EXHIBIT 10(ff)

 

FIRST AMENDMENT AND WAIVER AGREEMENT

 

This FIRST AMENDMENT AND WAIVER AGREEMENT (this “Agreement”), is made as of May
28, 2004, by and between AARON RENTS, INC., a Georgia corporation (together with
its successors and assigns, the “Company”), AARON RENTS, INC. PUERTO RICO, a
Puerto Rico corporation (together with its successors and assigns, “ARPR”) and
AARON INVESTMENT COMPANY, a Delaware corporation (together with its successors
and assigns, “AIC” and, together with the Company and ARPR, the “Obligors”) and
each of the Persons holding one or more Notes (defined below) on the Effective
Date (defined below) (collectively, the “Noteholders”), with respect to that
certain Note Purchase Agreement, dated as of August 15, 2002 (as in effect
immediately prior to giving effect to this Agreement, the “Existing Note
Purchase Agreement” and, as amended pursuant to this Agreement and as may be
further amended, restated or otherwise modified from time to time, the “Note
Purchase Agreement”), by and among the Obligors and each of the Persons listed
on Schedule A thereto (collectively, the “Purchasers”). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Existing Note Purchase Agreement.

 

RECITALS:

 

A.            Pursuant to the Existing Note Purchase Agreement, the Obligors
authorized the issuance and sale of $50,000,000 aggregate principal amount of
their 6.88% Senior Notes, due August 15, 2009 (the “Notes”) to the Purchasers.

B.            Certain Events of Default have occurred under the Existing Note
Purchase Agreement as more fully described herein.

C.            The Obligors have requested that the Noteholders waive certain of
their rights to take action against the Obligors that have arisen as a result of
the Existing Event of Default (defined below), and the undersigned Noteholders
are agreeable, subject to the terms and conditions set forth below, to waiving
such rights.

D.            The Obligors have requested that the Noteholders amend certain
provisions of the Existing Note Purchase Agreement, and the undersigned
Noteholders are agreeable, subject to the terms and conditions set forth below,
to consenting to such amendments.

E.             The Noteholders are the holders of all outstanding Notes as of
the date hereof.

 

AGREEMENT:

 

NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Obligors and the Noteholders agree as follows:

 

 

--------------------------------------------------------------------------------

 

1.                                      WAIVER; AMENDMENTS.

 

1.1.                            WAIVER.

 

Subject to the satisfaction of the conditions set forth in Section 3 hereof,
each of the undersigned Noteholders hereby waives its rights to take any action
against the Obligors based on any Event of Default (the “Existing Event of
Default”) arising under paragraph 6I(b) of the Note Purchase Agreement solely as
a result of the failure of the Company to be in compliance with such covenant
for the 2003 fiscal year due to the consummation by the Company of Acquisitions
during such fiscal year having total consideration in excess of the limitations
set forth in clause (e) of the definition of Permitted Acquisitions. (such
waiver herein referred to as the “Waiver”).

 

1.2.                            AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENT.

 

Subject to the satisfaction of the conditions set forth in Section 3 hereof, the
Existing Note Purchase Agreement is hereby amended in the manner specified in
Exhibit 1.1 (such amendments herein referred to as the “Amendments”).

 

1.3.                            AFFIRMATION OF OBLIGATIONS UNDER EXISTING NOTE
PURCHASE AGREEMENT AND NOTES.

 

The Obligors hereby acknowledge and affirm all of their respective obligations
under the terms of the Existing Note Purchase Agreement and the Notes.  The
execution, delivery and effectiveness of this Agreement shall not be deemed,
except as expressly provided herein, (a) to operate as a waiver of any right,
power or remedy of any of the Noteholders under the Existing Note Purchase
Agreement or the Notes, nor constitute a waiver of any provision thereunder, or
(b) to prejudice any rights which any Noteholder now has or may have in the
future under or in connection with the Note Purchase Agreement or the Notes or
under applicable law.

 

2.                                      WARRANTIES AND REPRESENTATIONS.

 

To induce the Noteholders to enter into this Agreement, each of the Obligors
represents and warrants to each of the Noteholders that as of the Effective Date
(as hereinafter defined):

 

2.1.                            CORPORATE AND OTHER ORGANIZATION AND AUTHORITY.

 

(A)           EACH OBLIGOR IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND
IN GOOD STANDING UNDER THE LAWS OF ITS JURISDICTION OF INCORPORATION, AND IS
DULY QUALIFIED AS A FOREIGN CORPORATION AND IS IN GOOD STANDING IN EACH
JURISDICTION IN WHICH SUCH QUALIFICATION IS REQUIRED BY LAW, OTHER THAN THOSE
JURISDICTIONS AS TO WHICH THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING
COULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT; AND

 

(B)           EACH OF THE OBLIGORS HAS THE REQUISITE CORPORATE POWER AND
AUTHORITY TO EXECUTE AND DELIVER THIS AGREEMENT AND TO PERFORM ITS OBLIGATIONS
HEREUNDER.

