Exhibit
10(v)


 


AMENDMENT
NO. 2 TO LOAN


FACILITY
AGREEMENT AND GUARANTY


 


THIS AMENDMENT NO. 2 TO LOAN FACILITY AGREEMENT AND
GUARANTY (this “Amendment”) dated as of April 30, 2003, by and among
AARON RENTS, INC., a Georgia corporation (“Sponsor”), each of the
financial institutions listed on the signature pages hereof (the “Participants”)
and SUNTRUST BANK, a Georgia banking corporation, as servicer (in such
capacity, the “Servicer”).


 


W  I
T  N  E  S  S  E  T  H:


 


WHEREAS, the Sponsor, Participants and Servicer, in
order to make available a  loan facility
to certain franchisees of Sponsor, entered into that certain Loan Facility
Agreement and Guaranty 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 (as hereafter amended or modified, the “Loan Facility Agreement”)
by and among Sponsor, Servicer and the Participants;


 


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


 


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 Loan Facility
Agreement.


 


2.                                       Amendments.


 


(a)   Section
1.1 of the Loan Facility Agreement is hereby amended by replacing the
definitions of  “Advance”, “Established
Franchisee Loan Agreement”, “Established Franchisee Loan”, “Established
Franchisee Loan Commitment”, “Established Franchisee Master Note”, “Maximum
Commitment Amount” and “Participating Commitment Amount” with the following new
definitions:


 


“Advance” shall mean a
funding of a loan to a Borrower by the Servicer pursuant to such Borrower’s
Loan Commitment.


 


“Established Franchisee Loan
Agreement” shall mean a Loan and Security Agreement setting
forth the terms and conditions, as between an Established Franchisee Borrower
and the Servicer, under which the Servicer has established a Loan Commitment to
make Advances to such Established Franchisee Borrower pursuant to the
Established Franchisee Loan Commitment,


 

















 


substantially in the form of Exhibit B, with
such changes as the Sponsor and the Servicer shall agree to; provided, however,
that any Established Franchisee Loan Agreement executed prior to the Effective
Date shall be substantially in the form required under the Existing Facility
Agreement; provided  further that any Established Franchisee Loan
Agreement executed from the Effective Date through the Second Amendment
Effective Date shall be substantially in the form required under this Agreement
as in effect prior to the Second Amendment Effective Date.


 


“Established Franchisee Loan”
shall mean either an Established Franchisee Term Loan or an Established
Franchisee Line of Credit Loan, as the case may be.


 


“Established Franchisee Loan
Commitment” shall mean, either, an Established Franchisee Line
of Credit Commitment or an Established Franchisee Term Loan Commitment, as the
case may be.


 


“Established Franchisee Master Note”
shall mean collectively, the Established Franchisee Master Term Notes and the
Established Franchisee Master Line of Credit Notes; provided that any
Established Franchisee Master Note executed prior to the Effective Date shall
be substantially in the form required under the Existing Loan Facility
Agreement; provided  further, that any Established Franchisee
Master Note executed from the Effective Date through the Second Amendment
Effective Date shall be substantially in the form required under this Agreement
as in effect prior to the Second Amendment Effective Date.


 


“Maximum Commitment Amount”
shall mean $110,000,000, as such amount may be reduced pursuant to Section 2.7,
Section 2.8 or Section 15.2.


 


“Participating Commitment Amount”
shall mean the amount set forth opposite each Participant’s name on the
signature pages of the Second Amendment, as such amount may be modified by
assignment pursuant to the terms hereof; provided, that, following the
termination of the Commitments, each Participant’s Participating Commitment
Amount shall be deemed to be its Pro Rata Share of the aggregate principal
amount of all Loan Commitments.


 


(b)   Section
1.1 of the Loan Facility Agreement is hereby amended by adding the following
new definitions of “Established Franchisee Line of Credit Commitment”,
“Established Franchisee Line of Credit Loans”, 
“Established Franchisee Master Line of Credit Note”, “Established
Franchisee Master Term Note”, “Established Franchisee Term Loan Commitment”,
“Established Franchisee Term Loans”, “Second Amendment” and “Second Amendment
Effective Date” thereto in the appropriate alphabetical order:


 


“Established Franchisee Line of
Credit Commitment” shall mean a commitment to make Established
Franchisee Line of Credit Loans to an


 


2

















 


Established Franchisee Borrower pursuant to an
Established Franchisee Loan Agreement.


 


“Established Franchisee Line of
Credit Loans” shall mean Advances made to an Established
Franchisee Borrower pursuant to an Established Franchisee Line of Credit
Commitment.


 


“Established Franchisee Master Line
of Credit Note” shall mean that certain Master Line of Credit
Note, executed by an Established Franchisee Borrower in favor of the Servicer,
evidencing such Established Franchisee Borrower’s obligation to repay all
Established Franchisee Line of Credit Loans made to it pursuant to an
Established Franchisee Line of Credit Commitment, substantially in the form of
Exhibit A-1 to the Established Franchisee Loan Agreement, with such changes as
the Sponsor and the Servicer shall agree to from time to time.


 


“Established Franchisee Master Term
Note” shall mean that certain Master Term Note, executed by an
Established Franchisee Borrower in favor of the Servicer, evidencing such
Established Franchisee Borrower’s obligation to repay all Established Franchisee
Term Loans made to it pursuant to an Established Franchisee Term Loan
Commitment, substantially in the form of Exhibit A-2 to the Established
Franchisee Loan Agreement, with such changes as the Sponsor and the Servicer
shall agree to from time to time.


 


“Established Franchisee Term Loan
Commitment” shall mean a commitment to make Established
Franchisee Term Loans to an Established Franchisee Borrower pursuant to an
Established Franchisee Loan Agreement.


 


“Established Franchisee Term Loans”
shall mean Advances made to an Established Franchisee Borrower pursuant to an
Established Franchisee Term Loan Commitment.


 


“Second Amendment”  shall mean that certain Amendment No. 2 to
Loan Facility Agreement and Guaranty dated as of March   , 2003.


 


“Second Amendment Effective Date”  shall mean April   , 2003.


 


(c)   Section
2.1 of the Loan Facility Agreement is hereby amending by deleting subsections
2.1(a), (b) and (d) thereof in their entirety and substituting the following in
lieu thereof:


 


(a)                                  Startup
Franchisee Commitment.  Subject to
and upon the terms and conditions set forth in this Agreement and the other
Operative Documents, and in reliance upon the guaranty and other obligations of
the Sponsor set forth herein, the Servicer hereby establishes a commitment to
the Sponsor to establish


 


3

















 


Startup Franchisee Loan Commitments and to make
Advances thereunder to such Startup Franchisee Borrowers as may be designated
by the Sponsor in its Funding Approval Notices during a period commencing on
the date hereof and ending on March 27, 2004 (as such period may be extended
for one or more subsequent 364-day periods pursuant to Section 2.8, the “Commitment Termination Date”)
in an aggregate committed amount at any one time outstanding not to exceed ONE
HUNDRED AND TEN MILLION AND NO/100 DOLLARS ($110,000,000) (the “Startup Franchisee Commitment”);
provided  that, notwithstanding any provision of this Agreement to
the contrary, at no time shall the sum of aggregate committed amounts of all
Loan Commitments outstanding pursuant to the Commitments, or, following the
termination of any such Loan Commitment, Advances outstanding thereunder,
exceed the Maximum Commitment Amount.


 


(b)                                 Established
Franchisee Commitment.  Subject to
and upon the terms and conditions set forth in this Agreement and the other
Operative Documents, and in reliance upon the guaranty and other obligations of
the Sponsor set forth herein, the Servicer hereby establishes a commitment to
the Sponsor to establish Established Franchisee Loan Commitments and to make
Advances thereunder to such Established Franchisees as may be designated by the
Sponsor in its Funding Approval Notices during a period commencing on the date
hereof and ending on the Commitment Termination Date in an aggregate committed
amount at any one time outstanding not to exceed ONE HUNDRED AND TEN MILLION
AND NO/100 DOLLARS ($110,000,000) (the “Established Franchisee Commitment”); provided
that, notwithstanding any provision of this Agreement to the contrary,
at no time shall the sum of aggregate committed amounts of all Loan Commitments
outstanding pursuant to the Commitments, or, following the termination of any
such Loan Commitment, Advances outstanding thereunder, exceed the Maximum Commitment
Amount.


 


(d)                                 Authorization
of Loan Commitments Pursuant to Established Franchisee Commitment; Loan Terms.  (i) Within the limits of the Established
Franchisee Commitment and in accordance with the procedures set forth in this
Agreement and the Servicing Agreement, the Sponsor may authorize the Servicer
to establish an Established Franchisee Line of Credit Commitment and/or an
Established Franchisee Term Loan Commitment pursuant to the Established
Franchisee Commitment in favor of an Established Franchisee who meets the
credit criteria established by the Sponsor.


 


(ii)                                  The
amount of each Established Franchisee Line of Credit Commitment shall be
determined by the Sponsor, but shall not be less than $100,000. Pursuant to the
Established Franchisee Line of Credit Commitment, the Servicer shall agree to
make Advances to the Established Franchisee Borrower thereunder.  Each Established Franchisee Line of Credit
Loan shall bear interest at the Borrower Rate designated by Sponsor in the
applicable Funding Approval


 


4

















 


Notice, and interest shall be payable on each Payment
Date and on the Maturity Date of such Established Franchisee Line of Credit
Loan when all principal and interest shall be due and payable in full.  Each Established Franchisee Line of Credit
Loan may be prepaid in full or in part on any Business Day, without premium or
penalty.  The Loan Term of each
Established Franchisee Line of Credit Loan shall not exceed four years.  The proceeds of each Advance made pursuant
to the Established Franchisee Line of Credit Commitments shall be used for
general corporate purposes.  Each
Established Franchisee Borrower shall agree to pay a commitment fee on the
unused Established Franchisee Line of Credit Commitment in an amount to be
determined by the Sponsor but in any event not to exceed 1.00% per annum, such
commitment fee to be paid quarterly, in arrears.  At no time, except as otherwise provided in the form of Established
Franchisee Loan Agreement, shall the aggregate outstanding principal amount of
any and all Established Franchisee Loans made to any Borrower exceed the
Established Franchisee Borrowing Base of such Borrower as in effect at such
time.


 


(iii)  The amount of each Established Franchisee
Term Loan Commitment shall be determined by the Sponsor, but shall not be less
than $100,000. Pursuant to the Established Franchisee Term Loan Commitment, the
Servicer shall agree to make Established Franchisee Term Loans to the
Established Franchisee Borrower thereunder. 
Each Established Franchisee Term Loan shall bear interest at the
Borrower Rate designated by Sponsor in the applicable Funding Approval Notice,
and interest shall be payable on each Payment Date and on the Maturity Date of
such Established Franchisee Term Loan. Principal on each Established Franchisee
Term Loan shall be payable on each Payment Date and shall be amortized over a
period of no more than 7 years with the balance of all outstanding principal
due and payable in full on the Maturity Date with respect to such Established
Franchisee Term Loan.  Each Established
Franchisee Term Loan may be prepaid in full or in part on any Business Day,
without premium or penalty.  The Loan
Term of each Established Franchisee Term Loan shall not exceed four years.  The proceeds of each Established Franchisee
Term Loan shall be used for general corporate purposes.


 


(d)                                 The
Loan Facility Agreement is hereby amended by replacing Exhibit B attached
thereto with Exhibit B attached hereto.


 


3.                                       Conditions
of Effectiveness.  This Amendment
shall become effective upon the receipt by Servicer of the following:


 


(i)                                     
a duly executed counterpart of this Amendment from each of the parties hereto;


 


(ii)                                  A
favorable written opinion of Kilpatrick Stockton, LLP, counsel for Sponsor and
Guarantors, in a form satisfactory to the Servicer and each Participant


 


5

















 


and covering such matters relating to the transactions
contemplated hereby as the Servicer may reasonably request;


 


(iii)                               All
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incident hereto or delivered
in connection therewith shall be satisfactory in form and substance to the
Servicer and the Participants;


 


(iv)                              Copies
of the organizational papers of Sponsor and each Guarantor, certified as true
and correct by the Secretaries of State of their respective States of
incorporation, and certificates from the Secretaries of State of such States of
incorporation certifying Sponsor’s and each Guarantor’s good standing as a
corporation in such State; and


 


(v)                                 A
certificate of the Secretary or Assistant Secretary of each of Sponsor and each
Guarantor certifying (i) the names and true signatures of the officers of
Sponsor and each Guarantor authorized to execute this Amendment and the other
Operative Documents to be delivered hereunder to which each is a party, (ii)
the bylaws of Sponsor and each Guarantor, respectively, and (iii) the
resolutions of the Board of Directors of each of Sponsor and each Guarantor,
respectively, approving the Operative Documents to which each is a party and
the transactions contemplated hereby.


 


In addition, each of the Participants shall have received a duly
executed Participation Certificate from the Servicer.


 


4.                                       Representations
and Warranties of Sponsor.  
Sponsor, without limiting the representations and warranties provided in
the Loan Facility Agreement, represents and warrants to the Participants and
the Servicer, after giving effect to this Amendment, 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
date hereof.


