Document:

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                                                                   EXHIBIT 10.15

                              TERMINATION AGREEMENT

                                      among

                       RFS, INC., a Tennessee corporation

                   RFS LEASING, INC., a Tennessee corporation

                  DTR RFS LESSEE, INC., an Arizona corporation

             RFS PARTNERSHIP, L.P., a Tennessee limited partnership

        RFS FINANCING PARTNERSHIP, L.P., a Tennessee limited partnership

                  PLANO INN, L.P., a Texas limited partnership

            RFS SPE 1 1998 LLC, a Virginia limited liability company

            RFS SPE 2 1998 LLC, a Virginia limited liability company

            RIDGE LAKE GENERAL PARTNER, INC., a Tennessee corporation

               RFS HOTEL INVESTORS, INC., a Tennessee corporation

                 DOUBLETREE CORPORATION, a Delaware corporation

                                       and

                HILTON HOTELS CORPORATION, a Delaware corporation

                          dated as of January 26, 2000

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                              TERMINATION AGREEMENT

                  TERMINATION AGREEMENT dated as of January 26, 2000, among RFS,
Inc., a Tennessee corporation ("RFS"); RFS Leasing, Inc., a Tennessee
corporation ("RFSL"); DTR RFS Lessee, Inc., an Arizona corporation ("DTR"); RFS
Partnership, L.P., a Tennessee limited partnership ("RFSOP"); RFS Financing
Partnership, L.P., a Tennessee limited partnership ("RFSFP"); Plano Inn, L.P.
(formerly known as Plano Hampton Inn, L.P.), a Texas limited partnership
("Plano"); RFS SPE 1 1998 LLC, a Virginia limited liability company ("RFS SPE
1"); RFS SPE 2 1998 LLC, a Virginia limited liability company ("RFS SPE 2");
Ridge Lake General Partner, Inc., a Tennessee corporation ("Ridge Lake"); RFS
Hotel Investors, Inc., a Tennessee corporation (the "REIT"); Doubletree
Corporation, a Delaware corporation; and Hilton Hotels Corporation, a Delaware
corporation ("Hilton").

                              W I T N E S S E T H:

                  WHEREAS, the Lessees and the Lessors (each as defined below)
have entered into lease agreements with respect to the hotel properties
described in Exhibit 1(a) hereto (as such agreements may have been amended or
modified, each a "Lease Agreement" and collectively, the "Lease Agreements");
and

                  WHEREAS, the Owners and the Manager (each as defined below)
have entered into management agreements with respect to the hotel properties
described in Exhibit 1(b) hereto (as such agreements may have been amended or
modified, each an "Owner Management Agreement" and collectively, the "Owner
Management Agreements"); and

                  WHEREAS, certain parties hereto have entered into the
agreements described in Exhibit 1(c) hereto (as such agreements may have been
amended or modified, the "Ancillary Agreements"); and

                  WHEREAS, the parties desire to provide for the termination of
the Lease Agreements, the Ancillary Agreements and the Owner Management
Agreements effective as of the Termination Date (as defined below) subject to
the terms and conditions described herein; and

                  WHEREAS, the parties desire to set forth other agreements and
covenants as set forth herein;

                  NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties do hereby agree as follows:

SECTION 1. DEFINITIONS.

(a)      Certain Definitions. For purposes of this Termination Agreement the
         following words and phrases shall have the meanings set forth below:

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                  "Affiliate Management Agreements" shall mean (i) the
Consolidated Management Agreement dated November 21, 1996, between RFS and RFSL,
(ii) the Management Agreement dated November 21, 1996, between RFSL and DT
Management, Inc. (Doubletree Hotel, Del Mar, CA), and (iii) any and all other
management agreements among the Lessee Parties with respect to Leased Hotels
owned by the REIT Parties.

                  "Aggregate Lease Termination Payment" shall mean Fifty-Nine
Million Five Hundred Thirty-Three Thousand Five Hundred Fifty Dollars
($59,533,550.00).

                  "Aggregate Management Termination Payment" shall mean the
amount determined pursuant to Section 3(d) hereof.

                  "Agreements" shall mean this Termination Agreement, the Escrow
Agreement and the Registration Rights Agreement.

                  "Common Stock" shall mean the REIT's common stock, par value
$.01 per share.

                  "Contracts" shall mean, with respect to any Leased Hotel, all
contracts to which a Lessee is a party or is otherwise obligated relating to the
operation of such Leased Hotel other than (i) any Lease Agreement, Franchise
Agreement, Third Party Management Agreement or License and (ii) any such
contracts with or between a Lessee and an affiliate of any of the Lessee
Parties, including, without limitation, the Affiliate Management Agreements.

                  "Current Market Value" shall mean, with respect to a share of
Common Stock, an amount determined by (A) multiplying the closing price per
share of Common Stock for each of the twenty (20) consecutive trading days
ending on the fifth (5th) business day prior to the Purchase Date, as reported
on the NYSE or the principal securities exchange on which the Common Stock is
then traded by the number of shares of Common Stock traded on such date, (B)
adding the products so obtained and (C) dividing the sum thereof by the total
number of shares of Common Stock traded during the 20-day period.

                  "Doubletree/RFS Merger" shall mean the merger consummated
pursuant to the Agreement and Plan of Merger described on Exhibit 1(c) hereto.

                  "Excluded Assets" shall mean, except as otherwise provided in
Exhibit 3(b)(i) hereto, with respect to any Leased Hotel, (a) all cash and cash
equivalents on hand at such Leased Hotel as of the Termination Date, (b) all
accounts receivable of such Leased Hotel as of the Termination Date, (c) all
insurance policies under which the Lessee is insured and rights of the Lessee
thereunder, and (d) all warranties, claims and causes of action of the Lessee
relating to the period prior to the Termination Date.

                  "Excluded Material Contract" shall mean (i) any Material
Contract in existence as of the date of this Termination Agreement which is not
disclosed on Exhibit 22 hereto, and (ii) any Material Contract executed after
the date of this Termination Agreement without the prior written consent of the
REIT Parties.

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                  "Franchise Agreement" shall mean, with respect to any Leased
Hotel, the hotel franchise agreement under which such Leased Hotel is operated.

                  "Hilton Franchise Agreement" shall mean a hotel franchise
agreement with a subsidiary of Hilton, as franchisor, for the Leased Hotels or
Managed Hotels which currently operate as a Hampton Inn, Homewood Suites, or
Doubletree hotel.

                  "Leased Hotel" shall mean each hotel described in Exhibit 1(a)
hereto other than (i) those hotels whose leases have been previously terminated
as described on Exhibit 1(a) hereto, or (ii) if the context requires, a hotel
with respect to which an Interim Lease Termination has occurred prior to the
Termination Date pursuant to Section 6 hereof.

                  "Lessees" shall mean RFS, RFSL, DTR and any affiliate of
Hilton that becomes a lessee for a hotel owned by a Lessor prior to the
Termination Date (each a "Lessee").

                  "Lessee Parties" shall mean Hilton, Doubletree, the Lessees
and the Manager, collectively.

                  "Lessors" shall mean RFSOP, RFSFP, Plano, RFS SPE 1, RFS SPE 2
and any affiliate of the REIT that becomes an owner of a hotel leased to a
Lessee prior to the Termination Date (each a "Lessor").

                  "Licenses" shall mean, with respect to any Leased Hotel or any
Managed Hotel, all licenses, operating permits and other governmental
authorizations that may be necessary for the operation of such Leased Hotel or
Managed Hotel.

                  "Managed Hotel" shall mean each hotel described in Exhibit
1(b) hereto, other than a hotel with respect to which an Interim Management
Termination has occurred prior to the Termination Date.

                  "Manager" shall mean RFS, Inc., in its capacity as manager of
the Managed Hotels pursuant to the Owner Management Agreements.

                  "Material Contract" shall mean any Contract applicable to one
or more Leased Hotels which (i) requires annual payments by any Lessee or an
affiliate of a Lessee of $25,000 or more or (ii) requires the delivery of more
than 20 room nights per month in exchange for services.

                  "NYSE" shall mean the New York Stock Exchange.

                  "Owners" shall mean the owners of the Managed Hotels described
in Exhibit 1(b) hereto.

                  "Preferred Stock" shall mean the 973,684 outstanding shares of
the REIT's Series A preferred stock, par value $.01 per share currently owned by
RFS.

                  "REIT Parties" shall mean the REIT, the Owners and the Lessors
collectively.

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                  "Registration Rights Agreement" shall mean that certain
Registration Rights Agreement of even date herewith by and between the REIT and
RFS.

                  "Standstill Agreement" shall mean the agreement to be executed
by Marriott, Hilton, RFS and RFSL in the form attached hereto as Exhibit 1(e)
with such modifications as shall be approved by the REIT.

                  "Subordination Agreement" shall mean that certain Consolidated
Lease Estoppel, Subordination, Attornment and Non-Disturbance Agreement dated as
of November 21, 1996 by and among LaSalle National Bank, RFSL and RFSFP, and any
amendments thereto.

                  "Successor Lessee" shall mean any entity designated by the
REIT as the successor to a Lessee as the lessee or operator of a Leased Hotel or
as a successor to the Manager as a lessee or operator of a Managed Hotel and/or
any management company engaged by the REIT Parties or a Successor Lessee to
operate a Leased Hotel.

                  "Third Party Franchise Agreement" shall mean a hotel franchise
agreement which is not a Hilton Franchise Agreement.

                  "Third Party Management Agreements" shall mean the management
agreements described in Exhibit 1(d) hereto.

                  "Tier II RFS Employee" shall mean an RFS Employee who is in
Tier II of RFS' organizational structure as shown in Exhibit 22 hereto.

                  "Units" shall mean units of limited partnership interests in
RFSOP.

(b)      Other Definitions. For purposes of this Termination Agreement, the
         following words and phrases shall have the meanings set forth in the
         respective sections hereof or exhibits hereto set forth below:

<TABLE>
                  <S>                                            <C>
                  Ancillary Agreements                           Recitals
                  Bill of Sale                                   4(c)(iii)
                  Consolidated Lease Amendment                   Exhibit 1(a)
                  DTR                                            Preamble
                  ERISA                                          8(d)
                  Escrow                                         5
                  Escrow Agent                                   5
                  Escrow Agreement                               5
                  Exchange Act                                   9(b)
                  Existing Shelf Registration Statement          9(b)
                  FF&E                                           11(a)
                  Hilton                                         Preamble
                  Hilton Indemnitees                             21(c)
                  Individual Lease Termination Payment           3(a)
                  Individual Management Termination Payment      3(a)
                  Interim Lease Termination                      6

</TABLE>

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<TABLE>
                  <S>                                            <C>

                  Interim Management Termination                 3(d)
                  Interim Lease Termination Payment              6
                  Landlord                                       10
                  Lease Agreements                               Recitals
                  Liabilities                                    21(b)
                  Marriott                                       2(c)
                  New Shelf Registration Statement               9(b)
                  Office Lease                                   10
                  Owner Management Agreements                    Recitals
                  Partnership Interests                          12
                  Plano                                          Preamble
                  Purchase Date                                  9(a)
                  Purchase Price                                 9(a)
                  Required PIPs                                  13
                  REIT                                           Preamble
                  REIT Indemnitees                               21(b)
                  RFS                                            Preamble
                  RFS Employees                                  7(a)
                  RFS SPE 1                                      Preamble
                  RFS SPE 2                                      Preamble
                  RFSFP                                          Preamble
                  RFSL                                           Preamble
                  RFSL Hotels                                    2(a)
                  RFSOP                                          Preamble
                  RFSOP Partnership Agreement                    9(c)
                  Ridge Lake                                     Preamble
                  Second Consolidated Lease Amendment            Exhibit 1(a)
                  Securities Act                                 9(b)
                  SEC                                            9(b)
                  Severance Payments                             7(b)
                  St. Louis Agreement                            8(d)
                  St. Louis Hotel                                8(d)
                  St. Louis Plan                                 8(d)
                  Submanaged Hotels                              2(a)
                  Termination Date                               4(a)
                  Third Consolidated Lease Amendment             Exhibit 1(a)
</TABLE>

Section 2. Termination of Lease Agreements and Related Matters.

(a)      Termination of Lease Agreements and Ancillary Agreements. Subject to
         the terms and conditions set forth herein, the Lessors and the Lessees
         hereby agree that the Lease Agreements and Ancillary Agreements shall
         terminate as of the Termination Date. Notwithstanding anything herein
         to the contrary, (i) the REIT may elect, in the notice delivered to
         Hilton in accordance with Section 4(a) hereof, or at least ten (10)
         days prior to the Termination Date upon written notice to Hilton, (A)
         to purchase from Hilton or one of its subsidiaries all of the
         outstanding capital stock of RFSL and, in the event the REIT so elects,
         on the Termination Date, Hilton or

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         such subsidiary shall sell, assign and convey to the REIT or its
         designee, all of the capital stock of RFSL, free and clear of any
         liens, claims, encumbrances and charges of any kind in exchange for an
         aggregate payment of Thirteen Million Four Hundred Sixty-Eight Thousand
         Dollars ($13,468,000) and/or (B) to have one or more of the Lease
         Agreements (as they relate to the Leased Hotels which are subject to
         Third Party Management Agreements (the "Submanaged Hotels")) assigned
         to the applicable Lessor or Successor Lessee and the applicable Lessees
         shall assign and convey to the applicable Lessors or Successor Lessees
         all of such Lessees' right, title and interest in and to the applicable
         Lease Agreements (as they relate to such Submanaged Hotel) and the
         Leased Property (as defined in the applicable Lease Agreement but
         exclusive of Excluded Assets) related to such Submanaged Hotels in
         exchange for an aggregate payment equal to the sum of the Interim Lease
         Termination Payments applicable thereto, and (ii) the Aggregate Lease
         Termination Payment otherwise payable on the Termination Date shall be
         reduced by the amounts paid pursuant to clauses (A) and/or (B) above;
         provided, however, that if Hilton has notified the REIT within thirty
         (30) days after the date hereof that a purchase of the capital stock of
         RFSL will cause Hilton to incur income tax liabilities it would not
         otherwise incur as a result of the termination of the Lease Agreements
         for the RFSL Hotels, the REIT shall not be entitled to the election
         described in clause (i)(A) above unless the REIT delivers to Hilton on
         the Termination Date an indemnity agreement in form satisfactory to
         Hilton covering such increased income tax liabilities. Hilton's
         notification to the REIT shall set forth a description of the
         computation of the income tax liability and the amount of the income
         tax liability. In the event the REIT or its designee purchases the
         capital stock of RFSL pursuant to clause (i)(A) above, the Lease
         Agreements for the Leased Hotels described in Section II of Exhibit
         1(a) hereto (the "RFSL Hotels") shall not be terminated pursuant hereto
         and the provisions of Sections 2(b), 2(d)(ii), 4(c)(ii), 4(d)(iv),
         4(e)(i), 8(a) and 8(b) hereof shall not apply to the RFSL Hotels. In
         the event the REIT or its designee takes an assignment of the Lease
         Agreements as they relate to one or more Submanaged Hotels pursuant to
         clause (i)(B) above, such Lease Agreements shall not be terminated as
         to such Submanaged Hotels pursuant hereto and the provisions of
         Sections 4(c)(ii), 4(d)(iv) and 4(e)(i) hereof shall not apply to such
         Submanaged Hotels.

(b)      Surrender of Leased Property. Subject to the terms and conditions set
         forth herein, upon the Termination Date, each Lessee shall remise,
         release, surrender and quitclaim unto the Lessor for the respective
         Leased Hotels, and such Lessor shall accept and assume, all right,
         title and interest of such Lessee in and to the Leased Property (as
         defined in the applicable Lease Agreement) relating to such Leased
         Hotel; provided, however, that the Leased Property relating to any
         Leased Hotel shall not include Excluded Assets relating to such Leased
         Hotel.

(c)      Franchise Agreements. Subject to the terms and conditions set forth
         herein, and to the extent necessary with respect to the RFSL Hotels if
         the REIT or its designee purchases the capital stock of RFSL, (i) the
         Lessee for each Leased Hotel currently operating under a Hilton
         Franchise Agreement shall cause the applicable franchisor to grant a
         replacement Hilton Franchise Agreement of the same brand for the
         balance of the existing term in favor of the applicable Lessor or
         Successor Lessee, as specified by such Lessor (by written notice
         delivered to such Lessee on or prior to the Termination Date), in the
         same form and on the same economic terms as the existing Hilton
         Franchise Agreements and effective as of the Termination Date, and (ii)
         the Lessee for each Leased Hotel operating under a Third Party
         Franchise Agreement shall exercise its good faith reasonable commercial
         efforts to assist the applicable Lessor or Successor Lessee

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         in obtaining a replacement Third Party Franchise Agreement (or
         commitment therefor) of the same brand for the balance of the existing
         term in favor of such Lessor or such Successor Lessee on terms then
         applicable for the issuance of such replacement Third Party Franchise
         Agreements (or commitments therefor) and effective as of the
         Termination Date. None of the Lessor Parties or any Successor Lessee
         shall be required to pay any change in ownership fee or other fee in
         connection with the issuance of a replacement Hilton Franchise
         Agreement. The Lessee Parties shall exercise their good faith
         reasonable commercial efforts to obtain an agreement from Marriott
         International, Inc. ("Marriott") to the effect that Marriott will not
         require payment of any re-licensing fee or any similar fee or increase
         the franchise, marketing or reservation fees over the amounts
         contemplated by the Standstill Agreement for the Leased Hotels
         operating under a franchise license from Marriott as a result of the
         transactions contemplated by this Termination Agreement. The REIT
         Parties acknowledge that Marriott's execution of the Standstill
         Agreement will satisfy the obligation of the Lessee Parties in the
         preceding sentence.

(d)      Management Agreements Related to Leased Hotels. Subject to the terms
         and conditions set forth herein, (i) the Affiliate Management
         Agreements shall terminate as of the Termination Date, and (ii) the
         applicable Lessor or Successor Lessee for each Leased Hotel operating
         under a Third Party Management Agreement shall accept and assume all
         liabilities under such Third Party Management Agreement effective as of
         the Termination Date and the Lessee Parties (exclusive of RFSL if the
         stock of RFSL is transferred to the REIT or its designee on the
         Termination Date pursuant to Section 2(a) hereof) shall be released of
         all liabilities under such Third Party Management Agreement from and
         after the Termination Date.

(e)      Contracts. Subject to the terms and conditions set forth herein, and to
         the extent necessary with respect to the RFSL Hotels if the REIT or its
         designee purchases the capital stock of RFSL, the Lessees shall use
         their good faith reasonable commercial efforts to assign and transfer
         to the Lessor for such Leased Hotel, or the applicable Successor
         Lessee, all Contracts with respect to such Leased Hotel effective as of
         the Termination Date, and such Lessor or Successor Lessee shall assume
         such assigned and transferred Contracts; provided, however, that if (i)
         any such Contract is not permitted to be assigned or (ii) such Lessor
         or Successor Lessee elects (by written notice delivered to the Lessees
         no less than thirty (30) days prior to the Termination Date) not to
         accept and assume any such Contract, the Lessees shall use their good
         faith reasonable commercial efforts to terminate such Contract as of
         (or as soon as practicable after) the Termination Date.

(f)      Owner Management Agreements. Subject to the terms and conditions set
         forth herein, unless earlier terminated in accordance with its terms,
         each Owner Management Agreement shall terminate as of the Termination
         Date, and Manager shall assign and deliver to the applicable Owner or
         its designee, and the assignee shall assume, all leases, concession
         agreements and commercial or other agreements in effect with respect to
         the Managed Hotels previously entered into by Manager pursuant to its
         authority under the Owner Management Agreements and which are then in
         Manager's, rather than the applicable Owner's, name.

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Section 3. Payments.

(a)      Termination Payments. As consideration for the termination of the Lease
         Agreements, the Owner Management Agreements and the Ancillary
         Agreements, on the Termination Date, the REIT Parties shall deliver to
         the Lessee Parties (i) the Aggregate Lease Termination Payment as
         adjusted if required pursuant to Sections 2(a) and 6 hereof, if
         applicable, and (ii) the Aggregate Management Termination Payment, both
         as further adjusted as provided in subsection (b) below and net of the
         principal amount of the Escrow which shall be disbursed by the Escrow
         Agent to the Lessee Parties in accordance with the terms of the Escrow
         Agreement. The Aggregate Lease Termination Payment and Aggregate
         Management Termination Payment (as so adjusted) shall be paid by wire
         transfer in immediately available funds to such bank account(s) as the
         Lessee Parties shall specify (by written notice delivered to the REIT
         Parties not less than three (3) business days prior to the Termination
         Date). The Aggregate Lease Termination Payment shall be allocated to
         the Lease Agreements for the applicable Leased Hotels as described in
         Exhibit 1(a) hereto and the Aggregate Management Termination Payment
         shall be allocated to the applicable Owner Management Agreements as
         described in Exhibit 1(b) hereto (as so allocated to a Leased Hotel, an
         "Individual Lease Termination Payment", and as so allocated to an Owner
         Management Agreement an "Individual Management Termination Payment").

(b)      Operational Settlement.

         (i)      All of the items described on Exhibit 3(b)(i) hereto shall be
                  allocated and prorated as of the Termination Date with respect
                  to the Leased Hotels in the manner described in said Exhibit
                  3(b)(i), and appropriate credits shall be given to the Lessors
                  and Lessees as adjustments to the Aggregate Lease Termination
                  Payment and the appropriate Individual Lease Termination
                  Payment. In the event that an amount for any such item cannot
                  be accurately determined as of the Termination Date, the
                  Lessors and the Lessees shall provide a good faith estimate of
                  such amount, which shall be adjusted as promptly as
                  practicable after the Termination Date; and

         (ii)     Funds or any other assets from each Managed Hotel remaining in
                  Manager's possession or control as of the Termination Date
                  which are the property of the applicable Owner shall be
                  remitted to or on behalf of such Owner in the manner set forth
                  in the applicable Owner Management Agreement.

(c)      Additional Payments.

         (i)      On the Termination Date, the REIT Parties shall pay or cause
                  to be paid to the appropriate Lessee Parties (A) the payments
                  specified in Section 11 hereof, and (B) such costs and
                  expenses as shall have been incurred by the Lessee Parties on
                  or before the Termination Date and for which the REIT Parties
                  are responsible or liable under the terms of Sections 7(b) or
                  21(a) hereof. Such payments shall be made by wire transfer in
                  immediately available funds to such bank account(s) as such
                  Lessee Parties shall specify (by written notice delivered to
                  the REIT Parties not less than three (3) business days prior
                  to the Termination Date).

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<PAGE>   10

         (ii)     On the Termination Date, the Lessee Parties shall pay or cause
                  to be paid all such costs and expenses as shall have been
                  incurred on or before the Termination Date and for which the
                  Lessee Parties are responsible or liable under the terms of
                  Section 21(a) hereof.

(d)      Determination of Aggregate Management Termination. The Aggregate
         Management Termination Payment shall be One Hundred Fifteen Thousand
         Dollars ($115,000); provided, however, that if one or more of the Owner
         Management Agreements is terminated in accordance with its terms prior
         to the Termination Date (an "Interim Management Termination") and the
         applicable Individual Management Termination Payment has been made to
         Manager, the Aggregate Management Termination Payment shall be reduced
         by the amount of the Individual Management Termination Payments so
         paid.

Section 4. The Closing.

(a)      Notice. On or before November 30, 2000, the REIT will notify Hilton, in
         writing, that either (i) the REIT Parties do not intend to terminate
         the Lease Agreements, the Owner Management Agreements, and the
         Ancillary Agreements pursuant to the terms of this Termination
         Agreement, or (ii) the REIT Parties intend to terminate the Lease
         Agreements, the Owner Management Agreements and the Ancillary
         Agreements pursuant to the terms of this Termination Agreement
         effective as of a date, designated by the REIT in the notice, not more
         than sixty (60) days and not less than thirty (30) days following the
         date of the notice (such designated date being herein referred to as
         the "Termination Date").

(b)      Closing. The closing of the transactions contemplated by this Agreement
         shall take place on the Termination Date at the offices of the REIT or
         at such other place or such other date as the parties shall mutually
         agree.

(c)      Closing Deliveries by the Lessee Parties. On the Termination Date (or,
         with respect to subparagraph (xiv) below, on the Purchase Date if
         different from the Termination Date), the Lessee Parties shall execute
         and deliver or cause to be executed and delivered the following to the
         REIT Parties or the applicable Successor Lessees:

         (i)      counterpart to a closing statement;

         (ii)     counterpart to a Memorandum of Lease Termination for each
                  Leased Hotel containing provisions substantially equivalent to
                  those set forth in Exhibit 4(c)(ii) hereto;

         (iii)    to the extent necessary with respect to the RFSL Hotels if the
                  REIT or its designee purchases the capital stock of RFSL, a
                  Bill of Sale with respect to the food and beverage inventory
                  at each Leased Hotel and the FF&E and other assets described
                  in Section 11 hereof substantially in the form of Exhibit
                  4(c)(iii) hereto (the "Bill of Sale"), together with a list of
                  all FF&E as of the Termination Date and the book values
                  thereof as of the last day of the month immediately preceding
                  the Termination Date;

         (iv)     counterpart to a replacement Hilton Franchise Agreement for
                  each Leased Hotel currently operating under a Hilton Franchise
                  Agreement in favor of the applicable Lessor or the applicable
                  Successor Lessee and otherwise in accordance with Section
                  2(c)(i) hereof;

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<PAGE>   11

         (v)      counterpart to an Assignment of Contracts and Assumption
                  Agreement for each Leased Hotel substantially in the form of
                  Exhibit 4(c)(v) hereto covering all Contracts to be assigned
                  and assumed as of the Termination Date in accordance with
                  Section 2(e) hereof;

         (vi)     counterpart to an Assignment of Office Lease and Assumption
                  Agreement substantially in the form of Exhibit 4(c)(vi) hereto
                  covering the Office Lease if it is to be assigned and assumed
                  as of the Termination Date in accordance with Section 10
                  hereof;

         (vii)    the documentation necessary to effect the agreement with
                  respect to Leased Hotels operating under a Third Party
                  Management Agreement set forth in Section 2(d) hereof;

         (viii)   legal opinion of counsel to the Lessee Parties reasonably
                  acceptable to the REIT Parties with respect to the matters set
                  forth on Exhibit 4(c)(viii) hereto;

         (ix)     a certificate of the Lessee Parties that the representations
                  and warranties contained in Sections 22 and 24(b) hereof
                  (after giving effect to any permitted updating of Exhibit 22
                  hereto pursuant to Section 22(b) hereof) are true and correct
                  in all material respects as of the Termination Date;

         (x)      a certificate of the Lessee Parties as to non-foreign status
                  pursuant to Section 1445 of the Internal Revenue Code;

         (xi)     evidence reasonably acceptable to the REIT Parties that the
                  Affiliate Management Agreements have been terminated;

         (xii)    counterpart to a Non-Compete Termination Agreement
                  substantially in the form of Exhibit 4(c)(xii) hereto;

         (xiii)   a release by Hilton, Doubletree and RFS of all
                  non-competition, confidentiality and similar restrictive
                  covenant obligations of each RFS Employee hired by the REIT
                  Parties or a Successor Lessee pursuant to Section 7(d) hereof;

         (xiv)    the certificate representing the Preferred Stock duly endorsed
                  for transfer; and

         (xv)     the documentation with respect to the Managed Hotels described
                  in Section 2(f) hereof.

         (xvi)    certificates representing the capital stock of RFSL if such
                  capital stock is to be transferred pursuant to Section 2(a)
                  hereof; and

         (xvii)   counterpart to an Assignment of Lease Agreement and Assumption
                  Agreement substantially in the form of Exhibit 4(c)(xvii)
                  hereto for each Submanaged Hotel with respect to which the
                  REIT has elected to take a lease assignment pursuant to
                  Section 2(a) hereof.

(d)      Closing Deliveries by the REIT Parties. On the Termination Date (and/or
         in the case of subparagraphs (ix), (xi) and (xiii) below, on the
         Purchase Date if different from the Termination Date), the REIT Parties
         shall execute and deliver or cause to be executed and delivered the
         following to the Lessee Parties:

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         (i)      all payments required to be made by the REIT Parties on the
                  Termination Date as set forth in Section 3 hereof;

         (ii)     the full principal amount of the Escrow;

         (iii)    counterpart to a closing statement;

         (iv)     counterpart to a Memorandum of Lease Termination for each
                  Leased Hotel containing provisions substantially equivalent to
                  those set forth in Exhibit 4(c)(ii) hereto;

         (v)      counterpart to a replacement Hilton Franchise Agreement for
                  each Leased Hotel currently operating as a Hampton Inn,
                  Homewood Suites or Doubletree Hotel in favor of the applicable
                  Lessor or the applicable Successor Lessee and otherwise in
                  accordance with Section 2(c)(i) hereof;

         (vi)     counterpart to an Assignment of Contracts and Assumption
                  Agreement for each Leased Hotel substantially in the form of
                  Exhibit 4(c)(v) hereto covering all Contracts to be assigned
                  and assumed as of the Termination Date in accordance with
                  Section 2(e) hereof;

         (vii)    counterpart to an Assignment of Office Lease and Assumption
                  Agreement substantially in the form of Exhibit 4(c)(vi) hereto
                  covering the Office Lease if it is to be assigned and assumed
                  as of the Termination Date in accordance with Section 10
                  hereof;

         (viii)   the documentation necessary to effect the agreement with
                  respect to Leased Hotels operating under a Third Party
                  Management Agreement set forth in Section 2(d) hereof;

         (ix)     legal opinion of counsel to the REIT Parties reasonably
                  acceptable to the Lessee Parties with respect to the matters
                  set forth on Exhibit 4(d)(ix) hereto;

         (x)      a certificate of the REIT Parties that the representations and
                  warranties contained in Section 24(a) hereof are true and
                  correct in all material respects as of the Termination Date;

         (xi)     evidence reasonably acceptable to the Lessee Parties that the
                  REIT has complied with all of the terms of the Registration
                  Rights Agreement to be complied with on or before the
                  Termination Date or the Purchase Date;

         (xii)    counterparts to a Non-Compete Termination Agreement
                  substantially in the form of Exhibit 4(c)(xii) hereto;

         (xiii)   the payments required pursuant to Section 9 hereof;

         (xiv)    the documentation with respect to the Managed Hotels described
                  in Section 2(f) hereof; and

         (xv)     counterpart to an Assignment of Lease Agreement and Assumption
                  Agreement substantially in the form of Exhibit 4(c)(xvii)
                  hereto for each Submanaged Hotel with respect to which the
                  REIT has elected to take a lease assignment pursuant to
                  Section 2(a) hereof.

                                       11
<PAGE>   13

(e)      Effect of Termination.

         (i)      Effective on the Termination Date, each Lease Agreement
                  (including, without limitation, any lease agreement which was
                  amended or restated thereby, the leasehold interest
                  thereunder, and any rights to review, options, or rights of
                  first offer or first refusal, if any, created thereby) and
                  each Ancillary Agreement shall terminate and shall be null and
                  void and have no further force and effect, except for the
                  obligation of each Lessee to pay all Rent (as defined in the
                  respective Lease Agreements) with respect to Leased Hotels
                  accrued and unpaid through the Termination Date. The Lessees
                  shall pay Rent under the Lease Agreements accrued through the
                  Termination Date as and when the same becomes due. This
                  Agreement (including, without limitation, the provisions of
                  this Section 4(e) and Section 21) shall override and nullify
                  any provision of any Lease Agreement or Ancillary Agreement
                  providing for the survival of any provisions set forth
                  therein.