 

2.2.                            AUTHORIZATION, ETC.

 

This Agreement has been duly authorized by all necessary corporate action on the
part of the Obligors.  Each of this Agreement, the Note Purchase Agreement and
the Notes constitutes a

 

2

--------------------------------------------------------------------------------

 

legal, valid and binding obligation of the Obligors, enforceable, in each case,
against such Obligor in accordance with its terms, except as such enforceability
may be limited by

 

(A)           APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR
OTHER SIMILAR LAWS AFFECTING THE ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY AND

 

(B)           GENERAL PRINCIPLES OF EQUITY (REGARDLESS OF WHETHER SUCH
ENFORCEABILITY IS CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW).

 

2.3.                            NO CONFLICTS, ETC.

 

The execution and delivery by each Obligor of this Agreement and the performance
by such Obligor of its obligations under each of this Agreement, the Note
Purchase Agreement and the Notes do not conflict with, result in any breach in
any of the provisions of, constitute a default under, violate or result in the
creation of any Lien upon any property of such Obligor under the provisions of:

 

(A)           ANY CHARTER DOCUMENT, CONSTITUTIVE DOCUMENT, AGREEMENT WITH
SHAREHOLDERS OR MEMBERS, BYLAWS OR ANY OTHER ORGANIZATIONAL OR GOVERNING
AGREEMENT OF SUCH OBLIGOR;

 

(B)           ANY AGREEMENT, INSTRUMENT OR CONVEYANCE BY WHICH SUCH OBLIGOR OR
ANY OF ITS SUBSIDIARIES OR ANY OF THEIR RESPECTIVE PROPERTIES MAY BE BOUND OR
AFFECTED; OR

 

(C)           ANY STATUTE, RULE OR REGULATION OR ANY ORDER, JUDGMENT OR AWARD OF
ANY COURT, TRIBUNAL OR ARBITRATOR BY WHICH SUCH OBLIGOR OR ANY OF ITS
SUBSIDIARIES OR ANY OF THEIR RESPECTIVE PROPERTIES MAY BE BOUND OR AFFECTED.

 

2.4.                            GOVERNMENTAL CONSENT.

 

The execution and delivery by the Obligors of this Agreement and the performance
by the Obligors of their respective obligations hereunder and under the Note
Purchase Agreement and the Notes do not require any consents, approvals or
authorizations of, or filings, registrations or qualifications with, any
Governmental Authority on the part of any Obligor.

 

2.5.                            EXISTENCE OF DEFAULTS.

 

After giving effect to the Waiver, no event has occurred and no condition exists
that would constitute a Default or an Event of Default under the Note Purchase
Agreement.

 

3.                                      CONDITIONS TO EFFECTIVENESS OF WAIVER
AND AMENDMENTS.

 

The Waiver and the Amendments shall become effective as of the date first
written above (the “Effective Date”), provided that (a) each of the Obligors
shall have executed and delivered to each of the Noteholders an original
counterpart of this Agreement and (b) all of the Noteholders shall have
indicated their agreement and written acceptance by executing and delivering the
applicable counterparts of this Agreement.

 

3

--------------------------------------------------------------------------------

 

4.                                      MISCELLANEOUS.

 

4.1.                            GOVERNING LAW.

 

THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

 

4.2.                            DUPLICATE ORIGINALS.

 

Two or more duplicate originals of this Agreement may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument.  This Agreement may be executed in one or more
counterparts and shall be effective when at least one counterpart shall have
been executed by each party hereto, and each set of counterparts that,
collectively, show execution by each party hereto shall constitute one duplicate
original.  Delivery of a facsimile of an executed signature page shall be
effective as delivery of an original.

 

4.3.                            WAIVER AND AMENDMENTS.

 

Neither this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally, or by any action or inaction, but only by an instrument in
writing signed by each of the parties signatory hereto.

 

4.4.                            COSTS AND EXPENSES.

 

Whether or not the Waiver and Amendments become effective, each of the Obligors
confirms its obligation under Paragraph 11B of the Note Purchase Agreement and
agrees that, on the Effective Date (or if an invoice is delivered subsequent to
the Effective Date or if the Waiver and Amendments do not become effective
promptly after receiving any statement or invoice therefor), it will pay all
costs and expenses of the Noteholders relating to this Agreement, including, but
not limited to, the statement for reasonable fees and disbursements of the
Noteholders’ special counsel presented to the Company on the Effective Date. 
The Obligors will also promptly pay, upon receipt thereof, each additional
statement for reasonable fees and disbursements of the Noteholder’s special
counsel rendered after the Effective Date in connection with this Agreement.

 

4.5.                            SUCCESSORS AND ASSIGNS.

 

This Agreement shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties hereto.  The provisions hereof are intended
to be for the benefit of the Noteholders and shall be enforceable by any
successor or assign of any such Noteholder, whether or not an express assignment
of rights hereunder shall have been made by such Noteholder or its successors
and assigns.