 


6

















 


5.                                       Survival.  Each
of the foregoing representations and warranties and each of the representations
and warranties made in the Loan Facility Agreement shall be made at and as of
the date hereof.  Each of the foregoing
representations and warranties shall constitute a representation and warranty
of Sponsor under the Loan Facility Agreement, and it shall be a Credit 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 Loan
Facility Agreement (including those made herein) shall survive and not be
waived by the execution and delivery of this Amendment or any investigation by
the Participants or the Servicer.


 


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


 


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


 


8.                                       Ratification
of Guaranty Agreement.   The
Guarantors hereby ratify and confirm that the Guaranty Agreement remains in
full force and effect and is hereby affirmed by the Guarantors.


 


9.                                       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.


 


10.                                 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


 


7

















 


Amendment and the other instruments and documents to be delivered
hereunder, and agrees to save the Servicer and each Participant harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes.


 


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


 


12.                                 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.


 


13.                                 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.


 


[Remainder of page intentionally
left blank.]


 


8

















 


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. 2 TO


LOAN
FACILITY AGREEMENT AND GUARANTY]


 


9

















 


	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald M. Thompson

  	
   

  
	
   

  	
   

  	
  Name: Donald M. Thompson

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
  Participating Commitment: $27,500,000.01

  	
   

  	
   

  
	
  Pro Rata Share: 
  25%

  	
   

  	
   

  



 


[SIGNATURE
PAGE TO AMENDMENT NO. 2 TO


LOAN
FACILITY AGREEMENT AND GUARANTY]


 


10

















 


	
   

  	
  REGIONS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen H. Lee

  	
   

  
	
   

  	
   

  	
  Name: Stephen H. Lee

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
  Participating Commitment: $18,333,333.34

  	
   

  	
   

  
	
  Pro Rata Share: 
  16.67%

  	
   

  	
   

  



 


[SIGNATURE
PAGE TO AMENDMENT NO. 2 TO


LOAN
FACILITY AGREEMENT AND GUARANTY]


 


11

















 


	
   

  	
  WACHOVIA BANK, NATIONAL

  
	
   

  	
  ASSOCIATION, formerly known as

  
	
   

  	
  First Union National Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William F. Fox

  	
   

  
	
   

  	
   

  	
  Name: William F. Fox

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
  Participating Commitment: $24,444,444.54

  	
   

  	
   

  
	
  Pro Rata Share: 
  22.22%

  	
   

  	
   

  



 


[SIGNATURE
PAGE TO AMENDMENT NO. 2 TO


LOAN
FACILITY AGREEMENT AND GUARANTY]


 


12

















 


	
   

  	
  SOUTHTRUST BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald Fontenot

  	
   

  
	
   

  	
   

  	
  Name: Ronald Fontenot

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
  Participating Commitment: $21,388,888.88

  	
   

  	
   

  
	
  Pro Rata Share: 
  19.44%

  	
   

  	
   

  



 


[SIGNATURE
PAGE TO AMENDMENT NO. 2 TO


LOAN
FACILITY AGREEMENT AND GUARANTY]


 


13

















 


	
   

  	
   

  	
  BRANCH BANKING & TRUST CO.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Paul E. Mclaughlin

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Paul E. Mclaughlin

  
	
   

  	
   

  	
   

  	
  Title: Senior VP

  
	
   

  	
   

  	
   

  	
   

  
	
  Participating Commitment: $12,222,222.22

  	
   

  	
   

  
	
  Pro Rata Share: 
  11.11%

  	
   

  	
   

  



 


[SIGNATURE
PAGE TO AMENDMENT NO. 2 TO


LOAN
FACILITY AGREEMENT AND GUARANTY]


 


14

















 


	
   

  	
  ISRAELI DISCOUNT BANK of NEW YORK

  
	
   

  	
  MIAMI BRANCH, as Assignee of
  ISRAELI

  
	
   

  	
  DISCOUNT BANK LIMITED, MIAMI

  
	
   

  	
  AGENCY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Keinan

  	
   

  
	
   

  	
   

  	
  Name: David Keinan

  
	
   

  	
   

  	
  Title: SVP & Regional Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roberto Munoz

  	
   

  
	
   

  	
   

  	
  Name: Roberto Munoz

  
	
   

  	
   

  	
  Title: SVP

  
	
   

  	
   

  	
   

  
	
  Participating Commitment: $6,111,111.11

  	
   

  
	
  Pro Rata Share: 
  5.56%

  	
   

  



 


[SIGNATURE
PAGE TO AMENDMENT NO. 2 TO


LOAN
FACILITY AGREEMENT AND GUARANTY]


 


15

















 


ACKNOWLEDGMENT
OF GUARANTORS


 


Each Guarantor
acknowledges and agrees to the terms of the foregoing Amendment, and further
acknowledges and agrees that (i) all of the obligations of the Sponsor shall
continue to constitute “Guaranteed Obligations” covered by the Guaranty
Agreement executed by each of the undersigned, and (ii) the Guaranty Agreement
is and shall remain in full force and effect on and after the date hereof, and
(iii) the foregoing agreement shall in no way release, discharge, or otherwise
limit the obligations of the undersigned Guarantors under the Guaranty
Agreement.


 


This
Acknowledgment of Guarantors made and delivered as of April   ,
2003.


 


 


	
   

  	
  AARON INVESTMENT COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gilbert L. Danielson

  	
   

  
	
   

  	
   

  	
  Name: Gilbert l. Danielson

  
	
   

  	
   

  	
  Title: Vice president and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AARON RENTS, INC. PUERTO RICO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gilbert L. Danielson

  	
   

  
	
   

  	
   

  	
  Name: Gilbert L. Danielson

  
	
   

  	
   

  	
  Title: President

  



 


16

















 


Exhibit
B


 


 


EXHIBIT
B


TO


LOAN
FACILITY AGREEMENT


AND
GUARANTY


 


FORM OF


LOAN AND SECURITY
AGREEMENT


(Established Franchisee
Borrower)


 


 


THIS LOAN AND
SECURITY AGREEMENT (this “Agreement”) dated as of
                          ,
200   , is made between                                            ,
[a                   
corporation] [a
                        
partnership] [a
                       
limited liability company] (“Borrower”), and SUNTRUST BANK (“Bank”), a Georgia
banking corporation having its principal office in Atlanta, Georgia.


 


W I T N E S S E T H:


 


WHEREAS, Borrower
engages in the business of renting and selling furniture, electronics, appliances,
jewelry and other household goods and is a franchisee of Aaron Rents, Inc., a
Georgia corporation (“Aaron”);


 


WHEREAS, Borrower
has requested and Bank has agreed to [establish a line of credit for  Borrower in order for Borrower to (i)
purchase inventory for use in connection with its Aaron’s Rental Purchase
franchise and (ii) borrow working capital, to the extent approved by
Aaron][and][make a term loan available to Borrower for general working capital
purposes];


 


WHEREAS, Borrower
and Bank wish to enter into this Agreement to set forth the terms and
conditions of Bank’s [establishment of a revolving line of credit for
Borrower][and][making of the term loan to the Borrower];


 


THEREFORE, upon
the terms and conditions hereinafter stated, and in consideration of the mutual
premises set forth above and other adequate consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:


 

















 


1.                                       DEFINITIONS
AND RULES OF CONSTRUCTION


 


1.1.                              As
used in this Agreement, the following terms shall have the meanings set forth
below (terms defined in the singular to have the same meaning when used in the
plural and vice versa):


 


“Aaron’s
Proprietary System” shall mean Aaron’s proprietary point of sale software
system, as modified from time to time, used by Aaron and its franchisees, such
as Borrower.


 


“Account”
means any right of Borrower to payment for goods sold or leased or for services
rendered which is not evidenced by an Instrument or Chattel Paper, whether or
not earned by performance.


 


“Account Debtor”
means any Person who is liable on an Account.


 


[“Advance”
shall mean an advance of funds by Bank on behalf of Borrower pursuant to the
Master Line of Credit Note executed by Borrower.]


 


“Agreement”
means this Loan and Security Agreement and all exhibits, riders and schedules
at any time executed by the parties and made a part hereof by reference, either
as originally executed or as hereafter amended, restated, modified or
supplemented from time to time.


 


“Applicable Law”
means all laws, rules and regulations applicable to the Person, conduct,
transaction, covenant or Loan Documents in question, including, without
limitation, all applicable law and equitable principles; all provisions of all
applicable state and federal constitutions, statutes, rules, regulations and
orders of governmental bodies; and all orders, judgments and decrees of all
courts and arbitrators.


 


“Approved
Invoice” means an invoice for the aggregate purchase of Merchandise purchased
by Borrower with a purchase order approved by Aaron.


 


“Asset
Disposition” shall mean (i) all sales of Merchandise; (ii) all
Rental/Purchase Contracts with respect to Merchandise with a “same as cash
option” regardless of term (i.e., 90, 120, 180 days); (iii) all
Merchandise which is determined to have been stolen; (iv) all Merchandise
that is destroyed, lost or otherwise removed from the premises of Borrower
other than pursuant to a Rental/Purchase Contract or by outright sale or for
repair work; and (v) all “skipped” Merchandise which is Merchandise
subject to a Rental/Purchase Contract.


 


“Balances”
means all monies and funds of Borrower at any time on deposit with Bank.


 


“Bank”
shall mean SunTrust Bank and its successors and assigns.


 


B-2

















 


“Bankruptcy
Code” means the Bankruptcy Reform Act of 1978, as may be amended from time
to time.


 


“Books and
Records” means all of Borrower’s books and records evidencing or relating
to its business, financial condition or the Collateral, including, but not
limited to, all customer lists, ledgers, invoices, purchase orders, financial
statements, computer tapes and disks.


 


“Borrowing Base”
shall mean, on any date of determination, the sum of:


 


(i) $300,000 for each franchisee
store operated by the Borrower where less than 7 calendar months have elapsed
since the Opening Date of each such store, plus


 


(ii) an amount equal to
5.5 multiplied by the sum of (x) the Rental Revenue (other than Electronic
Rental Revenue) from the most recently ended calendar month from all franchisee
stores operated by the Borrower where at least 6 calendar months but less than
12 calendar months have elapsed since the Opening Date of each such store, plus
(y) the average monthly Rental Revenue for the three most recently ended
calendar months from all franchisee stores operated by the Borrower where at
least 12 calendar months have elapsed since the Opening Date of each such
store, in each case as reported to the Bank by Aaron pursuant to Section 2.2(d)
hereof, plus


 


(iii) an amount equal to
11.0 multiplied by the sum of (x) the Electronic Rental Revenues from the most
recently ended calendar month from all franchisee stores operated by the
Borrower where at least 6 calendar months but less than 12 calendar months have
elapsed since the Opening Date of each such store, plus (y) the average monthly
Electronic Rental Revenues for the three most recently ended calendar months
from any and all franchisee stores operated by the Borrower where at least 12
calendar months have elapsed since the Opening Date of such store, in each case
as reported to the Bank by Aaron pursuant to Section 2.2(d) hereof.


 


“Borrowing Base
Report” shall have the meaning set forth in Section 2.2(d) hereof.


 


“Business Day”
shall mean any day other than a Saturday, Sunday or a day on which commercial
banks in Atlanta, Georgia are authorized by law to close.


 


“Chattel Paper”
shall have the meaning ascribed to it in the Code.


 


“Closing Date”
means the date upon which the initial advance with respect to the Loans is
funded.


 


“Closing Fee”
shall have the meaning given to such term in Section 2.9 hereof.


 


“Code”
means the Uniform Commercial Code as in effect from time to time in the State
of Georgia.


 


B-3

















 


“Collateral”
shall have the meaning given to such term in Section 3.1 hereof.


 


“Collateral
Agreement” means an agreement executed by Borrower and any other Persons
primarily or secondarily liable for all or part of the Loans or granting a
security interest to Bank in specified Collateral as security for the Loans,
including without limitation, this Agreement and any Guaranties.


 


“Commitment Fee”
shall have the meaning set forth in Section 2.10 hereof.


 


“DDA Account”
shall mean Borrower’s Demand Deposit Account into which Bank shall deposit the
Advances.


 


“Debt”
means (i) indebtedness for borrowed money or for the deferred purchase price of
property or services (other than trade accounts payable on customary terms in
the ordinary course of business), (ii) financial obligations evidenced by
bonds, debentures, notes or other similar instruments (other than  Debt of the Borrower which is subordinated
to the Loan Indebtedness owing to the Bank pursuant to a subordination
agreement in form and substance satisfactory to the Bank), (iii) financial
obligations as lessee under leases which shall have been or should be, in
accordance with GAAP, recorded as capital leases, and (iv) obligations under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or financial obligations of others of
the kinds referred to in clauses (i) through (iii) above.


 


“Default Condition”
means the occurrence of any event which, after satisfaction of any requirement
for the giving of notice or the lapse of time, or both, would become an Event
of Default.


 


“Default Rate”
means the annual percentage interest rate applied to the principal of the Loans
not paid when due under the terms of the applicable Loan Documents, which rate
shall equal the sum of two percent (2%) per annum plus the Floating Rate.


 


“Delinquent
Payment Fee” shall have the meaning given to such term in Section 2.11 hereof.


 


“Documents”
shall have the meaning ascribed to it in the Code.


 


[“EBIT”
shall mean, with respect to Borrower, for any period, (i) net income of
Borrower for such period, plus (ii) to the extent deducted in
determining net income, interest and taxes based on income for such period,
each as determined in accordance with GAAP consistently applied.]