         (ii)     Effective on the Termination Date, each Affiliate Management
                  Agreement and each Owner Management Agreement then in effect
                  shall terminate and shall be null and void and have no further
                  force and effect, except for (i) the obligation of each Owner
                  to pay all accrued and unpaid management fees and other
                  amounts owing to Manager under the Owner Management Agreements
                  through the Termination Date and (ii) and obligations and
                  liabilities which, under the terms of each Owner Management
                  Agreement, survive any termination of the same.

Section 5. Escrow.

                  Upon notice from the REIT to Hilton in accordance with Section
         4(a)(ii) hereof, the parties hereto will execute and deliver an Escrow
         Agreement with Lawyers Title Insurance Corporation, Chicago Office (the
         "Escrow Agent") in the form of Exhibit 5 hereto (the "Escrow
         Agreement") pursuant to which the Lessors will deposit Two Million
         Dollars ($2,000,000.00) in cash (the "Escrow") with the Escrow Agent,
         which will be held and disbursed by the Escrow Agent in accordance with
         the terms of the Escrow Agreement. A notice pursuant to said Section
         4(a)(ii) hereof shall have no effect and shall not be deemed given
         until the Lessors deposit the Escrow in accordance with this Section 5.
         If the Lessees become entitled to the Escrow pursuant to the terms of
         this Agreement and the Escrow Agreement, payment of the Escrow to the
         Lessees in accordance with the terms of the Escrow Agreement shall
         constitute the sole remedy of the Lessee Parties hereunder for failure
         of the REIT Parties to close the transactions described in Section 2
         hereof, it being the intention and agreement of the parties that the
         Escrow constitute liquidated damages for such failure determined in
         advance by the parties as a reasonable forecast of damage likely to
         occur in light of the fact that actual damage would be difficult to
         ascertain. The Escrow shall not constitute liquidated damages for any
         breach by the REIT Parties of their obligations under Sections 9 or 12
         hereof.

Section 6. Interim Lease Terminations.

                  From and after the date hereof, a Lessor may terminate a Lease
         Agreement with respect to a Leased Hotel upon sale of the Leased Hotel
         as set forth in the Lease Agreement for

                                       12
<PAGE>   14

         such Leased Hotel prior to the Termination Date (an "Interim Lease
         Termination"). The termination payment to be paid in connection with
         any such Interim Lease Termination (the "Interim Lease Termination
         Payment") shall be the Individual Lease Termination Payment for the
         applicable Leased Hotel as set forth on Exhibit 1(a) hereto. If an
         Interim Lease Termination occurs prior to the Termination Date, the
         applicable Interim Lease Termination Payment shall be paid on the
         earlier to occur of (i) the Termination Date and (ii) the date which is
         one hundred twenty (120) days after the date of such Interim Lease
         Termination. All Interim Lease Termination Payments pursuant to this
         Section 6 shall be made by wire transfer in immediately available funds
         to such bank account(s) as the Lessee Parties shall specify (by written
         notice delivered to the REIT Parties not less than three (3) business
         days prior to the required payment date).

Section 7. Employee Matters.

(a)      Employee Transition. As soon as practicable prior to the Termination
         Date and after consultation with Hilton, the REIT shall use its good
         faith reasonable commercial efforts to cause the Successor Lessees to
         fill their hiring needs, if any, first from the corporate headquarters
         and regional office employees of the Lessees described on Exhibit 22
         hereto (as updated pursuant to Section 22(b) hereof) (the "RFS
         Employees") on the terms set forth herein. Any offer of employment by a
         Successor Lessee to an RFS Employee shall be (i) contingent upon the
         closing of the transactions contemplated hereby, (ii) for a position
         with a title substantially equivalent to that described on Exhibit 22
         hereto (as updated pursuant to Section 22(b) hereof) and with
         authorities and responsibilities substantially equivalent to those
         existing on the Termination Date with respect to such RFS Employee,
         (iii) at the annual base salary described on Exhibit 22 hereto (as
         updated pursuant to Section 22(b) hereof) with respect to such RFS
         Employee, (iv) with employee benefits (including, without limitation,
         retirement, insurance and other welfare benefits) substantially similar
         to those described on Exhibit 7(a) hereto with respect to such RFS
         Employee, (v) with credit for all actual and credited service by such
         RFS Employee with the Lessees as described on Exhibit 22 hereto (as
         updated pursuant to Section 22(b) hereof) for purposes of (A)
         eligibility and vesting under all employment benefit plans (including,
         without limitation, retirement, insurance and other welfare plans) of
         the applicable Successor Lessee, and (B) to the extent not duplicative,
         benefit accruals under any severance or vacation pay plans of the
         applicable Successor Lessee, (vi) with credit for all unused vacation,
         sick, personal or other similar days earned or accrued with the Lessees
         by such RFS Employee as described on Exhibit 22 hereto (as updated
         pursuant to Section 22(b) hereof) and (vii) in the case of a Tier II
         RFS Employee, contingent upon the receipt by the Lessee Parties of a
         complete release and discharge of all obligations of the Lessee Parties
         under any applicable severance agreement acceptable in form and
         substance to the Lessee Parties and the REIT Parties.

(b)      Severance. If (i) the REIT Parties or a Successor Lessee do not offer
         to hire an RFS Employee following the Termination Date on the terms
         specified in Section 7(a) hereof, and (ii) such RFS Employee is owed
         and paid severance and/or accrued vacation by any Lessee Party pursuant
         to the severance pay plan described in Exhibit 7(b) hereto, the
         severance agreements described in Exhibit 7(b) hereto (as the same may
         be modified in accordance with the terms of Section 7(e)(i) hereof) or
         the severance agreement described in Section 7(e)(ii) hereof, including
         any and all payments required by applicable state law and made by such
         Lessee Party in respect of unused

                                       13
<PAGE>   15

         vacation, sick, personal or other similar days which are earned or
         accrued by RFS Employees as of the Termination Date (collectively, the
         "Severance Payments"), then RFSOP shall reimburse such Lessee Party for
         such Severance Payments within two (2) business days after receiving
         written notice of such payment from such Lessee Party.

(c)      Notice. Hilton shall notify the REIT of any claim for Severance
         Payments promptly upon receiving notice of such claim and in any event
         at least ten (10) days prior to the payment of such claim.

(d)      Restrictive Covenants. Effective as of the Termination Date, Hilton
         shall execute, or cause the appropriate subsidiary of Hilton to
         execute, a release of all non-competition, confidentiality and similar
         restrictive covenant obligations of each RFS Employee hired by a
         Successor Lessee in form and substance reasonably acceptable to the
         REIT; provided, however, that such release shall not be required to
         effectuate a release of any obligations with respect to confidential
         information pertaining to operations of Hilton or any of its
         subsidiaries other than the Lessees.

(e)      Extension of Certain Severance Benefits. RFS shall have the right (but
         not the obligation) to (i) extend the term of the severance agreements
         for the RFS Employees identified on Exhibit 7(b) hereof through January
         31, 2001 and (ii) provide to Mr. Mark Kucera the same severance
         benefits as are currently provided to Messrs. Kidney, Williams and West
         as described in Exhibit 7(b) hereto and for a term extending through
         January 31, 2001.

Section 8. Transition of Hotel Management.

(a)      Franchise Agreements; Subordination Agreement. The REIT Parties shall
         exercise their good faith reasonable commercial efforts to obtain from
         each franchisor of a Leased Hotel operating under a Third Party
         Franchise Agreement a release of the applicable Lessee from all
         liabilities arising under such Third Party Franchise Agreement or any
         other related agreement from and after the Termination Date, and the
         Lessee Parties and the REIT Parties shall execute and deliver all
         documents reasonably required by third party franchisors in connection
         therewith (other than indemnity agreements). The REIT Parties shall
         further exercise their good faith reasonable commercial efforts to
         obtain a release of RFSL from all liabilities arising under the
         Subordination Agreement from and after the Termination Date.

(b)      Licenses. The Lessee Parties shall exercise good faith reasonable
         commercial efforts (i) to assist the REIT Parties in obtaining
         replacement Licenses, and (ii) unless instructed otherwise by the REIT
         Parties, to terminate all Licenses as of the Termination Date. If a
         Successor Lessee or an Owner, as applicable, is not able to obtain
         replacement Licenses for one or more of the Leased Hotels or Managed
         Hotels effective as of (or as soon as practicable after) the
         Termination Date, the REIT Parties shall so notify the Lessee Parties
         in writing at least twenty (20) days prior to the Termination Date, and
         on the Termination Date, such Successor Lessee or Owner, as applicable,
         and the Lessee Parties shall execute a temporary operating agreement,
         in form and substance mutually acceptable to the REIT Parties and the
         Lessee Parties, to allow the uninterrupted operation of such Leased
         Hotels and Managed Hotels for a reasonable period of time after the
         Termination Date pending receipt of the replacement Licenses.

                                       14
<PAGE>   16

(c)      Books and Records. All books and records (including, but not limited
         to, accounting and financial records) for the Leased Hotels and the
         Managed Hotels kept by the Lessee Parties, and all personnel files
         regarding RFS Employees hired by any Successor Lessee, shall be
         delivered to the REIT promptly after the Termination Date; provided,
         however, that such books and records shall thereafter be available to
         the Lessee Parties at all reasonable times for inspection, audit,
         examination and transcription for a period of seven (7) years, and the
         Lessee Parties may retain copies or computer records thereof.

(d)      St. Louis Plan. It is the intent of the parties to satisfy the
         provisions of Section 4204 of the Employee Retirement Income Security
         Act of 1974, as amended ("ERISA"), with respect to the obligations of
         Holiday Inn St. Louis/Clayton Plaza (the "St. Louis Hotel") under the
         St. Louis Hotel and Restaurant Employees Pension Trust Fund (the "St.
         Louis Plan"). Therefore, the parties agree as follows:

         (i)      Notwithstanding the provisions of Section 2(e) hereof, the
                  REIT shall cause the Successor Lessee with respect to the St.
                  Louis Hotel to accept an assignment of, and assume all
                  obligations under, that certain agreement between the Hotel
                  Employees Restaurant Employees Local 74, AFL-CIO and the St.
                  Louis Hotel effective December 15, 1997 (the "St. Louis
                  Agreement"). Without limitation of the foregoing, from and
                  after the Termination Date, the REIT shall cause such
                  Successor Lessee to continue making contributions to the St.
                  Louis Plan in accordance with the terms of the St. Louis
                  Agreement for substantially the same number of contribution
                  base units for which the St. Louis Hotel had an obligation to
                  contribute to the St. Louis Plan on the Termination Date;

         (ii)     Unless exempt under Pension Benefit Guaranty Corporation
                  Regulations Section 4204.11, or Section 4204.21, the REIT
                  shall cause the Successor Lessee with respect to the St. Louis
                  Hotel to post a bond or hold in escrow in favor of the St.
                  Louis Plan for a period of five (5) plan years commencing with
                  the first plan year beginning after the Termination Date in an
                  amount and form that satisfies the requirements of Section
                  4204(a)(1)(B) of ERISA;

         (iii)    In the event that the Successor Lessee with respect to the St.
                  Louis Hotel withdraws in a complete or partial withdrawal
                  under Section 4201 of ERISA from the St. Louis Plan with
                  respect to the St. Louis Hotel during the first five (5) plan
                  years beginning after the Termination Date, and such Successor
                  Lessee fails to make any withdrawal liability payments when
                  due, without limitation of the provisions of Section
                  21(c)(viii) hereof, RFS and Hilton shall be secondarily liable
                  for any withdrawal liability that the St. Louis Hotel would
                  have had to the St. Louis Plan but for the provisions of this
                  Section 8(d) and Section 4204 of ERISA; and

                                       15
<PAGE>   17

         (iv)     RFS agrees to use its good faith reasonable commercial efforts
                  to obtain and deliver to the REIT on or before February 28,
                  2000, an actuarial valuation for the St. Louis Plan as of the
                  most recent practicable date.

Section 9. REIT Capital Stock.

(a)      Preferred Stock Purchase. On the earlier to occur of (i) the tenth
         (10th) day after receipt by Hilton of a notice from the REIT pursuant
         to Section 4(a) hereof evidencing the intention to terminate the Lease
         Agreements, the Owner Management Agreements and the Ancillary
         Agreements pursuant to the terms hereof or (ii) November 30, 2000, RFS
         shall have the one time right to deliver a purchase notice to RFSOP
         stating that RFS elects to require RFSOP to purchase all (but not less
         than all) of the 973,684 shares of Preferred Stock owned by RFS in
         accordance with the terms of this Section 9. In the event RFS delivers
         to RFSOP a purchase notice pursuant to the preceding sentence, RFSOP
         will purchase the Preferred Stock from RFS in accordance with the terms
         of this Section 9; provided, however, that the REIT shall have the
         right, but not the obligation, to assume RFSOP's obligation to purchase
         the Preferred Stock from RFS on the terms set forth in this Section
         9(a) or to designate a different transferee for the Preferred Stock;
         and provided, further, that any such assumption by the REIT or
         designation by RFSOP shall not otherwise release or waive any
         obligation of RFSOP under this Section 9(a). The aggregate purchase
         price for the Preferred Stock (the "Purchase Price") shall be the
         greater of (A) either (i) Thirteen Million Seven Hundred Fifty Thousand
         Dollars ($13,750,000.00), in the event the REIT has not elected to
         terminate the Lease Agreements, the Owner Management Agreements and the
         Ancillary Agreements in accordance with this Termination Agreement, or
         (ii) Thirteen Million Dollars ($13,000,000.00) in the event the REIT
         has elected to terminate the Lease Agreements, the Owner Management
         Agreements and the Ancillary Agreements in accordance with this
         Termination Agreement, in either case plus any accrued and unpaid
         dividends thereon through the Purchase Date (defined below) or (B) the
         amount determined by multiplying the Current Market Value by the number
         of shares of Common Stock into which the Preferred Stock would then be
         convertible under the terms of the REIT's Amended and Restated Charter
         notwithstanding the fact that pursuant to the terms of the REIT's
         Amended and Restated Charter, the Preferred Stock is not then
         convertible. The purchase and sale of the Preferred Stock pursuant to
         this Section 9(a) shall occur on the earlier of (i) the Termination
         Date, or (ii) January 31, 2001 (either such date, the "Purchase Date").
         If, as of the Purchase Date (i) the Common Stock is listed for trading
         on the NYSE or any other principal securities exchange and (ii) the New
         Shelf Registration Statement (defined below) is effective under the
         Securities Act (covering the number of shares of Common Stock to be
         issued), the REIT or RFSOP may elect, in its sole discretion, to pay
         all or part of the Purchase Price in the form of shares of Common
         Stock, in which event a share of Common Stock shall be valued at its
         Current Market Value. The REIT or RFSOP shall notify RFS on the
         business day prior to the Purchase Date whether it will pay any part of
         the Purchase Price in the form of Common Stock. In the event RFS does
         not elect to require RFSOP to acquire the Preferred Stock at the time
         and in the manner described in the first sentence of this Section 9(a)
         its right to elect to require such purchase shall be forfeited and null
         and void and of no further force and effect.

(b)      Shelf Registration Statement. In accordance with the terms of the
         Registration Rights Agreement, the REIT shall prepare and file with the
         Securities and Exchange Commission (the

                                       16
<PAGE>   18

         "SEC"), as expeditiously as reasonably possible and at the REIT's sole
         cost and expense, one or more shelf Registration Statements on Form S-3
         (collectively, the "New Shelf Registration Statement") pursuant to Rule
         415 under the Securities Act of 1933, as amended (the "Securities
         Act"), covering the resale by RFS of not less than 973,684 shares of
         Common Stock issuable to RFS in accordance with Section 9(a) hereof. In
         addition, the REIT, at its sole cost and expense, agrees to maintain
         the effectiveness of Registration Statement No. 333-28849 (the
         "Existing Shelf Registration Statement") covering the resale by RFS of
         the shares of Common Stock issuable to RFS upon the redemption of its
         Units. The REIT agrees to maintain the effectiveness of the New Shelf
         Registration Statement and the Existing Shelf Registration Statement,
         respectively, or any successor registration statement under the
         Securities Act which covers shares of Common Stock issuable to RFS to
         the same extent as the New Shelf Registration Statement and the
         Existing Shelf Registration Statement, until the earlier to occur of
         (i) the date on which RFS can sell all of the shares of Common Stock
         covered by such Registration Statement freely without restriction
         pursuant to Rule 144(k) under the Securities Act or any successor
         provision, (ii) the date on which RFS has sold all of the shares of
         Common Stock covered by such Registration Statement, or (iii), with
         respect to the New Shelf Registration Statement, until the day
         following the Purchase Date, if the REIT or RFSOP do not issue any
         shares of Common Stock to RFS in connection with the purchase of the
         Preferred Stock pursuant to Section 9(a) hereof. The REIT shall file
         all required reports under the Securities Exchange Act of 1934, as
         amended (the "Exchange Act") on or prior to the due date therefor.

(c)      Redemption of Units. The REIT shall cause to be maintained in effect
         the provisions of the Fourth Amended and Restated Agreement of Limited
         Partnership of RFSOP dated January 3, 1997 (the "RFSOP Partnership
         Agreement") allowing RFS to tender its Units to RFSOP for redemption,
         with the redemption price being payable in cash or shares of Common
         Stock at the option of the REIT.

(d)      Surrender of Certificates. On or prior to the Purchase Date, RFS shall
         deliver to the REIT or RFSOP, as applicable, certificates representing
         the Preferred Stock, duly endorsed for transfer, free and clear of any
         liens, claims, encumbrances or charges of any kind.

(e)      Limitations on Resales. Hilton and RFS agree that, in the event RFS
         receives shares of Common Stock pursuant to Section 9(a) hereof, RFS
         will not sell such shares of Common Stock on any trading day in an
         amount which exceeds 20% of the average daily trading volume for the
         Common Stock for the 30-trading-day period preceding the date of the
         sale. The REIT Parties agree to work in good faith to assist RFS in the
         orderly liquidation of any shares of Common Stock delivered pursuant to
         Section 9(a) hereof.

Section 10. Office Lease.

                  The REIT and RFS shall use their respective good faith
reasonable commercial efforts to effect either (a) the assignment to any REIT
Party or Successor Lessee as of the Termination Date of the Lease Agreement
dated December 1, 1994 by and between the predecessor in interest to Boyle
Investment Company, a Tennessee corporation (the "Landlord") and RFS, as amended
by the First Modification of Lease Agreement by and between Landlord and RFS
dated September ___, 1999 (the "Office Lease"), the assumption of the Office
Lease by

                                       17
<PAGE>   19

such REIT Party or Successor Lessee, and the release of RFS from all liabilities
arising under or from the Office Lease from and after the Termination Date, or
(b) the termination of the Office Lease as of the Termination Date and execution
of a new lease for the space demised under the Office Lease on substantially the
same terms as the Office Lease and for the remaining term thereof. Any such
assignment of the Office Lease shall be subject to the subleases described on
Exhibit 22 hereto.

Section 11. Furniture and Equipment.

(a)      FF&E. On the Termination Date, the REIT shall cause a REIT Party or
         Successor Lessee to purchase from RFS all corporate office furniture
         and equipment then owned by RFS (the "FF&E") at the book value thereof
         as of the Termination Date. Exhibit 11(a) hereof sets forth all FF&E as
         of December 31, 1999, and the book values thereof as of such date. The
         Lessees shall cause the FF&E to be transferred to the REIT Party or
         Successor Lessee free and clear of all liens, claims, encumbrances and
         charges of any kind pursuant to the Bill of Sale. Except as set forth
         in Section 11(b) below, the REIT Parties and Successor Lessees shall
         have no obligation to purchase from RFS any furniture, fixture or
         equipment, other than that described in Exhibit 11(a) hereto, unless
         the REIT agrees in writing prior to the Termination Date to make such
         purchase.

(b)      Corporate Office Capital Expenditures. On the Termination Date, the
         REIT shall cause a REIT Party or Successor Lessee to reimburse RFS for
         the actual costs of the capital expenditures made or irrevocably
         committed by or on behalf of the Lessees with respect to their
         corporate office and related systems during the period from and
         including the date hereof through and including the Termination Date;
         provided, however, that the REIT shall have no obligation to cause any
         REIT Party or Successor Lessee to reimburse RFS for (i) any such
         capital expenditure in excess of $25,000 unless the REIT has given its
         prior written consent to such capital expenditure, or (ii) the amount
         by which the aggregate of any such capital expenditures of less than
         $25,000 made without the REIT'S prior written consent exceeds $100,000.
         All assets represented by such capital expenditures for which RFS is
         reimbursed shall be conveyed to a REIT Party or Successor Lessee on the
         Termination Date pursuant to the Bill of Sale.

Section 12. Partnership Interests.

                  The REIT and RFS shall use their respective good faith
reasonable commercial efforts to effect, as soon as practicable after the date
hereof, and pursuant to an Assignment of Partnership Interests and Assumption
Agreement substantially in the form of Exhibit 12, hereto (a) the assignment to
the REIT or its designee of all of the right, title, and interest of RFS in
Highland Plaza Partners, L.P., Devonshire Associates, L.P., SF Partners, L. P.,
DDP Partners, L.P., and Shelby Distribution Partners, L.P., each a Tennessee
limited partnership (collectively, the "Partnership Interests"), (b) the
assumption of the Partnership Interests and all liabilities related thereto by
the REIT or its designee, and (c) the release of RFS from all liabilities
related to the Partnership Interests. Such assignment of Partnership Interests
(i) shall be free and clear of any liens, claims, encumbrances and charges of
any kind on or against the Partnership Interests that have been created by RFS
since the effective date of the Doubletree/RFS Merger, except as provided in the
applicable partnership agreements, and (ii) shall be in exchange for a cash
payment to RFS of $160,000. In the event the Partnership Interests have not been
assigned to the

                                       18
<PAGE>   20
REIT or its designee on or before the earlier of the Termination Date and
January 31, 2001, RFS shall assign to the REIT or its designee the economic
benefits of the Partnership Interests (to the extent permitted by the applicable
partnership agreements and related agreements) and effective on such date
receive the indemnification of the REIT Parties with respect to Liabilities
suffered or incurred with respect to the Partnership Interests set forth in
Section 21(c)(vi) hereof.

Section 13. Product Improvement Plans.

                  As soon as practicable, but in no event later than March 31,
2000, Hilton will notify the Lessors of any product improvement plans which will
be required at any of the Leased Hotels which will be operated pursuant to a
Hilton Franchise Agreement as a result of the transactions contemplated by this
Termination Agreement (the "Required PIPs") and the capital improvements
comprising such Required PIPs. The Lessee Parties agree that no Lessor or
Successor Lessee shall be required, as a result of the transactions contemplated
by this Agreement, to undertake a product improvement plan or capital
expenditures which are not consistent with those generally required of licensees
pursuant to standard Hilton Franchise Agreements.

Section 14. Financial Information.

(a)      Financial Disclosure. The Lessee Parties agree to (i) provide such
         financial information with respect to the Lessees and the Manager and
         the Leased Hotels and Managed Hotels as may be reasonably requested by
         the REIT Parties and their respective permitted successors and assigns,
         and (ii) exercise their good faith reasonable commercial efforts to
         obtain from their independent public accountants such consents,
         "comfort letters" and similar documents relating to the financial
         information described in clause (i) above as may reasonably be
         requested by the REIT Parties and their respective permitted successors
         and assigns for compliance with their respective SEC disclosure
         obligations.

(b)      Costs and Expenses. The REIT Parties shall pay all reasonable costs and
         expenses arising from the compliance by the Lessee Parties with the
         provisions of Section 14(a) hereof, including, without limitation, all
         salary and wage expenses attributable to time spent by employees of
         Hilton or any of its subsidiaries in complying with such provisions.
         Hilton shall provide the REIT Parties with satisfactory evidence of
         such costs and expenses.

Section 15. Conditions to Closing.

(a)      Conditions Precedent to Closing by the REIT Parties. The obligations of
         any of the REIT Parties under Sections 2, 3, 4, 7, 10, 11, 18(g) and
         18(h) of this Termination Agreement are subject to the satisfaction or
         waiver of the following conditions on or before the Termination Date:

         (i)      Performance of Covenants. The Lessee Parties shall have
                  performed, satisfied and complied in all material respects
                  with all covenants and agreements required by this Termination
                  Agreement to be performed, satisfied or complied with by the
                  Lessee Parties on or before the Termination Date;

                                       19
<PAGE>   21

         (ii)     Actions, Suits, Proceedings. No action, suit or proceeding by
                  any governmental authority or other third party seeking to
                  prevent or enjoin the transactions contemplated by this
                  Termination Agreement shall have been instituted or threatened
                  on or before the Termination Date; and

         (iii)    Representations and Warranties. The representations and
                  warranties of the Lessee Parties in Sections 22 and 24(b)
                  hereof (after giving effect to any permitted updating of
                  Exhibit 22 hereto pursuant to Section 22(b) hereof) shall
                  continue to be true and correct in all material respects as of
                  the Termination Date.

(b)      Conditions Precedent to Closing by the Lessee Parties. The obligations
         of any of the Lessee Parties under Sections 2, 3, 4, and 11 of this
         Termination Agreement are subject to the satisfaction or waiver of the
         following conditions on or before the Termination Date:

         (i)      Performance of Covenants. The REIT Parties shall have (i)
                  performed, satisfied and complied in all material respects
                  with all covenants and agreements required by this Termination
                  Agreement to be performed, satisfied or complied with by any
                  of the REIT Parties on or before the Termination Date and (ii)
                  obtained the consents described as Items 3 and 4 on Exhibit
                  24(a)(ii) hereto;

         (ii)     Actions, Suits, Proceedings. No action, suit or proceeding by
                  any governmental authority or other third party seeking to
                  prevent or enjoin the transactions contemplated by this
                  Termination Agreement shall have been instituted or threatened
                  on or before the Termination Date; and

         (iii)    Representations and Warranties. The representations and
                  warranties of the REIT Parties in Section 24(a) hereof shall
                  continue to be true and correct in all material respects as of
                  the Termination Date.

Section 16. Termination.

(a)      Termination Due to Other Circumstances. This Termination Agreement may
         be terminated at any time on or prior to January 31, 2001:

         (i)      by mutual written agreement of all parties hereto;

         (ii)     by (A) the REIT pursuant to a notice delivered pursuant to
                  Section 4(a)(i) hereof, or (B) by Hilton if (1) the REIT has
                  not notified Hilton in writing on or before November 30, 2000
                  that the REIT Parties intend to terminate the Lease
                  Agreements, the Owner Management Agreements and the Ancillary
                  Agreements pursuant to the terms of this Termination Agreement
                  or (2) the Lessors have not executed the Escrow Agreement and
                  deposited the Escrow pursuant to Section 5 hereof on or before
                  November 30, 2000; provided however, that in either such event
                  the provisions of Sections 9, 12 and 18(g) hereof shall
                  survive such termination.

         (iii)    by any party hereto if the Termination Date shall not have
                  occurred on or before January 31, 2001; provided, however,
                  that this provision shall not be available to the Lessee

                                       20
<PAGE>   22

                  Parties if the REIT Parties have the right to terminate this
                  Termination Agreement under clause (iv) below, and this
                  provision shall not be available to the REIT Parties if the
                  Lessee Parties have the right to terminate this Termination
                  Agreement under clause (v) below;

         (iv)     by the REIT Parties if there is (A) a breach of any material
                  covenant or material agreement to be complied with or
                  performed by the Lessee Parties pursuant to the terms of this
                  Termination Agreement and such breach has not been cured by
                  the Termination Date or (B) a failure of any condition set
                  forth in Section 15(a) hereof to be satisfied on or prior to
                  the Termination Date; or

         (v)      by the Lessee Parties if there is (A) a breach of any material
                  covenant or material agreement to be complied with or
                  performed by the REIT Parties pursuant to the terms of this
                  Termination Agreement and such breach has not been cured by
                  the Termination Date, or (B) a failure of any condition set
                  forth in Section 15(b) hereof to be satisfied on or prior to
                  the Termination Date.

(b)      Effect of Termination. The termination of this Termination Agreement
         pursuant to Section 16(a) above shall not affect the right of any party
         to bring any action for breach of this Termination Agreement, and the
         obligations of the parties under Sections 9, 12, 18(g) and 21 of this
         Termination Agreement shall survive any such termination. Each of the
         Lessee Parties (other than RFSL) shall be jointly and severally liable
         for any breach of this Termination Agreement by any of the Lessee
         Parties, and each of the REIT Parties shall be jointly and severally
         liable for any breach of this Termination Agreement by any of the REIT
         Parties.

Section 17. Public Announcements; Confidentiality.

(a)      Public Announcements. None of the REIT Parties shall issue or make, or
         permit any Successor Lessee to issue or make, any reports, statements
         or releases to the public or generally to its employees, customers,
         suppliers or other persons with respect to this Termination Agreement
         or the transactions contemplated hereby without giving Hilton
         twenty-four (24) hours (occurring during a business day) to comment on
         such report, statement or release. None of the Lessee Parties shall
         issue or make any reports, statements or releases to the public or
         generally to its employees, customers, suppliers or other persons with
         respect to this Termination Agreement or the transactions contemplated
         hereby without giving the REIT twenty-four (24) hours (occurring during
         a business day) to comment on such report, statement or release. If any
         Lessee Party is unable to obtain the comments of the REIT, or any REIT
         Party or Successor Lessee is unable to obtain the comments of Hilton,
         on any such report, statement or release after such time, then such
         party may make or issue such report, statement or release and promptly
         furnish the REIT or Hilton, as applicable, with a copy thereof.

(b)      Confidentiality. Each party hereto shall keep confidential, and shall
         cause its directors, officers, employees, agents, representatives and
         advisors to keep confidential, any information from time to time
         received by it from any other party regarding such other party or its
         business affairs; provided, however, that nothing herein shall restrict
         the disclosure of any such information to the

                                       21
<PAGE>   23

         extent required by statute, rule, regulation or judicial process, or
         the disclosure of any such information which is generally available to
         the public.

Section 18. Further Covenants and Agreements.

(a)      Employee Matters. The REIT shall have no obligation under Section 7(b)
         hereof with respect to any increase in Severance Payments resulting
         from any of the following actions taken by any Lessee Party prior to
         the Termination Date without the prior written consent of the REIT: (i)
         except as provided in Section 7(e) hereof, the increase of severance
         benefits or the extension of the term of any severance plan or
         individual severance agreement with respect to the RFS Employees
         described in Exhibit 7(b) hereto, (ii) the promotion of any RFS
         Employee to a level which entitles such RFS Employee to greater
         severance benefits, (iii) the increase in the compensation of any RFS
         Employee, except in the ordinary course of business, or (iv) the
         release of any RFS Employee from any non-compete provisions or other
         restrictive covenants applicable to such RFS Employee, except as
         required by Section 7(d) hereof.

(b)      Affairs of RFS. RFS hereby agrees to maintain its legal existence and
         to use good faith reasonable commercial efforts to (i) maintain its
         current management structure at its corporate headquarters and regional
         offices and (ii) retain the RFS Employees for the period prior to the
         Termination Date, subject to such changes as may occur in the ordinary
         course of business. It is the intention of the parties that prior to
         the Termination Date the Leased Hotels and the Managed Hotels continue
         to be managed in a manner consistent with current operations, and to
         the extent possible, by the same individuals who currently manage the
         Leased Hotels and the Managed Hotels. After the Termination Date, no
         Lessee Party shall make, or permit any of its subsidiaries to make,
         offers of employment to any RFS Employee or any manager of a Leased
         Hotel or Managed Hotel prior to the date which is six (6) months after
         the Termination Date.

