTE THIS AGREEMENT, TO FULFILL THE PROMISES AND TO RECEIVE
THE SUMS AND BENEFITS IN SECTION 2 ABOVE, LOUDERMILK FREELY AND KNOWINGLY, AND
AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT INTENDING TO WAIVE, SETTLE
AND RELEASE ALL CLAIMS, KNOWN OR UNKNOWN, LOUDERMILK HAS AGAINST AARON’S.

 

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
Agreement as of the date set forth below:

 

  Aaron’s, Inc.       By: /s/ Ray M. Robinson     Ray M. Robinson,     Lead
Director of the Board of Directors       Date: 8/24/2012

 

I have carefully read the above Agreement, understand the meaning and intent
thereof, and voluntarily agree to its terms this 23rd day of August, 2012.

 

/s/ R. Charles Loudermilk, Sr.   R. Charles Loudermilk, Sr.  

 

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Appendix A

 

Registration Rights Provisions

 

1.1          Registration Of Common Stock.

 

(a) Registration Upon Request of Loudermilk. If Aaron’s is at any time eligible
to register its Common Stock on Form S-3 (or any successor form thereto)
promulgated pursuant to the Securities Act of 1933, as amended (the “Securities
Act”), then Loudermilk will be entitled to request that Aaron’s register his
Registrable Securities on his behalf on such form, at any time and from time to
time, subject to any limitations set forth below, so long as he requests the
registration of Registrable Securities which have an anticipated aggregate
offering price of at least $10,000,000. Aaron’s shall have no obligation to
effect a registration under this Section 1.1(a) more than once during any twelve
(12) month period or within 365 days after the effectiveness of any other
registration statement filed pursuant to this Agreement. Upon any such request,
Aaron’s will use its commercially reasonable efforts to effect the prompt
registration on said Form S-3 (or such successor form thereto) of the
Registrable Securities which Aaron’s has been so requested to register by
Loudermilk. The rights provided in Section 1.1(a) and this Appendix A will
expire on the fifth anniversary of the Retirement Date.

 

As used in this Agreement “Registrable Securities” as of any particular time
shall mean: (A) all shares of Common Stock currently held by Loudermilk or
acquired after the Retirement Date from the Company pursuant to the exercise of
Aaron’s stock options or the settlement of restricted stock units, and (B) any
additional shares of Common Stock issued with respect to the foregoing clause
(A) pursuant to any stock split, stock dividend, recapitalization or similar
event.

 

(b) Registration Procedures. If and whenever Aaron’s is required by the
provisions of Section 1.1(a) to use its commercially reasonable efforts to
effect the registration of any of Registrable Securities under the Securities
Act, Aaron’s will, as expeditiously as possible:

 

(i) prepare and file with the Securities and Exchange Commission (the
“Commission”) a registration statement with respect to such securities and use
its commercially reasonable efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);

 

(ii) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for the period
specified in paragraph (i) above and to comply with the provisions of the
Securities Act with respect to the disposition of all Shares covered by such
registration statement in accordance with Loudermilk’s intended method of
disposition set forth in such registration statement for such period;

 

(iii) furnish to Loudermilk and to each underwriter such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities
covered by such registration statement;

 

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(iv) use its commercially reasonable efforts to register or qualify the shares
covered by such registration statement under the securities or blue sky laws of
such jurisdictions as Loudermilk or, in the case of an underwritten public
offering, the managing underwriter, may reasonably request;

 

(v) immediately notify each seller under such registration statement and each
underwriter, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;

 

(vi) use its commercially reasonable efforts (if the offering is underwritten)
to furnish, at the request of any seller, on the date that shares are delivered
to the underwriters for sale pursuant to such registration: (A) an opinion of
counsel representing Aaron’s for the purposes of such registration, addressed to
the underwriters in a form reasonably acceptable to Aaron’s and such
underwriters, and (B) a “comfort” letter dated such date from the independent
public accountants retained by Aaron’s, addressed to the underwriters in a form
reasonably acceptable to Aaron’s and such underwriters; and

 

(vii) make available for inspection by each seller, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by such seller or underwriter,
all financial and other records, pertinent corporate documents and properties of
Aaron’s, and cause Aaron’s officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement; provided
that all such parties agree to maintain the confidence of such information
pursuant to confidentiality agreements reasonably acceptable to Aaron’s.

 

Aaron’s may delay the filing or effectiveness of any registration statement for
a period of up to 120 days after the date of a request for registration pursuant
to Section 1.1(a) if at the time of such request (A) Aaron’s is engaged, or has
fixed plans to engage within 120 days of the time of such request, in a primary
public offering of Common Stock (in which case Aaron’s will use commercially
reasonable efforts to include the shares requested by Loudermilk in such
registration, if feasible and subject to prorata cut-backs reasonably requested
by the underwriters of such offering), or (B) Aaron’s shall furnish to
Loudermilk a certificate signed by the CFO of Aaron’s stating that in the
good-faith judgment of the Board of Directors of Aaron’s it would be detrimental
to Aaron’s and its shareholders for such registration statement to be filed and
it is therefore essential to defer the filing of such registration statement;
provided, however, that Aaron’s may only delay the filing or effectiveness of a
Registration Statement pursuant to this paragraph for a period of 120 days after
the date of a request for registration pursuant to Section 1.1(a).