 


“Electronic
Equipment” shall include all computers, computer equipment, big screen
televisions, and any other types of inventory designated by Aaron from time to
time.


 


B-4

















 


“Electronic
Rental Revenue” shall mean, with respect to the Borrower for any period,
the gross revenues of the Borrower from rentals to the public of the Borrower’s
Electronic Equipment inventory, including without limitation, all customer
deposits, advance rental payments, waiver fees, late fees, delivery fees,
nonsufficient funds fees, reinstatement fees, but excluding all retail sales
proceeds and sales taxes.


 


“Environment”
means navigable waters, waters of the contiguous zone, ocean waters, natural
resources, surface waters, ground water, drinking water supply, land surface,
subsurface strata, ambient air, both inside and outside of buildings and
structures.


 


“Environmental
Laws” means federal, state, local and foreign laws, principles of common
law, regulations and codes, as well as orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder relating to
pollution, protection of the environment or public health and safety,
including, but not limited to the release or threatened release of Hazardous
Substances into the Environment or otherwise relating to the presence,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.


 


“Equipment”
means all machinery, equipment, furniture, fixtures, motor vehicles and other
tangible personal property (other than Inventory) of Borrower, including, but
not limited to, all items described on the Equipment Schedule (if attached) and
all substitutions and replacements thereof.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.


 


“Event of
Default” shall have the meaning given to such term in Section 9 hereof.


 


“Floating Rate”
means a rate of interest per annum equal to the Prime Rate plus an additional
     percent (    %) per annum, such
rate to change as and when the Prime Rate changes.


 


“Franchise
Agreement” means the written agreement between Aaron and Borrower whereby
Borrower is authorized to establish an “Aaron’s Rental Purchase” franchise.


 


“GAAP”
means generally accepted accounting principles in the United States,
consistently applied.


 


“General
Intangibles” shall have the meaning ascribed to it in the Code and shall
include, without limitation, all of Borrower’s tax refund claims, patents,
copyrights, licenses, trademarks, trade names, service marks, patent
applications and choses in action.


 


“Guarantor”
means each Person who now or hereafter guarantees payment of the whole or any
part of the Loan Indebtedness.


 


B-5

















 


“Guaranty”
means any guaranty agreement executed by each of the partners, shareholders,
and where not prohibited by law, the spouses of such persons, of Borrower, or such
other Persons as may be required by the Bank, in favor of the Bank with respect
to the obligations of Borrower with respect to the Loans in the form provided
by the Bank, as the same may be amended, restated or supplemented from time to
time.


 


“Hazardous
Substances” means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, industrial substance or waste,
petroleum or petroleum-derived substance or waste, or any constituent of any
such substance or waste, including without limitation, any such substance
regulated under or defined by any Environmental Law.


 


“Instrument”
shall have the meaning ascribed to it in the Code.


 


“Inventory”
means all inventory of Borrower, including, without limitation, all raw
materials, work-in-process, finished goods, goods being leased pursuant to
Rental/Purchase Contracts, and other goods held by Borrower for sale or lease
or furnished under contracts of service.


 


“Investment
Property” shall have the meaning ascribed to it in the Code.


 


“Lien”
means any interest in property securing an obligation, whether such interest is
based on the common law, statute or contract, including, without limitation, a
security interest, lien or security title arising from a security agreement,
mortgage, security deed, trust deed, pledge or condition sale, or a lease,
consignment or bailment for security purposes.


 


“Line of Credit
Loans” means, as of any date of determination, the aggregate amount of
Advances outstanding pursuant to the Line of Credit Loan Commitment from the
Bank to Borrower established pursuant to Section 2 hereof.


 


“Line of Credit
Loan Commitment” means the committed amount of the line of credit facility
established by the Bank in favor of Borrower in the amount not exceeding, and
upon the terms described in, this Agreement.


 


“Loan Account”
means the internal bank loan account established by the Bank for Borrower.


 


“Loan
Commitment” means [either] [the Line of Credit Loan Commitment] [or] [the
Term Loan Commitment], as the case may be.


 


“Loan Documents”
means this Agreement, the Master Notes, the Collateral Agreements, any other
documents relating to the Loans delivered by Borrower or any guarantor or
surety thereof to the Bank and any amendments thereto.


 


B-6

















 


“Loan
Indebtedness” means all amounts due and payable by Borrower under the terms
of the Loan Documents with respect to the Loan Commitment and the Advances and
Loans made thereunder, including, without limitation, outstanding principal, accrued
interest, any late charges, and all reasonable costs and expenses of any legal
proceeding brought by the Bank to collect any of the foregoing (including
without limitation, reasonable attorneys’ fees).


 


“Loans”
means, as of any date of determination, [the Line of Credit Loans] [and] [the
Term Loan].


 


“Loan Term”
shall have the meaning set forth in Section 2.4 hereof.


 


“Master Line of
Credit Note” has the meaning set fort in Section 2.3.


 


“Master Note”
means [either] [the Master Line of Credit Note] [or] [the Master Term Note].


 


 “Master Term Note” has the meaning set
fort in Section 2.3.


 


“Materially
Adverse Effect” shall mean any materially adverse change in (i) the
business, results of operations, financial condition, assets or prospects of
the Borrower, taken as a whole, (ii) the ability of the Borrower to perform its
obligations under this Agreement, or (iii) the ability of the Guarantors (taken
as a whole) to perform their respective obligations under the Guaranty.


 


“Maturity Date”
shall have the meaning set forth in Section 2.3 hereof.


 


“Merchandise”
means goods distributed or sold to Borrower through Aaron.


 


“Net Book Value”
means, for any item of Merchandise, the cost of such Merchandise less
accumulated depreciation as calculated in accordance with the Aaron’s
Proprietary System.


 


“Opening Date”
shall mean with respect to each store location, the date determined by Aaron to
be the opening date of such location in accordance with its standard practice,
as notified to the Bank.


 


“Payment Date”
shall mean the last day of each calendar month; provided, however,
if such day is not a Business Day, the next succeeding Business Day


 


“Payment Period”
shall mean a period of one (1) month; provided that (i) the first day of
a Payment Period must be a Business Day, (ii) any Payment Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day, (iii) the first Payment Period hereunder shall
commence on the date hereof and shall end on the last day of the next
succeeding calendar month, and (iv) the first day of any succeeding Payment
Period


 


B-7

















 


shall be the last day of the preceding Payment Period and shall end on
the last day of the next succeeding calendar month.


 


“Permitted
Liens” means Liens in favor of Bank or Aaron; Liens for taxes not yet due
or payable; statutory Liens securing the claims of materialmen, mechanics,
carriers and landlords for labor, materials, supplies or rentals incurred in
the ordinary course of Borrower’s business, but only if payment thereof is not
at the time required and such Liens are at all times junior in priority to the
Liens in favor of Bank; Liens shown on Exhibit B (if any); and Liens
hereafter consented to by Bank in writing.


 


“Person”
means a corporation, an association, partnership, an organization, a business,
a business trust, a limited liability company, an individual, a government or
political subdivision thereof or a governmental agency.


 


“Prime Rate”
means the per annum rate of interest designated from time to time by the Bank
to be its prime rate, with any change in the rate of interest resulting from a
change in the Prime Rate to be effective as of the opening of business of the
Bank on the day of such change.  The
prime rate is one of several reference rates used by the Bank and the Bank
makes loans at rates both higher and lower than the Prime Rate.


 


“Quarterly
Covenant Compliance Report” shall mean that Quarterly Covenant Compliance
Report substantially in the form of Exhibit D attached hereto.


 


“Rental/Purchase
Contract” means a contract between Borrower and a customer to rent
Merchandise in the form approved by Aaron (and which may included purchase
options).


 


“Rental Revenue”
means, for any period, the gross revenues of Borrower from rentals to the
public of Borrower’s furniture inventory and rental equipment including,
without limitation, all customer deposits, advance rental payments, waiver
fees, late fees, delivery fees, nonsufficient fund fees, reinstatement fees,
but excluding all retail sales proceeds and sales taxes.


 


“Solvent”
means, as to any Person, such Person (i) is able to pay, and does pay, its
debts as they mature and (ii) has a positive tangible net worth determined in
accordance with GAAP.


 


“Spousal
Consent” shall mean any agreement provided by the spouse of any Person
executing a Guaranty to the extent such spouse has not personally executed a
Guaranty, to be substantially in the form provided by the Bank.


 


“Subsidiary”
means any corporation or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time
directly or indirectly owned by Borrower.


 


B-8

















 


[“Tangible
Net Worth” means, with respect to the Borrower as of any date of
determination, the excess of the total assets of the Borrower over the Total
Liabilities of the Borrower, determined in accordance with GAAP consistently
applied, excluding from the calculation of total assets the notes receivables
from shareholders of the Borrower, goodwill and other intangible assets of the
Borrower and including in such calculation of total assets the franchise fees as
shown on the balance sheet of the Borrower as of such date.]


 


[“Term Loan”
shall have the meaning set forth in Section 2.2.]


 


“Term Loan
Commitment” shall mean, the obligation of the Bank to make a Term Loan
hereunder on the Closing Date, in a principal amount not to exceed
$                      .]


 


[“Total
Liabilities” means, with respect to the Borrower, as of any date of
determination, total liabilities determined in accordance with GAAP
consistently applied, but excluding therefrom Debt of the Borrower which is
subordinated to the Loan Indebtedness owing to the Bank pursuant to a
subordination agreement in form and substance satisfactory to the Bank.]


 


1.2.                              Accounting
Terms and Determination.  Accounting
terms used in this Agreement such as “amortization,” “depreciation,” “interest
expense,” and “tangible net worth” shall have the meaning normally given them
by, and shall be calculated (both as to amounts and classification of items) in
accordance with, GAAP.  Any pronoun used
herein shall be deemed to cover all genders. 
All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations, and all
references to any instruments or agreements, including, without limitation,
references to any of the Loan Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.


 


2.                                     LOAN;
USE OF PROCEEDS.


 


2.1.                              Establishment
of DDA Account; Loan Account.  (a)
Prior to the Closing Date, Bank shall establish a DDA Account for Borrower.


 


(b) Prior to the Closing Date, Bank shall also
establish on its books an internal loan account in Borrower’s name (“the Loan
Account”) in which Bank shall record, in accordance with customary accounting
practice, all charges, expenses and other items properly chargeable to
Borrower; all payments made by Borrower on account of indebtedness evidenced by
the Loan Account; all proceeds of Collateral which are finally paid to Bank at
its office in cash or solvent credits; and other appropriate debits and
credits.  The debit balance of the Loan
Account shall reflect the amount of Borrower’s Loan Indebtedness from time to
time by reason of the Loans and other appropriate charges hereunder.  At least once each month, Bank shall render
a statement of account for the Loan Account, which statement shall be
considered correct, and accepted by and conclusively binding upon Borrower,
unless Borrower notifies Bank to the contrary within thirty (30) days after
Bank’s sending of said statement to Borrower.


 


B-9

















 


2.2.                              (a)  [Line of Credit Advances.  (i) Upon Borrower’s execution of this
Agreement and compliance with its terms and subject to Bank’s confirmation if
requested by Aaron that Bank has a first priority security interest in the
Collateral, Bank shall notify Borrower that Borrower may request Advances
pursuant to the Line of Credit Loan Commitment.  Bank shall make such Advances into the DDA Account for the sole
purposes of honoring requests from Borrower, made through the Aaron’s
Proprietary System, for ACH transfers to (x) suppliers of Merchandise in
payment of Approved Invoices, and (y) to other accounts as may be specified by
Borrower for Advances made for working capital purposes, subject to the
approval of Aaron, such approval to be evidenced by the granting of a vendor
identification number to Borrower to use in requesting such working capital
Advance through the Aaron’s Proprietary System.  Borrower shall not use the DDA Account for any other
purpose.  The maximum principal amount
of Advances at any time outstanding pursuant to this Agreement shall not exceed
the lesser of (A)
                                  
($
                     )
(the “Line of Credit Loan Commitment”) and (B) [the sum of] the Borrowing Base
[minus, the outstanding principal amount of the Term  Loan], as most recently reported by Aaron to Bank pursuant to
Section 2.2(iv) hereof (such lesser amount herein referred to as the “Revolver
Availability”).  Each Advance shall be
in the amount of not less than $500.


 


(ii)                                  Borrower
shall submit purchase order requests for Merchandise to Aaron.  In the event that the purchase order is
authorized pursuant to the Franchise Agreement, Aaron will prepare the purchase
order and submit the same to the appropriate supplier requested by
Borrower.  The supplier will be
instructed to ship all Merchandise directly to Borrower and Borrower will be
responsible for (x) inspecting all Merchandise and resolving all disputes
regarding the Merchandise with such supplier and (y) paying all freight and
other shipping and/or insurance charges arising in connection therewith with
funds other than Loan Proceeds.  The
supplier will invoice Borrower for such Merchandise in accordance with normal
industry practice.  When Borrower wishes
to pay such invoice, Borrower, subject to the Revolver Availability of the Line
of Credit Loan Commitment, shall pay such invoice by directing the Bank,
through the Aaron’s Proprietary System, to pay such invoice by means of an ACH
transfer from its DDA Account.  Any
directions for ACH transfers correctly inputted into the Aaron’s Proprietary
System prior to 12:00 Midnight (Atlanta, Georgia time) on any Business Day,
shall be paid by the Bank no later than the third Business Day thereafter,
unless Borrower is otherwise notified by Aaron or the Bank.