(c)      The RFS Name. No later than fifteen (15) business days after the
         Termination Date, the Lessee Parties shall take all necessary steps to
         change their respective corporate names so as to no longer contain the
         designation RFS. The Lessee Parties hereby agree not to utilize the
         trade name or mark of RFS (or any logo or other mark containing the
         designation RFS) in connection with any of their businesses from and
         after the Termination Date except as may be reasonably necessary to
         wind up the affairs of the Lessees.

(d)      Final Rent Payment and Management Fees. The Lessees shall pay all
         accrued and unpaid Percentage Rent and Additional Charges (as such
         terms are defined in the applicable Lease Agreements) and the Owners
         shall pay all management fees and other amounts due and owing pursuant
         to the Owner Management Agreements through the Termination Date on or
         before the date which is fifteen (15) days after the Termination Date.

(e)      St. Louis Plan. The Lessee Parties shall provide any information or
         give notice, or use good faith commercially reasonable efforts to cause
         the trustee of the St. Louis Plan to provide any information or give
         notice, reasonably requested by the REIT Parties or the applicable
         Successor Lessee in connection with their application of the Pension
         Benefit Guaranty Corporation Regulations exemptions referred to in
         Section 8(d)(ii) hereof.

                                       22
<PAGE>   24

(f)      RFSL. In the event the REIT or its designee purchases the capital stock
         of RFSL pursuant to Section 2(a) hereof, the assets and liabilities of
         RFSL shall be prorated and settled as of the Termination Date in the
         same manner as if the Lease Agreements applicable to the RFSL Hotels
         were being terminated in accordance with the provisions of this
         Agreement, it being the intention of the parties that at the
         Termination Date RFSL will have no more assets or liabilities than
         would the applicable Lessor or a Successor Lessee had the Lease
         Agreements for the RFSL Hotels been terminated in accordance with the
         provisions of this Termination Agreement and liabilities settled or
         indemnified in accordance with Sections 3(b), 4(e), 18(d) and 21
         hereof. The parties acknowledge and agree that, in the event the REIT
         or its designee elects to purchase the capital stock of RFSL pursuant
         to Section 2(a) hereof, all assets of RFSL other than the Lease
         Agreements and the Leased Property (as such term is defined in the
         Lease Agreements but exclusive of Excluded Assets) will be transferred
         by RFSL to Hilton or its designee in advance of such purchase.

(g)      Standstill Agreement. The REIT Parties hereby (i) consent to the
         execution by the Lessees of the "New Amendments" described in the
         Standstill Agreement, (ii) agree to execute the owner agreement
         amendments and new owner agreements described in the Standstill
         Agreement and (iii) agree to evidence their agreement set forth in this
         Section 18(g) to Marriott, if requested, in a form satisfactory to the
         REIT Parties.

(h)      Non-Interference. The parties hereby acknowledge and agree that, prior
         to the Termination Date, except as expressly set forth herein or in the
         Lease Agreements or the Ancillary Agreements, the REIT Parties shall
         have no rights hereunder with respect to the operations or business of
         the Lessees.

Section 19. [Intentionally Left Blank].

Section 20. Further Assurances.

                  Each party hereby agrees to cooperate in good faith with the
other parties and to execute and deliver such other agreements, documents or
instruments as may be necessary or desirable in connection with the transactions
contemplated by this Termination Agreement (including the termination of the
Lease Agreements, the Owner Management Agreements and the Ancillary Agreements
and execution and delivery of memoranda of lease termination that comply with
applicable local law) or in effecting the transfer of the operational control of
the Leased Hotels and the Managed Hotels resulting therefrom. Each party hereby
further agrees to use its good faith reasonable commercial efforts to obtain
consents and waivers from third parties, including franchisors, suppliers,
vendors, employees, lessors, lessees, lenders, trustees, rating agencies and
other third parties necessary to effect the transactions contemplated by this
Termination Agreement, including, without limitation, all requisite consents and
waivers identified on Exhibit 24(a)(ii) hereto and Exhibit 24(b)(ii) hereto. If
any affiliate of a REIT Party becomes a lessor for a Leased Hotel prior to the
Termination Date, the REIT shall cause such affiliate to become a party to and
be bound by this Termination Agreement as if it were an original party hereto.
If any affiliate of a Lessee Party becomes a lessee for a Leased Hotel prior

                                       23
<PAGE>   25

to the Termination Date, Hilton shall cause such affiliate to become a party to
and be bound by this Termination Agreement as if it were an original party
hereto.

Section 21. Costs and Expenses; Indemnities.

(a)      Costs and Expenses.

         (i)      Costs and Expenses Payable by the Lessee Parties. The Lessee
                  Parties shall pay all fees, costs and expenses associated with
                  (A) the termination of the Affiliate Management Agreements in
                  accordance with Section 2(d)(i) hereof, including, without
                  limitation, termination fees, liquidated damages and other
                  payments owing to the managers thereunder, and (B) obtaining
                  the consents, waivers and other actions described on Exhibit
                  24(b)(ii) hereto.

         (ii)     Costs and Expenses Payable by the REIT Parties. Except as
                  otherwise set forth herein and in the Standstill Agreement,
                  the REIT Parties shall pay all fees, costs and expenses
                  associated with (A) the replacement of the Third Party
                  Franchise Agreements applicable to the Leased Hotels in
                  accordance with Section 2(c) hereof, including, without
                  limitation, new license application fees, change of ownership
                  fees, liquidated damages and other payments owing to the
                  franchisors thereunder, whether as a result of the termination
                  of the applicable Lease Agreement, Third Party Franchise
                  Agreement or any other related agreement, the change of
                  ownership of the franchise, the execution of a replacement
                  Third Party Franchise Agreement with the applicable Lessor or
                  Successor Lessee, or otherwise, (B) the replacement and
                  termination of the Licenses applicable to the Leased Hotels
                  and the Managed Hotels in accordance with Section 8(b) hereof,
                  (C) the assignment or termination of the Contracts applicable
                  to the Leased Hotels (other than Excluded Material Contracts)
                  in accordance with Section 2(e) hereof, (D) the termination
                  and replacement or the assignment of the Office Lease in
                  accordance with Section 10 hereof and any subleases thereof,
                  (E) the assignment of the Partnership Interests, (F) the
                  acceptance and assumption of the Third Party Management
                  Agreements and the release of the Lessee Parties with respect
                  to the same, all in accordance with Section 2(d) hereof, and
                  (G) obtaining the consents, waivers and other actions
                  described on Exhibit 24(a)(ii) hereto; provided, however, that
                  the REIT Parties shall not be responsible for (x) amounts
                  owing by the Lessees or any of their affiliates under the
                  Franchise Agreements, Third Party Management Agreements,
                  Contracts, Licenses or the Office Lease for the period prior
                  to the Termination Date, or (y) any fees, costs or expenses
                  described in this subsection (ii) (exclusive of clause (E)
                  above) that are incurred by any Lessee Party prior to the date
                  that is thirty (30) days in advance of the Termination Date.

         (iii)    Other Costs and Expenses. Except as otherwise provided herein,
                  each of the parties shall pay all costs and expenses incurred
                  or to be incurred by it in negotiating and preparing this
                  Termination Agreement and the other documents and instruments
                  contemplated herein and in performing their respective
                  obligations hereunder and thereunder.

(b)      Indemnity by the Lessee Parties. The Lessee Parties (other than RFSL)
         agree, jointly and severally, to indemnify, defend and hold harmless
         the REIT Parties and their respective affiliates,

                                       24
<PAGE>   26

         officers, directors, shareholders, employees and agents and each
         Successor Lessee (collectively, the "REIT Indemnitees") from and
         against any and all claims, demands, obligations, losses, liabilities,
         damages, recoveries and deficiencies, including interest, penalties and
         reasonable attorneys' fees, costs and expenses, and any and all
         actions, suits and proceedings in respect thereof (collectively,
         "Liabilities"), suffered or incurred by any REIT Indemnitee as a result
         of (i) the termination of, or failure to terminate, the Affiliate
         Management Agreements for the Leased Hotels, (ii) the breach of any
         covenant of the Lessee Parties set forth herein or in any document or
         instrument delivered in connection herewith, (iii) the failure of any
         representation and warranty made by the Lessee Parties in Sections 22
         or 24(b) hereof or pursuant to Section 4(c)(ix) hereof to be true and
         correct in all material respects, (iv) the operation of the Leased
         Hotels by the Lessee Parties prior to the Termination Date, including,
         without limitation, claims or causes of action relating in any way to
         any employees of RFS based upon events occurring prior to the
         Termination Date, including but not limited to any alleged or actual
         unfair labor practices, employment discrimination charges and lawsuits,
         violations of collective bargaining contracts or trust agreements, any
         failure to make contributions to the St. Louis Plan contrary to the
         requirements of Section 515 of ERISA, and any other claims regarding
         employment, severance, safety, compensation, benefits or other matters,
         (v) any untrue statement of a material fact or omission of any material
         fact included in written information provided by any Lessee Party to
         any of the REIT Parties or their respective permitted successors and
         assigns or any Successor Lessee expressly for inclusion in any Exchange
         Act report or Securities Act registration statement, or (vi) in the
         event the REIT or its designee elects to purchase the capital stock of
         RFSL pursuant to Section 2(a) hereof, liabilities of RFSL arising prior
         to the Termination Date but not from the operation of the Leased
         Hotels. The Lessee Parties shall pay any and all amounts owing under
         this indemnity within two (2) business days after demand by the
         applicable REIT Indemnitee together with reasonable supporting
         documentation therefor. This indemnity shall survive the Termination
         Date for a period of three (3) years plus, with respect only to any
         claim for indemnification made hereunder before the expiration of such
         three (3)-year period, any period during which such claim is pending
         and unresolved hereunder. Payment of a Liability by a REIT Indemnitee
         shall not be a condition precedent to the obligations of the Lessee
         Parties under this indemnity. The limitation on the indemnification
         obligation set forth in clause (vi) above shall not in any way limit
         the indemnification obligation set forth in clause (iv) above.

(c)      Indemnity by the REIT Parties. The REIT Parties agree, jointly and
         severally, to indemnify, defend and hold harmless the Lessee Parties
         and their respective affiliates, officers, directors, shareholders,
         employees and agents (collectively, the "Hilton Indemnitees") from and
         against any and all Liabilities suffered or incurred by any Hilton
         Indemnitee as a result of (i) the breach of any covenant of any REIT
         Party or Successor Lessee or any other designee of the REIT Parties set
         forth herein or in any document or instrument delivered in connection
         herewith, including, without limitation, the breach of any obligation
         under a Contract, Third Party Franchise Agreement, Third Party
         Management Agreement or License assumed by any REIT Party or Successor
         Lessee occurring after the Termination Date, (ii) the failure of any
         representation and warranty made by the REIT Parties in Section 24(a)
         hereof or pursuant to Section 4(d)(x) hereof to be true and correct in
         all material respects, (iii) the operation of the Leased Hotels by the
         Lessors or any Successor Lessee after the Termination Date, including,
         without limitation, (A) costs of complying with all product improvement
         plans and satisfying

                                       25
<PAGE>   27

         other requirements for the issuance or continuance of a replacement
         Franchise Agreement and (B) claims or causes of action relating in any
         way to any employee based upon events occurring after the Termination
         Date, including but not limited to any alleged or actual unfair labor
         practices, employment discrimination charges and lawsuits, violations
         of collective bargaining contracts or trust agreements, any failure to
         make contributions to the St. Louis Plan contrary to the requirements
         of Section 515 of ERISA or Section 8(d)(i) hereof, and any other claims
         regarding employment, severance, safety, compensation, benefits or
         other matters, (iv) the continuation beyond the Termination Date of any
         Contract (other than an Excluded Material Contract), License or
         Franchise Agreement which is not assumed by a REIT Party or Successor
         Lessee, (v) the continuation beyond the Termination Date of any
         obligations of the Lessee Parties under the Subordination Agreements,
         (vi) the Partnership Interests (exclusive of Liabilities arising with
         respect thereto from the gross negligence or willful misconduct of RFS
         after the effective date of the Doubletree/RFS Merger), (vii) any
         withdrawal liability incurred as a result of the transactions
         contemplated hereby with respect to the St. Louis Plan, (viii) any
         information with respect to the Lessee Parties set forth in any reports
         of any of the REIT Parties or their respective permitted successors and
         assigns or any Successor Lessee under the Exchange Act or any
         registration statement under the Securities Act, except, to the extent
         that any Liabilities in respect thereof result from any untrue
         statement of a material fact or omission of any material fact included
         in written information provided by any Lessee Party to such REIT Party,
         permitted successor or assign or Successor Lessee expressly for
         inclusion in any such Exchange Act report or Securities Act
         registration statement, and (ix) any transfer taxes incurred as a
         result of any lease assignment with respect to Submanaged Hotels
         pursuant to Section 2(a) hereof or as a result of the transfer of the
         stock of RFSL pursuant to Section 2(a) hereof. The REIT Parties shall
         pay any and all amounts owing under this indemnity within two (2)
         business days after demand by the applicable Hilton Indemnitee together
         with reasonable supporting documentation therefor. This indemnity shall
         survive the Termination Date for a period of three (3) years plus, with
         respect only to any claim for indemnification made hereunder before the
         expiration of such three (3)-year period, any period during which such
         claim is pending and unresolved hereunder; provided, however, that (i)
         the indemnity obligation described in clause (vii) above shall survive
         the Termination Date for a period of six (6)-years plus, with respect
         only to any claim for such indemnification made hereunder before the
         expiration of such six (6) year period, any period during which such
         claim is pending and unresolved hereunder, and (ii) the indemnity
         obligations described in clause (vi) above with respect to the
         Partnership Interests and all liabilities related thereto shall survive
         the Termination Date for the applicable statute of limitations period.
         Payment of a Liability by a Hilton Indemnitee shall not be a condition
         precedent to the obligations of the REIT Parties under this indemnity.

(d)      Defense of Claims. If a claim for Liabilities is to be made by a party
         entitled to indemnification under this Section 21, the party entitled
         to such indemnification shall give written notice to the indemnifying
         party as soon as practicable after the party entitled to
         indemnification becomes aware of any fact, condition or event which may
         give rise to Liabilities for which indemnification may be sought under
         this Section 21. If any action, suit or proceeding alleging a claim for
         Liabilities is filed against any party entitled to the benefit of
         indemnity hereunder, written notice thereof shall be given to the
         indemnifying party as promptly as practicable. After such notice, the
         indemnifying party shall be entitled, if it so elects, (i) to take
         control of the defense and investigation of such action, suit or
         proceeding, (ii) to employ and engage attorneys and experts

                                       26
<PAGE>   28

         of its own choice to handle and defend the same, and (iii) with the
         indemnified party's consent, to settle such action, suit or proceeding,
         all at the indemnifying party's sole risk and expense, provided, in
         each instance, that the indemnifying party and its counsel shall
         proceed with diligence and in good faith with respect thereto;
         provided, however, that any such settlement shall include, among other
         things, an absolute and unconditional release of the indemnified party
         from all Liabilities. The indemnified party shall cooperate in all
         reasonable respects with the indemnifying party and such attorneys in
         the investigation, trial and defense of such action, suit or proceeding
         and any appeal arising therefrom; provided, however, that the
         indemnified party may, at its own cost, participate in the
         investigation, trial and defense of such action, suit or proceeding and
         any appeal arising therefrom. This Section 21(d) shall have no
         application to the reimbursement obligation of the RFSOP set forth in
         Section 7(b) hereof.

(e)      Applicability of Indemnity Provisions. Except with respect to the
         indemnity provided by the Lessee Parties (other than RFSL) pursuant to
         Section 21(b)(v) hereof and the indemnity provided by the REIT Parties
         pursuant to Section 21(c)(vi) and Section 21(c)(viii) hereof, the
         provisions of subsections (b), (c) and (d) of this Section 21 shall not
         become applicable until the consummation of the transactions
         contemplated by Section 2 hereof on the Termination Date. The indemnity
         provided by the REIT Parties pursuant to Section 21(c)(vi) shall not
         become applicable until the earliest of (i) the consummation of the
         transactions contemplated by Section 12 hereof, (ii) the consummation
         of the transactions contemplated by Section 2 hereof on the Termination
         Date and (iii) January 31, 2001.

Section 22. Disclosure.

(a)      Representations and Warranties. The Lessee Parties hereby make the
         following representations and warranties:

         (i)      Litigation. To the actual knowledge of Lawrence A. Russell,
                  Jr., Section (a) of Exhibit 22 hereto (to be completed by RFS
                  within ten (10) days after the date hereof) will set forth a
                  true and correct list of all pending and threatened actions,
                  suits and proceedings against the Lessees as of the date
                  hereof.

         (ii)     Material Contracts. To the actual knowledge of Lawrence A.
                  Russell, Jr., Section (b) of Exhibit 22 hereto sets forth a
                  true and correct list of all Material Contracts as of the date
                  hereof.

         (iii)    Employee Matters. Section (c) of Exhibit 22 hereto sets forth
                  a true and correct statement of the current information with
                  respect to the RFS Employees set forth therein.

         (iv)     Subleases. Section (d) of Exhibit 22 hereto sets forth a true
                  and correct list of all subleases executed by any of the
                  Lessee Parties with respect to the space demised under the
                  Office Lease.

         (v)      Management Agreements. Exhibit 1(d) hereto sets forth all of
                  the Third Party Management Agreements with respect to the
                  Leased Hotels.

                                       27
<PAGE>   29
         (vi)     RFS Leasing, Inc. RFSL is duly incorporated, validly existing
                  and in good standing under the laws of the State of Tennessee
                  and is in good standing in each state in which it leases a
                  hotel property from RFSFP. Other than its obligations pursuant
                  to the Lease Agreements, Franchise Agreements, Licenses, Third
                  Party Management Agreements, Affiliate Management Agreements,
                  and Contracts relating to the RFSL Hotels, the Standstill
                  Agreement, this Termination Agreement, the Escrow Agreement,
                  the Subordination Agreement and the Ancillary Agreements, RFSL
                  has no material contractual obligations of any kind, and RFSL
                  has no business operations of any kind which are unrelated to
                  the RFSL Hotels. Hilton (either directly or indirectly) owns
                  all of the outstanding capital stock of RFSL free and clear of
                  any liens, claims, encumbrances and charges of any kind.

         (vii)    Replacement Hilton Franchise Agreements. Hilton, or a wholly
                  owned subsidiary of Hilton, has full legal right and authority
                  to grant to the REIT Parties or a Successor Lessee a
                  replacement Hilton Franchise Agreement for the same franchise
                  brand for each Leased Hotel currently operating under a Hilton
                  Franchise Agreement.

(b)      Updating of Disclosures. The Lessee Parties shall promptly update any
         of the information set forth in Exhibit 22 hereto to include
         developments after the date hereof by delivering written notice of such
         new developments to the REIT Parties.

Section 23. Counterparts.

                  This Termination Agreement may be executed in multiple
counterparts, each of which shall be deemed an original.

Section 24. Authorization; No Consents.

(a)      The REIT Parties. The REIT Parties hereby represent and warrant to the
         Lessee Parties as follows:

         (i)      The execution, delivery and performance of the Agreements and
                  the consummation of the transactions contemplated therein by
                  each of the REIT Parties have been duly authorized by all
                  necessary corporate or partnership action, as the case may be.
                  Each Agreement constitutes a valid and binding agreement of
                  each of the REIT Parties, enforceable in accordance with its
                  terms.

         (ii)     Except as set forth on Exhibit 24(a)(ii) and Exhibit 24(b)(ii)
                  hereto, and except for required consents to the assignment,
                  replacement and/or termination of the Franchise Agreements
                  (and related agreements), the Licenses, the Contracts, the
                  Third Party Management Agreements, the Office Lease and the
                  Partnership Interests, no consents, waivers or other actions
                  by any third party are required in connection with the
                  execution, delivery and performance of any Agreement by any of
                  the REIT Parties.

(b)      The Lessee Parties. The Lessee Parties hereby represent and warrant to
         the REIT Parties as follows:

                                       28
<PAGE>   30
         (i)      The execution, delivery and performance of the Agreements and
                  the consummation of the transactions contemplated therein by
                  each of the Lessee Parties (including, without limitation, the
                  execution and delivery of the agreement described in Section
                  4(c)(xii) hereof) have been duly authorized by all necessary
                  corporate or partnership action, as the case may be. Each
                  Agreement constitutes a valid and binding agreement of each of
                  the Lessee Parties, enforceable in accordance with its terms.

         (ii)     Except as set forth on Exhibit 24(a)(ii) and Exhibit 24(b)(ii)
                  hereto and except for required consents to the assignment,
                  replacement and/or termination of the Franchise Agreements
                  (and related agreements), the Licenses, the Contracts, the
                  Third Party Management Agreements, the Office Lease and the
                  Partnership Interests, no consents, waivers or other actions
                  by any third party are required in connection with the
                  execution, delivery and performance of any Agreement by any of
                  the Lessee Parties.

Section 25. Notices.

                  Any notice required or permitted to be given under this
Termination Agreement shall be in writing and shall be sent by facsimile
transmission (confirmed by any of the following methods: overnight delivery
(with proof of delivery), courier service (with proof of delivery), hand
delivery, or certified or registered mail (return receipt requested and first
class postage prepaid)) and addressed as follows:

                  If to any Lessee Party:

                           c/o Hilton Hotels Corporation
                           755 Crossover Lane
                           Memphis, TN 38117-4900
                           Attention: Rick Schultz and Kevin Kern
                           Facsimile: (901) 374-5521

         with a copy to:

                           Hilton Hotels Corporation
                           9336 Civic Center Drive
                           Beverly Hills, CA 90210
                           Attention: Kevin Luebbers
                           Facsimile: (310) 205-4611

         with a copy (which shall not constitute notice) to:

                           Latham & Watkins
                           5800 Sears Tower
                           Chicago, IL 60606
                           Attention: Linda S. Schurman
                           Facsimile: (312) 993-9767

                                       29
<PAGE>   31

                  If to any REIT Party:

                           c/o RFS Hotel Investors, Inc.
                           850 Ridge Lake Boulevard
                           Suite 220
                           Memphis, TN 38120
                           Attention: Robert M. Solmson, Chairman of the Board
                           Facsimile: (901) 818-5260

         with a copy (which shall not constitute notice) to:

                           Hunton & Williams
                           Riverfront Plaza, East Tower
                           951 East Byrd Street
                           Richmond, VA 23219
                           Attention: David C. Wright
                           Facsimile: (804) 788-8218

or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date the notice
is received or receipt is rejected.

Section 26. Successors and Assigns.

                  This Termination Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that no party may make any assignment of this
Termination Agreement or any rights or obligations hereunder without the prior
written consent of the other parties. Notwithstanding the foregoing, RFS shall
have the right to assign its rights under Section 9 hereof to Hilton or any
subsidiary of Hilton which is a successive holder of any Preferred Stock, Common
Stock or Units; provided, however, that RFS shall notify the REIT in writing of
any such assignment prior to the filing of the New Shelf Registration Statement.

Section 27. Entire Agreement; Amendments.

                  The Agreements and the exhibits and schedules thereto
constitute the entire agreement among the parties thereto with respect to the
subject matters thereof and supersede all prior agreements and understandings
among the parties with respect to the matters set forth therein, including,
without limitation, any termination or survival provisions in the Lease
Agreements. No addition to or amendment or modification of any provision of this
Termination Agreement shall be binding upon any party hereto unless made in
writing and signed by each party hereto.

Section 28. Headings.

                  Headings of the sections of this Termination Agreement are for
the convenience of the parties only and shall be given no substantive or
interpretive effect whatsoever.

                                       30
<PAGE>   32

Section 29. Incorporation.

                  The exhibits hereto are hereby incorporated herein and made a
part hereof for all purposes as if fully set forth herein.

Section 30. Enforcement of Agreement.

                  The parties agree that irreparable damage will occur in the
event that any of the provisions of this Termination Agreement is not performed
in accordance with the specific terms hereof or are otherwise breached. It is
accordingly agreed that, except as otherwise provided in Section 5 hereof, in
addition to any other remedy to which the parties are entitled at law or in
equity, the parties shall be entitled to injunctive relief to prevent breaches
of this Termination Agreement and to enforce specifically the terms and
provisions hereof in any court in the State of Tennessee.

Section 31. Governing Law.

                  This Termination Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee without regard to its
rules of conflicts of laws.

Section 32. Severability.

                  Any term or provision of this Termination Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Termination Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Termination Agreement in any other jurisdiction. If
any provision of this Termination Agreement is so broad as to be unenforceable,
the provision shall be interpreted to be only so broad as is enforceable.

Section 33. Attorneys Fees.

                  If any party brings an action against another party to enforce
any condition or covenant of this Termination Agreement or any other Agreement,
the prevailing party in such action shall be entitled to recover its court
costs, attorneys' fees and expenses in the judgment rendered through such
action.

Section 34. Time of the Essence.

                  Time is of the essence of this Termination Agreement.

Section 35. Risk of Loss.

                  In the event of a casualty or condemnation affecting any
Leased Hotel, no party shall have the right to terminate any Agreement and the
applicable Lessee shall hold and assign to the applicable Lessor or Successor
Lessee any and all proceeds of insurance or any condemnation award relating to
such casualty or condemnation in such Lessee's possession as of the Termination
Date.

                                       31
<PAGE>   33

Section 36. Survival.

                  Except as limited by Section 21 hereof, all agreements and
obligations of the parties to this Termination Agreement shall survive the
Termination Date.

Section 37. Consents.

                  Whenever the consent or approval of a party is required under
this Termination Agreement, such consent shall not be unreasonably withheld or
delayed.

Section 38. Good Faith Reasonable Commercial Efforts.

                  Whenever a party is obligated under this Termination Agreement
to use its good faith reasonable commercial efforts, such obligation shall not
require such party to expend funds or incur liability not contemplated by this
Termination Agreement.

                            [SIGNATURE PAGES FOLLOW]

                                       32
<PAGE>   34
                  IN WITNESS WHEREOF, each party has caused this Termination
Agreement to be duly executed on its behalf as of the day and year first above
written.

                                   RFS, INC.

                                   By: /s/ Kevin M. Luebbers
                                       -----------------------------------------
                                   Name: Kevin M. Luebbers
                                         ---------------------------------------
                                   Title: Senior Vice President
                                          --------------------------------------

                                   RIDGE LAKE GENERAL PARTNER, INC.

                                   By: /s/ R. Churchey
                                       -----------------------------------------
                                   Name: R. Churchey
                                         ---------------------------------------
                                   Title: President and COO
                                          --------------------------------------

                                   RFS LEASING, INC.

                                   By: /s/ Kevin M. Luebbers
                                       -----------------------------------------
                                   Name: Kevin M. Luebbers
                                         ---------------------------------------
                                   Title: Senior Vice President
                                          --------------------------------------

                                   DTR RFS LESSEE, INC.

                                   By: /s/ Kevin M. Luebbers
                                       -----------------------------------------
                                   Name: Kevin M. Luebbers
                                         ---------------------------------------
                                   Title: Senior Vice President
                                          --------------------------------------

                                   RFS PARTNERSHIP, L.P.

                                   By: RFS Hotel Investors, Inc., general
                                       partner

                                       By: /s/ R. Churchey
                                           -------------------------------------
                                       Name: R. Churchey
                                             -----------------------------------
                                       Title: President and COO
                                              ----------------------------------

                                      S-1
<PAGE>   35

                                   RFS FINANCING PARTNERSHIP, L.P.

                                       By: RFS Financing, Inc., general partner

                                   By: /s/ R. Churchey
                                       -----------------------------------------
                                   Name: R. Churchey
                                         ---------------------------------------
                                   Title: President and COO
                                          --------------------------------------

                                   PLANO INN, L.P.

                                   By: RFS Partnership, L.P., general partner

                                       By: RFS Hotel Investors, Inc., general
                                           partner

                                           By: /s/ R. Churchey
                                               ---------------------------------
                                           Name: R. Churchey
                                                 -------------------------------
                                           Title: President and COO
                                                  ------------------------------

                                   RFS HOTEL INVESTORS, INC.