 

4

--------------------------------------------------------------------------------

 

4.6.                            SURVIVAL.

 

All warranties, representations, certifications and covenants made by the
Obligors in this Agreement shall be considered to have been relied upon by the
Noteholders and shall survive the execution and delivery of this Agreement,
regardless of any investigation made by or on behalf of the Noteholders.

 

4.7.                            PART OF EXISTING NOTE PURCHASE AGREEMENT; FUTURE
REFERENCES, ETC.

 

This Agreement shall be construed in connection with and as a part of the
Existing Note Purchase Agreement and the Notes and, except as expressly amended
by this Agreement, all terms, conditions and covenants contained in the Existing
Note Purchase Agreement and the Notes are hereby ratified and shall be and
remain in full force and effect.  Any and all notices, requests, certificates
and other instruments executed and delivered after the execution and delivery of
this Agreement may refer to the Existing Note Purchase Agreement and the Notes
without making specific reference to this Agreement, but nevertheless all such
references shall include this Agreement unless the context otherwise requires.

 

[Remainder of page intentionally left blank.  Next page is signature page.]

 

5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed on its behalf by a duly authorized officer or agent thereof.

 

 

 

Very truly yours,

 

 

 

AARON RENTS, INC.

 

 

 

 

 

By:

/s/ Gilbert L. Danielson

 

 

Name:

Gilbert L. Danielson

 

Title:

Executive Vice President

 

and Chief Financial Officer

 

 

 

AARON RENTS, INC. PUERTO RICO

 

 

 

 

 

By:

/s/ Gilbert L. Danielson

 

 

Name:

Gilbert L. Danielson

 

Title:

President

 

 

 

AARON INVESTMENT COMPANY

 

 

 

 

 

By:

/s/ Gilbert L. Danielson

 

 

Name:

Gilbert L. Danielson

 

Title:

Vice President and Treasurer

 

[Signature Page to First Amendment and Waiver Agreement]

 

--------------------------------------------------------------------------------

 

Accepted and Agreed:

 

 

 

The foregoing Agreement is hereby accepted as of the date first above written.

 

 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

 

 

By:

 

/s/ Robert R. Derrick

 

Name:

Robert R. Derrick

Title:

Vice President

 

 

GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY

By:

Prudential Private Placement Investors, L.P., as Investment Advisor

 

By:          Prudential Private Placement Investors, Inc., General Partner

 

 

 

 

By:

 

/s/ Robert R. Derrick

 

Name:

Robert R. Derrick

Title:

Vice President

 

 

 

 

GENERAL ELECTRIC LIFE AND ANNUITY ASSURANCE COMPANY

By:

Prudential Private Placement Investors, L.P., as Investment Advisor

 

By:          Prudential Private Placement Investors, Inc., General Partner

 

 

By:

 

/s/ Robert R. Derrick

 

Name:

Robert R. Derrick

Title:

Vice President

 

 

 

 

ING LIFE INSURANCE & ANNUITY COMPANY

By:

Prudential Private Placement Investors, L.P., as Investment Advisor

 

By:          Prudential Private Placement Investors, Inc., General Partner

 

 

By:

 

/s/ Robert R. Derrick

 

Name:

Robert R. Derrick

Title:

Vice President

 

6

--------------------------------------------------------------------------------

 

EXHIBIT 1.1

 

AMENDMENTS

 

1.             Clause (f) of Paragraph 6E (Indebtedness) of the Existing Note
Purchase Agreement is hereby amended by (a) deleting the reference to $5,000,000
in subclause (2) thereof and inserting $250,000 in lieu thereof, and (b)
deleting the reference to $5,000,000 in subclause (3) thereof and inserting
$10,000,000 in lieu thereof.

 

2.             Paragraph 6G (Sale of Assets) of the Existing Note Purchase
Agreement is hereby amended and restated to read in its entirety as follows:

 

6G.        Sale of Assets. The Company will not, and will not permit any of its
Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose of,
any of its assets, business or property, whether now owned or hereafter
acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary’s common stock to any Person other than an Obligor (or to qualify
directors if required by applicable law), except (a) the sale or other
disposition for fair market value of obsolete or worn out property or other
property not necessary for operations, disposed of in the ordinary course of
business; (b) the sale, lease or other disposition of inventory and Permitted
Investments in the ordinary course of business, (c) sales and dispositions
permitted under paragraph 6M and sale and leaseback transactions permitted under
paragraph 6O and (d) other sales of assets made on and after the First Amendment
Effective Date not to exceed $10,000,000 in book value in the aggregate for all
such sales.

 

3.             Clause (h) of Paragraph 6I (Restricted Investments) of the
Existing Note Purchase Agreement is hereby amended and restated to read in its
entirety as follows:

 

(h)         Other Investments not to exceed $10,000,000 in the aggregate at any
time.

 

4.             The following new definition is hereby added to Paragraph 10B of
the Existing Note Purchase Agreement in its proper alphabetical order:

 

“First Amendment Effective Date” shall mean May 28, 2004.

 

1

--------------------------------------------------------------------------------