 


(iii)                               Upon receipt of the
request for an ACH transfer (provided that such request relates to an Approved
Invoice), the Bank shall honor such request by making an Advance pursuant to
the Line of Credit Loan Commitment in the amount of such request into the
Borrower’s DDA Account and automatically forwarding such amount to the supplier
by means of an ACH transfer in accordance with the instructions of Borrower.  In the event that a request for an ACH
transfer is presented for payment and Borrower’s availability pursuant to the
Line of Credit Loan Commitment is insufficient to honor such request, the Bank
may, but shall have no obligation to, make such overadvance, which shall be an
Advance for all purposes hereunder, but shall be due and payable upon
demand.  At the end of each calendar
month, Bank shall provide


 


B-10

















 


Borrower with a monthly DDA Account statement in the form customarily
used by Bank for its commercial customers and a loan account statement.


 


(iv)                              On
the fifth Business Day of each month (as determined on the last day of the
preceding calendar month), Aaron shall calculate the Borrowing Base and report
the same to Bank in writing (the “Borrowing Base Report”), and Bank shall be
entitled to rely conclusively upon such information.  Upon receipt of the Borrowing Base Report, Bank shall input such
information into Bank’s loan records to be effective as of the date which is
two Business Days after receipt of such information.   On the 10th day of each calendar month, Bank shall mail to
Borrower a bill setting forth the total amount of principal (to the extent that
the outstanding principal amount of the Loans exceeds the Borrowing Base as set
forth in the most recent Borrowing Base Report) and interest due on the next
Payment Date which bill shall be considered correct, and accepted by and
conclusively binding upon Borrower, unless Borrower notifies Bank to the
contrary within thirty (30) days after Bank’s sending of said bill to
Borrower.  In addition, Bank, on the
date which is two Business Days after receipt of the Borrowing Base Report from
Aaron, shall notify Borrower in writing (including facsimile) of the new
Borrowing Base for Borrower and shall require that Borrower repay on the next
Payment Date any additional Advances made since the date of the preparation of
the statement for such Payment Date if necessary to avoid any overadvance as of
such date and such amount  (in addition
to any amounts set forth in the bill to Borrower) shall be due and payable on
the next Payment Date.]


 


(b)                                 [Term
Loan.  Subject to the terms and
conditions set forth herein, the Bank agrees to make a single loan (the “Term
Loan”) to the Borrower on the Closing Date in a principal amount not to exceed
the Term Loan Commitment; provided, that if for any reason the full
amount of the Bank’s Term Loan Commitment is not fully drawn on the Closing
Date, the undrawn portion thereof shall automatically be cancelled.]  The proceeds of the Term Loan shall be used
for
                           .


 


2.3.                              Master
Notes; Repayment.  [(i) The Line of
Credit Loan Commitment shall be evidenced by a note executed by Borrower in
favor of Bank, substantially in the form of Exhibit A-1 attached hereto
(the “Master Line of Credit Note”).  The
Master Line of Credit Note shall be dated as of the date hereof and shall be
payable to the order of Bank in the stated principal amount of the Line of
Credit Loan Commitment.  Payments of
principal shall be due and payable by Borrower to Bank, subject to the
provisions of Section 2.6(b) below, on
                   
    , 200   (the “Maturity Date”), unless sooner
accelerated in accordance with the terms hereof.]


 


(ii)   [The Term Loan shall be evidenced by a note
executed by Borrower in favor of Bank, substantially in the form of Exhibit
A-2 attached hereto (the “Master Term Note”).  The Master Term Note shall be dated as of the date hereof and
shall be payable to the order of Bank in the stated principal amount of the
Term Loan Commitment.  Repayment will be
in                 
consecutive equal monthly installments of principal in the amount of $
                      
based on a                     
month amortization plus accrued and unpaid interest and shall due and payable
on each Payment Date, with the first installment being due and payable
on                      


 


B-11

















 


           , and
the remaining outstanding principal amount together with all accumulated unpaid
interest being due and payable on the Maturity Date.


 


(iii)  Except as provided below, all payments of
principal of, or interest on, the Loan Documents and all other sums due under
the terms of the Loans shall be made in either (x) immediately available funds
(including ACH transfers), or (y) checks or money orders made payable to the
Bank at its principal office in Atlanta, Georgia in accordance with written
instructions provided by the Bank.  All
voluntary prepayments of the Loans shall be made to the Bank at its Strategic
Partner Programs Department in Atlanta, Georgia using preprinted envelopes
provided by the Bank for such purpose or, if such envelopes are unavailable,
mailed to the following address:


 


	
  SunTrust Bank

  
	
  Strategic Partner Programs Department

  
	
  Attn: Aaron Rent’s Program Manager

  
	
  P.O. Box 4418

  
	
  Mail Code 1923

  
	
  Atlanta, GA 30302

  



 


2.4.                              Loan
Term; Voluntary Termination.  The
term of the Line of Credit Loan Commitment and the Term Loan shall be a period
of four years from the Closing Date (the “Loan Term”), subject to Section 10
hereof.  Upon the termination of the
Line of Credit Loan Commitment, the principal of and all accrued but unpaid
interest on the Loan Indebtedness shall be forthwith due and payable, but all
of the duties and covenants of Borrower hereunder, and all rights, remedies and
privileges of Bank under this Agreement and Bank’s security interest in the
Collateral, shall continue in full force and effect until all of the Loan
Indebtedness is fully and finally paid.


 


2.5.                              Interest.  (a) 
From and after the date hereof, interest shall accrue on the unpaid
principal amount of the Loan Indebtedness at the Floating Rate.   Interest shall be calculated daily and
shall be computed on the basis of actual days elapsed over the period of a 360
day year.  Interest shall be payable in
arrears on each Payment Date and on the Maturity Date, whether due to
acceleration or otherwise. After the occurrence of an Event of Default and
during the continuance thereof, the outstanding principal balance of the Loans
shall bear interest at the Default Rate, which shall be payable upon demand.


 


(b)  In no
contingency or event whatsoever shall the amount paid or agreed to be paid to
Bank for the use, forbearance or detention of money advanced under this
Agreement exceed the highest lawful rate permissible under Applicable Law.  It is the intent hereof that Borrower will
not pay or contract to pay, and that Bank not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be charged to and paid by Borrower under Applicable Law.  All interest (and charges deemed interest)
paid or agreed to be paid to Bank shall, to the extent permitted by Applicable
Law, be amortized, pro rated, allocated and spread in equal parts throughout
the full term hereof until payment in full of


 


B-12

















 


the principal amount of the Loan Indebtedness owing hereunder
(including the period of any renewal or extension hereof) so that interest on
the principal amount of the Loan Indebtedness outstanding hereunder for such
full period will not exceed the maximum amount permitted by Applicable Law.


 


2.6.                              Loan
Prepayment.  (a)   Voluntary Prepayment.  Borrower shall have the right to prepay the
Loans in whole or in part upon at least two (2) Business Days’ prior written
notice to Bank, provided, however, that any voluntary partial prepayment of the
Loans shall be in a minimum amount of $1,000.


 


(b) Mandatory Prepayment. On any Payment Date
on which the aggregate outstanding principal amount of the Loans exceeds the
Borrowing Base, as most recently reported to Borrower by Bank pursuant to
Section 2.2(iv) hereof, Borrower shall prepay the Loans in the amount of such
overadvance, as notified to Borrower by Bank.


 


2.7.                              Audits.  Borrower hereby consents and authorizes
Aaron or the Bank or any agent or representative thereof  to conduct periodic field audits of
Borrower.  Such field audits may
include, without limitation, examinations of the payment receipts, tax returns,
bank statements, loan statements, Rental/Purchase Contracts, inventory on hand,
computer-generated reports of Asset Dispositions, Rental Revenue and other
financial data necessary to determine the accuracy and validity of the reports,
compliance certificates, financial reports and other information forwarded to
either of the Bank or Aaron by Borrower in connection with the Loan.


 


2.8.                              Tracking
of Merchandise.  All Merchandise
financed by the Bank must be serialized by means of the Aaron’s Proprietary
System for appropriate reconciliation of Advances and receipt of
Merchandise.  Borrower shall  be obligated to furnish serial numbers for
all Merchandise purchased directly to Aaron on a weekly basis (and, if
available, on a daily basis) by transmittal of Borrower’s receiving report
(containing Aaron’s Proprietary System numbers) directly to Aaron on the
Aaron’s Proprietary System.  As set
forth more fully below, Aaron will maintain and track such information as agent
for the Bank and the Bank shall at all times have access to such information.


 


2.9.                              Closing
Fee.  On the Closing Date, Borrower
shall pay to Bank a closing fee (“Closing Fee”) in the amount of $500 per store
location [plus $5,000](1).


 


2.10.                        Commitment
Fees. (a)  Borrower shall pay a
commitment fee (the “Commitment Fee”) on any unused portion of the Line of
Credit Loan Commitment in the amount of
        percent (       %)
per annum, such Commitment Fee to be paid quarterly in arrears on every third
Payment Date, commencing on
                           .


 












(1) Note:  in the case of an
Established Franchisee Borrower that has customized financial covenants as
specified by Sponsor in accordance with Section 6 hereof, an additional $5,000
fee will be charged.


 


B-13

















 


(b)                                 All
Commitment Fees shall be paid on the dates due, in immediately available funds,
to the Bank.


 


2.11.                        Delinquent
Payment Fees.  In the event that any
payment due and payable hereunder is not received by the Bank on the Payment
Date when due, the Borrower shall, upon request from the Bank, pay to the Bank
a delinquent payment fee (the “Delinquent Payment Fee”) in an amount equal to
the greater of (i) one percent (1%) of the amount of the late payment and (ii)
$500.00.


 


3.                                     COLLATERAL
AND INSURANCE.


 


3.1.                              Granting
of Security Interest in Collateral. 
As security for the payment and performance of all of the Loan
Indebtedness, Bank shall have and Borrower hereby grants to Bank a continuing
security interest in the following described property of Borrower, whether now
in existence or hereafter created or acquired and wherever located
(collectively, the “Collateral”):  all
Accounts, Merchandise, Inventory, Investment Property, Equipment, General
Intangibles, Documents, Instruments, Chattel Paper (including, but not limited
to, the Rental/Purchase Contracts), Balances, and Books and Records, and all
products and proceeds of the foregoing (including insurance proceeds).  The Loan Indebtedness shall also be secured
by any other property (whether real or personal) in which Borrower may have
heretofore or concurrently herewith granted, or may hereafter grant, a Lien in
favor of Bank.


 


3.2.                              Form
of Rental/Purchase Contracts.  All
Rental/Purchase Contracts will be (a) in a form prescribed by Aaron for use by
its franchisees, (b) be transferable to Bank and (c) contain the following
provision directly above Borrower’s customer’s signature:


 


“NOTWITHSTANDING ANYTHING SET FORTH IN THIS AGREEMENT
TO THE CONTRARY, THE UNDERSIGNED ACKNOWLEDGES AND CONSENTS TO THE TRANSFER OF,
OR GRANT OF A SECURITY INTEREST IN, ANY OR ALL OF THE LESSOR’S RIGHT, TITLE AND
INTEREST (RESIDUAL OR OTHERWISE) IN AND UNDER THIS AGREEMENT TO ANY THIRD
PARTY.  NO SUCH TRANSFER OR GRANT OF
SECURITY INTEREST WILL:  (A) AFFECT THE
UNDERSIGNED’S LOAN INDEBTEDNESS; (B) CHANGE ANY DUTIES OF, OR INCREASE ANY
BURDENS OR RISKS IMPOSED ON, THE PARTIES TO THIS AGREEMENT; OR (C) GIVE RISE TO
ANY RIGHTS OR REMEDIES PROVIDED UNDER SECTION 2A-303(1)(b) OF THE UNIFORM
COMMERCIAL CODE, AS ADOPTED IN THE APPLICABLE JURISDICTION.  NO ENFORCEMENT OF ANY SECURITY INTEREST WILL
CONSTITUTE A TRANSFER THAT CHANGES ANY DUTIES OF, OR INCREASES ANY BURDENS OR
RISK IMPOSED ON, THE PARTIES TO THIS AGREEMENT.  THE UNDERSIGNED WAIVES ALL RIGHTS AND REMEDIES PROVIDED UNDER
SECTION 2A-303 OF THE UNIFORM COMMERCIAL CODE, AS ADOPTED IN THE APPLICABLE
JURISDICTION.”


 


B-14

















 


Immediately upon execution of the same, all Rental/Purchase Contracts
shall be hereby assigned to Bank, and, immediately upon Bank’s request,
delivered to Bank together with any and all related documents, and will
contain, by way of a stamp or as a part of the preprinted rental contract or
lease agreement form, the following legend directly below Borrower’s customer’s
signature:


 


“FOR VALUE RECEIVED, THIS AGREEMENT HAS BEEN ASSIGNED
TO SUNTRUST BANK AND THERE ARE NO DEFENSES AGAINST THE ASSIGNEE.”