                                   By: /s/ R. Churchey
                                       -----------------------------------------
                                   Name: R. Churchey
                                         ---------------------------------------
                                   Title: President and COO
                                          --------------------------------------

                                   RFS SPE 1 1998 LLC, A VIRGINIA LIMITED
                                   LIABILITY COMPANY

                                   By: RFS MM 1 1998 CORPORATION, a Virginia
                                       corporation, its managing partner

                                       By: /s/ R. Churchey
                                           -------------------------------------
                                       Name: R. Churchey
                                             -----------------------------------
                                       Title: President and COO
                                              ----------------------------------

                                      S-2
<PAGE>   36

                                   RFS SPE 2 1998 LLC

                                   By: RFS MM 2 1998 CORPORATION, a Virginia
                                       corporation, its managing partner

                                       By: /s/ R. Churchey
                                           -------------------------------------
                                       Name: R. Churchey
                                             -----------------------------------
                                       Title: President and COO
                                              ----------------------------------

                                   DOUBLETREE CORPORATION

                                   By: /s/ Kevin M. Luebbers
                                       -----------------------------------------
                                   Name: Kevin M. Luebbers
                                         ---------------------------------------
                                   Title: Senior Vice President
                                          --------------------------------------

                                   HILTON HOTELS CORPORATION

                                   By: /s/ Kevin M. Luebbers
                                       -----------------------------------------
                                   Name: Kevin M. Luebbers
                                         ---------------------------------------
                                   Title: Senior Vice President
                                          --------------------------------------

                                      S-3
<PAGE>   37

                                    EXHIBITS

<TABLE>
<S>                              <C>
Exhibit 1(a)              -      Hotels and Lease Agreements
Exhibit 1(b)              -      Owner Management Agreements
Exhibit 1(c)              -      Ancillary Agreements
Exhibit 1(d)              -      Third Party Management Agreements
Exhibit 1(e)              -      Form of Standstill Agreement
Exhibit 3(b)(i)           -      Operational Settlement for Leased Hotels
Exhibit 4(c)(ii)          -      Provisions for Memorandum of Lease Termination
Exhibit 4(c)(iii)         -      Bill of Sale
Exhibit 4(c)(v)           -      Assignment of Contracts and Assumption Agreement
Exhibit 4(c)(vi)          -      Assignment of Office Lease and Assumption Agreement
Exhibit 4(c)(viii)        -      Legal Opinion of Counsel to Lessee Parties
Exhibit 4(c)(xii)         -      Non-Compete Termination Agreement
Exhibit 4(c)(xvii)        -      Assignment of Lease Agreement and Assumption Agreement
Exhibit 4(d)(ix)          -      Legal Opinion of Counsel to REIT Parties
Exhibit 5                 -      Escrow Agreement
Exhibit 7(a)              -      Employee Benefits to RFS Employees
Exhibit 7(b)              -      Severance Agreements and Policies
Exhibit 11(a)             -      FF&E and Book Values
Exhibit 12                -      Assignment of Partnership Interests and Assumption Agreement
Exhibit 22                -      Disclosures
Exhibit 24(a)(ii)         -      Required Third Party Consents of REIT Parties
Exhibit 24(b)(ii)         -      Required Third Party Consents of Lessee Parties
</TABLE>

<PAGE>   38

                                  EXHIBIT 1(A)

                           HOTELS AND LEASE AGREEMENTS

I.       Consolidated Lease Amendment dated February 27, 1996 between RFSOP, as
         lessor, and RFS, as lessee (the "Consolidated Lease Amendment") with
         respect to the following Hotels:

<TABLE>
<CAPTION>
                                                                         Termination
             Hotel                    Location                              Payment
             -----                    --------                              -------
<S>                                <C>                                 <C>
  1.   Holiday Inn Express         Tupelo, MS                          Previously Terminated
  2.   Holiday Inn Express         Franklin, TN                        Previously Terminated
  3.   Holiday Inn                 Louisville, KY                                 $  214,000
  4.   Executive Inn               Tupelo, MS                          Previously Terminated
  5.   Holiday Inn                 Clayton, MO                                     3,177,000
  6.   Holiday Inn                 Columbia, SC                                    1,217,000
  7.   Ramada Inn (A)              Lexington, KY
  8.   Comfort Inn                 Conyers, GA                         Previously Terminated
  9.   Holiday Inn                 Lafayette, LA                                   2,492,000
  10.  Comfort Inn (B)             Marietta, GA                                      435,000
  11.  Residence Inn               Kansas City, MO                                   934,000
  12.  Comfort Inn                 Clemson, SC                         Previously Terminated
  13.  Comfort Inn (B)             Ft. Mill, SC                                          -0-
  14.  Hampton Inn                 Ft. Lauderdale, FL                                846,000
  15.  Holiday Inn Express         Arlington Heights, IL                             249,000
  16.  Holiday Inn Express         Bloomington, MN                                   975,000
  17.  Hampton Inn                 Bloomington, MN                                   640,000
  18.  Hampton Inn                 Denver (Lakewood), CO                             121,000
  19.  Holiday Inn Express         Downers Grove, IL                                 602,000
  20.  Comfort Inn                 Farmington Hills, MI                              745,000
  21.  Comfort Inn                 Grand Rapids, MI                    Previously Terminated
  22.  Hampton Inn                 Indianapolis, IN                                  296,000
  23.  Hampton Inn                 Lansing, MI                         Previously Terminated
  24.  Hampton Inn                 Lincoln, NE                                       259,000
  25.  Hampton Inn                 Minnetonka, MN                                    300,000
  26.  Hampton Inn (B)             Oklahoma City, OK                                 701,000
  27.  Hampton Inn (B)             Omaha, NE                                         600,000
  28.  Hampton Inn                 Tulsa, OK                                         677,000
  29.  Hampton Inn                 Warren, MI                                        270,000
  30.  Holiday Inn Express         Wauwatosa, WI                                     254,000
  31.  Residence Inn               Tyler, TX                                       1,117,000
  32.  Residence Inn               Fishkill, NY                                    3,218,000
  33.  Residence Inn (B)           Providence (Warwick), RI                        1,570,000
  34.  Hampton Inn                 Memphis, TN                                       572,000
  35.  Residence Inn (B)           Ft. Worth, TX                                     915,000
</TABLE>

                                     1(a)-1
<PAGE>   39

<TABLE>
<S>                                <C>                                 <C>
  36.  Residence Inn               Torrance, CA                                    3,392,000
  37.  Residence Inn               Wilmington, DE                                  1,381,000
  38.  Residence Inn (B)           Ann Arbor, MI                                     129,000
  39.  Holiday Inn                 Flint, MI                                       3,413,000
  40.  Residence Inn (B)           Charlotte, NC                                     534,000
  41.  Hawthorn Suites Hotel       Atlanta (Marietta), GA                          1,783,550
  42.  Holiday Inn Express (B)     Austin, TX                                            -0-
  43.  Hampton Inn (B)             Lakewood, CO                                      945,000
  44.  Hampton Inn (B)             Hattiesburg, MS                                       -0-
  45.  Hampton Inn                 Laredo, TX                                      1,137,000
  46.  Residence Inn               Atlanta, GA                                        76,000
  47.  Holiday Inn (B)             Crystal Lake, IL                                3,010,000
  48.  Residence Inn (B)           Orlando, FL                                     2,263,000
  49.  Residence Inn (B)           Sacramento, CA                                  1,623,000
</TABLE>

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

(A)      Hotel previously sold by RFSOP and parties hereby agree that the Lease
         Agreement with respect to such Hotel was terminated effective as of
         March 5, 1996 with no termination payment being due or payable pursuant
         to Section 11 of the Master Agreement dated as of February 1, 1996
         among Doubletree Corporation, Seedling Merger Subsidiary, Inc., RFS,
         the REIT and RFSOP.

(B)      The Lease Agreements with respect to these Hotels were amended and
         restated pursuant to the Second Consolidated Lease Amendment described
         in II. below. The Lease Agreements for the remaining Hotels were
         amended and restated pursuant to the Third Consolidated Lease Amendment
         described in III. below.

                                     1(a)-2
<PAGE>   40

II.      Second Consolidated Lease Amendment dated as of November 21, 1996
         between RFSFP, as lessor, and RFSL, as lessee (the "Second Consolidated
         Lease Amendment") with respect to the following Hotels. Except for the
         Doubletree Hotel San Diego (Del Mar), California, the Individual
         Termination Payments for the following Hotels which are subject to the
         Second Consolidated Lease Amendment are set forth in I. above.

<TABLE>
                  <S>                                  <C>
                   1.  Residence Inn                   Providence, RI
                   2.  Residence Inn                   Ft. Worth, TX
                   3.  Residence Inn                   Ann Arbor, MI
                   4.  Residence Inn                   Charlotte, NC
                   5.  Residence Inn                   Orlando, FL
                   6.  Residence Inn                   Sacramento, CA
                   7.  Hampton Inn                     Oklahoma City, OK
                   8.  Hampton Inn                     Omaha, NE
                   9.  Hampton Inn                     Denver (Lakewood), CO
                  10.  Hampton Inn                     Hattiesburg, MS
                  11.  Comfort Inn                     Marietta, GA
                  12.  Comfort Inn                     Fort Mill, SC
                  13.  Holiday Inn                     Crystal Lake, IL
                  14.  Holiday Inn Express             Austin, TX
                  15.  Doubletree Hotel                San Diego (Del Mar), CA, Individual
                                                             Termination Payment is
                                                             $1,567,000
</TABLE>

III.     Third Consolidated Lease Amendment dated November 21, 1996 between
         RFSOP, as lessor, and RFS, as lessee (the "Third Consolidated Lease
         Amendment") with respect to the following Hotels. The Individual
         Termination Payments for the following Hotels which are subject to the
         Third Consolidated Lease Amendment are set forth in I. above.

<TABLE>
<S>                                                     <C>
         1.   Holiday Inn                               Louisville, KY
         2.   Holiday Inn                               Clayton, MO
         3.   Holiday Inn                               Columbia, SC
         4.   Holiday Inn                               Lafayette, LA
         5.   Residence Inn (B)                         Kansas City, MO
         6.   Hampton Inn                               Ft. Lauderdale, FL
         7.   Holiday Inn Express                       Arlington Heights, IL
         8.   Holiday Inn Express                       Bloomington, MN
         9.   Hampton Inn (B)                           Bloomington, MN
         10.  Hampton Inn                               Denver (Lakewood), CO
         11.  Holiday Inn Express                       Downers Grove, IL
         12.  Comfort Inn (A)                           Farmington Hills, MI
         13.  Hampton Inn (A)                           Indianapolis, IN
         14.  Hampton Inn                               Lincoln, NE
         15.  Hampton Inn                               Minnetonka, MN
         16.  Hampton Inn                               Tulsa, OK
</TABLE>

                                     1(a)-3
<PAGE>   41

<TABLE>
<S>                                                     <C>
         17.  Hampton Inn                               Warren, MI
         18.  Holiday Inn Express (B)                   Wauwatosa, WI
         19.  Residence Inn                             Tyler, TX
         20.  Residence Inn                             Fishkill, NY
         21.  Hampton Inn (A)                           Memphis, TN
         22.  Residence Inn                             Torrance, CA
         23.  Residence Inn                             Wilmington, DE
         24.  Holiday Inn                               Flint, MI
         25.  Hawthorne Suites Hotel                    Atlanta (Marietta), GA
         26.  Hampton Inn                               Laredo, TX
         27.  Residence Inn                             Atlanta, GA
</TABLE>

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

(A)      Hotel transferred to RFS SPE 1 and Third Consolidated Lease Amendment
         modified as to this Hotel by Amendment to Third Consolidated Lease
         Amendment and Lease Agreements dated as of December 18, 1998 by and
         between RFSOP and RFS.

(B)      Hotel transferred to RFS SPE 2 and Third Consolidated Lease Amendment
         modified as to this Hotel by Amendment to Third Consolidated Lease
         Amendment and Lease Agreements dated as of December 18, 1998 by and
         between RFSOP and RFS.

IV.      Lease Agreements between RFSOP, as lessor, and RFS, as lessee, with
         respect to the following Hotels:

<TABLE>
<CAPTION>
              Date of
               Lease                                                        Termination
             Agreement       Hotel                      Location               Payment
             ---------       -----                      --------               -------
<S>                       <C>                          <C>                  <C>
             11/22/96     Hampton Inn                  Houston, TX            $ 378,000
             12/22/96     Courtyard by Marriott        Flint, MI              1,016,000
             05/11/97     Hampton Inn                  Chandler, AZ                 -0-
             06/17/97     Hampton Inn                  Sedona, AZ                   -0-
             01/01/97     Sheraton Hotel (A)           Milpitas, CA           4,579,000
             01/01/97     Sheraton Four Points (A)     Sunnyvale, CA          3,992,000
             01/01/97     Sheraton Four Points (A)     Pleasanton, CA         3,140,000
             01/01/97     Sheraton Four Points (A)     Bakersfield, CA        1,658,000
</TABLE>

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

(A)      Hotel transferred to either RFS SPE 1 or RFS SPE 2 and Third
         Consolidated Lease Amendment modified as to this Hotel by Amendment to
         Third Consolidated Lease Amendment and Lease Agreements dated as of
         December 18, 1998 by and between RFSOP and RFS.

                                     1(a)-4
<PAGE>   42

V.       Lease Agreement dated June 23, 1997 between RFSOP, as lessor, and DTR,
         as lessee with respect to the Beverly Heritage hotel, Milpitas,
         California. Individual Termination payment is $0.00.

VI.      Lease Agreement dated July 15, 1996 between Plano and RFS, with respect
         to the Hampton Inn, Plano, Texas. Individual Termination Payment is
         $121,000.

VII.     Lease Agreement dated as of May 30, 1996, between RFSOP, as lessor, and
         DTR, as lessee, with respect to the Doubletree Hotel, San Diego, CA.
         This Lease Agreement was amended and restated pursuant to the Second
         Consolidated Lease Amendment described in II. above. The Termination
         Payment is set forth in II.
         above.

VIII.    Lease Agreement dated as of April 1, 1997 between RFSOP, as lessor, and
         RFS, as lessee, with respect to the Homewood Suites Hotel, Plano,
         Texas. The parties agree that this Lease Agreement was terminated
         effective as of September 30, 1997 and that no Termination Payment was
         or is owed in connection with such termination, as a result of the
         letter agreement dated August 14, 1997 between RFSOP and RFS.

IX.      Lease Agreement dated as of November 8, 1996 between RFSOP, as lessor,
         and RFS, as lessee, with respect to the Homewood Suites, Salt Lake
         City, Utah. The parties agree that this Lease Agreement was terminated
         effective as of September 30, 1997 and that no Termination Payment was
         or is owed in connection with such termination, as a result of the
         letter agreement dated August 14, 1997 between RFSOP and RFS.

                                     1(a)-5
<PAGE>   43

                                  EXHIBIT 1(B)

                           OWNER MANAGEMENT AGREEMENTS

Management Agreement dated April 1, 1998 between RFSOP (Owner) and RFS (Homewood
      Suites, Chandler, AZ). Individual Termination Payment is $7,500.00.

Management Agreement dated __________ between RFSOP (Owner) and RFS (TownePlace
      Suites, Fort Worth, TX). Individual Termination Payment is $7,500.00.

Management Agreement dated April 19, 1999 between Ridge Lake (Owner) and RFS
      (Sheraton, Birmingham, AL). Individual Termination Payment is $100,000.00.

                                     1(b)-1
<PAGE>   44

                                  EXHIBIT 1(C)

                              ANCILLARY AGREEMENTS

Master Agreement dated as of February 1, 1996 among Doubletree, Seedling
         Merger Subsidiary, Inc., RFS, the REIT and RFSOP.

First Amendment to Master Agreement dated as of February 1, 1996 among
         Doubletree, Seedling Merger Subsidiary, Inc., RFS, the REIT and RFSOP.

First Amendment to Master Agreement dated as of November 21, 1996 among
         Doubletree, RFS, the REIT, RFSOP, RFSL, RFSFP and DTR.

Agreement and Plan of Merger dated as of February 1, 1996 among Doubletree, RFS,
         Seedling Merger Subsidiary, Inc. and the Target Principal Shareholders
         (as defined therein).

First Amendment to Agreement and Plan of Merger dated as of February 27,
         1996, among Doubletree, RFS, Seedling Merger Subsidiary, Inc., Robert
         M. Solmson, H. Lance Forsdick, J. William Lovelace, and Michael J.
         Pascal.

Preferred Stock Purchase Agreement dated as of February 1, 1996 among
         Doubletree, Seedling Merger Subsidiary and the REIT.

Shared Services Agreement dated as of February 27, 1996 between RFSOP and RFS.

Letter agreement dated as of August 14, 1997 between RFSOP and RFS with
         respect to the substitution of certain hotel leases

Letter agreement dated October 17, 1997 among RFSOP, RFSFP, Plano, RFS, RFSL and
         DTR.

All other agreements executed by some or all of the Lessee Parties on the
         one hand and some or all of the REIT Parties on the other hand in
         connection with the Lease Agreements or any of the foregoing Ancillary
         Agreements; provided, however, that in no event shall the RFSOP
         Partnership Agreement be considered an Ancillary Agreement.

                                     1(c)-1
<PAGE>   45

                                  EXHIBIT 1(D)

                        THIRD PARTY MANAGEMENT AGREEMENTS

Management Agreement dated as of August 3, 1994 between RFS Management Co., Inc.
         and FRIMCO Associates, Inc. d/b/a Alpha Inn Management (Residence Inn
         (Fishkill, NY))

Management and Operating Agreement dated as of June 28, 1988 between TMH Hotels,
         Inc. and Metcap Income Properties II, L.P., as affected by the
         Assignment and Assumption Agreement With Modification dated as of
         November 3, 1994 by and between Metcap Income Properties II, L.P., as
         "Assignor", RFSOP, as "Assignee", RFS Management Co., Inc., as
         "Reassignee" and TMH Hotels, Inc., as "Operator". (Residence Inn
         (Charlotte, NC))

Management Agreement dated August 3, 1994 between RFS Management Co., Inc. and
         FRIMCO Associates d/b/a Alpha Inn Management (Residence Inn
         (Providence, RI))

Management Agreement dated October 14, 1994 between RFS Management Co., Inc. and
         FRIMCO Associates, Inc. d/b/a Alpha Inn Management (Residence Inn
         (Wilmington, DE))

                                     1(d)-1
<PAGE>   46

                                  EXHIBIT 1(E)

                          FORM OF STANDSTILL AGREEMENT

                  THIS STANDSTILL AGREEMENT (this "Agreement") is entered into
as of this ___ day of January, 2000, by and among MARRIOTT INTERNATIONAL, INC.,
a Delaware corporation (the "Franchisor"), RFS, INC., a Tennessee corporation
("RFS"), RFS LEASING, INC, a Tennessee corporation ("RFS Leasing"; together with
RFS, the "Franchisees"), and Hilton Hotels Corporation, a Delaware corporation
("Hilton").

                                    RECITALS

                  A. RFS Partnership, L.P., a Tennessee corporation ("RFSOP") is
the owner or ground lessee of the six hotel properties described on Exhibit A
attached hereto (each an "RFSOP Hotel"). Each RFSOP Hotel is subject to a lease
to RFS and related documents described on Exhibit A attached hereto (the "RFSOP
Hotel Lease Documents"). Each RFSOP Hotel is further subject to the franchise
and related agreements described on Exhibit A attached hereto (the "RFSOP Hotel
Franchise Documents").

                  B. RFS Financing Partnership, L.P., a Tennessee corporation
("RFSFP") is the owner of the six hotel properties described on Exhibit B
attached hereto (each an "RFSFP Hotel"). Each RFSFP Hotel is subject to a lease
to RFS Leasing and related documents described on Exhibit B attached hereto (the
"RFSFP Hotel Lease Documents"). Each RFSFP Hotel is further subject to the
franchise and related agreements described on Exhibit B attached hereto (the
"RFSFP Hotel Franchise Documents").

                  C. RFS SPE 2 1998 LLC, a Virginia limited liability company
("RFS SPE"; together with RFSOP and RFSFP, the "Owners"), is the owner of the
single hotel property described on Exhibit C attached hereto (the "RFS SPE
Hotel"). The RFS SPE Hotel is subject to a lease to RFS and related documents
described on Exhibit C attached hereto (the "RFS SPE Lease Documents"). The RFS
SPE Hotel is further subject to the franchise and related agreements described
on Exhibit C attached hereto (the "RFS SPE Hotel Franchise Documents").

                  D. The RFSOP Hotels, the RFSFP Hotels and the RFS SPE Hotel
are collectively referred to herein as the "Hotels". The franchise agreements
and commitment agreements for change of ownership described on Exhibits A, B and
C attached hereto are collectively referred to herein as the "Franchise
Agreements". The RFSOP Franchise Documents, the RFSFP Franchise Documents and
the RFS SPE Franchise Documents are collectively referred to herein as the
"Franchise Documents". The lease documents described on Exhibits A, B and C
attached hereto are collectively referred to herein as the "Lease Agreements".

                                     1(e)-1
<PAGE>   47

                  E. Franchisor has asserted that certain events involving
affiliates of the Franchisees have resulted or will result in a change in
ownership of the Franchisees which is not permitted under the Franchise
Agreements without the consent of Franchisor. These events are (i) the 1997
merger of Promus Hotel Corporation and Doubletree Corporation (the "Doubletree
Merger") and (ii) the 1999 merger of Promus Hotel Corporation and Hilton Hotels
Corporation (the "Hilton Merger"; and together with the Doubletree Merger, the
"Change of Control Events"). Hilton and the Franchisees acknowledge that the
Hilton Merger was a change in ownership of the Franchisees which was not
permitted under the Franchise Agreements without the prior written consent of
Franchisor.

                  F. Franchisor has agreed, however, to suspend the exercise of
any of its rights under the Franchise Documents arising from either Change of
Control Event for a period of time subject to the satisfaction of the conditions
set forth in this Agreement.

                                    AGREEMENT

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:

                  1. Standstill Agreement. Subject to the terms and conditions
set forth herein, Franchisor hereby agrees to suspend the exercise of any of its
rights under the Franchise Documents applicable to each Hotel which may arise
from any Change of Control Event until after April 15, 2001 (the "Termination
Date"). Notwithstanding the foregoing, Franchisor is not suspending the exercise
of any other rights it has, or may have, under the Franchise Documents.

                  2. Divestiture. On or before the Termination Date, Hilton
shall have (i) divested itself of all interests in each Hotel (whether held
directly or indirectly) and (ii) caused an entity that (a) is not a person or
entity that would be a "Competitor" (as defined under Franchisor's current form
of franchise agreement), (b) complies with Franchisor's franchise application
process, including providing Franchisor with all organizational, ownership and
property related documents, and all information which Franchisor may reasonably
request in order to make its evaluation, (c) in Franchisor's reasonable judgment
is experienced in managerial skills or operational capacity or capability so as
to be able to adhere fully to the obligations and requirements of the Transferee
Franchise Agreement described below, and (d) in Franchisor's reasonable judgment
is financially capable of fully satisfying the requirements of the Transferee
Franchise Agreement described below (any such entity satisfying the conditions
set forth in the foregoing clauses (a) through (d) being hereinafter referred to
as a "Permitted Transferee"), to (x) enter into a new franchise agreement on
Franchisor's then-current form but on the same economic terms as the applicable
New Amendment described in Section 3(i) below except as otherwise provided in
Section 7 below (a "Transferee Franchise Agreement"), and (y) together with the
applicable Owner, enter into a new owner agreement on the same terms as the
existing owner agreement, as amended in accordance with Section 3(i) below;
provided, however, that the foregoing clause (y) shall have no application if
the applicable Owner is the franchisee under the Transferee Franchise Agreement.
The method by which the divestiture of

                                     1(e)-2
<PAGE>   48

interests required by subsection (i) above with respect to any Hotel may be
accomplished shall include, without limitation, the transfer of the stock of the
applicable Franchisee and the termination of the applicable Lease Agreements.

                  3. Conditions for Standstill Agreement. Franchisor's agreement
set forth in Section 1 above with respect to any Hotel is expressly conditioned
upon satisfaction of the following conditions:

                     (i) Franchise Agreement Amendments; Owner Acknowledgements.
         Within thirty (30) days after the date of this Agreement (or such
         longer period (not to exceed ninety (90) days) as shall be necessary so
         long as the applicable Franchisee is proceeding with reasonable
         diligence to satisfy the requirements of this Section 3(i)), (a) the
         applicable Franchisee for such Hotel shall have executed and delivered
         to Franchisor an amended and restated franchise agreement on the
         applicable form attached hereto as Exhibit D (Residence Inn form) and
         Exhibit E (Courtyard by Marriott form), reflecting a five percent (5%)
         franchise/royalty fee (effective as of the date of the amended and
         restated franchise agreement, but subject to increase after the
         Termination Date as provided in Section 5 below), the applicable term
         set forth on Exhibit F attached hereto, the termination right described
         in subsection (ii) below and the agreements with respect to New PIPs
         and operational issues described in Sections 6, 7 and 8 below (a "New
         Amendment"), and (b) the applicable Owner of such Hotel shall have
         consented to such New Amendment and executed appropriate amendments to
         the existing owner agreement indicating that the ownership of such
         Hotel will be subject to the terms of such New Amendment; provided,
         however, that if the New Amendments for all Hotels are not executed by
         all parties by 5:00 p.m. (EST) February 8, 2000, the franchise/royalty
         fee for all Hotels shall be revised, retroactive to January 1, 2000, to
         five percent (5%);

                     (ii) Termination by Franchisor. The applicable New
         Amendment for such Hotel shall contain a provision that if the
         provisions set forth in Section 2 are not satisfied with respect to
         such Hotel, Franchisor will have the option, but not the obligation, to
         terminate such New Amendment, and exercise all of its post-termination
         rights thereunder; and

                     (iii) Re-Licensing Fees. In conjunction with the execution
         of the applicable New Amendment for such Hotel, the applicable
         Franchisee shall have paid to Franchisor a re-licensing/transfer fee
         equal to the greater of $50,000 or $400 per room in such Hotel.

                  4. Application/Transfer Fees. Upon the divestiture of a Hotel
pursuant to Section 2 hereof on or prior to the Termination Date, neither the
applicable Franchisee nor the franchisee under the applicable Transferee
Franchise Agreement shall be required to pay application, relicensing or
transfer fees in connection with the execution of such Transferee Franchise
Agreement or any termination charge or other payment in connection with the
resulting termination of the applicable New Amendment, it being the intention of
the parties that all applicable application, relicensing or transfer fees will
have been paid pursuant to Section

                                     1(e)-3
<PAGE>   49

3(iii) above and the termination of any New Amendment in connection with the
required divestiture of a Hotel be by mutual agreement of the parties and
without damages owing.

                  5. Royalty Payments. In the event a Hotel is not divested
pursuant to Section 2 hereof on or prior to the Termination Date and Franchisor
does not exercise its option to terminate the existing Franchise Documents
applicable thereto or the New Amendment, as applicable, the continued operation
of such Hotel by the applicable Franchisee would be subject to the then-current
fee schedules as set forth in Franchisor's then-current UFOC; provided, however,
that the royalty fee will not exceed six percent (6%). Also, if the fee schedule
offered to new franchisees in the system increases after the Termination Date,
any Hotel which has not been divested pursuant to Section 2 hereof on or prior
to such Termination Date would be subject to an increase to the then-current
rate; provided, however, that the royalty fee will not exceed six percent (6%).
In the event a Hotel is divested pursuant to Section 2 hereof on or prior to the
Termination Date, the transferee would not be subject to any such royalty fee
increase and would be entitled to continue to pay, for the term of the
applicable Transferee Franchise Agreement, the fee set forth in the applicable
New Amendment.

                  6. PIPs. The New Amendment for each Hotel shall include an
obligation by the applicable Franchisee and its transferee to complete in a
timely manner any currently existing product improvement plan ("PIP") applicable
to such Hotel, including requirements imposed following Franchisor's notice to
Franchisee of certain Guest Satisfaction Survey scores, and/or "Red Zone" and
"Yellow Zone" reports. All currently existing PIPs, and "Red Zone" or "Yellow
Zone" notices and applicable cure requirements for the Hotels are described in
Exhibit G attached hereto. The New Amendments will further provide that
Franchisor may evaluate each Hotel property and develop new PIPs for each Hotel,
in accordance with Franchisor's policies concerning hotel renovations,
compliance with system standards, and compliance with other operational
requirements ("New PIPs"), which New PIPs may require major, full-scale, and/or
"Gen-1 Refresh" renovations. The New Amendments will provide that if Franchisee
completes in a timely manner all currently existing PIPs for the Hotels, and (i)
implements the required actions to cure the "Red Zone" and "Yellow Zone"
notices, (ii) maintains minimum Guest Satisfaction Survey scores acceptable to
Franchisor at the other Hotels, and (iii) complies with system standards as set
forth by Franchisor for all Hotels, Franchisor will not require commencement of
work in response to the New PIPs prior to the earlier of (a) Termination Date or
(b) the date of divestiture, and, thereafter, the then-current franchisee must
comply with and complete the New PIPs in accordance with the terms and timing of
such New PIPs.

                  7. Restrictions on Competitive Activities and Information. The
New Amendment for each Hotel will include the following protections for the
benefit of Franchisor: (i) the protections set forth in Sections 9 and 10 of
that certain Amendment to the Marriott Franchise Agreements dated February 15,
1996 between Franchisor and RFS (the "1996 Amendment"); (ii) a restriction on
the ability of the applicable Franchisee to participate in the franchise
advisory council of any of the Franchisor's brands; (iii) restrictions on access
to confidential or sensitive information which may result in prohibiting
Franchisees from participating in programs, meetings, shared services
arrangements and/or voluntary programs, including, by way of example only,
cluster marketing and area reservation programs

                                     1(e)-4
<PAGE>   50

(collectively, "Programs"); (iv) limitations on Franchisees' participation in
Programs except to an extent consistent with past practices between Franchisor
and RFS since the 1996 Amendment; and (v) provisions stating that certain
competitive information such as marketing data, marketing plans, customer lists,
marketing participation information and other similar information would be
restricted, and dissemination of such information by Franchisor to such
Franchisee may be limited; provided, however, that each such New Amendment shall
also provide that the restrictions and limitations described in subclauses (iii)
and (v) shall be consistent with past practices between Franchisor and RFS since
the 1996 Amendment and shall not operate to materially impair the applicable
Franchisee's ability to discharge its obligations under the applicable Lease
Agreements. The protections described in this Section 7 shall not be included in
any Transferee Franchise Agreement executed in connection with a divestiture of
such Hotel in accordance with Section 2 above.

                  8. Management. Franchisor hereby acknowledges that the
operational policies and procedures currently in place at RFS and described on
Exhibit H attached hereto are adequate for purposes of enabling the Franchisees
to comply with their confidentiality obligations under the Franchise Agreements
and the New Amendments notwithstanding the Franchisees' affiliation with Hilton.
Until the divestiture of all of the Hotels in accordance with Section 2 hereof,
RFS will maintain and enforce such policies and procedures, and no modification
of such policies and procedures shall be made without the prior written consent
of Franchisor (such consent not to be unreasonably withheld or delayed).
Franchisor's acceptance of the management structure of RFS and each Franchisee
shall be applicable only during the period that this Agreement is in effect, and
Franchisor reserves the right to require that any franchisee under a Transferee
Franchise Agreement comply fully with the terms and conditions of the Transferee
Franchise Agreement.

                  9. Franchisor Cooperation. Franchisor agrees to enter into a
New Amendment for each Hotel with the applicable Franchisee and to enter into a
Transferee Franchise Agreement for each Hotel which is divested in accordance
with the provisions of Section 2 hereof.

                  10. New Amendments to Supercede Existing Franchise Agreements.
Each New Amendment shall supercede the terms of the Franchise Documents amended
thereby, and neither Franchisor nor the applicable Franchisee shall have any
continuing rights or obligations under such prior Franchise Documents which are
not set forth in such New Amendment or this Agreement; provided, however, that
neither such Franchisee nor the applicable Owner shall be released from any
obligations under such prior Franchise Documents which related to the period
through and including the effective date of such New Amendment.

                  11. No Estoppel or Waiver. Hilton and the Franchisees agree
that Franchisor's forbearance to date in the exercise of its rights under the
Franchise Documents shall not be construed as, or claimed to be, a waiver or
estoppel of Franchisor's rights under the Franchise Documents. Finally, except
as set forth herein, the execution of this Agreement by any party hereto shall
not be construed as a waiver by such party of any right such party may have
under the Franchise Documents.

                                     1(e)-5
<PAGE>   51

                  12. Termination. In the event that Hilton is in breach of
Section 2 of this Agreement, Franchisor shall have the right, but not the
obligation, to terminate any or all of the New Amendments and Franchise
Documents applicable to Hotels which have not been previously divested pursuant
to Section 2 hereof, such termination to be effective immediately upon Hilton's
receipt of notice of such termination from Franchisor. In the event that any
Franchisee is in breach of the provisions of any New Amendment which are
described in Sections 7 and 8 of this Agreement, and such breach continues for
more than thirty (30) days after Hilton's receipt of notice of such breach from
Franchisor, Franchisor shall have the right, but not the obligation, to
terminate any or all of the New Amendments and Franchise Documents applicable to
Hotels which have not been previously divested pursuant to Section 2 hereof. The
above-described termination rights together with any termination damages
determined in accordance with the provisions of the New Amendments and Franchise
Documents shall constitute the sole remedy of Franchisor for any breach by
Hilton of Section 2 of this Agreement and any breach by a Franchisee of the
provisions of the New Amendments described in Sections 7 and 8 of this
Agreement. The foregoing provisions of this Section 12 shall not limit or
restrict Franchisor's right to terminate the Franchise Documents for any Hotel
as amended by the applicable New Amendment, for an uncured default by the
applicable Franchisee under such Franchise Documents, and to pursue all
appropriate remedies for default under such Franchise Documents as amended.

                  13. Ownership Interests in RFSHI. The parties acknowledge that
as of the date hereof, Hilton holds an indirect ownership interest in the
capital stock of RFS Hotel Investors, Inc. ("RFSHI") and the limited partner
units of RFSOP, which ownership interests collectively constitute, as of the
date hereof, less than a five percent (5%) interest in the two entities combined
(such ownership interests together with any capital stock of RFSHI received by
Hilton in exchange for some or all of such ownership interests, the "Minority
Interests"). Notwithstanding anything to the contrary set forth herein, Hilton
shall not be in breach of the divestiture obligation set forth in Section 2
hereof solely by reason of its continuing ownership of the Minority Interests
beyond the date of divestiture, provided that Hilton does not acquire prior to
the date of divestiture any additional shares, limited partnership units or
other interests in RFSHI, RFSOP or any of their affiliates having an interest in
any of the Hotels.

                  14. Miscellaneous.

                      (a) Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original.