 

For purposes of paragraphs (i) and (ii) above, the period of distribution of
Registrable Securities in a firm commitment underwritten public offering is
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable
Securities in any other registration is deemed to extend until the earlier of
the sale of all Registrable Securities covered thereby or three months after the
effective date thereof.

 

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In connection with each registration hereunder, Loudermilk will furnish to
Aaron’s in writing such information with respect to himself and the proposed
distribution by him as may be reasonably necessary in order to assure compliance
with federal and applicable state securities laws. Reasonable compliance with
the obligation to furnish such information is a condition to Aaron’s obligations
hereunder.

 

If any registration statement is an underwritten public offering, Loudermilk’s
right to registration shall be conditioned upon his participating in such
reasonable underwriting arrangements as Aaron’s shall make regarding the
offering, and the inclusion of Registrable Securities in the underwriting may be
limited to the extent required by the managing underwriters in their reasonable
judgment. Loudermilk shall (together with Aaron’s) enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by Aaron’s.

 

(c) Expenses. All expenses incurred by Aaron’s in complying with Section 1.1(a),
including, without limitation, all printing expenses, fees and disbursements of
counsel and independent public accountants for Aaron’s and Loudermilk, fees and
disbursements of counsel in connection with registration under state securities
laws, fees of the Financial Industry Regulatory Authority, transfer taxes, fees
of transfer agents and registrars, and costs of insurance (if any), but
excluding any Selling Expenses, are herein called “Registration Expenses.” All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities, and all registration and filing fees for Shares being
registered for sale by Loudermilk are herein called “Selling Expenses.”

 

All Selling Expenses in connection with any registration statement filed
pursuant to Section 1.1(a) will be paid by Loudermilk, and all Registration
Expenses in connection with any registration statement filed pursuant to Section
1.1(a) will be paid by Aaron’s.

 

(d)          No Assignment. The registration rights provided for in this
Appendix A are personal to Loudermilk and shall not be assignable without
Aaron’s express written consent.

 

2.1           Indemnification by Company. To the extent permitted by law,
Aaron’s will indemnify Loudermilk with respect to any registration,
qualification or compliance effected pursuant to this Agreement, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, to the extent such expenses, claims,
losses, damages or liabilities arise out of or are based on any untrue statement
(or alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other similar document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by Aaron’s of the Securities Act or any rule or
regulation promulgated under the Securities Act applicable to Aaron’s in
connection with any such registration, qualification or compliance, and Aaron’s
will reimburse Loudermilk for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action; provided, however, that the indemnity
contained herein shall not apply to amounts paid in settlement of any claim,
loss, damage, liability or expense if settlement is effected without the consent
of Aaron’s (which consent shall not unreasonably be withheld); provided,
further, that Aaron’s will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to Aaron’s by
Loudermilk specifically for use therein.

 

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2.2           Indemnification by Loudermilk. To the extent permitted by law,
Loudermilk will, if securities held by Loudermilk are included in a registration
being effected pursuant to terms hereof, indemnify Aaron’s, each of its
directors and officers, each underwriter, if any, of Aaron’s securities covered
by such a registration statement, and each person who controls Aaron’s or such
underwriter within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by Loudermilk of any rule or
regulation promulgated under the Securities Act applicable to Loudermilk and
relating to action or inaction required of Loudermilk in connection with any
such registration, and will reimburse Aaron’s, such other persons, such
directors, officers, persons, underwriters or control persons for any legal or
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to Aaron’s by Loudermilk
specifically for use therein; provided, however, that the indemnity contained
herein shall not apply to amounts paid in settlement of any claim, loss, damage,
liability or expense if settlement is effected without the consent of Loudermilk
(which consent shall not be unreasonably withheld). Notwithstanding the
foregoing, the liability of Loudermilk under this Section 2.2 shall be limited
in an amount equal to the net proceeds from the sale of the shares sold by
Loudermilk, unless such liability arises out of or is based on willful conduct
by him.

 

2.3           Indemnification Procedures. Notwithstanding the foregoing Sections
2.1 and 2.2, each party entitled to indemnification under this Section (the
“Indemnified Party”) shall give notice to the party required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party’s expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party’s ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or as to which the
Indemnifying Party is asserting separate or different defenses, which defenses
are inconsistent with the defenses of the Indemnified Party. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. No Indemnified Party shall
consent to entry of any judgment or enter into any settlement without the
consent of each Indemnifying Party.

 

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