 


Borrower will not assign, sell, pledge, convey or by any other means
transfer to any person other than Bank any Rental/Purchase Contracts or Chattel
Paper, without Bank’s prior written consent.


 


3.3.                              Other
Documents.  Borrower shall execute
and deliver, or shall be caused to be executed and delivered, to Bank such
other instruments, agreements, assignments, notifications or other documents
relating to the Collateral as Bank may from time to time request in order to
evidence, perfect or continue the perfection of Bank’s Liens upon any of the
Collateral.


 


3.4.                              Insurance.  Borrower shall maintain and keep in force
insurance of the types and in the amounts customarily carried in lines of
business similar to Borrower’s and such other insurance as Bank may require,
including, without limitation, theft, fire, public liability, business
interruption, casualty, property damage, and worker’s compensation insurance,
which insurance shall be carried with companies and in amounts satisfactory to
Bank.  All casualty and property damage insurance
shall name Bank as mortgagee or loss payee, as appropriate.  Borrower shall deliver to Bank from time to
time, at Bank’s request, copies of all such insurance policies and certificates
of insurance and schedules setting forth all insurance then in effect.  Each policy of insurance shall contain a
clause requiring the insurer to give not less than thirty (30) days’ prior
written notice to Bank in the event of 
cancellation of the policy for any reason whatsoever and a clause that
the interest of Bank shall not be impaired or invalidated by any act or neglect
of Borrower or owner of the property nor by the occupation of the premises for
purposes more hazardous than are permitted by said policy.  All such insurance policies shall contain
such other provisions as Bank may require in order to protect Bank’s security
interests in the collateral and Bank’s right to receive payments under such
policies.  Borrower hereby appoints Bank
as attorney-in-fact for Borrower to file claims under any insurance
policies, to receive, receipt and give acquittance for any payments that may be
payable to Borrower thereunder, and to execute any and all endorsements,
receipts, releases, assignments, reassignments, or other documents that may be
necessary to effect the collection, compromise or settlement of any claims
under any such insurance policies, which power of attorney shall be deemed
coupled with an interest and irrevocable so long as Bank shall have a security
interest in any of the Collateral pursuant to this Agreement.  If Borrower shall fail to procure such
insurance or to pay any premium with respect thereto, then Bank may, at its
discretion, procure such insurance or pay such premium and any costs so
incurred by Bank shall constitute a part of the liabilities secured hereby.  Bank may apply the proceeds of any insurance
policy received by Bank to the payment of any liabilities, whether or not due,
in such order of application as Bank shall determine.  Borrower shall promptly furnish Bank with certificates or other
evidence satisfactory to Bank indicating compliance with the foregoing
insurance requirements.


 


B-15

















 


3.5.                              Validation
and Collection of Accounts.  Whether
or not a Default Condition or an Event of Default has occurred, Bank shall have
the right, at any time or times hereafter, in the name of Bank or any designee
of Bank to verify the validity, amount or any other matter relating to any
Accounts by mail, telephone or otherwise, and Borrower shall fully cooperate
with Bank in an effort to facilitate and promptly conclude any such
verification process.  Unless Bank shall
at any time following the occurrence of an Event of Default, elect to give
notice to Account Debtors to make payments on the Accounts directly to Bank,
Borrower shall endeavor in the first instance to make collection of its
Accounts for Bank.  Borrower shall at
the request of Bank notify the Account Debtors of the security interest of Bank
in any Account and Bank may itself at any time so notify Account Debtors.  Upon or after the occurrence of an Event of
Default, Borrower shall (if and to the extent requested to do so by Bank)
notify the Account Debtors to make all payments owing to Borrower directly to
Bank for application to the Loan Indebtedness.


 


3.6.                              Maintenance
of Collateral.  Borrower shall
maintain all Inventory and Equipment in good condition, reasonable wear and
tear excepted in the case of Equipment, and shall, as and when requested by
Bank, provide Bank with a list of all of the Equipment and evidence of
ownership thereof.  Borrower shall not
permit any of the Equipment to become affixed to any real property so that such
Equipment is deemed a fixture under the real estate laws of the applicable
jurisdiction.


 


3.7.                              Expenses
Relating to Collateral.  Borrower
shall pay Bank on demand an amount equal to any and all expenses, including
legal fees, incurred or paid by Bank in connection with Bank’s insuring,
maintaining, protecting, storing, safeguarding, or paying Liens with respect to
any of the Collateral or otherwise discharging any duty or obligation of
Borrower with respect to any of the Collateral.


 


3.8.                              Rights
to Collateral.  Bank shall have no
duty to collect, protect or preserve the underlying value of any Collateral or
any income thereon or to preserve any rights against prior parties.  Bank may exercise its rights and remedies
with respect to the Collateral without first resorting (and without regard) to
any other security for the Loan or other sources of payment or reimbursement for
the Loan Indebtedness.


 


4.                                     CONDITIONS
PRECEDENT.


 


Borrower shall
deliver and Bank shall have received the following documents, each in form and
substance satisfactory to Bank, as conditions precedent of the Loan:


 


(a)                                  a
validly executed copy of this Agreement;


 


(b)                                 the
validly executed Master Note[s];


 


(c)                                  a
validly executed copy of a Guaranty of each partner or majority stockholder of
Borrower, and to the extent not prohibited by Applicable Law, the spouse


 


B-16

















 


of such Person; provided, however, that
if such spouse is not providing a Guaranty, a validly executed copy of the
Spousal Consent;


 


(d)                                 a
validly executed Landlord’s Waiver for each location of Borrower where the
financed Merchandise is located;


 


(e)                                  a
validly executed Subordination Agreement from each other debtholder of
Borrower;


 


(f)                                    validly
executed Uniform Commercial Code Financing Statements suitable to enable Bank
to perfect the security interest granted to it under this Agreement;


 


(g)                                 evidence
of Borrower’s good standing;


 


(h)                                 a
validly executed Officer’s Certificate or such other evidence acceptable to
Bank evidencing Borrower’s corporate, partnership or other necessary
authorization of the Loans and incumbency;


 


(i)                                     a
Certificate of Insurance from an insurer acceptable to Bank evidencing
Borrower’s compliance with Section 3.4 hereof and naming the Bank as loss
payee/additional insured as follows:


 


	
  SunTrust Bank

  
	
  Strategic Partner Programs Department

  
	
  Attn: Aaron Rents Program Manager

  
	
  PO Box 4418

  
	
  Mail Code 1923

  
	
  Atlanta, GA 30302

  



 


(j)                                     a
validly executed authorization to make the ACH transfers for payments of
principal, interest and fees contemplated hereunder, including without
limitation, mandatory prepayments of the Loans pursuant to Section 2.6(b),
which authorization shall be in form and substance satisfactory to the Bank;
and


 


(k)                                  an
initial Borrowing Base Report from Aaron.


 


In addition, Bank shall have satisfied itself that
there are no Liens on any of the Collateral, and Bank shall be satisfied that
all corporate or partnership proceedings necessary for the authorization of the
Loan Commitment shall have been taken and the Bank shall have received any
other documents that it deems necessary or advisable.


 


B-17

















 


5.                                     BORROWER’S
REPRESENTATIONS AND WARRANTIES.


 


To induce Bank to
enter into this Agreement, Borrower represents and warrants as follows:


 


5.1.                              Organization
and Qualification of Borrower. Borrower is [a corporation duly organized,
validly existing and in good standing] [a
                 
partnership duly formed and validly existing] [a limited liability company duly
organized, validly existing and in good standing] under the laws of the state
shown on the first page hereof, and is qualified to do business in all jurisdictions
where the character of its properties or the nature of its activities make such
qualification necessary.


 


5.2.                              Trade
Names, Subsidiaries and Location of Assets.  Exhibit B attached hereto and made a part hereof fully and
accurately discloses any legal name, trade name or style ever used by Borrower,
any Subsidiaries owned by Borrower, and each office, other place of business or
location of assets of Borrower.


 


5.3.                              Corporate
or Other Authority; No Violation of Other Agreements. The execution, delivery
and performance by Borrower of this Agreement and the other Loan Documents have
been duly authorized by all necessary action on the part of Borrower and do not
and will not (i) violate any provision of Borrower’s articles of incorporation,
by-laws, or other organizational documents or any Applicable Law, or (ii)
be in conflict with, result in a breach of, or constitute (following notice or
lapse of time or both) a default under any agreement to which Borrower is a
party or by which Borrower or any of its property is bound.


 


5.4.                              Enforceability.
This Agreement and each of the other Loan Documents create legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms.


 


5.5.                              Entire
Agreement.  The Master Note[s] and
accompanying Loan Documents executed in connection with the Loan and delivered
to Bank are the only contracts evidencing the transaction described herein and
constitute the entire agreement of the parties hereto with respect to the
transaction.


 


5.6.                              Genuineness
of Signatures.  The Master Note[s]
and each accompanying Loan Document executed in connection with the Loan is
genuine and all signatures, names, amounts and other facts and statements
therein and thereon are true and correct.


 


5.7.                              Litigation.  There are no actions, suits, proceedings or
investigations pending or, to the knowledge of Borrower, threatened before any
court or administrative or governmental agency that may, individually or
collectively, adversely affect the financial condition or business operations
of Borrower.


 


5.8.                              Financial
Condition.  Borrower’s financial
statement previously delivered to Aaron, fairly and accurately presents the
financial condition of Borrower as of such date and has been prepared in
accordance with GAAP consistently applied, and since the date of that financial


 


B-18

















 


statement, there has been no material adverse change in the financial
condition of Borrower.  Borrower is now
and will remain Solvent.


 


5.9.                              Taxes.   All federal, state and local tax returns
have been duly filed, and all taxes, assessments and withholdings shown on such
returns or billed to Borrower have been paid, and Borrower maintains adequate
reserves and accruals in respect of all such federal, state and other taxes,
assessments and withholdings.  There are
no unpaid assessments pending against Borrower for any taxes or withholdings,
and Borrower knows of no basis therefor.


 


5.10.                        Compliance
with Laws.  Borrower has duly
complied with, and its properties and business operations are in compliance in
all material respects with, the provisions of all Applicable Laws, including,
without limitation ERISA, the Fair Labor Standards Act and all Environmental
Laws.  Borrower possesses all permits,
franchises, licenses, trademark rights, trade names, patents and other
authorizations necessary to enable it to conduct its business operations as now
conducted, and no filing with, and no consent, authorization, order or license
of, any Person is necessary in connection with the execution or performance of
this Agreement or the other Loan Documents.


 


5.11.                        No
Default.  No Default Condition or
Event of Default exists.


 


5.12.                        Accounts.  Each Account arises out of a bona fide lease
or sale and delivery of goods or rendition of services by Borrower and, unless
otherwise indicated by Borrower to Bank in writing promptly after learning
thereof, the facts appearing on the invoice evidencing such Account and
Borrower’s books relating thereto are true and accurate and payment thereof is
not subject to any known dispute, offset or claim except for discounts granted
in the ordinary course of Borrower’s business that are reflected on the face of
such invoice.


 


5.13.                        Use of
Proceeds.  None of the proceeds of
any Advances or the Term Loan by Bank have been or will be used to purchase or
carry (or to satisfy or refinance any indebtedness incurred to purchase or
carry) any “margin stock” (as defined in Regulation U of the Federal Reserve
Board).  Advances shall be made for the
sole purposes of honoring requests for ACH transfers to (i) suppliers of
Merchandise in payment of Approved Invoices, and (ii) other accounts specified
by Borrower with respect to Advances made for working capital purposes, subject
to the approval of Aaron,  which
requests have been entered by the Borrower in the Aaron’s Proprietary System as
provided above.  The proceeds of the
Term Loans shall be used for general working capital purposes.


 


5.14.                        Experience
as Aaron Franchisee.   Borrower (x)
has been a franchisee of Aaron for a period of at least 18 months; (y) has had
at least two Aaron Rent’s stores open for a minimum of 12 months; and (z) has
at least four Aaron Rent’s stores open or under executed area development
agreements.


 


Each submission of  an Approved
Invoice made by Borrower pursuant to this Agreement or any other Loan Document
shall constitute an automatic representation and warranty by Borrower to


 


B-19

















 


Bank that there does not then exist any Default Condition or Event of
Default and a reaffirmation as of the date of said request that all
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents are true in all material respects.  All representations and warranties contained
in this Agreement or in any of the other Loan Documents shall survive the
execution, delivery and acceptance hereof by Bank and the closing of the
transactions described herein.


 


6.                                     FINANCIAL
COVENANTS.


 


Borrower shall comply
with the following financial covenants:


 


[(i)                                Debt
to EBIT.  Commencing on the first day of the calendar quarter in
which the first day of the 19th month following the Opening Date of
the first store of Borrower occurs and measured on the last day of the calendar
quarter in which such 19th month occurs and on the last day of each
calendar quarter thereafter, the ratio of Borrower’s Debt to EBIT for such
calendar quarter shall not exceed 16:1.0;


 


(ii)                                Debt
to Rental Revenue.  Commencing on
the first day of the calendar quarter in which the first day of the 19th month
following the Opening Date of the first store location of  Borrower occurs and measured as of the last
day of the calendar quarter in which such 19th month occurs and on the last day
of each calendar quarter thereafter, the ratio of  Borrower’s Debt to Borrower’s Rental Revenue, shall not exceed
5.5:1.0; and


 


(iii)                            
Total Liabilities to Tangible Net Worth. 
Commencing on the first day of the calendar quarter in which the first
day of the 13th month following the Opening Date of the first store location
of  Borrower occurs and measured as of
the last day of the calendar quarter in which such 13th month occurs and on the
last day of each calendar quarter thereafter, the ratio of Borrower’s Total Liabilities
to Tangible Net Worth, shall not exceed 5.5:1.0.