                      (b) Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be sent by facsimile
transmission (confirmed by any of the following methods: courier service (with
proof of delivery), hand delivery, or certified or registered mail (return
receipt requested and first class postage prepaid)) and addressed as follows:

                                     1(e)-6
<PAGE>   52

                  If to Hilton or any Franchisee:

                           c/o Hilton Hotels Corporation
                           755 Crossover Lane
                           Memphis TN  38117-4900
                           Attention:  Rick Schultz and Kevin Kern
                           Facsimile: (901) 374-5521

                  If to Franchisor:

                           Marriott International, Inc.
                           10400 Fernwood Road
                           Bethesda, MD  20817
                           Attention: Law Department #52/923
                           Facsimile: (301) 380-6727

or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date the notice
is received or receipt is rejected.

                      (c) Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

                      (d) Entire Agreement; Amendments. This Agreement
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
among the parties with respect to the matters set forth herein. No addition to
or amendment or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by each party hereto.

                      (e) Headings. Headings of the sections of this Agreement
are for the convenience of the parties only and shall be given no substantive or
interpretive effect whatsoever.

                      (f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland without regard to
its rules of conflicts of laws.

                      (g) Lease Agreements. The parties acknowledge and agree
that Franchisor has not received or reviewed any of the Lease Agreements and is
not bound by any of the terms thereof or in any way responsible for the accuracy
of the descriptions thereof set forth in this Agreement.

                                     1(e)-7
<PAGE>   53

                  IN WITNESS WHEREOF, each party has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.

                                   RFS, INC., a Tennessee corporation

                                   By:
                                       -----------------------------------------
                                   Name:
                                         ---------------------------------------
                                   Title:
                                          --------------------------------------

                                   RFS LEASING, INC., a Tennessee corporation

                                   By:
                                       -----------------------------------------
                                   Name:
                                         ---------------------------------------
                                   Title:
                                          --------------------------------------

                                   HILTON HOTELS CORPORATION, a Delaware
                                   corporation

                                   By:
                                       -----------------------------------------
                                   Name:
                                         ---------------------------------------
                                   Title:
                                          --------------------------------------

                                   MARRIOTT INTERNATIONAL, INC., a Delaware
                                   corporation

                                   By:
                                       -----------------------------------------
                                   Name:
                                         ---------------------------------------
                                   Title:
                                          --------------------------------------

                                     1(e)-8<PAGE>   1
                                                                   EXHIBIT 10(j)

                              AMENDED AND RESTATED
                             LOAN FACILITY AGREEMENT
                                  AND GUARANTY

                                  by and among

                               AARON RENTS, INC.,

                       SUNTRUST BANK, ATLANTA, as Servicer

                                       and

                      EACH OF THE PARTICIPANTS PARTY HERETO

                          Dated as of November 3, 1999
<PAGE>   2
                                Table of Contents

<TABLE>
<S>                                                                                                            <C>
1.       DEFINITIONS...........................................................................................   1
   1.1     Definitions.........................................................................................   1
   1.2     Accounting Terms and Determination..................................................................  18
   1.3     Other Definitional Terms............................................................................  18
   1.4     Exhibits and Schedules..............................................................................  18

2.       LOAN FACILITY.........................................................................................  18
   2.1     Establishment of Commitments; Terms of Loans........................................................  18
   2.2     Conveyance of Participant's Interest................................................................  21
   2.3     Funding of Advances; Swing Line; Funding of Participant's Interest in Loans.........................  22
   2.4     Commitment Fees.....................................................................................  24
   2.5     Interest on Funded Participant's Interest...........................................................  25
   2.6     Default Interest....................................................................................  26
   2.7     Voluntary Reduction of the Unutilized Commitment....................................................  26
   2.8     Extension of Commitments............................................................................  26
   2.9     Wind-Down Events....................................................................................  28
   2.10    Reserve Requirements; Change in Circumstances; Change in Lending Offices............................  28
   2.11    Pro Rata Treatment..................................................................................  30
   2.12    Payments............................................................................................  30
   2.13    Sharing of Setoffs..................................................................................  30

3.       SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION OF PAYMENTS............................................  31
   3.1     Servicer's Obligations with Respect to Loans; Collateral; Non-Recourse..............................  31
   3.2     Application of Payments.............................................................................  33
   3.3     Monthly Servicing Report and Quarterly Servicing Report.............................................  34

4.       LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND...........................................................  35
   4.1     Notice Of Loan Default..............................................................................  35
   4.2     Waiver or Cure By The Sponsor.......................................................................  35
   4.3     Defaulted Loan Guaranty Demand......................................................................  36
   4.4     No Waiver or Cure Available.........................................................................  37

5.       REPRESENTATIONS AND WARRANTIES........................................................................  37
   5.1     Organization and Qualification......................................................................  37
   5.2     Sponsor's Powers....................................................................................  37
   5.3     Enforceability of Agreement and Other Operative Documents...........................................  38
   5.4     Consent.............................................................................................  38
   5.5     Statutes, Judgments.................................................................................  38
   5.6     Financial Statements................................................................................  38
   5.7     Actions Pending.....................................................................................  39
</TABLE>

                                      (i)
<PAGE>   3
<TABLE>
<S>                                                                                                              <C>
   5.8     Outstanding Debt....................................................................................  39
   5.9     Title to Properties.................................................................................  39
   5.10    Taxes...............................................................................................  39
   5.11    Regulation U, Etc...................................................................................  40
   5.12    No Credit Event; Unmatured Credit Event or Change of Control........................................  40
   5.13    ERISA...............................................................................................  40
   5.14    Pollution and Environmental Control.................................................................  40
   5.15    Possession of Franchises, Licenses, Etc.............................................................  41
   5.16    Contingent Liabilities..............................................................................  41
   5.17    Compliance with Laws................................................................................  41
   5.18    Representations and Warranties with Respect to Specific Loans.......................................  41

6.       AFFIRMATIVE COVENANTS.................................................................................  42
   6.1     Financial Statements, Reports and Other Financial Data..............................................  42
   6.2     Inspection of Property..............................................................................  44
   6.3     Maintenance of Insurance............................................................................  44
   6.4     Funded Debt Ratio...................................................................................  44
   6.5     Leverage Ratio......................................................................................  44
   6.6     Fixed Charge Coverage...............................................................................  44
   6.7     Account Verification................................................................................  45
   6.8     ERISA...............................................................................................  45
   6.9     Payment.............................................................................................  45
   6.10    Notice of Credit Event, Unmatured Credit Event or Change of Control.................................  45
   6.11    Corporate Existence.................................................................................  45
   6.12    Compliance with Laws, Etc...........................................................................  46
   6.13    Additional Guarantors...............................................................................  46

7.       NEGATIVE COVENANTS....................................................................................  46
   7.1     Liens...............................................................................................  46
   7.2     Minimum Net Worth...................................................................................  47
   7.3     Loans, Advances, Investments and Contingent Liabilities.............................................  48
   7.4     Sale of Stock and Debt of Subsidiaries..............................................................  49
   7.5     Merger and Sale of Assets...........................................................................  49
   7.6     Additional Negative Pledges.........................................................................  49

8.       CREDIT EVENTS AND REMEDIES............................................................................  50

9.       CHANGE OF CONTROL; CASH COLLATERAL ACCOUNT............................................................  53
   9.1     Change of Control; Deposit In Cash Collateral Account...............................................  53
   9.2     Obligations with Respect to Defaulted Loans.........................................................  53
   9.3     Effect of Credit Event Following Change of Control..................................................  54
   9.4     Deposit of Maximum Qualified Franchisee Recourse Amount Following Credit
           Event...............................................................................................  54
</TABLE>

                                      (ii)
<PAGE>   4
<TABLE>
<S>                                                                                                              <C>
10.      GUARANTY..............................................................................................  55
   10.1    Unconditional Guaranty..............................................................................  55
   10.2    Limitation on Guaranty of Startup Franchisee Loans..................................................  55
   10.3    Obligations of Sponsor With Respect to Established Franchisee Loans.................................  56
   10.4    Continuing Guaranty.................................................................................  57
   10.5    Waivers.............................................................................................  57
   10.6    Additional Actions..................................................................................  58
   10.7    Additional Waivers..................................................................................  58
   10.8    Postponement of Obligations.........................................................................  59
   10.9    Effect on Additional Guaranties.....................................................................  59
   10.10   Reliance on Guaranty and Purchase Obligation; Disclaimer of Liability...............................  59
   10.11   Reinstatement of Obligations........................................................................  60
   10.12   Right to Bring Separate Action......................................................................  60
   10.13   Subordination of Liens..............................................................................  61
   10.14   Exercise of Remedies With Respect to Collateral.....................................................  61
   10.15   Rights Of Sponsor Upon Payment; Cooperation By Servicer.............................................  63

11.      INDEMNIFICATION.......................................................................................  63
   11.1    Indemnification.....................................................................................  64
   11.2    Notice Of Proceedings; Right To Defend..............................................................  65
   11.3    Third Party Beneficiaries...........................................................................  66

12.      SURVIVAL OF LOAN FACILITY.............................................................................  66

13.      CONDITIONS PRECEDENT..................................................................................  66
   13.1    Receipt of Documents................................................................................  66

14.      THE SERVICER..........................................................................................  67
   14.1    Appointment of Servicer as Agent....................................................................  68
   14.2    Nature of Duties of Servicer........................................................................  68
   14.3    Lack of Reliance on the Servicer....................................................................  68
   14.4    Certain Rights of the Servicer......................................................................  69
   14.5    Reliance by Servicer................................................................................  69
   14.6    Indemnification of Servicer.........................................................................  69
   14.7    The Servicer in its Individual Capacity.............................................................  70
   14.8    Holders of Participation Certificates...............................................................  70

15.      MISCELLANEOUS.........................................................................................  70
   15.1    Notices.............................................................................................  70
   15.2    Amendments, Etc.....................................................................................  71
   15.3    No Waiver; Remedies Cumulative......................................................................  71
   15.4    Payment of Expenses, Etc............................................................................  72
</TABLE>

                                (iii)
<PAGE>   5
<TABLE>
<S>                                                                                                              <C>
   15.5    Right of Setoff.....................................................................................  72
   15.6    Benefit of Agreement; Assignments; Participations...................................................  72
   15.7    Governing Law; Submission to Jurisdiction...........................................................  75
   15.8    Counterparts........................................................................................  75
   15.9    Severability........................................................................................  75
   15.10   Independence of Covenants...........................................................................  76
   15.11   No Joint Venture....................................................................................  76
   15.12   Repurchase Right....................................................................................  76
   15.13   Effect on Existing Facility Agreement; Execution of New Loan Documents..............................  76
   15.14   Confidentiality.....................................................................................  77
   15.15   Headings Descriptive; Entire Agreement.............................................................   78

EXHIBITS

Exhibit A - Form of Assignment and Acceptance Agreement
Exhibit B - Form of Established Franchisee Loan Agreement
Exhibit C - Form of Guaranty Agreement
Exhibit D - Form of Participation Certificate
Exhibit E - Form of Startup Franchisee Loan Agreement
Exhibit F - Form of Monthly Servicing Report
Exhibit G - Form of Quarterly Servicing Report
</TABLE>

                                      (iv)
<PAGE>   6
                              AMENDED AND RESTATED
                      LOAN FACILITY AGREEMENT AND GUARANTY

         THIS AMENDED AND RESTATED LOAN FACILITY AGREEMENT AND GUARANTY (the
"Agreement") made as of this 3rd day of November, 1999, by and among AARON
RENTS, INC., a Georgia corporation having its principal place of business and
chief executive office at 1100 Aaron Building, 309 East Paces Ferry Road, N.E.,
Atlanta, Georgia 30305 ("Sponsor"), SUNTRUST BANK, ATLANTA ("SunTrust") and each
of the other lending institutions listed on the signature pages hereto
(SunTrust, such lenders, together with any assignees thereof becoming
"Participants" pursuant to the terms of this Agreement, the "Participants") and
SUNTRUST BANK, ATLANTA, a banking corporation organized and existing under the
laws of Georgia having its principal office in Atlanta, Georgia, as Servicer and
agent for the Participants (in such capacity, the "Servicer").

                              W I T N E S S E T H:

         WHEREAS, Sponsor has established franchise relationships with certain
rental store operators (the "Franchisees") across the United States to own and
operate rental stores under the "Aaron's Rental Purchase" franchise;

         WHEREAS, in connection therewith, Sponsor has established a loan
program with the Servicer pursuant to that certain Loan Facility Agreement and
Guaranty, dated as of January 20, 1998, as amended by that certain Amendment No.
1 to Loan Facility Agreement and Guaranty, dated as of March 13, 1998, and that
certain Amendment No. 2 to Loan Facility Agreement and Guaranty, dated July 31,
1998, by and among the Sponsor, the Servicer and the Participants (the "Existing
Facility Agreement"), to provide lines of credit to the Franchisees for business
purposes arising in connection with the acquisition of such franchise rights and
the opening of rental stores and ongoing inventory financing in connection
therewith;

         WHEREAS, Sponsor, Servicer and the Participants wish to amend and
restate the Existing Facility Agreement in the manner set forth below;

         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 that the Existing Facility
Agreement is amended and restated in its entirety as follows:

                                 1. DEFINITIONS

1.1      Definitions. In addition to the other terms defined herein, the
         following terms used herein shall have the meanings herein specified
         (such meanings to be equally applicable to both the singular and plural
         forms of the terms defined):
<PAGE>   7
         "Adjusted LIBO Rate" shall mean, with respect to each Payment Period,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined pursuant to the following formula:

           "Adjusted LIBO Rate"     =         LIBOR
                                       ------------
                                       1.00 - LIBOR Reserve Percentage

As used herein, LIBOR Reserve Percentage shall mean, for any Payment Period for
any Funded Participant's Interest outstanding hereunder, the reserve percentage
(expressed as a decimal) equal to the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or against any successor category of liabilities as defined in
Regulation D).

         "Advance" shall mean a funding of an advance to a Borrower by the
Servicer pursuant to such Borrower's Loan Commitment.

         "Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person.

         "Agreement" shall mean this Amended and Restated Loan Facility
Agreement and Guaranty, as amended, restated, supplemented or modified from time
to time.

         "Amortization Period" shall mean (x) 18 months with respect to any
Advance to a Startup Franchisee Borrower other than an Electronic Equipment
Advance and (y) 24 months with respect to any Electronic Equipment Advance;
provided, however, in the event any Startup Franchisee Loan Commitment to a
Startup Franchisee Borrower is terminated upon 90 days' notice from the
Servicer, all amounts due and payable with respect to Electronic Equipment
Advances shall be due and payable in full no later than the 18-month anniversary
of the termination of the Startup Franchisee Loan Commitment.

         "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.

                                       2
<PAGE>   8
         "Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Participant and an Eligible Assignee in accordance with the
terms of this Agreement and substantially in the form of Exhibit A.

         "ATAC System" shall mean the Sponsor's proprietary software system, as
modified from time to time, used by the Sponsor and its franchisees.

         "Authorized Signatory" shall mean each officer of Sponsor specified
from time to time in an appropriate certificate to the Servicer as authorized to
execute Funding Approval Notices and other such documents relating to the Loan
Documents.

         "Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as amended
and in effect from time to time (11 U.S.C.Section 101 et seq.).

         "Borrower" shall mean either an Established Franchisee Borrower or a
Startup Franchisee Borrower, as the case may be.

         "Borrower Group" shall mean, for any Borrower, collectively, such
Borrower and each other Person directly or indirectly controlling, controlled
by, or under common control with, such Borrower, whether through the ownership
of voting securities, by contract or otherwise. For purposes of this definition,
"control" of any person or entity means the possession, directly or indirectly,
of the right to vote at least 25% of the issued and outstanding shares of voting
securities policies of that person or entity.

         "Borrower Rate" shall mean, with respect to each Loan, the Prime Rate
per annum plus any additional margin per annum specified for such Loan by
Sponsor in the applicable Funding Approval Notice, such margin not to exceed ten
percent (10.0%) per annum; provided that, at no time may there be more than two
different Borrower Rates applicable to the Startup Franchisee Loans or more than
two different Borrower Rates applicable to the Established Franchisee Loans.

         "Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which banks are required or authorized to close in Atlanta, Georgia
or New York, New York and, if the applicable Business Day relates to Adjusted
LIBOR, on which trading is not carried on by and between banks in the London
interbank market.

         "Cash Collateral Account" shall have the meaning set forth in Section
9.1.

         "Change in Control" shall mean (i) any person or group of persons
(other than the Loudermilk Family) (within the meaning of Section 13 or 14 of
the Securities Exchange Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the SEC under said
Act) of 50% or more in voting power of the outstanding Voting Stock of the
Sponsor or (ii) members of the Board of Directors of the Sponsor on the date

                                       3
<PAGE>   9
hereof, plus any additional members of such Board whose nomination for election
or election to such Board is recommended or approved by the then current members
of such Board or by Robert Charles Loudermilk, Sr., shall at any time fail to
constitute a majority of such Board.

         "Change in Control Date" shall mean a date on which a Change in Control
occurs.

         "Closing Date" shall mean, for any Loan, the date upon which the Loan
Documents with respect to such Loan are executed and delivered and the Loan
Commitment is established thereunder.

         "Collateral" shall mean, with respect to any Loan, all property of the
Borrower and all guarantors obligated with respect to such Loan that secures
such Loan, which property shall be designated by the Sponsor and may include all
accounts receivable, inventory, Rental/Purchase Contracts and other business
assets of such Borrower and guarantors.

         "Collateral Agreement" shall mean an agreement executed by a Borrower
and any other Persons primarily or secondarily liable for all or part of the
Loan or granting a security interest to the Servicer in specified Collateral as
security for such Loan, including without limitation, any Loan Agreements and
any Personal Guaranties.

         "Commitments" shall mean, collectively, the Startup Franchisee
Commitment and the Established Franchisee Commitment.

         "Commitment Fee" shall have the meaning set forth in Section 2.4.

         "Commitment Termination Date" shall have the meaning set forth in
Section 2.1(a).

         "Consolidated Companies" shall mean, collectively, Sponsor and all of
its Subsidiaries.

         "Consolidated Net Worth" shall mean, as of the date of determination,
the Sponsor's total shareholders' equity, determined on a consolidated basis in
accordance with GAAP.

         "Credit Event" shall have the meaning set forth in Article 8 of this
Agreement.

         "Credit Parties" shall mean, collectively, each of the Sponsor and the
Guarantors.

         "Default Waiver Request" shall mean a request by Sponsor that the
Servicer waive a Loan Default with respect to a Loan, such request to be
substantially in the form required in the Servicing Agreement.

         "Defaulted Borrower" shall mean a Borrower under a Defaulted Loan.

                                       4
<PAGE>   10
         "Defaulted Loan" shall mean a Loan evidenced by Loan Documents under
the terms of which exist one or more Loan Defaults which have not been cured or
waived as permitted herein.

         "Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of
the United States of America.

         "Effective Date" shall mean the date upon which all conditions
precedent to the effectiveness of this Agreement have been satisfied.

         "Electronic Equipment" shall mean all computers, computer equipment,
big screen televisions and any other types of inventory designated by the
Sponsor from time to time.

         "Electronic Equipment Advances" shall mean all advances under Startup
Franchisee Loan Commitments made to purchase Electronic Equipment for which the
Sponsor and the Startup Franchisee Borrower have agreed that the Amortization
Period shall be 24 months.

         "Electronic Equipment Asset Dispositions" shall mean all Asset
Dispositions of Electronic Equipment for which the Sponsor and the Startup
Franchisee Borrower have agreed that the Amortization Period shall be 24 months.

         "Electronic Rental Revenue" shall mean, with respect to any Borrower
for any period, the gross revenues of such Borrower from rentals to the public
of such Borrower's Electronic Equipment, 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.

         "Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof having total assets in excess
of $1,000,000,000.00 or any commercial finance or asset-based lending Affiliate
of any such commercial bank and (ii) any Participant.

         "Environmental Laws" shall mean all federal, state, local and
applicable foreign statutes and codes or regulations, rules or ordinances
issued, promulgated, or approved thereunder, now or hereafter in effect
(including, without limitation, those with respect to asbestos or asbestos
containing material or exposure to asbestos or asbestos containing material),
relating to pollution or protection of the environment and relating to public
health and safety, relating to (i) emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial toxic or hazardous
constituents, substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any petroleum
product or other waste, chemicals or substances regulated by any Environmental
Law into the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), or (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of any Hazardous Substance, petroleum

                                       5
<PAGE>   11
including crude oil or any fraction thereof, any petroleum product or other
waste, chemicals or substances regulated by any Environmental Law, and (iii)
underground storage tanks and related piping, and emissions, discharges and
releases or threatened releases therefrom, such Environmental Laws to include,
without limitation (a) the Clean Air Act (42 U.S.C. Section 7401 et seq.), (b)
the Clean Water Act (33 U.S.C. Section 1251 et seq.), (c) the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), (d) the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), (e) the Comprehensive
Environmental Response Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. Section 9601 et seq.),
and (f) all applicable national and local laws or regulations with respect to
environmental control.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time, and any regulations promulgated
thereunder.

         "ERISA Affiliate" shall mean, with respect to any Person, each trade or
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
the regulations promulgated under Section 414 of the Tax Code.

         "Established Franchisee" shall mean a Franchisee that (x) has been a
Franchisee for at least 18 months; (y) has had at least two Aaron Rents' stores
open for a minimum of 12 months; and (z) has at least four Aaron Rents' stores
open or under executed area development agreements.

         "Established Franchisee Borrower" shall mean an Established Franchisee
who is primarily liable for repayment of an Established Franchisee Loan as a
result of having executed Loan Documents as maker, or its permitted assignee.

         "Established Franchisee Borrowing Base" shall mean, with respect to
each Established Franchisee Borrower, on any date of determination, the sum of:

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

                  (ii) an amount equal to 5.5 multiplied by the sum of (x) the
         Rental Revenue from the most recently ended calendar month for all
         Aaron Rents franchisee stores operated by such 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 Aaron Rents franchisee stores operated by such Borrower where at
         least 12 calendar months have elapsed since the Opening Date of each
         such store, in each case as reported to Servicer by Sponsor pursuant to
         the Servicing Agreement, plus

                                       6
<PAGE>   12
                  (iii) an amount equal to 11.0 multiplied by the sum of (x) the
         Electronic Rental Revenues from the most recently ended calendar month
         for all franchisee stores operated by such 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 all Aaron Rents franchisee stores operated by such Borrower
         where at least 12 calendar months have elapsed since the Opening Date
         of such store, in each case as reported to Servicer by Sponsor pursuant
         to the Servicing Agreement.

         "Established Franchisee Commitment" shall have the meaning set forth in
Section 2.1(b).

         "Established Franchisee Loan" shall mean the aggregate Advances made to
an Established Franchisee Borrower under its Established Franchisee Loan
Commitment.

         "Established Franchisee Loan Agreement" shall mean a Line of Credit 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 Qualified Franchisee Loan Commitment,
substantially in the form of Exhibit B, with such changes as the Sponsor and the
Servicer shall agree to, subject to Section 3.1(b); 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.

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

         "Established Franchisee Master Note" shall mean that certain Master
Note, executed by an Established Franchisee Borrower in favor of the Servicer,
evidencing such Established Franchisee Borrower's obligation to repay all
Advances made to it pursuant to an Established Franchisee Loan Commitment,
substantially in the form of Exhibit A to the Established Franchisee Loan
Agreement, with such changes as the Sponsor and the Servicer shall agree to,
subject to Section 3.1(b); provided, however, that any Established Franchisee
Master Note executed prior to the Effective Date shall be substantially in the
form required under the Existing Facility Agreement.

         "Executive Officer" shall mean, with respect to any Person, the
President, any Vice President, Chief Financial Officer, Treasurer, Secretary and
any Person holding comparable offices or duties.

         "Existing Facility Agreement" shall have the meaning set forth in the
recitals hereof.

                                       7
<PAGE>   13
         "Existing Loan Agreement" shall mean that certain Second Amended and
Restated Revolving Credit and Term Loan Agreement dated as of January 5, 1995,
by and among Sponsor, SunTrust, individually and as agent, and the other lenders
named therein, as amended, restated, modified or supplemented from time to time.

         "Facility" shall mean either the loan facility established pursuant to
the Startup Franchisee Commitment or the loan facility established pursuant to
the Established Franchisee Commitment, as the case may be.

         "Facility Fee" shall have the meaning set forth in Section 2.4.

         "Federal Funds Rate" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of Atlanta, or, if such rate
is not so published for any day that is a Business Day, the average quotations
for the day of such transactions received by the Servicer from three federal
funds brokers of recognized standing selected by it.

         "Fee Letter" shall mean that certain letter agreement dated as of even
date herewith, by and between the Sponsor and the Servicer, setting forth
certain fees applicable to the loan facility described herein, either as
originally executed or as hereafter amended or modified.

         "Final Termination Date" shall mean the date which is ninety (90) days
after the last Maturity Date of the Loans.

         "Financial Covenant Loan Default" shall mean the failure of a Borrower
to comply with the financial covenants set forth in Section 6 of such Borrower's
Loan Agreement.

         "Financing Statement" shall mean, with respect to a Loan, a document
which among other things, describes the Borrower and the Collateral, the proper
filing of which perfects a security interest in the Collateral described therein
under the laws of the state in which such document is filed.

         "Franchise Agreement" shall mean the written agreement between Sponsor
and a Franchisee whereby the Franchisee is authorized to establish an "Aaron's
Rental Purchase" franchise.

         "Franchisee" shall have the meaning set forth in the recitals hereof.

         "Franchisee Loan Program" shall mean the transaction evidenced by (i)
this Agreement wherein the Sponsor has guaranteed, to the extent set forth
herein, certain obligations of Franchisees of the Sponsor, and (ii) the other
"Operative Documents" (as such term is defined herein) executed by the
Consolidated Companies in connection herewith and therewith.

                                       8
<PAGE>   14
         "Funded Debt" shall mean all indebtedness for money borrowed, plus
purchase money mortgages, capitalized leases, conditional sales contracts and
similar title retention debt instruments (including any current maturities of
such debt) which by its terms matures more than one year from the date of the
calculation hereof and/or which is renewable or extendable for such a period.

         "Funded Debt Ratio" shall mean, as to the Sponsor for any period, a
ratio of (i) its Funded Debt to (ii) the sum of its net income before income
taxes, plus interest expense for such period.

         "Funded Established Franchisee Participant's Interest" shall mean the
aggregate outstanding amount of Advances made by a Participant hereunder with
respect to the Established Franchisee Loans, and shall include, with respect to
SunTrust, the aggregate outstanding amount of Swing Line Advances made with
respect to Established Franchisee Loans.

         "Funded Participant's Interest" shall mean, with respect to any
Participant, the sum of such Participant's Funded Startup Franchisee
Participant's Interest plus such Participant's Funded Established Franchisee's
Participant's Interest.

         "Funded Startup Franchisee Participant's Interest" shall mean the
aggregate outstanding amount of Advances made by a Participant hereunder with
respect to the Startup Franchisee Loans, and shall include, with respect to
SunTrust, the aggregate outstanding amount of Swing Line Advances made with
respect to Startup Franchisee Loans.

         "Funding Approval Notice" shall mean a written notice to the Servicer
from Sponsor setting forth the conditions of a proposed Loan Commitment,
consistent with the requirements therefor as set forth in this Agreement, and
containing such information and in substantially such form as shall be agreed to
by Servicer and Sponsor pursuant to the Servicing Agreement.

         "GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or, if no such
statements are promulgated, then such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

         "Guaranteed Obligations" shall mean the aggregate amount of all Loan
Indebtedness of all Borrowers outstanding under all Loan Documents to include,
without limitation (i) all principal, interest and commitment fees due with
respect to all Loans, including post-petition interest in any proceeding under
federal bankruptcy laws, (ii) all fees, expenses, and amounts payable by all
Borrowers for reimbursement or indemnification under the terms of all Loan
Agreements and all other Loan Documents executed in connection with the Loan to
such

                                       9
<PAGE>   15
Borrower, (iii) all amounts advanced by Servicer to protect or preserve the
value of any security for the Loans, and (iv) all renewals, extensions,
modifications, and refinancings (in whole or in part) of any of the amounts
referred to in clauses (i) and (ii) above).

         "Guarantors" shall mean, collectively, Aaron Investment Company and all
other subsidiaries of the Sponsor that from time to time become parties to the
Guaranty Agreement and their respective successors and permitted assigns.

         "Guaranty Agreement" shall mean the Guaranty Agreement executed by each
of the Subsidiaries of the Sponsor in favor of the Servicer and the
Participants, substantially in the form of Exhibit C, as the same may be
amended, restated, supplemented or otherwise modified from time to time

         "Hazardous Substances" shall have the meaning assigned to that term in
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Acts of 1986.

         "LIBOR" shall mean, for each Payment Period, the offered rate for
deposits in U.S. Dollars, for a period of one month and in an amount comparable
to the aggregate outstanding Funded Participant's Interests as of the first day
of such Payment Period, appearing on Telerate Page 3750 as of 11:00 A.M.
(Atlanta, Georgia time) on such date. If two or more of such rates appear on
Telerate Page 3750, the rate for that Payment Period shall be the arithmetic
mean of such rates. If the foregoing rate is unavailable from Telerate Page 3750
for any reason, then such rate shall be determined by the Servicer from the
Reuters Screen LIBO Page or, if such rate is also unavailable on such service,
then on any other interest rate reporting service of recognized standing
designated in writing by the Servicer to Sponsor; in any such case rounded, if
necessary, to the next higher 1/100 of 1.0%, if the rate is not such a multiple.

         "Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, charge, hypothecation, assignment, deposit arrangement, title retention,
preferential property right, trust or other arrangement having the practical
effect of the foregoing (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any lease in the nature
thereof, including any lease or similar arrangement with a public authority
executed in connection with the issuance of industrial revenue bonds or
pollution control revenue bonds, and the filing of or agreements to give any
financing statement under the Uniform Commercial Code of any jurisdiction).

         "Loan" shall mean either a Startup Franchisee Loan or an Established
Franchisee Loan, as the case may be.

         "Loan Agreement" shall mean either a Startup Franchisee Loan Agreement
or an Established Franchisee Loan Agreement as the case may be.

                                       10
<PAGE>   16
         "Loan Commitment" shall mean the commitment to make Advances
established by the Servicer in favor of any Borrower in the amount not
exceeding, and upon the terms described in, the applicable Funding Approval
Notice and the applicable Loan Documents, which Loan Commitment may be either a
Startup Franchisee Loan Commitment or an Established Franchisee Loan Commitment.

         "Loan Default" shall mean an occurrence with respect to a Loan which is
defined by the applicable Loan Documents to be an event of default (including
but not limited to a Loan Payment Default and a Financial Covenant Loan
Default).

         "Loan Documents" shall mean, with respect to any Loan, the Loan
Agreement, the Master Note, any Personal Guaranty, any Spousal Consent, the
Collateral Agreements, in each case relating to such Loan, any other documents
relating to such Loan delivered by any Borrower or any guarantor or surety
thereof to the Servicer and any amendments thereto (provided that such
amendments are made with the consent of Sponsor, where such consent is required
under this Agreement).

         "Loan Indebtedness" shall mean all amounts due and payable by a
Borrower under the terms of the Loan Documents governing the Loan to such
Borrower, including, without limitation, outstanding principal, accrued
interest, any commitment fees, and all reasonable costs and expenses of any
legal proceeding brought by the Servicer to collect any of the foregoing
(including without limitation, reasonable attorneys' fees actually incurred).

         "Loan Payment Default" shall mean the failure of a Borrower to make a
payment of principal, accrued interest thereon or any other amounts, within the
cure period following the due date therefor, as provided under the applicable
Loan Documents.