 


With
respect to the financial covenants set forth above in subsections (i) and (ii),
which are calculated based upon the Opening Date of a store location, the
financial information from store locations that have not reached the Opening
Date anniversary incorporated into such covenants shall be excluded from such
calculations.  Debt attributable to such
locations and deducted from the final calculations shall be deducted on a pro
rata basis calculated by dividing such stores’ aggregate Net Book Value of
Merchandise by the Net Book Value of Merchandise for all store locations. The
financial covenants shall otherwise be calculated on a consolidated basis as to
all store locations.]


 


OR


 


B-20

















 


[Financial
Covenants to be specified by Sponsor]


 


7.                                       BORROWER’S
AFFIRMATIVE COVENANTS.


 


During the term of
this Agreement, and thereafter for so long as there are is any outstanding Loan
Indebtedness to Bank, Borrower covenants that, unless otherwise consented to by
Bank in writing, it shall:


 


7.1.                              Financial
Reports.  Deliver to Aaron or cause
to be delivered to Aaron:


 


(i) on or before the last
Business Day of each month, an unaudited balance sheet and income statement
accurately reflecting the financial transactions and status of the Borrower as
of the end of the prior month and on a year to date basis, on a consolidated
and per store basis; prepared in accordance with GAAP in the format recommended
by Aaron;


 


(ii) on or before the
last Business Day of each month after the end of each calendar quarter (a) an
unaudited balance sheet and income statement accurately reflecting the
financial transactions and status of Borrower as of the end of the prior month
and on a quarterly basis, on a consolidated and per store basis, prepared in
accordance with GAAP in the format recommended by Aaron, and (b) a Compliance
Certificate as described below in Section 7.2;


 


(iii) within 90 days
after the end of each fiscal year a balance sheet and income statement of
Borrower as of the end of such year, compiled by such firm of independent
public accountants as may be designated by Borrower and be satisfactory to Bank
as prepared in accordance with GAAP and, to the extent delivered to Aaron,
audited financial statements for such period;


 


(iv) within 120 days
after the end of each fiscal year, an annual personal financial statement of
each Guarantor; and


 


(v)  with reasonable promptness, all reports by
Borrower to its shareholders and such other information as Aaron or the Bank
may reasonably request from time to time.


 


7.2.                              Compliance
Certificate.  Prepare and deliver to
Aaron, in conjunction with the quarterly financial reports required to be
delivered pursuant to Section 7.1(iii) above, a quarterly Compliance
Certificate (the form of which is attached hereto as Exhibit C)
presenting the calculation of the financial covenants set forth above in
Section 6, noting any negative variances with the covenants and explaining any
such variances.


 


Borrower acknowledges that Aaron will review each Compliance
Certificate and may revise the calculations set forth on such Compliance
Certificate to be consistent with the information


 


B-21

















 


shown on quarterly detailed Inventory reconciliation reports and
detailed revenue reports prepared by Aaron each quarter showing the amount of
Inventory at each of Borrower’s stores as of the end of such quarter and the
amount of monthly and quarterly revenue at each of Borrower’s stores.  Borrower acknowledges that Aaron will
forward copies of each Compliance Certificate, with revised calculations as
appropriate, to Bank and agrees that Bank shall be entitled to rely each such
Compliance Certificate, as revised by Aaron, for purposes of determining
whether the covenants set forth in Section 6 above have been met.


 


7.3.                              Books
and Records.  Maintain its Books and
Records and accounts in accordance with GAAP and permit any Person designated
by Bank or Aaron to visit Borrower’s premises, inspect any of the Collateral or
any of the Books and Records, and to make copies thereof and take extracts
therefrom, and to discuss Borrower’s financial affairs with Borrower’s
financial officers and accountants.


 


7.4.                              Taxes.  Promptly file all tax returns and pay and
discharge all taxes, assessments, withholdings and other governmental charges
imposed upon it, its income or profits, or upon any property belonging to it,
prior to the date on which penalties attach thereto.


 


7.5.                              Notices
to Bank.  Promptly notify Bank in
writing of (i) the occurrence of any Default Condition or Event of Default;
(ii) any pending or threatened litigation claiming damages in excess of $25,000
or seeking relief that, if granted, would adversely affect the financial
condition or business operations of 
Borrower; (iii) the release or discharge of any Hazardous Substance on
any property owned by Borrower; and (iii) any asserted violation by Borrower of
or demand for compliance by Borrower with any Applicable Law.


 


7.6.                              Compliance
with Applicable Laws.  Comply in all
material respects with all Applicable Laws, including, without limitation,
ERISA, the Fair Labor Standards Act and all Environmental Laws.


 


7.7.                              Corporate
Existence.  Maintain its separate
corporate existence and all rights, privileges and franchises in connection
therewith, and maintain its qualification and good standing in all
jurisdictions where the failure to do so could have a material adverse effect
upon its financial condition or ability to collect the Accounts.


 


8.                                     NEGATIVE
COVENANTS.


 


During the term of
this Agreement, and thereafter for so long as there are is Loan Indebtedness
outstanding, Borrower covenants that unless Bank has first consented thereto in
writing, it will not:


 


8.1.                              Merger;
Disposal or Moving of Collateral. 
Merge or consolidate with or acquire any substantial portion of the
assets or stock of any Person; sell, lease, transfer or otherwise dispose of
all or any portion of its properties (including any of the Collateral), except
sales or rentals of Inventory in the ordinary course of business; or, without
having given Bank at least 60


 


B-22

















 


days prior written notice and having executed such instruments and
agreements as Bank shall require, change its name, the location of any
Collateral or the location of its chief executive office, principal place of
business or the office at which it maintains its Books and Records.  Notwithstanding the foregoing, to the extent
that Borrower is calculating its compliance with the financial covenants set
forth in Section 6 hereof on a consolidated basis, Borrower may move Inventory
from one location included in such calculation to another of Borrower’s Aaron’s
Rental Purchase locations without complying with the notice provisions hereof,
as long as such Inventory is properly transferred in the Aaron’s Proprietary
System.


 


8.2.                              Liens.  Grant or suffer to exist any Lien upon any
of the Collateral except Permitted Liens.


 


8.3.                              Guarantees.  Guarantee, assume, endorse or otherwise
become contingently liable for any obligation or indebtedness of any Person,
either directly or indirectly, exceeding $25,000 not existing as of this date,
except by endorsement of items of payment for deposit or collection.


 


8.4.                              Loans.  Make loans or advances of money to or
investments in any Person, or (except in the ordinary course of business and on
fair and reasonable terms) engage in any transaction with a subsidiary or
affiliate.


 


8.5.                              Stock
of Borrower.  Repurchase, or pay or
declare any dividend on, any of its capital stock; provided, however,
that if no Default Condition or Event of Default exists and Borrower remains in
compliance with the financial covenants set forth in Section 6 above after
giving effect thereto, it may pay dividends and make such repurchases.


 


9.                                     EVENTS
OF DEFAULT.


 


9.1.                              List
of Events of Default.  The
occurrence of any one or more of the following conditions or events shall
constitute an “Event of Default”:


 


(a) Borrower shall fail
to pay any of the Loan Indebtedness (including any overadvance) within ten (10)
days of the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise);


 


(b) any warranty,
representation, or other statement by Borrower herein or in any instrument,
certificate or financial statement furnished in compliance herewith proves to
have been false or misleading in any material respect when made;


 


(c) Borrower shall fail
or neglect to perform, keep or observe any covenant contained in this
Agreement, any of the other Loan Documents or any other agreement now or
hereafter entered into with Bank; Borrower shall fail to abide by the financial


 


B-23

















 


covenants set forth in Section 6 hereof, provided that
Aaron may waive any financial covenant.


 


(d) Borrower or any
Guarantor shall fail to pay when due any amount owed to any creditor (other
than Bank) or any Guarantor shall fail to pay or perform any liability or
obligation in accordance with the terms of any agreement with Bank;


 


(e) Borrower, Aaron or
any Guarantor shall cease to be Solvent, shall die or become incompetent, shall
suffer the appointment of a receiver, trustee, custodian or similar fiduciary,
shall make an assignment for the benefit of creditors, or shall make an offer
of settlement or composition to their respective unsecured creditors generally;


 


(f) any petition for an
order for relief shall be filed by or against Borrower or any Guarantor or
Aaron under the Bankruptcy Code (if against Borrower or any Guarantor, the
continuation of such proceeding for more than 30 days);


 


(g) any judgment, writ of
attachment or similar process is entered or filed against Borrower or any
Guarantor or any of Borrower’s or any Guarantor’s property and such judgment,
writ of attachment or process is not dismissed, satisfied or vacated within ten
(10) days thereafter or results in the creation or imposition of any Lien upon
any Collateral that is not a Permitted Lien;


 


(h) Any Guarantor shall
revoke or attempt to revoke the guaranty signed by such Guarantor or shall
repudiate such Guarantor’s liability thereunder or Aaron shall default in its
obligations to Bank with respect to the Loan Indebtedness or repudiate its
liability therefor;


 


(i) any Person, or group
of Persons (whether or not related), shall have or obtain legal or beneficial
ownership of a majority of the outstanding voting securities or rights of
Borrower, other than any Person, or group of Persons, that has such majority
ownership on the date of execution of this Agreement;


 


(j) Borrower shall lose
its franchise, license or right to rent or to sell the Inventory or Borrower’s
Franchise Agreement is terminated or revoked for any reason;


 


(k) Borrower shall fail
to enter properly any acquisition of Inventory or Equipment or any Asset
Disposition on the Aaron’s Proprietary System; or


 


(l) Borrower shall use
its DDA Account for any use other than as explicitly authorized pursuant to
this Agreement.


 


9.2.                              Cure
Period.  Borrower shall have a five
(5) calendar day period after the Bank gives it notice of the occurrence of an
Event of Default (other than an Event of Default pursuant to Section 9.1(f))
above, during which it may cure such Event of Default.   An Event of Default


 


B-24

















 


arising under Section 9.1(a) above shall only be cured by the Bank’s
receipt of payment in immediately available funds by wire transfer, money order
or cashier’s check.


 


9.3.                              Advances.  In no event shall the Bank have any
obligation to make any Loan hereunder if there exists a Default Condition or an
Event of Default.


 


10.                               REMEDIES.



 


All of the Loan
Indebtedness shall become immediately due and payable and the Loan Commitments
shall be deemed immediately terminated (without notice to or demand upon
Borrower) upon the occurrence of an Event of Default under Section 9.1(f) of
this Agreement; and upon and after the occurrence of any other Event of
Default, subject to the cure period set forth in Section 9.2 hereof, Bank shall
have the right to terminate immediately the Loan Commitments and to declare the
entire unpaid principal balance of and accrued interest with respect to the
Loan Indebtedness to be, and the same shall thereupon become, immediately due
and payable upon receipt by Borrower of written notice and demand.  From and after the date on which the Loan
Indebtedness becomes automatically due and payable or is declared by  Bank to be due and payable as aforesaid,
Bank shall have and may exercise from time to time any and all rights and
remedies afforded to a secured party under the Code or any other Applicable
Law.  If the Loan Indebtedness is
collected by or through an attorney at law, Bank shall be entitled to collect
reasonable attorneys’ fees and court costs from Borrower.  In addition to, and without limiting the
generality of the foregoing, Bank shall have the following rights and remedies
which it may exercise at any time or times (all of which rights and remedies
shall be cumulative and may be exercised singularly or concurrently):


 


(a)                                  The
right to notify any Account Debtor to make all payments owing to Borrower
directly to Bank for application to the Loan Indebtedness and to collect all
amounts owing from any such Account Debtor;


 


(b)                                 The
right to sell, lease or otherwise dispose of any or all of the Collateral at
public or private sale, for cash, upon credit or upon such other terms as Bank
deems advisable in its sole discretion, or otherwise to realize upon the whole
or from time to time any part of the Collateral in which Bank may have a
security interest.  Any requirement of
reasonable notice shall be met if such notice is sent to Borrower in accordance
with Section 12 hereof at least seven (7) days before the date of sale or other
disposition of the Collateral.  Bank may
bid and be the purchaser at any such sale if permitted by Applicable Law;


 


(c)                                  The
right to require Borrower, at Borrower’s expense, to assemble the Collateral
and make it available to Bank at a place reasonably convenient to both parties
(and, for purposes hereof, Borrower stipulates that Bank shall be entitled to
the remedy of specific performance). 
Alternatively, Bank may peaceably by its own means or with judicial
assistance enter Borrower’s premises and take possession of the Collateral or
dispose of the Collateral on Borrower’s premises without interference by
Borrower;


 


B-25

















 