         "Loan Term" shall mean, with respect to any Loan, the prescribed term
of the Loan Commitment relating to such Loan, as documented in the applicable
Loan Documents, and any term-out period thereafter; provided, however, that the
Loan Term shall not exceed (x) in the case of any Startup Franchisee Loan
Commitment, one (1) year subject to extension in accordance with the terms of
the applicable Startup Franchisee Loan Agreement, plus, in the event that the
Startup Franchisee Loan Commitment is terminated upon ninety (90) days' prior
notice from the Servicer, the Amortization Period and (y) in the case of an
Established Franchisee Loan Commitment, four (4) years.

         "Loudermilk Family" shall mean, collectively, Robert Charles
Loudermilk, Sr., his spouse, his children, his grandchildren and any trust which
may be now or hereafter established for the sole benefit of any of the foregoing
persons.

         "Margin Regulations" shall mean Regulation T, Regulation U and
Regulation X of the Board of Governors of the Federal Reserve System, as the
same may be in effect from time to time.

                                       11
<PAGE>   17
         "Master Note" shall mean either a Startup Franchisee Master Note or an
Established Franchisee Master Note, as the case may be.

         "Materially Adverse Effect" shall mean any materially adverse change in
(i) the business, results of operations, financial condition, assets or
prospects of the Sponsor and its Subsidiaries, taken as a whole, (ii) the
ability of the Sponsor 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 Agreement.

         "Maturity Date" shall mean, with respect to any Loan, the date set
forth under the applicable Loan Documents when the related Loan Commitment has
terminated and all principal and interest with respect to such Loan shall become
due and payable in full; provided that, each Maturity Date shall be a Payment
Date.

         "Maximum Amount" shall have the meaning set forth in Section 10.2.

         "Maximum Commitment Amount" shall mean $52,000,000, as such amount may
be reduced pursuant to Section 2.7, Section 2.8 or Section 15.2.

         "Maximum Established Franchisee Recourse Amount" shall mean the greater
of (x) $11,000,000 and (y) two (2) times the largest aggregate amount committed
or loaned to any Borrower Group under the Franchisee Loan Program, in each case
as reduced by any amounts paid by Sponsor pursuant to Section 10.3(c).

         "Merchandise" shall mean goods distributed or sold to Franchisees
through Sponsor.

         "Minimum Purchase Price" shall mean, with respect to any Established
Franchisee Loan, the lesser of (x) the outstanding Loan Indebtedness thereof and
(y) the sum of (i) the Established Franchisee Borrowing Base in effect on the
date of the occurrence of the relevant Loan Default, or if greater, during the
last full calendar month preceding the date of the occurrence of the relevant
Loan Default, plus (ii) all advances made between the date that such Established
Franchisee Borrowing Base is reported to the Servicer by the Sponsor and the
date which is two Business Days thereafter.

         "Monthly Deposit Amount" shall have the meaning set forth in Section
9.1.

         "Monthly Servicing Report" shall have the meaning set forth in Section
3.3.

         "Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.

                                       12
<PAGE>   18
         "Opening Date" shall mean, with respect to each store location, the
date determined by the Sponsor to be the opening date of such location in
accordance with its standard practice, as notified to the Servicer in accordance
with the terms hereof.

         "Operative Documents" shall mean this Agreement, the Guaranty
Agreement, the Servicing Agreement, the Fee Letter and any other documents
delivered by Sponsor or any Guarantor to the Servicer or the Participants in
connection herewith or therewith.

         "Participant" shall mean SunTrust, the other lending institutions
listed on the signature pages hereof and each assignee thereof, if any, pursuant
to the terms hereof.

         "Participating Commitment" shall mean the commitment of each
Participant to fund its Pro Rata Share of outstanding Loans in an amount not to
exceed such Participant's Participating Commitment Amount.

         "Participating Commitment Amount" shall mean the amount set forth
opposite each Participant's name on the signature pages hereof, 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.

         "Participant Funding" shall mean a funding by the Participants of their
respective Pro Rata Shares of Advances or Loans outstanding under either or both
Facilities.

         "Participant's Interest" shall have the meaning set forth in Section
2.2.

         "Participant's Unused Commitment" shall mean, with respect to any
Participant, the difference between such Participant's Participating Commitment
Amount and such Participant's Funded Participant's Interest.

         "Participation Certificate" shall mean a certificate issued by the
Servicer to a Participant, substantially in the form of Exhibit D attached
hereto, evidencing such Participant's ownership interest conveyed hereunder.

         "Payment Date" shall mean the 20th 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

                                       13
<PAGE>   19
shall be the last day of the preceding Payment Period and shall end on the last
day of the next succeeding calendar month.

         "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.

         "Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, trust or other entity, or any government or
political subdivision or agency, department or instrumentality thereof.

         "Personal Guaranty" shall mean any guaranty from a principal of a
Borrower substantially in the form required by the Servicing Agreement.

         "Plan" shall mean any "employee benefit plan" (as defined in Section
3(3)f ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits.

         "Prime Rate" shall mean the per annum rate of interest designated from
time to time by the Bank to be its prime rate. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate of interest that
is being offered by the Bank to its borrowers.

         "Pro Rata Share" shall mean, with respect to each of the Participants,
the percentage designated as such Participant's Pro Rata Share on the signature
pages hereof, as such percentage may change from time to time as a result of
assignments or amendments pursuant to this Agreement.

         "Quarterly Date" shall have the meaning set forth in Section 2.4.

         "Quarterly Servicing Report" shall have the meaning set forth in
Section 3.3(b).

         "Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.

         "Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal (including the abandonment or discarding of
barrels, containers, or other closed receptacles), discharge, dispersal,
leaching or migration into the indoor or outdoor Environment or into or out of
any property, including the movement of Hazardous Substances through or in the
air, soil, surface water, ground water or property.

         "Remedial Action" shall mean all actions reasonably necessary, whether
voluntary or involuntary, to (a) clean up, remove, treat or in any other way
adjust Hazardous Substances in

                                       14
<PAGE>   20
the indoor or outdoor Environment; (b) prevent the Release or further movement
of Hazardous Substances so that they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor Environment; or (c)
perform remedial studies, investigations, restoration and post-remedial studies,
investigations and monitoring on, about or in the Property, assets, equipment or
facilities

         "Rental/Purchase Contract" shall mean a contract between a Franchisee
and a customer to rent Merchandise in the form approved by the Sponsor (and
which may included purchase options).

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

         "Reportable Event" shall have the meaning assigned to such term in
ERISA.

         "Required Participants" shall mean (x) at any time prior to termination
of the Commitments, Participants holding at least 66 2/3% of the sum of (x) the
aggregate Funded Participant's Interests, plus (y) the Participant's Unused
Commitments, and (y) at any time on and after the termination of the
Commitments, Participants holding at least 66 2/3% of the aggregate outstanding
Funded Participant's Interests at such time.

         "Requirement of Law" for any person shall mean the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other governmental authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

         "Response Period" shall mean (i) with respect to any Loan Default,
other than a Financial Covenant Loan Default, arising under the Loan Documents
for any Startup Franchise Loan, a period of seventy (70) days commencing on the
day next succeeding the day on which the Sponsor receives a notice from the
Servicer of such Loan Default, and (ii) with respect to any Loan Default, other
than a Financial Covenant Loan Default, arising under the Loan Documents for any
Established Franchisee Loan, a period of five (5) Business Days commencing on
the day next succeeding the day on which the Sponsor receives a notice from the
Servicer of such Loan Default, provided, however, that no Response Period shall
extend beyond the Final Termination Date.

         "Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuters Monitor
Money Rates Service (or such

                                       15
<PAGE>   21
other page as may replace that page on that service for the purpose of
displaying rates comparable to LIBOR).

         "Revolving Credit Agreement" shall mean that certain Second Amended and
Restated Revolving Credit and Term Loan Agreement by and among the Sponsor,
SunTrust, as a lender and as Agent, The First National Bank of Chicago and
SouthTrust Bank dated as January 6, 1995, as amended.

         "Servicing Agreement" shall have the meaning set forth in the recitals
hereof.

         "Servicing Fee" shall mean the fee payable to the Servicer pursuant to
the terms of the Servicing Agreement.

         "Servicer" shall mean SunTrust Bank, Atlanta and its successors and
assigns.

         "Sponsor's Fee" shall have the meaning set forth in the Servicing
Agreement.

         "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 Servicer.

         "Startup Franchisee Borrower" shall mean a Franchisee who is primarily
liable for repayment of a Startup Franchisee Loan as a result of having executed
Loan Documents as maker, or its permitted assignee.

         "Startup Franchisee Commitment" shall have the meaning set forth in
Section 2.1(a).

         "Startup Franchisee Loan" shall mean the aggregate Advances made to a
Startup Franchisee Borrower under its Startup Franchisee Loan Commitment.

         "Startup Franchisee Loan Agreement" shall mean a Line of Credit and
Security Agreement setting forth the terms and conditions, as between a Startup
Franchisee Borrower and the Servicer, under which the Servicer has established a
Startup Franchisee Loan Commitment to make Advances to the Startup Franchisee
Borrower, substantially in the form of Exhibit E, with such changes as the
Sponsor and the Servicer shall agree to, subject to Section 3.1(b); provided,
however, that any Startup Franchisee Loan Agreement executed prior to the
Effective Date shall be substantially in the form required under the Existing
Facility Agreement.

         "Startup Franchisee Loan Commitment" shall mean a commitment to make
Startup Franchisee Loans extended to a Startup Franchisee Borrower pursuant to a
Startup Franchisee Loan Agreement.

                                       16
<PAGE>   22
         "Startup Franchisee Master Note" shall mean that certain Master Note,
executed by a Startup Franchisee Borrower in favor of the Servicer, evidencing
such Startup Franchisee Borrower's obligation to repay all Advances made to it
pursuant to a Startup Franchisee Loan Commitment, substantially in the form of
Exhibit A to the Startup Franchisee Loan Agreement, with such changes as the
Sponsor and the Servicer shall agree to, subject to Section 3.1(b); provided,
however, that any Startup Franchisee Master Note executed prior to the Effective
Date shall be substantially in the form required under the Existing Facility
Agreement.

         "Store Opening Information Sheet" shall have the meaning assigned to
such term in the Servicing Agreement.

         "Subordinated Debt" shall have the meaning set forth in Section 10.8.

         "Subsidiary" shall mean, with respect to any Person, any corporation or
other entity (including, without limitation, partnerships, joint ventures, and
associations) regardless of its jurisdiction of organization or formation, at
least a majority of the total combined voting power of all classes of voting
stock or other ownership interests of which shall, at the time as of which any
determination is being made, be owned by such Person, either directly or
indirectly through one or more other Subsidiaries.

         "Swing Line Advances" shall have the meaning set forth in Section 2.3.

         "Synthetic Lease Documents" shall mean, collectively, the Master
Agreement, dated as of September 30, 1996, among the Sponsor, SunTrust Banks,
Inc., as lessor (the "Lessor"), SunTrust Bank, Atlanta and SouthTrust Bank of
Georgia, N.A., as lenders, and SunTrust Bank, Atlanta, as agent, the Lease
Agreement, dated as of September 30, 1996, between the Lessor and the Sponsor
and any supplements thereto, the Construction Agency Agreement, dated as of
September 30, 1996, among the Lessor and the Sponsor, the Guaranty, dated as of
September 30, 1996, executed by the Sponsor in favor of the Funding Parties (as
defined therein), and any and all Security Agreements and Assignments
(Construction Contract, Architect's Agreement, Permits, Licenses and
Governmental Approvals, and Plans and Specifications and Drawings) executed from
time to time by the Sponsor in favor of the Lessor, and any modifications of or
replacements for any or all of the foregoing.

         "Tax Code" shall mean the Internal Revenue Code of 1986, as amended and
in effect from time to time.

         "Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing

                                       17
<PAGE>   23
authority thereof or therein and all interest, penalties, additions to tax and
similar liabilities with respect thereto.

         "Telerate" shall mean, when used in connection with any designated page
and LIBOR, the display page so designated on the Dow Jones Telerate Service (or
such other page as may replace that page on that service for the purpose of
displaying rates comparable to LIBOR).

         "Unmatured Credit Event" shall mean any condition or event which, with
notice or the passage of time or both, would constitute a Credit Event.

         "Voting Stock" shall mean securities of any class or classes, the
holders of which are entitled to elect all of the corporate directors (or
Persons performing similar functions).

         "Wind-Down Event" shall mean either (i) the event that the Commitments
are not extended for any reason and the Commitment Termination Date occurs or
(ii) the event that the Maximum Established Franchisee Recourse Amount is, at
any date of determination, less than $10,000,000.

1.2      Accounting Terms and Determination.

         Unless otherwise defined or specified herein, all accounting terms
         shall be construed herein, all accounting determinations hereunder
         shall be made, all financial statements required to be delivered
         hereunder shall be prepared, and all financial records shall be
         maintained in accordance with, GAAP.

1.3      Other Definitional Terms.

         The words "hereof", "herein" and "hereunder" and words of similar
         import when used in this Agreement shall refer to this Agreement as a
         whole and not to any particular provision of this Agreement, and
         Article, Section, Schedule, Exhibit and like references are to this
         Agreement unless otherwise specified.

1.4      Exhibits and Schedules.

         All Exhibits and Schedules attached hereto are by reference made a part
         hereof.

                                2. LOAN FACILITY

2.1      Establishment of Commitments; Terms of Loans.

                  (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

                                       18
<PAGE>   24
         upon the guaranty and other obligations of the Sponsor set forth
         herein, the Servicer hereby establishes a commitment to the Sponsor to
         establish Startup Franchisee Loan Commitments and to make Advances
         thereunder to such Startup Franchisees as may be designated by the
         Sponsor in its Funding Approval Notices during a period commencing on
         the date hereof and ending on November 1, 2000 (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 FIFTY-TWO MILLION AND
         NO/100 DOLLARS ($52,000,000) (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 THIRTY-SEVEN MILLION
         AND NO/100 DOLLARS ($37,000,000) (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.

                  (c) Authorization of Loan Commitments Pursuant to Startup
         Franchisee Commitment; Loan Terms. Within the limits of the Startup
         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 a Startup Franchisee Loan
         Commitment pursuant to the Startup Franchisee Commitment in favor of a
         Franchisee who meets the credit criteria established by the Sponsor.
         The amount of each Startup Franchisee Loan Commitment shall be
         determined by the Sponsor but shall not be less than $100,000 for any
         Franchisee. Pursuant to the Startup Franchisee Loan Commitment, the
         Servicer shall agree to make Advances to the Startup Franchisee
         Borrower thereunder. Each Startup Franchisee 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 Startup Franchisee Loan when all principal
         and interest shall be due and payable in full. Each Startup Franchisee
         Loan may be prepaid in full or in part on any Business Day, without
         premium

                                       19
<PAGE>   25
         or penalty. The Loan Term of each Startup Franchisee Loan Commitment
         shall be, initially, one year, but shall automatically renew unless
         terminated by ninety (90) days' prior written notice by Servicer to the
         Startup Franchisee Borrower prior to the first anniversary date and may
         thereafter be terminated at any time by Servicer upon ninety (90) days'
         prior written notice by Servicer to the Startup Franchisee Borrower;
         provided that the amounts outstanding thereunder shall be allowed to
         term out over the Amortization Period as provided below. The proceeds
         of each Advance made pursuant to the Startup Franchisee Loan
         Commitments shall be used solely to purchase inventory, and to the
         extent permitted by Sponsor, to pay state sales and use taxes and
         freight charges. At the end of each month, the aggregate Advances
         (other than Electronic Equipment Advances) made to each Startup
         Franchisee Borrower during such month (net of any prepayments during
         such month other than Electronic Equipment Asset Disposition proceeds
         to the extent applied to offset Electronic Equipment Advances as
         provided below) shall be amortized (in accordance with a straight-line
         amortization schedule) over the Amortization Period. At the end of the
         month, the aggregate Electronic Equipment Advances made to each Startup
         Franchisee Borrower during such month (net of proceeds of Electronic
         Equipment Asset Dispositions received during such month) shall be
         amortized (in accordance with a straight-line amortization schedule)
         over the Amortization Period. In the event that the Startup Franchisee
         Loan Commitment of any Startup Franchisee Borrower is terminated by the
         Servicer as provided above, such Startup Franchisee Borrower shall,
         notwithstanding the other provisions of this Section 2.1(c), amortize
         all outstanding Advances over the Amortization Period (in accordance
         with a straight-line amortization schedule), with all Electronic
         Equipment Advances due and payable in full no later than 18 months
         after termination. In the event that the Startup Franchisee Borrower
         terminates the Startup Franchisee Loan Commitment, all amounts advanced
         to such Startup Franchisee Borrower shall be due and payable in full on
         the termination date, together with all accrued and unpaid interest
         thereon. With respect to each Startup Franchisee Loan Agreement
         executed after January 20, 1998, each Startup Franchisee Borrower shall
         agree to pay a commitment fee on its unused Startup Franchisee Loan
         Commitment in an amount to be determined by the Sponsor, such
         commitment fee to be paid quarterly, in arrears.

                  (d) Authorization of Loan Commitments Pursuant to Established
         Franchisee Commitment; Loan Terms. 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 Loan
         Commitment pursuant to the Established Franchisee Commitment in favor
         of an Established Franchisee who meets the credit criteria established
         by the Sponsor. The amount of each Established Franchisee Loan
         Commitment shall be determined by the Sponsor, but shall not be less
         than $100,000. Pursuant to the Established Franchisee Loan Commitment,
         the Servicer shall agree to make Advances to the Established Franchisee
         Borrower thereunder. Each Established Franchisee Loan shall bear
         interest at the Borrower Rate designated by Sponsor in the applicable
         Funding

                                       20
<PAGE>   26
         Approval Notice, and interest shall be payable on each Payment Date and
         on the Maturity Date of such Established Franchisee Loan when all
         principal and interest shall be due and payable in full. Each
         Established Franchisee Loan may be prepaid in full or in part on any
         Business Day, without premium or penalty. The Loan Term of each
         Established Franchisee Loan shall not exceed four years. The proceeds
         of each Advance made pursuant to the Established Franchisee Loan
         Commitments shall be used for general corporate purposes. Each
         Established Franchisee Borrower shall agree to pay a commitment fee on
         the unused Established Franchisee Loan Commitment in an amount to be
         determined by the Sponsor but in any event not to exceed 0.5% 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.

(e)      Conditions to Obligation of Servicer to Establish Loan Commitments.
         Servicer's obligation to establish each Loan Commitment under the
         Operative Documents is subject to the fulfillment of the following
         conditions as of the Closing Date of such Loan:

                           (ii) this Agreement and each of the other Operative
         Documents shall be in full force and effect;

                           (iii) the representations and warranties of the
         Sponsor contained in Article 5 shall be true and correct in all
         material respects with the same effect as though such representations
         and warranties had been made on the Closing Date of such Loan;

                           (iv) the Servicer shall have received from the
         Sponsor a Funding Approval Notice authorizing such Loan Commitment and
         a Store Opening Information Sheet;

                           (v) all precedents and conditions to the Loan
         Commitment specified in the Servicing Agreement, together with such
         additional precedents and conditions as may, at Sponsor's election, be
         included in the applicable Funding Approval Notice, shall have been
         completed to the Servicer's reasonable satisfaction; and

                           (vi) no Credit Event, Unmatured Credit Event, Change
         of Control or Wind-Down Event shall have occurred and be continuing.

2.2      Conveyance of Participant's Interest.

                  (a) The Servicer hereby sells, assigns, transfers and conveys
         to the Participants, without recourse or warranty, and each Participant
         hereby purchases from

                                       21
<PAGE>   27
         the Servicer, an undivided percentage ownership interest (which
         percentage shall be equal to each Participant's Pro Rata Share) in (i)
         the Commitments, (ii) the Loan Commitments, (iii) the Loans, (iv) the
         Collateral, (v) all rights against any guarantor of any Loan, including
         the Sponsor, (vi) the Loan Documents, (vii) all rights pursuant to the
         Guaranty Agreement and (viii) all right, title and interest to any
         payment or right to receive payment with respect to the foregoing
         (collectively, the "Participant's Interest"). Notwithstanding the
         foregoing, each Participant's right to receive payments of interest,
         commitments fees or other fees with respect to the Commitment, the Loan
         Commitments and the Loans shall not exceed the amounts which such
         Participant is entitled to receive pursuant to the terms of this
         Agreement.

(b)      In consideration of the entry by each Participant into this Agreement
         and the obligation of each Participant hereunder, the Servicer shall
         issue to each Participant on the Closing Date, a Participation
         Certificate. Each Participation Certificate shall be in an amount equal
         to the relevant Participant's Participating Commitment Amount, and the
         Funded Participant's Interest outstanding thereunder shall bear
         interest as hereinafter set forth and shall be payable as hereinafter
         set forth.

(c)      In accordance with the terms and conditions hereof, and in
         consideration of the sale of the Participant's Interest to such
         Participant, each Participant severally agrees from time to time,
         during the period commencing on the Effective Date and ending on the
         Final Termination Date, to fund its Pro Rata Share of outstanding Loans
         made by the Servicer to the Borrowers in an aggregate amount at any one
         outstanding not to exceed such Participant's Participating Commitment
         Amount (subject to each Participant's obligations pursuant to Section
         2.3(d)).

2.3      Funding of Advances; Swing Line; Funding of Participant's Interest in
         Loans.

                  (a) Funding of Advances. The Servicer shall fund Advances
         requested by the Borrowers in accordance with the terms of the
         applicable Loan Documents and the Servicing Agreement. On the date of
         any such funding, the Servicer shall elect whether or not to require
         the Participants to fund their respective Pro Rata Share of the
         Advances to be made on such date. In the event that the Servicer elects
         not to require the Participants to fund their Pro Rata Share of the
         Advances to be made on such date, the Servicer shall make such Advances
         (each, a "Swing Line Advance") to the Borrowers for the account of the
         Servicer; provided that, the aggregate amount of Swing Line Advances
         outstanding on any date shall not exceed $5,000,000 and further
         provided that the sum of (x) the aggregate outstanding Swing Line
         Advances plus (y) the aggregate outstanding Funded Participant's
         Interests (exclusive of the Swing Line Advances) shall not exceed the
         Maximum Commitment Amount. If (i) any Credit Event, Change of Control
         or Wind-Down Event shall have occurred, (ii) after giving effect to any
         requested Advance, the aggregate Swing Line Advances outstanding
         hereunder would exceed $5,000,000, or (iii) the Servicer otherwise
         determines in its sole discretion to request a Participant

                                       22
<PAGE>   28
         Funding hereunder, then the Servicer shall notify the Participants
         pursuant to subsection (b) requesting a Participant Funding.

                  (b) Notification of Participant Funding. In the event that the
         Servicer desires that the Participants fund their respective Pro Rata
         Shares of Advances or Loans made or outstanding pursuant to the Loan
         Documents, the Servicer shall deliver written or telecopy notice to the
         Participants (or telephonic notice promptly confirmed in writing or by
         telecopy) (a "Participant Funding Request") by no later than 10:00 a.m.
         (Atlanta, Georgia time) on the date which is the requested date of the
         Participant Funding which shall specify (x) the date of the Participant
         Funding, which shall be a Business Day, and (y) each Participant's Pro
         Rata Share of the Advances or Loans outstanding to be funded in
         connection with such Participant Funding.

                  (c) Each Participant shall make available its Pro Rata Share
         of the requested Participant Funding on the proposed date thereof by
         wire transfer of immediately available funds to the Servicer in
         Atlanta, Georgia by not later than 2:00 P.M. (Atlanta, Georgia time).
         Unless the Servicer shall have received notice from a Participant prior
         to the date of any Participant Funding that such Participant will not
         make available to the Servicer such Participant's Pro Rata Share of
         such Participant Funding, the Servicer may assume that the Participant
         has made such portion available to the Servicer on the date of such
         Participant Funding in accordance with this subsection (c) and the
         Servicer may, in reliance on such assumption, make available to the
         Borrowers a corresponding amount or credit the same to Swing Line
         Advances. If and to the extent that such Participant shall not have
         made such portion available to the Servicer, such Participant and the
         Sponsor shall severally agree to repay the Servicer forthwith (on
         demand in the case of the Participant and within three (3) days of such
         demand in the case of the Sponsor), without duplication, such amount
         with interest at the Federal Funds Rate plus 2% per annum and, until
         such time as such Participant has repaid to the Servicer such amount,
         such Participant shall (i) have no right to vote regarding any issue on
         which voting is required or advisable under this Agreement or the other
         Operative Documents, and (ii) shall not be entitled to receive any
         payments of interest, fees or repayment of the principal amount of such
         Advance or Loan which the Participant has failed to pay to the
         Servicer. If such Participant shall repay to the Servicer such amount,
         then such amount shall constitute part of such Participant's Funded
         Participant's Interest.

                  (d) Each Participant's obligations to fund its Pro Rata Share
         of any requested Participant Funding shall be absolute and
         unconditional and shall not be affected by any circumstance, including,
         without limitation, (i) any setoff, counterclaim, recoupment, defense,
         or other right which such Participant may have against the Servicer,
         the Sponsor, any Borrower or any other Person for any reason
         whatsoever, (ii) the occurrence of any Credit Event, Unmatured Credit
         Event, Change of Control or Wind-Down Event, (iii) the occurrence of
         any Loan Default, (iv) any adverse change in the condition (financial
         or otherwise) of the Sponsor or any other Credit Party or any Borrower,
         (v) the acceleration

                                       23
<PAGE>   29
         or maturity of any Loan or the Sponsor's obligations hereunder or the
         termination of the Commitments, Loan Commitments or the Participating
         Commitments after the making of any Swing Line Advance, (vi) any breach
         of this Agreement by the Sponsor or any other Participant, or (vii) any
         other circumstance, happening or event whatsoever, whether or not
         similar to any of the foregoing.

                  (e) Notwithstanding the foregoing provisions of this Section
         2.3, no Participant shall be required to fund its Pro Rata Share of any
         requested Participant Funding for purposes of refunding a Swing Line
         Advance pursuant to subsection (d) above if a Loan Default with respect
         to the relevant Loan has occurred and is continuing and, prior to the
         making by the Servicer of such Swing Line Advance, the Servicer had
         received written notice from Sponsor, the relevant Borrower or any
         Participant specifying that such Loan Default had occurred and was
         continuing (and identifying the same as a Loan Default, as the case may
         be) which has not been cured or waived; provided that, in the case of a
         Loan Default arising from an Unmatured Credit Event or Credit Event
         where the Participants are not pursuing remedies, the Participants will
         be obligated to fund their respective Pro Rata Shares of Swing Line
         Advances as long as the aggregate amount of such Swing Line Advances
         does not exceed $2,000,000.

2.4      Commitment Fees.

                  (a) Each Participant will receive, from amounts paid by the
         Borrowers under the Loan Documents and the Sponsor under the Operative
         Documents, a commitment fee (the "Commitment Fee") with respect to the
         average daily amount of each Participant's Unused Commitment, for the
         period commencing on the Effective Date and ending on the Final
         Termination Date, or such earlier date as the Participating Commitments
         shall expire or terminate, equal to 0.125% per annum, such Commitment
         Fee to be payable in arrears on each third Payment Date (a "Quarterly
         Date") commencing on October 20, 1999, for the preceding Payment
         Period, calculated on the basis of a 360-day year and the actual number
         of days elapsed.

                  (b) All Commitment Fees shall be paid on the dates due, in
         immediately available funds, to the Participants by the Servicer from
         amounts received from the Borrowers and Sponsor.

                  (c) In the event that the commitment fees received by the
         Servicer from the Borrowers and the Sponsor are not sufficient on any
         Quarterly Date to pay the Commitment Fees to the Participants required
         pursuant hereto, the Sponsor shall, upon demand of the Servicer,
         immediately fund such difference to the Servicer (with such payment
         allocated to specific Loan Payment Defaults as agreed by Sponsor and
         Servicer, if applicable) and either, at the election of the Sponsor,
         (x) the Sponsor shall be reimbursed by the Servicer upon receipt of
         such amount from the Borrower, (y) the Loan Indebtedness shall be
         deemed to be reduced by such amount for purposes of a repayment

                                       24
<PAGE>   30
         or purchase of such Defaulted Loan by Sponsor in accordance with the
         terms of this Agreement or (z) if elected by Sponsor and if such amount
         is sufficient to cure any Loan Payment Default such amount shall be
         deemed to have satisfied Sponsor's obligation to cure such Loan Payment
         Default hereunder.

2.5      Interest on Funded Participant's Interest.

                  (a) Funded Startup Franchisee Participant's Interest. Subject
         to the provisions of Section 2.6, each Participant's Funded Startup
         Franchisee Participant's Interest shall bear interest (computed on the
         basis of the actual number of days elapsed over a year of 360 days) at
         rate per annum equal to the Adjusted LIBO Rate for the Payment Period
         in which such Funded Startup Franchisee Participant's Interest is
         outstanding (with the Adjusted LIBO Rate applicable to all amounts
         outstanding during any Payment Period being automatically reset on the
         first day of each Payment Period regardless of the date of any
         Participant Funding hereunder) plus an additional one and one quarter
         of one percent (1.25%) per annum.

                  (b) Funded Established Franchisee Participant's Interest.
         Subject to the provisions of Section 2.6, each Participant's Funded
         Established Franchisee Participant's Interest shall bear interest
         (computed on the basis of the actual number of days elapsed over a year
         of 360 days) at rate per annum equal to the Adjusted LIBO Rate for the
         Payment Period in which such Funded Established Franchisee
         Participant's Interest is outstanding (with the Adjusted LIBO Rate
         applicable to all amounts outstanding during any Payment Period being
         automatically reset on the first day of each Payment Period regardless
         of the date of any Participant Funding hereunder) plus an additional
         one and one half of one percent (1.50%) per annum.

                  (c) Payment of Interest. Interest on each Participant's Funded
         Participant's Interest shall be payable by the Servicer to the
         Participants on each Payment Date from interest payments received on
         the Loans under such Facility on such Payment Date for the preceding
         Payment Period and from other amounts received from the Sponsor.

                  (d) Sponsor's Obligation. In the event that the interest
         received by the Servicer from the Borrowers on any Payment Date is not
         sufficient to pay the interest to the Participants required pursuant
         hereto, the Sponsor shall, upon demand of the Servicer, immediately
         fund such difference to the Servicer (with such payment allocated to
         specific Loan Payment Defaults as agreed by Sponsor and Servicer) and
         if such shortfall results from Loan Payment Defaults rather than
         interest rate variances, either, at the election of the Sponsor, (x)
         the Sponsor shall be reimbursed by the Servicer upon receipt of such
         amount from the applicable Borrower, (y) the Loan Indebtedness of such
         Borrower shall be deemed to be reduced by such amount for purposes of a
         repayment or purchase of such Defaulted Loan by Sponsor in accordance
         with the terms of this Agreement or (z) if elected by Sponsor and if
         such amount is sufficient to cure any Loan Payment Default,

                                       25
<PAGE>   31
         such amount shall be deemed to have satisfied Sponsor's obligation to
         cure such Loan Payment Default hereunder.

                  (e) In the event that LIBOR is not determinable by the Bank or
         it becomes impossible or illegal for the Bank to determine the Funded
         Participants Interest based upon LIBOR, the parties agree that in such
         event the Funded Participants Interest shall bear interest at a rate
         per annum equal to the Prime Rate plus a mutually agreed upon spread
         based upon current market conditions.

2.6      Default Interest.

         If any amount payable to the Servicer or the Participants by the
         Sponsor under the Operative Documents is not paid on the date due
         hereunder, such amount shall bear interest (to the extent permitted by
         law) for each day from such date up to (but not including) the date of
         actual payment (after as well as before judgment) at a rate per annum
         (computed on the basis of the actual number of days elapsed over a year
         of 360 days) equal to the rate set forth in Section 2.5 for each
         Facility plus an additional one percent (1.0%) per annum.