(d)                                 The
right to incur attorneys’ fees and expenses in exercising any of the rights,
remedies, powers or privileges provided hereunder, and the right (but not the
obligation) to pay, satisfy and discharge, or to bond, deposit or indemnify
against, any tax or other Lien which in the opinion of Bank may in any manner
or to any extent encumber any of the Collateral, all of which fees, payments
and expenses shall become part of Bank’s expenses of retaking, holding,
preparing for sale and the like, and shall be added to and become a part of the
principal amount of the Loan Indebtedness;


 


(e)                                  The
right, in Bank’s sole discretion, to perform any agreement of Borrower
hereunder which Borrower shall fail to perform and take any other action which
Bank deems necessary for the maintenance or preservation of any of the
Collateral or Bank’s interest therein, and Borrower agrees forthwith to reimburse
Bank  for all expenses incurred in
connection with the foregoing, together with interest thereon at the Default
Rate from the date incurred until the date of reimbursement;


 


(f)                                    The
right at any time or times, to the fullest extent permitted by Applicable Law,
to set off and apply any and all deposits (general or special, time or demand)
held by Bank for Borrower’s account against any of the Loan Indebtedness,
irrespective of whether or not Bank has made any demand under the this
Agreement;


 


(g)                                 The
right to apply the proceeds realized from any collection, sale, lease or other
disposition of the Collateral first to the costs, expenses and attorneys’ fees
incurred by Bank for collection and for acquisition, protection, removal,
storage, sale and delivery of the Collateral; secondly, to interest due upon
the principal amount of the Loan Indebtedness; and thirdly, to the principal
amount of the Loan Indebtedness.  If any
deficiency shall arise, Borrower and Guarantors shall remain bound and liable
to Bank therefor;


 


(h)                                 The
right to act as Borrower’s attorney-in-fact (and Borrower hereby irrevocably
appoints Bank as Borrower’s agent and attorney-in-fact), in Borrower’s or
Bank’s name, but at Borrower’s cost and expense, to receive, open and dispose
of all mail addressed to Borrower pertaining to any of the Collateral, to
notify postal authorities to change the address and delivery of mail to
Borrower to such address as Bank may designate, to sign Borrower’s name on any
bill of lading constituting or relating to any Collateral, to send
verifications with respect to the Collateral, to execute in Borrower’s name any
affidavits or notices with regard to any all Lien rights and to do all other
acts and things necessary to carry out the terms of this Agreement or to discharge
any obligation of Borrower hereunder, this power, being coupled with an
interest, is to be irrevocable so long as any Loan Indebtedness is outstanding.


 


B-26

















 


11.                                 WAIVERS.


 


Borrower waives
notice of Bank’s acceptance hereof. 
Borrower hereby waives any requirement on the part of Bank to post any
bond or other security as a condition to Bank’s right to obtain an immediate
writ of possession with respect to any Collateral.  Bank shall not be deemed to have waived any of its rights upon or
remedies hereunder or any Event of Default unless such waiver be in writing and
signed by Bank.  No delay or omission on
the part of Bank in exercising any right shall operate as a waiver of such
right or any other right.  A waiver on
any one occasion shall not be construed as a bar to or waiver of any right on
any future occasion.


 


12.                                 NOTICES.


 


All notices and
demands to or upon a party hereto shall be in writing and shall be sent by
certified mail, return receipt requested, personal delivery against receipt or
by  telecopier or other facsimile
transmission and shall be deemed to have been validly served, given or
delivered when delivered against receipt or one Business Day after deposit in
the mail, postage prepaid, or, in the case of facsimile transmission, when
indicated by verification receipt printed by the sending machine as having been
received at the office of the noticed party, addressed in each case as follows:


 


	
  If to Borrower:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention  

  
	
   

  	
   

  	
  Telecopier No.:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to Bank:

  	
   

  	
  SunTrust Bank

  
	
   

  	
   

  	
  Strategic Partner Program

  
	
   

  	
   

  	
  Attn: Aaron Rents Program Manager

  
	
   

  	
   

  	
  303 Peachtree Street, N.E., 2nd Floor

  
	
   

  	
   

  	
  Atlanta, Georgia 30308

  
	
   

  	
   

  	
  Telecopier No.:(404) 724-3716

  



 


or to such other address as each party may designate for itself by like
notice given in accordance with this Section. 
Any written notice or demand that is not sent in conformity with the
provisions hereof shall nevertheless be effective on the date that such notice
is actually received by the individual to whose attention such notice is to be
sent as specified above or such individual’s successor in office.


 


13.                               INDEMNIFICATION.


 


Borrower hereby
agrees to indemnify Bank and hold Bank harmless from and against any liability,
loss, damage, suit, action or proceeding ever suffered or incurred by Bank as
the result


 


B-27

















 


of Borrower’s failure to observe, perform or discharge Borrower’s
duties hereunder.  Without limiting the
generality of the foregoing, this indemnity shall extend to any claims asserted
against Bank by any Person under any environmental laws.  If any taxes, fees or other charges shall be
payable by Borrower or Bank on account of the execution, delivery or recording
of any of the Loan Documents or any loans outstanding hereunder, Borrower will
pay (or reimburse Bank’s payment of) all such taxes, fees or other charges,
including any applicable interests and penalties, and will indemnify and hold
Bank harmless from and against liability in connection therewith.  The indemnity obligations of Borrower under
this Section shall survive the payment in full of the Loan Indebtedness.


 


14.                               ENTIRE
AGREEMENT; AMENDMENT.


 


This Agreement and
the other Loan Documents embody the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof, and this
Agreement may not be modified or amended except by an agreement in writing
signed by Borrower and Bank.


 


15.                               SUCCESSORS
AND ASSIGNS.


 


This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; but Borrower shall not assign this Agreement
or any right or benefit hereunder to any Person.  The Bank may assign its rights and obligations hereunder at any time
and to any Person, including without limitation, to Aaron.


 


16.                               ARBITRATION.


 


ANY CONTROVERSY
ARISING WITH RESPECT TO THIS AGREEMENT SHALL BE DETERMINED BY ARBITRATION IN
THE CITY AGREED UPON BY BORROWER AND BANK. 
IF BORROWER AND BANK FAIL TO SO AGREE, THEN SUCH ARBITRATION SHALL TAKE
PLACE IN ATLANTA, GEORGIA.  ARBITRATION
SHALL BE IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION EXCEPT TO THE EXTENT OTHERWISE SET FORTH IN THIS
SECTION.  THE DISPUTE SHALL BE
DETERMINED BY AN ARBITRATOR ACCEPTABLE TO BOTH PARTIES WHO SHALL BE SELECTED
WITHIN SEVEN (7) DAYS OF FILING OF NOTICE OF INTENTION TO ARBITRATE. OTHERWISE,
THE DISPUTE SHALL BE DETERMINED BY A PANEL OF THREE ARBITRATORS SELECTED AS
FOLLOWS:  WITHIN SEVEN (7) DAYS OF
FILING NOTICE OF INTENTION TO ARBITRATE, EACH PARTY WILL APPOINT ONE
ARBITRATOR, WHO SHALL BE AN ATTORNEY ADMITTED BEFORE THE BAR OF ANY STATE OF
THE UNITED STATES (BUT NEITHER SUCH ATTORNEY NOR ANY FIRM WITH WHICH SUCH
ATTORNEY HAS BEEN ASSOCIATED IN THE IMMEDIATELY PRECEDING FIVE YEARS SHALL HAVE
BEEN RETAINED BY SUCH PARTY DURING THE IMMEDIATELY PRECEDING FIVE YEARS).  THESE TWO ARBITRATORS WILL THEN NAME A THIRD
ARBITRATOR, WHO SHALL ALSO BE


 


B-28

















 


AN ATTORNEY ADMITTED BEFORE THE BAR OF ANY STATE OF THE UNITED STATES
(BUT NEITHER SUCH ATTORNEY NOR ANY FIRM WITH WHICH SUCH ATTORNEY HAD BEEN
ASSOCIATED FOR THE IMMEDIATELY PRECEDING FIVE YEARS SHALL HAVE BEEN RETAINED BY
EITHER PARTY DURING THE IMMEDIATELY PRECEDING FIVE YEARS) AND WHO SHALL PRESIDE
OVER THE PANEL.  IF EITHER PARTY FAILS
TO APPOINT AN ARBITRATOR, OR IF THE TWO ARBITRATORS DO NOT NAME A THIRD
ARBITRATOR WITHIN SEVEN (7) DAYS, EITHER PARTY MAY REQUEST THE AMERICAN
ARBITRATION ASSOCIATION TO APPOINT THE NECESSARY ARBITRATOR(S) PURSUANT TO THE
COMMERCIAL ARBITRATION RULES. 
ARBITRATORS SHALL BE COMPENSATED FOR THEIR SERVICES BY THE
NON-PREVAILING PARTY AT THE STANDARD HOURLY RATE CHARGED BY SUCH ARBITRATORS IN
THEIR PRIVATE PROFESSIONAL ACTIVITIES. 
ALL TESTIMONY SHALL BE TRANSCRIBED BY A PUBLIC STENOGRAPHER OR COURT
REPORTER.  THE AWARD OF THE PANEL SHALL
BE ACCOMPANIED BY FINDINGS OF FACT AND A STATEMENT OF REASONS FOR THE
DECISION.  ALL PARTIES AGREE TO BE BOUND
BY THE RESULTS OF SUCH ARBITRATIONS; JUDGMENT UPON THE AWARD SO RENDERED MAY BE
ENTERED AND ENFORCED IN ANY COURT OF COMPETENT JURISDICTION.  TO THE EXTENT REASONABLY PRACTICABLE, BOTH
PARTIES AGREE TO CONTINUE PERFORMING THEIR RESPECTIVE OBLIGATIONS UNDER THIS
AGREEMENT WHILE THE DISPUTE IS BEING RESOLVED.


 


17.                               MISCELLANEOUS.  Time is of the essence of this
Agreement.  Bank reserves the right to
participate, sell or assign the Loans made hereunder and provide any
participant or assignee all information in Bank’s possession regarding
Borrower, its business and the Collateral. 
Borrower shall reimburse Bank for Bank’s out-of-pocket expenses and for
the fees and expenses and disbursements of Bank’s counsel in connection with
the negotiation, documentation and closing of the transactions contemplated
hereby, and Borrower will pay all expenses incurred by Borrower in connection
with the transactions.  The Section
headings are for convenience only and shall not limit or otherwise affect any
of the terms hereof.  THIS AGREEMENT AND ALL RIGHTS AND OBLIGATIONS
HEREUNDER, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA (WITHOUT REGARD TO THE
LAWS OF CONFLICTS THEREOF) AND IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT.


 


18.                               RELATIONS
WITH AARON.


 


Borrower
recognizes and acknowledges that the Bank has made the Loan Commitments
available to Borrower hereunder at the behest of and as an accommodation to
Aaron.  Accordingly, Borrower agrees
that from time to time the Bank may release to Aaron such information about
Borrower and the Loans as Aaron may request, and the Bank may condition its
agreement to any waiver, modification or amendment on the prior written consent
of Aaron.  Borrower further agrees that
upon the occurrence of an Event of Default hereunder, the Bank


 


B-29

















 


may notify Aaron of such Event of Default prior to notifying Borrower
thereof, and the Bank shall not be liable to Borrower for failure to give simultaneous
notice to Borrower.  Borrower further
agrees that the Bank shall not be liable to Borrower as a result of any
information or document obtained by Bank regarding Borrower which is shared by
Bank with Aaron.


 


B-30

















 


WITNESS the hand
and seal of the parties hereto on the date first above written.


 


 


Accepted in Atlanta, Georgia:


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  	
  (Seal)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [CORPORATE SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK:

  
	
   

  	
   

  
	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
										



 


B-31

















 


EXHIBIT
A-1


 


 


FORM OF


MASTER LINE OF CREDIT
NOTE


(Established Franchisee
Borrower)


 


	
  [DATE]

  	
   

  	
  [$                         ]

  
	
   

  	
   

  	
  Atlanta, Georgia

  



 


 


FOR VALUE
RECEIVED, the undersigned,
[                        ,
a
                                               ]
(the “Borrower”), promises to pay to the order of SUNTRUST BANK,  a Georgia banking corporation (the “Bank”),
at Bank’s principal office in Atlanta, Georgia, or at such other place as the
holder hereof may designate by notice in writing to Borrower, in immediately
available funds in lawful money of the United States of America, on the
Maturity Date, as set forth in that certain Loan and Security Agreement, dated
as of even date herewith, by and between the Borrower and Bank (the “Loan
Agreement”), the lesser of (i) principal sum of
                                                         
AND NO/100 DOLLARS ($                        ),
or (ii) so much thereof as shall have been from time to time disbursed
hereunder in accordance with the Loan 
Agreement and not theretofore repaid, as shown on the records of the
Bank.


 


In addition to
principal, Borrower agrees to pay interest on the principal amounts disbursed
hereunder from time to time from the date of each disbursement until paid at
such rates of interest per annum and upon such dates as provided for in the
Loan Agreement.  Interest shall accrue
on the outstanding principal balance from the date hereof up to and through the
date on which all principal and interest hereunder is paid in full, and shall
be computed on the basis of the actual number of days elapsed in a 360-day
year.  Such interest is to be paid to
Bank at its address set forth above or as otherwise provided in the Loan
Agreement.  For informational purposes,
as of the date hereof the Prime Rate in effect is
      % per annum, thus producing an initial
interest rate under the Loan Agreement on such date of
      % per annum.  Any principal amount due under this Master Line of Credit  Note (the “Note”) that is not paid on the due
date therefor whether on the Maturity Date, or resulting from the acceleration
of maturity upon the occurrence of an Event of Default (as defined in the Loan
Agreement), shall bear interest from the date due until payment in full at the
Default Rate, as such term is defined in the Loan Agreement.