2.7      Voluntary Reduction of the Unutilized Commitment.

         Upon at least three (3) Business Days' prior telephonic notice
         (promptly confirmed in writing) to the Servicer, Sponsor shall have the
         right, without premium or penalty, to terminate the Commitments, in
         part or in whole, provided that (i) any such termination shall apply to
         proportionately and permanently reduce each Facility, (ii) any such
         termination shall apply to proportionately and permanently reduce the
         Participating Commitments of each of the Participants, (ii) any partial
         termination pursuant to this Section 2.7 shall be in an amount of at
         least $5,000,000 and integral multiples of $1,000,000, and (iii) the
         Commitments may not be reduced if, as a result thereof, the amount of
         either Facility is less than the aggregate sum of all outstanding Loan
         Commitments pursuant to such Facility.

2.8      Extension of Commitments.

                  (a) The Sponsor may, by written notice to the Servicer (which
         shall promptly deliver a copy to each of the Participants), given not
         more than sixty (60) days prior to any anniversary of the date of this
         Agreement while the Commitments are effect, request that the
         Participants extend the then scheduled Commitment Termination Date (the
         "Existing Date") for an additional 364-day period. Each Participant
         shall, by notice to the Sponsor and the Servicer given within fifteen
         (15) Business Days after receipt of such request, advise the Sponsor
         and the Servicer whether or not such Participant consents to the
         extension request (and any Participant which does not respond during
         such 15-day period shall be deemed to have advised the Sponsor and the
         Servicer that it will not agree to such extension).

                                       26
<PAGE>   32
                  (b) In the event that, on the 15th Business Day after receipt
         of the notice delivered pursuant to subsection (a) above, all of the
         Participants shall have agreed to extend their respective Participating
         Commitments, the Commitment Termination Date shall be deemed to have
         been extended, effective as of the Existing Date, to the date which is
         364 days thereafter.

                  (c) In the event that, on the 15th Business Day after receipt
         of the notice delivered pursuant to subsection (a) above, all of the
         Participants shall not have agreed to extend their respective
         Participating Commitments, the Sponsor and the Servicer shall notify
         the consenting Participants ("Consenting Participants") of the
         aggregate Participating Commitment Amounts of the non-extending
         Participants ("Non-Consenting Participants") and such Consenting
         Participants shall, by notice to the Sponsor and the Servicer given
         within ten (10) Business Days after receipt of such notice, advise the
         Servicer and Sponsor whether or not such Participant wishes to purchase
         all or a portion of the Participating Commitments of the Non-Consenting
         Participants (and any Participant which does not respond during such
         10-Business Day period shall be deemed to have rejected such offer). In
         the event that more than one Consenting Participant agrees to purchase
         all or a portion of such Participating Commitments, the Sponsor and the
         Servicer shall allocate such Participating Commitments among such
         Consenting Participants so as to preserve, to the extent possible, the
         relative pro rata shares of the Consenting Participants of the
         Participating Commitments prior to such extension request. If
         Consenting Participants do not elect to assume all of the Participating
         Commitments of the Non-Consenting Participants, the Sponsor shall have
         the right, subject to the terms and conditions of Section 15.6, to
         arrange for one or more banks (any such bank being called a "New
         Participant") to purchase the Participating Commitment of any
         Non-Consenting Participant. Each Non-Consenting Participant shall
         assign its Participating Commitment and its Participant's Interest
         outstanding hereunder to the Consenting Participant or New Participant
         purchasing such Participating Commitment in accordance with Section
         15.6, in return for payment in full of all principal, interest and
         other amounts owing to such Non-Consenting Participant hereunder, on or
         before the Existing Date and, as of the effective date of such
         assignment, shall no longer be a party hereto, provided that each New
         Participant shall be subject to the approval of the Servicer (which
         approval shall not be unreasonably withheld). If (and only if)
         Participants (including New Participants) holding Participating
         Commitments representing at least an amount equal to the greater of (x)
         the sum of all outstanding Loan Commitments under both Facilities and
         (y) 85% of the aggregate Participating Commitments on the date of such
         extension request shall have agreed to such extension by the Existing
         Date (the "Continuing Participants"), then (i) the Commitment
         Termination Date shall be extended for an additional 364-day period and
         (ii) the Participating Commitment of any Non-Consenting Participant
         which has not been assigned to a Consenting Participant or a New
         Participant shall terminate (with the result that the amount of the
         Commitments shall be decreased proportionately by the amount of such
         Participating Commitment), and all

                                       27
<PAGE>   33
         amounts owing to such Non-Consenting Participant shall become due and
         payable, together with all interest accrued thereon and all other
         amounts owed to such Non-Consenting Participant hereunder, on the
         Existing Date applicable to such Participant without giving effect to
         any extension of the Commitment Termination Date.

2.9      Wind-Down Events.

                  (a) In the event that the Commitments are not extended for any
         reason and the Commitment Termination Date occurs, then (x) the Sponsor
         shall not have the right to request that any further Loan Commitments
         be established, and (y) the Servicer shall, within a reasonable period
         of time and in any event no later than thirty (30) days after the
         Commitment Termination Date, give notice to each of the Startup
         Franchisee Borrowers terminating the Startup Franchisee Loan
         Commitments as of the date which is ninety (90) days after delivery of
         such notice, subject, in each case, to the right of the Startup
         Franchisee Borrowers to term out the amounts outstanding under their
         Loan Commitments as set forth in Section 2.1(c); provided, however,
         that the occurrence of such Wind-Down Event shall not affect the
         obligation of (i) the Servicer to make Advances pursuant to existing
         Startup Franchisee Loan Commitments, except to the extent that the
         Startup Franchisee Loan Commitments are terminated pursuant to clause
         (y) above, (ii) the Participants to fund their Participant's Interest
         as provided herein, except to the extent that the Startup Franchisee
         Loan Commitments are terminated pursuant to clause (y) above or (iii)
         the Credit Parties under the Operative Documents.

                  (b) In the event that the Maximum Established Franchisee
         Recourse Amount is, at any date of determination, less than
         $10,000,000, then the Sponsor shall not have the right to request that
         any further Established Franchisee Loan Commitments be established;
         provided, however, that the occurrence of such Wind-Down Event shall
         not affect the obligation of (x) the Servicer to make Advances pursuant
         to existing Established Franchisee Loan Commitments, (y) the
         Participants to fund their Participant's Interest as provided herein,
         or (z) the Credit Parties under the Operative Documents.

2.10     Reserve Requirements; Change in Circumstances; Change in Lending
         Offices.

                                       28
<PAGE>   34
                  (a) Notwithstanding any other provision herein, if, by reason
         of (i) after the date hereof, the introduction of or any change
         (including any change by way of imposition or increase of reserve
         requirements) in or in the interpretation of any law or regulation, or
         (ii) the compliance with any guideline or request from any central bank
         or other governmental authority or quasi-governmental authority
         exercising control over banks or financial institutions generally
         (whether or not having the force of law), any reserve (including any
         imposed by the Federal Reserve Board), special deposit or similar
         requirement (including a reserve, special deposit or similar
         requirement that takes the form of a tax) against assets of, deposits
         with or for the account of, or credit extended by, any Participant's
         office through which it funds its obligations hereunder shall be
         imposed or deemed applicable or any other condition affecting its
         obligation to make or maintain its Funded Participant's Interest at a
         rate based upon the Adjusted LIBO Rate shall be imposed on any
         Participant or its office through which it funds its obligations
         hereunder or the interbank Eurodollar market; and as a result thereof
         there shall be any increase in the cost to such Participant of agreeing
         to make or making, funding or maintaining funds its obligations
         hereunder (except to the extent already included in the determination
         of the applicable Adjusted LIBO Rate), or there shall be a reduction in
         the amount received or receivable by that Participant or its office
         through which it funds its obligations hereunder, then the Sponsor
         shall from time to time, upon written notice from and demand by the
         Participant (with a copy of such notice and demand to the Servicer),
         pay to the Servicer for the account of that Participant within five
         Business Days after the date specified in such notice and demand,
         additional amounts sufficient to indemnify that Participant against
         such increased cost. A certificate as to the amount of such increased
         cost submitted to the Sponsor and the Servicer by that Participant,
         shall, except for manifest error, be final, conclusive and binding for
         all purposes.

                  (b) If while the Commitments or any Loan Commitments are
         outstanding, any Participant (including any the Servicer) determines
         that the adoption of any law, rule or regulation regarding capital
         adequacy or capital maintenance, or any change in any of the foregoing
         or in the interpretation or administration thereof by any governmental
         authority, central bank or comparable agency charged with the
         interpretation or administration thereof, or compliance by any
         Participant (or any lending office of such Participant) or any
         Participant's holding company with any request or directive regarding
         capital adequacy or capital maintenance (whether or not having the
         force of law) of any such authority, central bank or comparable agency,
         has or would have the effect of reducing the rate of return on such
         Participant's capital or on the capital of such Participant's holding
         company, if any, as a consequence of this Agreement, the Loan Documents
         or the purchases made by such Participant pursuant hereto to a level
         below that which such Participant or such Participant's holding company
         could have achieved but for such adoption, change or compliance (taking
         into consideration such Participant's policies and the policies of such
         Participant's holding company with respect to capital adequacy) by an
         amount reasonably deemed by such Participant to be material, then from
         time to time, within 15 days after written demand by such Participant,
         the Sponsor pay to

                                       29
<PAGE>   35
         such Participant such additional amount or amounts as will compensate
         such Participant or such Participant's holding company for such
         reduction. A certificate as to the amount of any such additional amount
         or amounts, submitted to the Sponsor and the Servicer by such
         Participant, shall, except for manifest error, be final, conclusive and
         binding for all purposes.

                  (c) Each Participant agrees that, if requested by the Sponsor,
         it will use reasonable efforts (subject to overall policy
         considerations of such Participant) to designate an alternate lending
         office with respect to any of its Funded Participant's Interest
         affected by the matters or circumstances described above to reduce the
         liability of the Sponsor or avoid the results provided thereunder, so
         long as such designation is not disadvantageous to such Participant as
         determined by such Participant, which determination if made in good
         faith, shall be conclusive and binding on all parties hereto. Nothing
         in this Section 2.10(c) shall affect or postpone any of the obligations
         of the Sponsor or any right of any Participant provided hereunder.

2.11     Pro Rata Treatment.

         Subject to the application of payments pursuant to Article 3 and except
         as specifically provided therein, each payment of principal of any
         Funded Participant's Interest, each payment of interest with respect to
         the Funded Participant's Interest, each payment of the Commitment Fees
         and each reduction of the Commitments shall be allocated pro rata among
         the Participants in accordance with their respective applicable Pro
         Rata Share of the applicable Facility or Commitments, as appropriate.
         Each Participant agrees that in computing such Participant's portion of
         any Funded Participant's Interest to be made hereunder, the Servicer
         may, in its discretion, round each Participant's percentage of such
         Participant Funding Request to the next higher or lower whole dollar
         amount.

2.12     Payments.

                  (a) The Sponsor shall make each payment required to be made by
         Sponsor hereunder and under any other Operative Document to any
         Participant or the Servicer not later than 1:00 p.m. (Atlanta, Georgia
         time), on the date when due in dollars to the Servicer at its offices
         in Atlanta, Georgia in immediately available funds.

                  (b) Whenever any payment hereunder or under any other
         Operative Document shall become due, or otherwise would occur, on a day
         that is not a Business Day, such payment may be made on the next
         succeeding Business Day, and such extension of time shall in such case
         be included in the computation of interest or Commitment Fees, if
         applicable.

2.13     Sharing of Setoffs.

                                       30
<PAGE>   36
         Each Participant agrees that if it shall, in accordance with applicable
         law, through the exercise of a right of banker's lien, setoff or
         counterclaim against the Sponsor or any Borrower, or pursuant to a
         secured claim under Section 506 or Title 11 of the United States Code
         or other security or interest arising from, or in lieu of, such secured
         claim, received by the Participant under any applicable bankruptcy,
         insolvency or other similar law or otherwise, or by any other means,
         obtain payment (voluntary or involuntary) in respect of any Funded
         Participant's Interest under this Agreement as a result of which the
         unpaid principal portion of its Funded Participant's Interest shall be
         proportionately less than the unpaid principal portion of the Funded
         Participant's Interest of any other Participant, it shall be deemed
         simultaneously to have purchased from such other Participant at face
         value, and shall promptly pay to such other Participant the purchase
         price for, a participation in the Funded Participant's Interest of such
         other Participant, so that the aggregate unpaid principal amount of the
         Funded Participant's Interest and participations in Funded
         Participant's Interests held by each Participant shall be in the same
         proportion to the aggregate unpaid principal amount of all Funded
         Participant's Interests then outstanding as the principal amount of its
         Purchases prior to such exercise of banker's lien, setoff or
         counterclaim or other event was to the principal amount of all Funded
         Participant's Interests outstanding prior to such exercise of banker's
         lien, setoff or counterclaim or other event; provided, however, that,
         if any such purchase or purchases or adjustments shall be made pursuant
         to this Section and the payment giving rise thereto shall thereafter be
         recovered, such purchase or purchases or adjustments shall be rescinded
         to the extent of such recovery and the purchase price or prices or
         adjustment restored without interest. The Servicer and each Participant
         hereby further agrees that any set-off amount received with respect to
         any Borrower, the Sponsor or any Guarantor shall first be applied to
         amounts outstanding under the Franchisee Loan Program prior to
         application to any other obligations of any such Person to the Servicer
         or such Participant. The Sponsor expressly consents to the foregoing
         arrangements and agrees, to the extent permitted by applicable law,
         that any Participant holding a Funded Participant's Interest or a
         participation in a Funded Participant's Interest deemed to have been so
         purchased may exercise any and all rights of banker's lien, setoff or
         counterclaim with respect to any and all moneys owing by the Sponsor to
         such Participant by reason thereof.

         3. SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION OF PAYMENTS

3.1      Servicer's Obligations with Respect to Loans; Collateral; Non-Recourse.

                  (a) The Servicer shall, for itself and the benefit of all of
         the Participants and the Sponsor, (i) document, close, manage,
         administer and collect the Loans in accordance with the terms of this
         Agreement and the Servicing Agreement and exercise all discretionary
         powers involved in such management, administration and collection and
         (ii) shall distribute the funds received with respect to the Loans and
         from the Sponsor in accordance with the terms of this Agreement. The
         Servicer agrees that it will exercise the

                                       31
<PAGE>   37
         same care in administering the Loans as it exercises with respect to
         loans of similar size and type in which no participations are allocated
         and in accordance with the terms of the Servicing Agreement and Section
         10.14 hereto.

                  (b) The forms of Loan Agreement and Master Note used by the
         Servicer as documentation for each Loan on and after the Effective Date
         shall be substantially in the forms attached hereto. The Sponsor shall
         have the right to direct the Servicer to make modifications to such
         forms and amendments thereto from time but the Sponsor may not direct
         the Servicer to revise or amend such forms so as to be inconsistent
         with the terms of Section 2.1 (c) and (d).

                  (c) Notwithstanding anything in this Agreement to the
         contrary, each of the Participants acknowledges and agrees that the
         Servicer shall have no obligation to the Participants with respect to
         the obtaining or retention of any guaranties required by the Sponsor
         (other than to distribute any proceeds therefrom in accordance with the
         terms of this Article 3). The Participants acknowledge and agree that
         the Sponsor has the right to release or modify the terms of, or not
         require, any Personal Guaranty or any Spousal Consent.

                  (d) In addition, each of the Participants acknowledges and
         agrees that the obligations of the Servicer with respect to the
         Collateral shall be expressly limited to the filing of financing
         statements (but not fixture filings) in the locations indicated in the
         applicable Funding Approval Notice for each Borrower and filing
         continuation statements with respect thereto and taking enforcement
         action in accordance with Section 10.14 hereto.

                  (e) Each of the Participants acknowledges and agrees that all
         payments made to the Participants pursuant to this Agreement by the
         Servicer shall be made solely from amounts received from the Sponsor,
         the Borrowers and other obligors or Collateral under the applicable
         Loan Documents and the Servicer shall have no personal liability for
         any amounts payable to the Participants hereunder. Each of the
         Participants acknowledges and agrees that the Servicer shall be relying
         solely upon the Sponsor for purposes of calculating and ensuring
         compliance by Established Franchisee Borrowers with the Established
         Franchisee Borrowing Base for each Established Franchisee Loan.

                  (f) Each of the Participants acknowledges and agrees that any
         payments of delinquent payment fees received from the Borrowers
         pursuant to the Loan Agreements shall be for the sole account of the
         Sponsor and that the Participants shall have no right to receive such
         payments unless a Credit Event has occurred and is continuing; provided
         that, with respect to any payments received from a Borrower, such
         payments shall be first applied to pay all accrued but unpaid interest
         and principal and other fees due and owing from such Borrower before
         application of such payment to any delinquent payment fees.

                                       32
<PAGE>   38
                  (g) Each Participant hereby acknowledges and agrees that the
         Servicer has no ability to halt an ACH transfer upon the inputting of
         such transfer request by Sponsor from the ATAC System into the ACH
         system (other than the ability to retrieve ACH transfers which are sent
         to the wrong party or otherwise manifestly erroneous as provided in the
         ACH Agreement with Sponsor), and Sponsor hereby accepts full
         responsibility for any overadvance created by such inputting of
         information and shall indemnify the Servicer and the Participants
         therefor as provided herein.

3.2      Application of Payments.

                  (a) The Servicer and the Sponsor shall instruct each Borrower
         to make payments with respect to Loans and the Loan Commitments
         directly to the Servicer, either by mail, wire transfer or debit
         pursuant to an ACH Authorization.

                  (b) On each Quarterly Date, all payments of Commitment Fees
         shall be distributed by the Servicer to the Participants pro rata in
         accordance with Section 2.4, with any remainder to be applied as set
         forth in the Servicing Agreement.

                  (c) On each Payment Date, all payments of interest received by
         the Servicer from the Borrowers under each Facility and from the
         Sponsor pursuant to its guaranty of each Facility contained herein with
         respect to the Loans and not previously distributed by the Servicer,
         shall be applied to pay all accrued but unpaid interest on the Funded
         Participant's Interest under the applicable Facility pursuant to this
         Agreement, then to pay all accrued but unpaid Servicing Fees and then
         to pay the Sponsor's Fee, in accordance with the terms of the Servicing
         Agreement and Fee Letter.

                  (d) On any Business Day on which the Servicer shall receive
         any payment in respect of the principal amount of any Loan, whether
         from a Borrower, the Sponsor pursuant to its guaranty contained herein,
         or any other obligor with respect thereto, the Servicer may elect, in
         its sole discretion to (i) apply such principal payment to fund any
         requested Advances, (ii) apply such amount to repay any outstanding
         Swing Line Advances, or (iii) to either (x) distribute such amount to
         the Participants to reduce each Participant's Funded Participant's
         Interest under such Facility or (y) apply such amount to SunTrust's
         Funded Participant's Interest under such Facility only (with the
         understanding that the Funded Participant's Interest of each
         Participant shall not be deemed to have been repaid until such amount
         is actually received by such Participant); provided that, in the event
         that the Servicer elects to apply any repayment to reduce SunTrust's
         Funded Participant's Interest without a corresponding reduction of the
         other Participant's Funded Participant's Interest, SunTrust shall be
         obligated to make a payment to each Participant equal to such
         Participant's Pro Rata Share of such payment upon the earlier of (i)
         the next Payment Date and (ii) the occurrence of a Credit Event
         hereunder.

                                       33
<PAGE>   39
                  (e) If during any period when no Credit Event has occurred and
         is continuing, amounts received by Servicer are not capable of being
         allocated to any specific Loan or, in the case of amounts allocable to
         a specific Loan, are not sufficient to repay all obligations then due
         and owing with respect thereto, such amounts shall be applied by the
         Servicer as follows: (i) first, to the payment of Commitment Fees owing
         to the Participants hereunder, (ii) second, to the payment of accrued
         interest on the Funded Participant's Interest hereunder, pro rata
         between the two Facilities, (iii) third, to the payment of the
         Servicing Fees owing under the Servicing Agreement, (iv) fourth, to the
         repayment of the Funded Participant's Interests outstanding hereunder
         pro rata between the two Facilities, (v) fifth, to the payment of all
         other amounts owing to the Servicer or any Participant hereunder, and
         (vi) sixth, if all obligations of the Sponsor pursuant to the Operative
         Documents have been satisfied in full, to the Sponsor.

                  (f) During any period when a Credit Event has occurred and is
         continuing, any amounts received by Servicer with respect to the Loans
         shall be applied, after deduction of any expenses incurred in the
         collection of any such amounts, as follows (i) first, to the payment of
         any accrued and unpaid Servicing Fee, (ii) second, to each Participant
         in accordance with Pro Rata Share, and (iii) thereafter, to such
         Persons as may be legally entitled thereto.

                  (g) If not sooner repaid, all amounts due and payable to the
         Servicer and the Participants under the Operative Documents shall be
         due and payable in full on the Final Termination Date.

3.3      Monthly Servicing Report and Quarterly Servicing Report.

                  (a) On each Payment Date, the Servicer shall telecopy to the
         Sponsor and each Participant a servicing report in the form of Exhibit
         F (the "Monthly Servicing Report") setting forth the following
         information with respect the Loans:

                           (i) the aggregate principal balance of the Loans
                  under each Facility as of the close of business on the last
                  day of the preceding Payment Period and on such Payment Date;

                           (ii) the aggregate amount of Loans repurchased by the
                  Sponsor or amounts collected with respect to the Collateral
                  for the Loans with respect to each Facility since the last
                  Payment Date;

                           (iii) the aggregate Loan Commitments under each
                  Facility as of the close of business on the last Business Day
                  of the preceding Payment Period and on such Payment Date;

                                       34
<PAGE>   40
                           (iv) each Loan which is past due (including the past
                  due amount and the number of days past due) under each
                  Facility;

                           (v) if a Change of Control has occurred, the amount
                  on deposit in the Cash Collateral Account; and

                           (vi) the amount of the Maximum Established Franchisee
                  Recourse Amount as of such date.

                  (b) No later than fifty (50) days after the end of each
         calendar quarter, the Servicer shall provide to the Sponsor and each
         Participant a quarterly servicing report in the form of Exhibit G (the
         "Quarterly Servicing Report") setting forth the information required
         therein.

                  4.       LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND

4.1      Notice Of Loan Default.

         The Servicer shall notify the Sponsor and the relevant Borrower of a
         Loan Payment Default within fifteen (15) Business Days following the
         occurrence thereof and of any other Loan Default of which the Servicer
         has actual knowledge in accordance with the terms of the Servicing
         Agreement.

4.2      Waiver or Cure By The Sponsor.

         Unless a Credit Event, an Unmatured Credit Event or a Change of Control
         has occurred and is continuing, within the Response Period, the Sponsor
         shall be entitled (but not obligated) to:

                  (a) in the case of a Loan Default, other than a Loan Payment
         Default, waive such Loan Default by sending to the Servicer a Default
         Waiver Request, except as set forth in Section 4.4; provided however,
         that the Sponsor shall not request a waiver of (A) more than three (3)
         such Loan Defaults in any one year period with respect to any Loan; (B)
         more than two (2) consecutive Financial Covenant Loan Defaults; or (C)
         compliance by any Established Franchisee Borrower with the applicable
         Established Franchisee Borrowing Base (except to the extent that the
         Sponsor may cure a Loan Payment Default caused by a failure to make any
         required prepayment as a result of an overadvance to the extent
         permitted by subsection (b) of this Section 4.2); or

                  (b) in the case of a Loan Payment Default, to waive and cure
         such Loan Payment Default (including a Loan Payment Default resulting
         from the failure of a Borrower to remain in compliance with the
         borrowing base requirements of the applicable Established Franchisee
         Loan Agreement); provided, however, that Sponsor shall not waive and
         cure

                                       35
<PAGE>   41
         more than two (2) consecutive Loan Payment Defaults nor waive and cure
         more than a total of four (4) Loan Payment Defaults in any four year
         period, with respect to any Loan.

                  During a Response Period, the Servicer shall refrain from
         taking any legal action against the Defaulted Borrower under the
         Defaulted Loan which is the subject of such Response Period, and from
         accelerating payment of the Loan Indebtedness under such Defaulted Loan
         but the Servicer shall cease funding any further Advances pursuant to
         the Loan Commitment. If the Sponsor waives any Loan Default (other than
         a Loan Payment Default) or waives and cures any Loan Payment Default
         (subject to Section 4.4) prior to the expiration of a Response Period,
         then as to each Loan Default so waived or waived and cured, the
         Defaulted Borrower's and the Servicer's respective rights and
         obligations under the Loan Documents shall be restored to the same
         status as if such waived Loan Default never occurred. In addition, if
         the Sponsor takes over the operation of the business of an Established
         Franchisee Borrower as provided in Article 10, the Servicer shall
         refrain from exercising remedies against such Borrower for as long as
         the Sponsor is complying with Section 10.3, unless a Credit Event has
         occurred and is continuing or the Required Participants otherwise
         agree.

4.3      Defaulted Loan Guaranty Demand.

         (a)      In the event that following the end of a Response Period, a
                  Loan Payment Default is not cured or in the event that any
                  other Loan Default is not then waived, the Servicer shall have
                  the right at any time thereafter to demand that Sponsor comply
                  with its obligations with respect to such Defaulted Loan set
                  forth in Article 10.

         (b)      In the event that the Sponsor is not obligated to repay the
                  Loan Indebtedness with respect to a Defaulted Loan pursuant to
                  the Article 10 or in the event that a Credit Event has
                  occurred and is continuing and Sponsor has not purchased all
                  outstanding Startup Franchisee Loans hereunder and fully
                  cash-collateralized the Maximum Established Franchisee
                  Recourse Amount, the Sponsor agrees that the Servicer shall be
                  released from its obligations to the Sponsor hereunder with
                  respect to administering and enforcing all Loans and may
                  administer and enforce such Loans as it deems appropriate,
                  without regard to any limitations or restrictions set forth
                  herein (but subject to Article 3 in all events) or in any
                  other Operative Document.

4.4      No Waiver or Cure Available.

         Notwithstanding anything contained in this Article to the contrary, the
         Sponsor shall, within five (5) Business Days of its receipt of a
         written demand from the Servicer instructing it to do so, purchase the
         Loan Indebtedness of any Loan and assume the Loan Commitment with
         respect to a Defaulted Borrower whose Loan Default either arises from
         the bankruptcy or insolvency of such Borrower or the termination of the
         Franchise Agreement to which such Borrower is a party; provided that,
         with respect to an

                                       36
<PAGE>   42
         Established Franchisee Loan, the Servicer, at its option, with the
         approval of the Required Participants, may require that the Sponsor
         exercise any or all of the remedies set forth in Section 10.3 with
         respect to such Defaulted Loan except to the extent prohibited by
         applicable law in the case of the bankruptcy of the Borrower.

         Notwithstanding any other provision of the Operative Documents to the
         contrary, the repurchase by the Sponsor of any Loan or Loan Commitment
         upon termination (or failure to renew) of the relevant Borrower's
         Franchise Agreement by the Sponsor for any reason other than default
         thereunder by such Borrower shall not be deemed to be a payment
         pursuant to Article 10 and shall not reduce the Maximum Amount or the
         Maximum Established Franchisee Recourse Amount thereunder.

                  5.       REPRESENTATIONS AND WARRANTIES

         The Sponsor (as to itself and each of the Consolidated Companies)
         hereby represents and warrants to the Servicer and each of the
         Participants that:

5.1      Organization and Qualification.

         The Sponsor and its Subsidiaries are corporations duly organized,
         validly existing and in good standing under the laws of the State of
         Georgia and the State of Delaware, as applicable; the Sponsor and its
         Subsidiaries have the corporate power to own their property and to
         carry on their business as now being conducted; and the Sponsor and its
         Subsidiaries are duly qualified as foreign corporations to do business
         and are in good standing in every jurisdiction in which the nature of
         the business conducted by them makes such qualification necessary and
         where failure to qualify would have a Materially Adverse Effect.

5.2      Sponsor's Powers.

         The execution, delivery and performance of this Agreement, the Guaranty
         Agreement and each other Operative Document required hereunder are
         within the Sponsor's or the Guarantors' corporate powers, as the case
         may be, have been duly authorized by all necessary shareholder or
         corporate action, and do not and will not contravene or conflict with
         the terms of any charter, by-law or other organizational papers of the
         Sponsor or any of its Subsidiaries, or any indenture, agreement or
         undertaking to which the Sponsor or any of its Subsidiaries is a party
         or by which the Sponsor or any of its Subsidiaries is bound or
         affected.

5.3      Enforceability of Agreement and Other Operative Documents.

                                       37
<PAGE>   43
         This Agreement is a legal, valid and binding agreement of the Sponsor,
         enforceable against the Sponsor in accordance with its terms, and each
         other Operative Document and any other instrument or agreement required
         hereunder, when executed and delivered, will be similarly legal, valid,
         binding and enforceable against the Sponsor and its Subsidiaries, as
         applicable, in accordance with their respective terms.

5.4      Consent.

         No consent, permission, authorization, order or license of any
         governmental authority is necessary in connection with the execution,
         delivery, performance or enforcement of this Agreement, the Guaranty
         Agreement, any other Operative Document or any other instrument or
         agreement required hereunder, except as may have been obtained and
         certified copies of which have been delivered to each Participant.

5.5      Statutes, Judgments.

         There is no law, statute, rule or regulation, nor is there any
         judgment, decree or order of any court or agency binding on the Sponsor
         or any of its Subsidiaries, which would be contravened by the
         execution, delivery or performance of this Agreement, the Guaranty
         Agreement, any other Operative Document or any other instrument or
         agreement required hereunder.

5.6      Financial Statements.

         The Sponsor has furnished each Participant with the following financial
         statements, identified by a principal financial officer of the Sponsor:

                  Audited Consolidated Financial and Operating Statements for
                  the Consolidated Companies for the years ended December 31,
                  1998, December 31, 1997, December 31, 1996 and December 31,
                  1995, and audit opinions with respect to such statements of
                  Ernst & Young LLP; and unaudited financial and operating
                  statements for the six-month period ended June 30, 1999.

         The above financial statements (including any related schedules and/or
         notes) are true and correct in all material respects and have been
         prepared in accordance with generally accepted accounting principles
         consistently followed throughout the periods involved and show all
         known liabilities, direct and contingent, of the entities covered
         thereby required to be shown in accordance with such principles. The
         balance sheets fairly present the condition of the entities covered
         thereby as at the dates thereof, and the profit and loss and surplus
         statements fairly present the results of the operations of the entities
         covered thereby for the periods indicated. There has been no material
         adverse change in the business, condition or operations (financial or
         otherwise) of the Consolidated Companies since December 31, 1998.

                                       38
<PAGE>   44
5.7      Actions Pending.

         There is no action, suit, investigation or proceeding pending or, to
         the knowledge of the Sponsor, threatened against or affecting the
         Sponsor or any of its Subsidiaries, or any properties or rights of the
         Sponsor or any of its Subsidiaries, before any court, arbitrator or
         administrative or governmental body which is reasonably likely to
         result in any Materially Adverse Effect.

5.8      Outstanding Debt.

         Neither the Sponsor nor any of its Subsidiaries has outstanding any
         indebtedness except debt permitted hereunder or permitted under the
         Revolving Credit Agreement. There exists no default under the
         provisions of any instrument evidencing such indebtedness or of any
         agreement relating thereto.