 


This Note
evidences a loan incurred pursuant to the terms and conditions of the Loan
Agreement to which reference is hereby made for a full and complete description
of such terms and conditions, including, without limitation, provisions for the
acceleration of the maturity hereof upon the existence or occurrence of certain
conditions or events, and the terms of


 

















 


any permitted prepayments hereof. 
All capitalized terms used in this Note shall have the same meanings as
set forth in the Loan Agreement.


 


Upon the existence
or occurrence of any Event of Default, the principal and all accrued interest
hereof shall automatically become, or may be declared, due and payable in the
manner and with the effect provided in the Loan Agreement.  In addition, this Note is subject to
mandatory prepayment upon the terms and conditions of the Loan Agreement.


 


Bank shall at all
times have a right of set-off against any deposit balances of Borrower in the
possession of the Bank and the Bank may apply the same against payment of this
Note or any other indebtedness of Borrower to the Bank, irrespective of whether
or not Bank has made any demand under the Loan Agreement.  The payment of any indebtedness evidenced by
this Note prior to the Maturity Date shall not affect the enforceability of
this Note as to any future, different or other indebtedness incurred hereunder
by the Borrower.  In the event the
indebtedness evidenced by this Note is collected by legal action or through an
attorney-at-law, the Bank shall be entitled to recover from Borrower all costs
of collection, including, without limitation, reasonable attorneys’ fees if
collected by or through an attorney-at-law.


 


Borrower acknowledges
that the actual crediting of the amount of any disbursement under the Loan
Agreement to an account of Borrower or recording such amount in the records of
the Bank shall, in the absence of manifest error, constitute presumptive
evidence of such disbursement and that such Advance was made and borrowed under
the Loan  Agreement.  Such account records shall constitute, in
the absence of manifest error, presumptive evidence of principal amounts
outstanding and the payments made under the Loan Agreement at any time and from
time to time, provided that the failure of Bank to record in such account the
type or amount of any Advance shall not affect the obligation of the
undersigned to repay such amount together with interest thereon in accordance
with this Note and the Loan Agreement.


 


Failure or
forbearance of Bank to exercise any right hereunder, or otherwise granted by
the Loan Agreement or by law, shall not affect or release the liability of
Borrower hereunder, and shall not constitute a waiver of such right unless so
stated by Bank in writing.  THIS NOTE AND THE RIGHTS AND OBLIGATION HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE SATE OF
GEORGIA.  TIME IS OF THE ESSENCE OF THIS
NOTE.


 


PRESENTMENT FOR
PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.


 


Executed under
hand and seal of the Borrower as of the day and year first above written.


 


A-2

















 


	
  [if Borrower is a corporation:]

  	
  [NAME OF BORROWER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [CORPORATE SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
  [if Borrower is partnership:]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [if General Partner is a corporation:]

  	
  [NAME OF GENERAL PARTNER

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  [if General Partner is  an individual:]

  	
   

  	
  (Seal)

  
	
   

  	
    Name of
  General Partner]

  
	
   

  	
   

  
	
   

  	
   

  
	
  [if Borrower is a limited liability company:]

  	
  [NAME OF BORROWER

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
   
  Title:                                                      ]

  
							



 


A-3

















 


EXHIBIT
A-1


 


 


FORM OF


MASTER TERM  NOTE


(Established Franchisee
Borrower)


 


	
  [DATE]

  	
   

  	
  [$                            ]

  
	
   

  	
   

  	
  Atlanta, Georgia

  



 


 


FOR VALUE
RECEIVED, the undersigned,
[                            ,
a                                                   ]
(the “Borrower”), promises to pay to the order of SUNTRUST BANK,  a Georgia banking corporation (the “Bank”),
at Bank’s principal office in Atlanta, Georgia, or at such other place as the
holder hereof may designate by notice in writing to Borrower, in immediately
available funds in lawful money of the United States of America, as set forth
in that certain Loan and  Security
Agreement, dated as of even date herewith, by and between the Borrower and Bank
(the “Loan Agreement”),  principal sum of
                                                     
AND NO/100 DOLLARS
($                             
in accordance with the Loan Agreement (defined below).


 


In addition to
principal, Borrower agrees to pay interest on the principal amounts at such
rates of interest per annum and upon such dates as provided for in the Loan
Agreement.  Interest shall accrue on the
outstanding principal balance from the date hereof up to and through the date on
which all principal and interest hereunder is paid in full, and shall be
computed on the basis of the actual number of days elapsed in a 360-day
year.  Such interest is to be paid to
Bank at its address set forth above or as otherwise provided in the Loan
Agreement.  For informational purposes,
as of the date hereof the Prime Rate in effect is
        % per annum, thus producing an
initial interest rate under the Loan Agreement on such date of
        % per annum.  Any principal amount due under this Master
Term Note (the “Note”) that is not paid on the due date therefor whether on the
due date, or resulting from the acceleration of maturity upon the occurrence of
an Event of Default (as defined in the Loan Agreement), shall bear interest
from the date due until payment in full at the Default Rate, as such term is
defined in the Loan Agreement.


 


This Note
evidences a loan incurred pursuant to the terms and conditions of the Loan
Agreement to which reference is hereby made for a full and complete description
of such terms and conditions, including, without limitation, provisions for the
acceleration of the maturity hereof upon the existence or occurrence of certain
conditions or events, and the terms of any permitted prepayments hereof.  All capitalized terms used in this Note
shall have the same meanings as set forth in the Loan Agreement.


 


Upon the existence
or occurrence of any Event of Default, the principal and all accrued interest
hereof shall automatically become, or may be declared, due and payable in the


 


A-4

















 


manner and with the effect provided in the Loan Agreement.  In addition, this Note is subject to
mandatory prepayment upon the terms and conditions of the Loan Agreement.


 


Bank shall at all
times have a right of set–off against any deposit balances of Borrower in the
possession of the Bank and the Bank may apply the same against payment of this
Note or any other indebtedness of Borrower to the Bank, irrespective of whether
or not Bank has made any demand under the Loan Agreement.  The payment of any indebtedness evidenced by
this Note prior to the Maturity Date shall not affect the enforceability of
this Note as to any future, different or other indebtedness incurred hereunder
by the Borrower.  In the event the
indebtedness evidenced by this Note is collected by legal action or through an
attorney-at-law, the Bank shall be entitled to recover from Borrower all costs
of collection, including, without limitation, reasonable attorneys’ fees if
collected by or through an attorney-at-law.


 


Borrower
acknowledges that the actual crediting of the amount of any disbursement under
the Loan Agreement to an account of Borrower or recording such amount in the
records of the Bank shall, in the absence of manifest error, constitute
presumptive evidence of such disbursement. 
Such account records shall constitute, in the absence of manifest error,
presumptive evidence of principal amounts outstanding and the payments made
under the Loan Agreement at any time and from time to time, provided that the
failure of Bank to record in such account the type or amount of any advance
shall not affect the obligation of the undersigned to repay such amount
together with interest thereon in accordance with this Note and the Loan
Agreement.


 


Failure or
forbearance of Bank to exercise any right hereunder, or otherwise granted by
the Loan Agreement or by law, shall not affect or release the liability of
Borrower hereunder, and shall not constitute a waiver of such right unless so
stated by Bank in writing.  THIS NOTE AND THE RIGHTS AND OBLIGATION HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE SATE OF
GEORGIA.  TIME IS OF THE ESSENCE OF THIS
NOTE.


 


PRESENTMENT FOR
PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.


 


Executed under
hand and seal of the Borrower as of the day and year first above written.


 


 


	
  [if Borrower is a corporation:]

  	
  [NAME OF BORROWER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Name:

  



 


A-5

















 


	
   

  	
    Title:

  	 

	
   

  	
   

  	 

	
   

  	
  [CORPORATE SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
  [if Borrower is partnership:]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [if General Partner is a corporation:]

  	
  [NAME OF GENERAL PARTNER

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  [if General Partner is an individual:]

  	
   

  	
  (Seal)

  
	
   

  	
    Name of
  General Partner]

  
	
   

  	
   

  
	
   

  	
   

  
	
  [if Borrower is a limited liability company:]

  	
  [NAME OF BORROWER

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
   
  Title:                                                      ]

  
							



 


A-6

















 


EXHIBIT
B


 


 


A.                                   Permitted Liens


 


The following
described Liens are Permitted Liens (if none, so state):


 


	
  Name of
  Lien Holder

  	
   

  	
  Date of
  Recording

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


B.                                     Trade Names and Styles


 


The following are
the only trade names or trade styles ever used by Borrower (if none, so state):


 


 


C                                        Subsidiaries


 


The following are
all of the subsidiaries owned by Borrower (if none, so state):


 


 


D.                                    Business Locations


 


The following are
all of the locations where Borrower has an office or other place of business or
owns assets:


 

















 


EXHIBIT
C


 


 


COMPLIANCE CERTIFICATE OF
BORROWER


 


 


(Pursuant to Section 7.2
of Line of Credit and Security Agreement

dated
                   ,
20     )


 


 


[NAME OF BORROWER] (the “Borrower”) HEREBY CERTIFIES that:


 


This Compliance
Certificate is furnished pursuant to the Line of Credit and Security Agreement
(the “Agreement”) dated
                    ,
20       by and between the Borrower and SUNTRUST
BANK (the “Bank”).  Unless otherwise
defined herein, the terms used in this Report have the meanings given to them
in this Agreement.


 


1.                                       The
figures and information for determining compliance by the Borrower with the
financial covenants set forth in the Quarterly Covenant Compliance Report
attached hereto have been prepared based upon the financial reports accompanied
hereby and both the Quarterly Covenant Compliance Report and such financial
reports are true and complete as of the date hereof.


 


2.                                       The
activities of the Borrower during the preceding quarter have been reviewed by
the [president or other authorized officer] or the employees or agents under
his immediate supervision.  Based on
such review, to the best knowledge and belief of the [president or other
authorized officer], and as of the date of this Certificate, the Borrower has
performed and observed each and every covenant contained in the Agreement to be
performed by it, and no Event of Default or Default Condition exists, except
for the following:


 


Please describe or indicate “None” if none exist:


 


 


 


C- 2

















 


WITNESS my hand
this             day of
                    ,
       .


 


 


	
   

  	
  [NAME OF BORROWER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Title:

  	
   

  	
   

  
						



 


C- 3

















 


EXHIBIT
D


 


QUARTERLY COVENANT
COMPLIANCE REPORT


 


(Section 6 - Financial
Covenants)


 


 


 


For Quarter Ending:
                                


 


With respect to
the financial covenants set forth below in I and II, which are calculated based
upon the Opening Date of a store location, the financial information from store
locations that have not reached the Opening Date anniversary incorporated into
such covenants shall be excluded from such calculations.  [Debt
attributable to such locations and deducted from the final calculations shall
be deducted on a pro rata basis calculated by dividing such stores’ aggregate
Net Book Value of Merchandise by the Net Book Value of Merchandise for all
store locations.] The financial covenants shall otherwise be
calculated on a consolidated basis as to all store locations.


 


	
  [I.                                   Debt
  to EBIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Enter
  amount of Debt

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Enter amount of Debt

  attributable to store locations open

  less than 19 months

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Subtract B from A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  Enter amount of net income for

  last three months (backing out income

  for stores less than 19 months old)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  E.

  	
  Enter amount of interest and taxes

  based upon income for last

  three months (backing out

  interest and taxes for

  stores less than 19 months old)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  F.

  	
  Add D plus E

  	
   

  
								



 

















 


	
   

  	
   

  	
   

  	
  Ratio of C:F

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  STANDARD

  	
  16.0 : 1.0

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Compliance?  Yes       
  No       

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  II.

  	
  Debt to Rental Revenue

  	
   

  	 

	
   

  	
   

  
	
   

  	
  A.

  	
  Enter amount of Debt.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  B.

  	
  Enter amount of Debt attributable

  to store locations open less

  than 19 months.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  C.

  	
  Subtract B from A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  D.

  	
  Enter Amount of last month’s

  Rental Revenue.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  E.

  	
  Enter
  amount of last month’s Rental

  Revenue attributable to store locations

  open less than 19 months.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  F.

  	
  Subtract E from D.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  Ratio of C : F.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  STANDARD 

  	
  5.5 : 1.0

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Compliance?  Yes
          No
           

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  III.

  	
  Total Liabilities to Tangible Net
  Worth

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  A.

  	
  Enter amount of Total Liabilities.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  B.

  	
  Enter amount of Tangible Net Worth.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  C.

  	
  Ratio of A : B.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  STANDARD — Commencing on the

  first day of the 13th month following

  the Opening Date of the first store

  
								



 


D-2

















 


	
   

  	
   

  	
  location, ratio not great than

  	
  5.5 : 1.0

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance?  Yes
          No
           ]

  
					



 


[TO BE SPECIFIED BY AARON]


 


Note: All terms are those used in generally accepted accounting
practices unless specifically defined in the Agreement.


 


D-3