5.9      Title to Properties.

         The Sponsor and each of its Subsidiaries have good and marketable title
         to their respective real properties, subject only to Liens permitted
         under Section 7.1, and good title to all of its other respective
         properties and assets, including the properties and assets reflected in
         the balance sheet as of December 31, 1996 hereinabove described (other
         than properties and assets disposed of in the ordinary course of
         business), subject to no Lien of any kind except Liens permitted under
         Section 7.1. The Sponsor and its Subsidiaries enjoy full and
         undisturbed possession of all leases necessary in any material respect
         for the operation of their respective properties and assets, none of
         which contains any unusual or burdensome provisions which might
         materially affect or impair the operation of such properties and
         assets. All such leases are valid and subsisting and are free from
         defaults by the Sponsor or respective landlords and in full force and
         effect.

5.10     Taxes.

         The Sponsor has and each of its Subsidiaries has filed all federal and
         state income tax returns which, to the best knowledge of the officers
         of the Sponsor, are required to be filed, and each has paid all taxes
         as shown on said returns and on all assessments received by it to the
         extent such taxes have become due, except to the extent expressly
         permitted by Section 7.1(a).

5.11     Regulation U, Etc.

         Neither the Sponsor nor any of its Subsidiaries own or have any present
         intention of acquiring any "margin security" as defined in Regulation U
         of the Board of Governors of the Federal Reserve System (herein called
         a "margin security"). None of the proceeds of

                                       39
<PAGE>   45
         any Advance will be used, directly or indirectly, for the purpose of
         purchasing or carrying any margin security or for the purpose of
         reducing or retiring any indebtedness which was originally incurred to
         purchase or carry a margin security or for any other purpose which
         might constitute this transaction a "purpose credit" within the meaning
         of said Regulation U.

5.12     No Credit Event; Unmatured Credit Event or Change of Control.

         No Credit Event, Unmatured Credit Event or Change of Control, has
         occurred and is continuing or will occur as a result of the incurring
         of any obligation under this Agreement.

5.13     ERISA.

         No fact or circumstance, including but not limited to any Reportable
         Event, exists in connection with any Plan of the Sponsor or its
         Subsidiaries which might constitute grounds for the termination of any
         such Plan by the PBGC or for the appointment by the appropriate United
         States District Court of a trustee to administer any such Plan. For
         purposes of this representation and warranty, if the Sponsor is not the
         Plan administrator, it shall nonetheless be deemed to have knowledge of
         all facts attributable to the Plan administrator designated pursuant to
         ERISA.

5.14     Pollution and Environmental Control.

         Each of the Sponsor and its Subsidiaries has obtained all permits,
         licenses and other authorizations which are required under, and is in
         material compliance with, all federal, state, and local laws and
         regulations relating to pollution, reclamation, or protection of the
         environment, including laws relating to emissions, discharges, releases
         or threatened releases of pollutants, contaminants, or hazardous or
         toxic materials or wastes into air, water, or land, or otherwise
         relating to the manufacture, processing, distribution, use, treatment,
         storage, disposal, transport, or handling of pollutants, contaminants
         or hazardous or toxic materials or wastes.

5.15     Possession of Franchises, Licenses, Etc.

         The Sponsor and its Subsidiaries possess all franchises, certificates,
         licenses, permits and other authorizations from governmental political
         subdivisions or regulatory authorities, and all patents, trademarks,
         service marks, trade names, copyrights, licenses and other rights, free
         from burdensome restrictions, that are necessary for the ownership,
         maintenance and operation of any of their respective properties and
         assets, and neither the Sponsor nor any of its Subsidiaries is in
         violation in any material respect of any thereof.

5.16     Contingent Liabilities.

                                       40
<PAGE>   46
         After due inquiry, there exists no material contingent liability or
         obligation assertable against the Sponsor or its Subsidiaries that is
         not identified and disclosed to the Participants in the consolidated
         financial statements delivered pursuant to Sections 5.6 or 6.1 or in
         Schedule 5.16 attached hereto.

5.17     Compliance with Laws.

         Each of the Sponsor and its Subsidiaries is in compliance in all
         material respects with all applicable federal, state and local laws,
         rules, regulations and orders, including, without limitation, all
         federal, state and local laws, rules, regulations and orders relating
         to pollution, reclamation or protection of the environment, including
         laws relating to emissions, discharges, releases or threatened releases
         of pollutants, contaminants, or hazardous or toxic materials or wastes
         into air, water, or land, or otherwise relating to the manufacture,
         processing, distribution, use, treatment, storage, disposal, transport,
         or handling of pollutants, contaminants or hazardous or toxic materials
         or wastes, and all federal, state and local laws, rules, regulations
         and orders relating to franchising activities.

5.18     Representations and Warranties with Respect to Specific Loans.

         The Sponsor represents and warrants to the Servicer and each
         Participant with respect to each Loan Commitment established and each
         Advance made pursuant to the Operative Documents that:

                  (a) The Franchise Agreement, the Master Note, the Loan
         Agreement and each other Loan Document executed in connection with such
         Loan Commitment each constitutes a valid and binding agreement of each
         Borrower or guarantor party thereto and is enforceable against each
         such party in accordance with its terms.

                  (b) The Master Note and accompanying Loan Documents executed
         in connection with such Loan and delivered to the Servicer are the only
         contracts evidencing the transaction described therein and constitute
         the entire agreement of the parties thereto with respect to such
         transaction and Sponsor has not made any other promises, agreements or
         representations and warranties with respect to the transactions
         evidenced by such Master Note.

                  (c) The Master Note and each accompanying Loan Document
         executed in connection with such Loan is genuine and all signatures,
         names, amounts and other facts and statements therein and thereon are
         true and correct.

                  (d) All disclosures required to be made under applicable
         federal and state law in connection with such Loan have been properly
         and completely made with respect to

                                       41
<PAGE>   47
         each Master Note, the other Loan Documents and the Loan and each such
         Master Note, other Loan Documents and Loan is in full compliance with
         all applicable federal and state laws, including without limitation,
         applicable state and federal usury laws and regulations.

                  (e) The proceeds of each Master Note will be solely for the
         purpose of financing the acquisition and expansion of stores franchised
         by the Sponsor and operated by the relevant Borrower, for the
         acquisition of inventory and equipment with respect to the ongoing
         operations thereof, for Sponsor-approved payment of state use tax and
         freight charges and, in the case of Established Franchisee Borrowers,
         for Sponsor-approved working capital purposes, but excluding in all
         cases any non-business purposes.

                  6.       AFFIRMATIVE COVENANTS

         The Sponsor covenants and agrees that it will, as long as either of the
Commitments is in effect or the Servicer is committed to make Advances under any
Loan Documents and thereafter so long as any Loans remain outstanding under this
Agreement or Sponsor has any other unsatisfied obligations under the Operative
Documents:

6.1      Financial Statements, Reports and Other Financial Data.

         The Sponsor will deliver to the Servicer (for further delivery to each
Participant):

                  (a) as soon as practicable and in any event within forty-five
         (45) days after the end of each calendar quarter (other than the last
         calendar quarter) in each fiscal year, consolidated statements of
         income, cash flow and retained earnings of the Sponsor and its
         Subsidiaries for the period from the beginning of the current fiscal
         year to the end of such calendar quarter, and consolidated balance
         sheets of the Sponsor and its Subsidiaries as at the end of such
         calendar quarter, setting forth in each case in comparative form
         figures for the corresponding period in the preceding fiscal year, all
         in reasonable detail and certified by the Chief Financial Officer of
         the Sponsor, subject to changes resulting from year-end adjustments;

                  (b) as soon as practicable and in any event within 90 days
         after the end of each fiscal year (or as soon as made available by the
         Sponsor's independent public accountants if availability is delayed
         beyond such 90-day period for reasons beyond the Sponsor's control)
         audited consolidated statements of income, cash flow and retained
         earnings of the Sponsor and its Subsidiaries for such year, and an
         audited consolidated balance sheet of the Sponsor and its Subsidiaries
         as at the end of such year, setting forth in each case in comparative
         form corresponding figures from the preceding annual statements, all in
         reasonable detail and reasonably satisfactory in scope to Participants,
         and the consolidated financial statements shall be certified by
         independent public

                                       42
<PAGE>   48
         accountants of recognized standing, selected by the Sponsor, whose
         report shall be in scope and substance reasonably satisfactory to
         Participants, and shall be certified by the Chief Financial Officer of
         the Sponsor;

                  (c) along with the quarterly and annual reports required by
         clauses (a) and (b) above, a certificate of the Chief Financial Officer
         of the Sponsor certifying that no Event of Default exists and that no
         event exists which with notice or the lapse of time or both would
         become such an Event of Default, which certificate shall also
         demonstrate in reasonable detail, with respect to both quarterly
         reports and annual reports, the Sponsor's compliance with the covenants
         set out in Sections 6.4, 6.5, 6.6, 7.2 and 7.3;

                  (d) promptly upon receipt thereof, copies of any detailed
         reports submitted to the Sponsor by its independent public accountants
         in connection with each annual audit or interim review of the books of
         the Sponsor or its Subsidiaries made by such accountants;

                  (e) promptly upon transmission thereof, copies of all
         financial statements, proxy statements, notices and reports as the
         Sponsor shall send to its shareholders and of all regular or periodic
         reports which it is or may be required to file with the Securities and
         Exchange Commission or any governmental department, bureau, commission
         or agency succeeding to the functions of the Securities and Exchange
         Commission; and

                  (f) with reasonable promptness, such other financial data as
         any Participant, through the Servicer, may reasonably request.

6.2      Inspection of Property.

         The Sponsor will permit any Person designated by a Participant in
         writing, to visit and inspect any of the properties, corporate books
         and financial records of the Sponsor and its Subsidiaries and to make
         copies thereof and take extracts therefrom and to discuss the affairs,
         finances and accounts of any such corporations with the principal
         officers of the Sponsor or its Subsidiaries, all at such reasonable
         times and as often as such Participant may reasonably request, subject
         in all cases to the confidentiality requirements of Section 15.11.

6.3      Maintenance of Insurance.

         The Sponsor and each Subsidiary will maintain insurance in such amounts
         and against such liabilities and hazards as customarily is maintained
         by other companies operating similar businesses.

6.4      Funded Debt Ratio.

                                       43
<PAGE>   49
         The Sponsor shall maintain and operate its business in a manner to
         insure that its Funded Debt Ratio, measured as of the last day of each
         fiscal quarter for the four immediately preceding quarters ending on
         such date, is less than 4.00:1.00.

6.5      Leverage Ratio.

         The Sponsor shall maintain and operate its business in such a manner to
         insure that its ratio, measured as of the last day of each fiscal
         quarter, of (i) Funded Debt to (ii) the sum of Funded Debt plus the
         Consolidated Net Worth of the Sponsor and its Subsidiaries, is less
         than 0.50:1.00.

6.6      Fixed Charge Coverage.

         The Sponsor will operate its business in such a manner to insure that
         the sum of its (i) consolidated net income before income taxes, plus
         (ii) interest expense, plus (iii) rental and lease expense are greater
         than 150% of the sum of (i) interest expense, plus (ii) rental and
         lease expense, all determined on a consolidated basis for the Sponsor
         and its Subsidiaries. Compliance with the aforementioned fixed charge
         coverage ratio will be determined at the end of each fiscal quarter of
         the Sponsor and taking into account operations during the four
         consecutive fiscal quarters ending on such date. The following
         mathematical formula illustrates the Sponsor's fixed charge coverage
         obligation:

         Pretax Net             Interest     Rental and Lease
         Income  +              Expense  +   Expense               >        1.50
         ----------------------------------------------------      -
         Interest Expense       +            Rental and Lease
                                             Expense

6.7      Account Verification.

         Upon the request of any Participant, made at reasonable intervals and
         on a reasonable basis, the Sponsor will mail letters to selected lease
         customers or account debtors requesting them to verify the status of
         their leases or accounts, with responses to be returned directly to the
         Servicer.

6.8      ERISA.

         The Sponsor and each Subsidiary will:

                  (a) At all times, make prompt payment of contributions
         required to meet the minimum funding standard set forth in ERISA with
         respect to its Plans;

                  (b) Notify Participants and the Servicer immediately of any
         fact, including, but not limited to, any Reportable Event arising in
         connection with any of its Plans which

                                       44
<PAGE>   50
         might constitute grounds for termination thereof by the PBGC or for the
         appointment by the appropriate United States District Court of a
         trustee to administer such Plan, together with a statement, if
         requested by Participants, as to the reasons therefor and the action,
         if any, which the Sponsor or any of its Subsidiaries proposes to take
         with respect thereto; and

                  (c) Furnish to Participants or the Servicer, upon request,
         such additional information concerning any of its Plans as may be
         reasonably requested.

6.9      Payment.

         The Sponsor will pay all sums due under this Agreement and the other
         Operative Documents according to the terms hereof.

6.10     Notice of Credit Event, Unmatured Credit Event or Change of Control.

         The Sponsor will immediately give notice to the Servicer and each
         Participant of any Credit Event, Unmatured Credit Event or Change of
         Control.

6.11     Corporate Existence.

         Except as expressly permitted by Section 7.5, the Sponsor will maintain
         and will cause each Subsidiary to maintain its corporate existence and
         good standing in the jurisdiction of its incorporation, and the Sponsor
         will qualify and will cause each Subsidiary to qualify and remain
         qualified to do business as a foreign corporation in each jurisdiction
         in which the nature of the business conducted by it or its ownership of
         property makes such qualification necessary and where failure to
         qualify would have a Materially Adverse Effect.

6.12     Compliance with Laws, Etc.

         The Sponsor will comply, and cause each of its Subsidiaries to comply,
         in all material respects with all applicable federal, state, and local
         laws, rules, regulations and orders, including, without limitation, all
         federal, state and local laws, rules, regulations and orders relating
         to pollution, reclamation, or protection of the environment, including
         laws relating to emissions, discharges, releases or threatened releases
         of pollutants, contaminants, or hazardous or toxic materials or wastes
         into air, water, or land, or otherwise relating to the manufacture,
         processing, distribution, use, treatment, storage, disposal, transport,
         or handling of pollutants, contaminants or hazardous or toxic materials
         or wastes, and all federal, state and local law, rules, regulations and
         orders relating to franchising activities.

6.13     Additional Guarantors.

                                       45
<PAGE>   51
         Promptly after any Person which is not a Subsidiary as of the Effective
         Date becomes a Subsidiary of the Sponsor, the Sponsor shall cause such
         Person to execute and deliver to the Servicer a Supplement to the
         Guaranty Agreement, in the form of Exhibit 1 to the Guaranty Agreement,
         together with related corporate authorization documents, organizational
         documents, secretary's certificates and opinions, all in form and
         substance satisfactory to the Servicer and the Required Participants.

                  7.       NEGATIVE COVENANTS

         The Sponsor covenants and agrees that so long as either of the
Commitments remains outstanding or any Loans remain outstanding or the Sponsor
has any obligations under the Operative Documents, and until the full and final
payment of all indebtedness of all Borrowers incurred pursuant to the Loan
Documents and unless otherwise consented to in writing by the Required
Participants:

7.1      Liens.

         The Sponsor will not and will not permit any of its Subsidiaries to
         create, assume or suffer to exist any Lien upon any of its property or
         assets, whether now owned or hereafter acquired, except:

                   (a) Liens for taxes not yet due or which are being actively
         contested in good faith by appropriate proceedings;

                   (b) other Liens incidental to the conduct of its business or
         the ownership of its property and assets which were not incurred in
         connection with the borrowing of money or the obtaining of advances or
         credit, and which do not in the aggregate materially detract from the
         value of its property or assets or materially impair the use thereof in
         the operation of its business;

                   (c) Liens on property or assets of a Subsidiary to secure
         obligations of such Subsidiary to the Sponsor or another Subsidiary;

                   (d) Liens on insurance policies owned by the Sponsor on the
         lives of its officers securing policy loans obtained from the insurers
         under such policies, provided that (A) the aggregate amount borrowed on
         each policy shall not exceed the loan value thereof, and (B) the
         Sponsor shall not incur any liability to repay any such loan;

                   (e) Liens on real property or equipment acquired by the
         Sponsor to secure (i) all or any portion of the purchase price thereof
         or the financing of the purchase price thereof, provided that the
         aggregate principal amount of equipment loans secured by such

                                       46
<PAGE>   52
         Liens shall be limited to $500,000 in aggregate or (ii) the costs of
         improvements being constructed thereon or on real property leased by
         the Sponsor for use by the Sponsor as stores or warehouses or as a part
         thereof or the financing of such costs;

                   (f) Liens existing on the date hereof as set forth on
         Schedule 7.1 attached hereto and incorporated herein;

                   (g) easements, rights of way, restrictive covenants and
         similar encumbrances on or exceptions to title to real property which
         do not materially and adversely affect the value or the utility of the
         real property involved;

                   (h) Liens granted under the Synthetic Lease Documents in the
         real or personal property financed thereunder and in certain related
         rights of the Sponsor to secure the Sponsor's indebtedness and
         liabilities under the Synthetic Lease Documents to the extent permitted
         under Section 7.3(h); and

                   (i) Liens assigned and granted by the Sponsor to the Servicer
         pursuant to the Operative Documents.

7.2      Minimum Net Worth.

         The Sponsor will not permit its Consolidated Net Worth as of the last
         day of any fiscal quarter, commencing with the fiscal quarter ending
         September 30, 1999, to be less than the sum of (a) $112,000,000 plus
         (b) 50% of the Sponsor's consolidated net income after taxes (but not
         loss) (as determined in accordance with generally accepted accounting
         principles) for the period beginning July 1, 1999 and ending on the
         last day of such fiscal quarter.

7.3      Loans, Advances, Investments and Contingent Liabilities.

         The Sponsor will not and will not permit any of its Subsidiaries to
         make or permit to remain outstanding any loan or advance to, or extend
         credit to, or guarantee, endorse or otherwise be or become contingently
         liable, directly or indirectly, in connection with the obligations,
         stock or dividends of, or own, purchase or acquire any stock,
         obligations or securities of, or any other interest in, or make any
         capital contributions to, any Person, except that the Sponsor or any of
         its Subsidiaries may:

                   (a) create, incur, assure or suffer to exist, debt evidenced
         by the Operative Documents or the Existing Credit Agreement;

                   (b) suffer to exist unsecured current liabilities (not
         resulting from borrowing) incurred in the ordinary cause of business
         for current purposes and not represented by a promissory note or other
         evidence of indebtedness;

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<PAGE>   53
                   (c) permit to remain outstanding loans or advances to or
         investments in any of its Subsidiaries existing on the date of this
         Agreement;

                   (d) own, purchase or acquire stock, obligations or securities
         of a Subsidiary or of a corporation which immediately after such
         purchase or acquisition will be a Subsidiary or will be merged with
         Sponsor, provided, however, written consent of the Participants, which
         any of them may withhold in their sole discretion, is required for
         purchases and acquisitions with (A) a cash purchase price greater than
         or equal to $10,000,000, or (B) a total purchase price (including cash,
         stock of the Sponsor and any of its Subsidiaries and any other
         consideration) greater than or equal to $15,000,000;

                   (e) acquire and own stock, obligations or securities received
         in settlement of debts (created in the ordinary course of business)
         owing to the Sponsor or any of its Subsidiaries;

                   (f) own, purchase or acquire (i) prime commercial paper and
         certificates of deposit in United States commercial banks (whose
         long-term debt is rated "A" or better by Moody's Investors Service or
         Standard and Poor's Corporation) (issued by banks having capital
         resources in excess of $50,000,000), in each case due within one year
         from the date of purchase and payable in the United States in dollars,
         direct obligations of the United States Government or any agency
         thereof, or obligations fully guaranteed as to principal and interest
         by the United States Government or any agency thereof, in each case
         maturing within one year from the date of creation of such obligation
         or (ii) up to an additional $500,000 of other securities or investments
         at any one time;

                   (g) endorse negotiable instruments for collection in the
         ordinary course of business;

                   (h) incur or guaranty indebtedness or contingent liability
         under the Synthetic Lease Documents provided that the aggregate
         outstanding principal amount of all such indebtedness or liabilities
         does not exceed $20,000,000 at any one time; and

                   (i) make or permit to remain outstanding loans or advances to
         officers, stockholders, employees and directors of the Sponsor,
         provided that the aggregate principal amount of such loans and advances
         shall not exceed $350,000 at any time outstanding for the Sponsor and
         all Subsidiaries, and further provided that no Subsidiary shall make
         any loan or advance to, or acquire any stock, obligations or securities
         of, the Sponsor; and

                   (j) guarantee in the ordinary course of business up to
         $26,000,000 of indebtedness or obligations of any franchise operators.

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<PAGE>   54
7.4      Sale of Stock and Debt of Subsidiaries.

         The Sponsor will not sell or otherwise dispose of, or part with control
         of, any shares of stock or debt of any of its Subsidiaries of the
         Sponsor without the prior written consent of the Required Participants.

7.5      Merger and Sale of Assets.

         The Sponsor will not merge or consolidate with any other corporation or
         sell, lease or transfer or otherwise dispose of all or a substantial
         part of its assets or the assets of a Subsidiary, or assets which shall
         have contributed a substantial part of consolidated net earnings for
         any of the three fiscal years then most recently ended, to any Person,
         except that any of its Subsidiaries may merge with or liquidate into
         the Sponsor (provided that the Sponsor shall be the continuing or
         surviving corporation) or merge with any one or more other
         Subsidiaries, provided that immediately after giving effect to such
         merger or liquidation no Credit Event or Unmatured Credit Event shall
         exist.

7.6      Additional Negative Pledges.

         The Sponsor shall not, and shall not permit any of its Subsidiaries to,
         create or otherwise cause or suffer to exist or become effective,
         directly or indirectly, any prohibition or restriction on the creation
         or existence of any Lien upon any assets of the Sponsor or any of its
         Subsidiaries, other than pursuant to (a) Section 7.1, (b) the terms of
         any agreement, instrument or other document pursuant to which any debt
         permitted by Section 7.1(e) is incurred by the Sponsor or any of its
         Subsidiaries, so long as such prohibition or restriction applies only
         to the property or asset being financed by such debt, (c) the terms of
         the Existing Loan Agreement and the terms of the Synthetic Lease
         Documents, and (d) any requirement of applicable law or any regulatory
         authority having jurisdiction over the Sponsor or any of its
         Subsidiaries.

                  8.       CREDIT EVENTS AND REMEDIES

         In the event that:

8.1      The Sponsor defaults in the payment of any amount due hereunder; or

8.2      The Sponsor or any of its Subsidiaries defaults in any payment of
         principal of or interest on any other obligation for a material amount
         of money borrowed (or any material obligation under conditional sale or
         other title retention agreement or any material obligation secured by a
         purchase money mortgage or any material obligation under notes payable
         or drafts accepted representing extensions of credit) or defaults in
         the performance of any other agreement, term or condition contained in
         any agreement under which any such material obligation is created (or
         if any other default under any such

                                       49
<PAGE>   55
         agreement shall occur and be continuing) if the effect of such default
         is to cause, or to permit the holder or holders of such obligation (or
         a trustee on behalf of such holder or holders) to cause, such
         obligation to become due prior to its stated maturity (for purposes of
         this Section 8.2, an obligation shall be material if the amount owed
         thereunder exceeds $250,000); or

8.3      Any representation or warranty made by the Sponsor or any of its
         Subsidiaries herein or in any writing furnished in connection with or
         pursuant to this Agreement or other Operative Document shall be false
         or misleading in any material respect on the date as of which made; or

8.4      The Sponsor defaults in the performance or observance of any covenant
         or agreement contained in Sections 6.4, 6.5, 6.6 or Article 7; or

8.5      The Sponsor defaults in the performance or observance of any other
         agreement, term or condition contained herein and such default shall
         continue for 30 days after the Sponsor knows or has reason to know of
         any such default; or

8.6      The Sponsor or any of its Subsidiaries makes an assignment for the
         benefit of creditors or fails to pay its debts generally as they become
         due; or

8.7      Any order, judgment or decree is entered under any bankruptcy,
         reorganization, compromise, arrangement, insolvency, readjustment of
         debt, dissolution or liquidation or similar law (herein called the
         "Bankruptcy Law") of any jurisdiction adjudicating the Sponsor or any
         of its Subsidiaries bankrupt or insolvent; or

8.8      The Sponsor or any of its Subsidiaries petitions or applies to any
         tribunal for, or consents to, the appointment of, or taking possession
         by, a trustee, receiver, custodian or liquidator or similar official of
         the Sponsor or any of its Subsidiaries, or of any substantial part of
         the assets of the Sponsor or any of its Subsidiaries, or commences any
         proceedings (other than proceedings for the voluntary liquidation and
         dissolution of a Subsidiary) relating to the Sponsor or any of its
         Subsidiaries under the Bankruptcy Law of any jurisdiction, whether now
         or hereafter in effect, or any such petition or application is filed,
         or any such proceedings are commenced, against the Sponsor or any of
         its Subsidiaries and the Sponsor or such Subsidiary by any act
         indicates its approval thereof, consent thereto or acquiescence
         therein, or an order for relief is entered in an involuntary case under
         the federal bankruptcy laws, as now or hereafter constituted, or an
         order, judgment or decree is entered appointing any such trustee,
         receiver, custodian, liquidator or similar official, or approving the
         petition in any such proceedings, and such order judgment, or decree
         remains unstayed and in effect for more than 60 days; or

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<PAGE>   56
8.9      Any order, judgment or decree is entered in any proceedings against the
         Sponsor decreeing the dissolution of the Sponsor and such order,
         judgment or decree remains unstayed and in effect for more than 60
         days; or

8.10     Any order, judgment or decree is entered in any proceedings against the
         Sponsor or any of its Subsidiaries decreeing a split-up of the Sponsor
         or such Subsidiary which requires the divestiture of a substantial
         part, or the divestiture of assets, or stock of a Subsidiary, which
         shall have contributed a substantial part of consolidated net earnings
         for any of the three fiscal years most recently ended, and such order,
         judgment or decree remains unstayed and in effect for more than 60
         days; or

8.11     Any Reportable Event shall have occurred, or any finding or
         determination shall be made with respect to a Plan under Section
         4041(c) or (e) of ERISA, or any fact or circumstance shall occur with
         respect to a Plan which, in the opinion of the Required Participants,
         provides grounds for the commencement of any proceeding under Section
         4042 of ERISA, or any proceeding shall be commenced with respect to a
         Plan under Section 4042 of ERISA; or

8.12     There shall exist or occur any default as provided under the terms of
         any other Operative Document, or any Operative Document ceases to be in
         full force and effect or the validity or enforceability thereof is
         disaffirmed by or on behalf of Sponsor or any other Credit Party, or at
         any time it is or becomes unlawful for Sponsor or any other Credit
         Party to perform or comply with its obligations under any Operative
         Document, or the obligations of Sponsor or any other Credit Party under
         any Operative Document are not or cease to be legal, valid and binding
         on Sponsor or any such Credit Party; or

8.13     The Sponsor or any of its Subsidiaries shall fail to make any payment
         as and when such payment is due under the Synthetic Lease Documents, or
         any other default, event or condition shall have occurred or exist
         under the Synthetic Lease Documents, the effect of which is to cause,
         or to permit the holder of the obligations of the Sponsor or any such
         Subsidiary under the Synthetic Lease Documents to cause, the
         obligations of the Sponsor or any of its Subsidiaries, or any portion
         thereof, to become due prior to its stated maturity date or prior to
         its regularly scheduled date of payment;

         then upon the occurrence and during the continuation of any such event
         (each, a "Credit Event"):

         the Servicer may, with the consent of the Required Participants, and
         upon the written request of the Required Participants, shall, take any
         or all of the following actions, without prejudice to the rights of the
         Servicer or any Participant to enforce its claims against Sponsor, any
         other Credit Party, any Borrower or other obligor with respect to any
         Loan: (i) declare the Commitments terminated, whereupon the Commitments
         shall terminate immediately and any unpaid Commitment Fee shall
         forthwith become due and

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<PAGE>   57
         payable without any other notice of any kind (with the express
         understanding that such termination of the Commitments shall not result
         in a termination of the Participating Commitments of each Participant
         or of the obligation of the Servicer to fund any Loan Commitment); (ii)
         demand that the Sponsor purchase specified or all outstanding Startup
         Franchisee Loans and Startup Franchisee Loan Commitments by paying to
         the Servicer the Loan Indebtedness of each such Startup Franchisee Loan
         and assuming the Servicer's obligations under each Startup Franchisee
         Loan Commitment, whereupon such amount shall become, forthwith due and
         payable without presentment, demand, protest or other notice of any
         kind, all of which are hereby waived by the Sponsor (with the express
         understanding the limitations on Sponsor's guaranty obligations set
         forth in Article 10 shall not apply); (iii) demand that the Sponsor
         immediately deposit into the Cash Collateral Account, in immediately
         available funds, an amount equal to the Maximum Established Franchisee
         Recourse Amount (without relieving Sponsor of its obligations pursuant
         to Section 10.3(a) and (b)); and (iv) take any other action and
         exercise any other remedy available by contract or at law; provided,
         that, if a Credit Event specified in Sections 8.6, 8.7 or 8.8 shall
         occur, the result which would occur upon the giving of notice by the
         Servicer to any Credit Party, shall occur automatically without the
         giving of any such notice.

         In addition, the Servicer may, with the consent of the Required
         Participants and shall, upon the written request of the Required
         Participants, (A) to the extent authorized to do so pursuant to the
         Established Franchisee Loan Agreements (which authorization is limited
         to certain specified Credit Events), (x) cease funding further Advances
         pursuant to the Established Franchisee Loan Commitments and (y) declare
         all Loan Indebtedness outstanding pursuant to the Established
         Franchisee Loan Commitments to be immediately due and payable in
         accordance with the terms of the applicable Loan Documents and exercise
         all rights and remedies provided under the Loan Documents, and (B) give
         notice to the Startup Franchisee Borrowers that the Startup Franchisee
         Loan Commitments shall be terminated upon the date which is ninety (90)
         days after receipt by each such Startup Franchisee Borrower of such
         notice of termination, subject to such Startup Franchisee Borrower's
         right to term out advances for the Amortization Period.

                  9.       CHANGE OF CONTROL; CASH COLLATERAL ACCOUNT

9.1      Change of Control; Deposit In Cash Collateral Account.

         In the event of the occurrence of a Change of Control, (x) the
         Commitments shall automatically terminate on the Change of Control Date
         (with the express understanding that such termination of the
         Commitments shall not result in a termination of the Participating
         Commitments of each Participant or of the obligation of the Servicer to
         fund any Loan Commitment) and (y) the Sponsor shall immediately deposit
         with the Servicer, for the benefit of the Participants, a cash amount,
         in immediately available funds, equal to 1/24th of the aggregate
         outstanding amount of the Loan Commitments on such date (the

                                       52
<PAGE>   58
         "Monthly Deposit Amount"). The Servicer shall deposit such amount into
         an interest bearing account with the Servicer subject to the sole
         dominion and control of the Servicer (the "Cash Collateral Account").
         On each Payment Date thereafter, the Sponsor shall deposit with the
         Servicer, for the benefit of the Participants, an amount equal to the
         original Monthly Deposit Amount (regardless of any interim reduction of
         the Loan Commitments). On the earliest of (x) the Payment Date on which
         the aggregate amount on deposit in the Cash Collateral Account equals
         or exceeds the aggregate outstanding Loan Indebtedness pursuant to the
         Franchisee Loan Program and (y) the 23rd Payment Date, the Servicer
         shall (i) assign all Loans and Loan Commitments to the Sponsor, and the
         Sponsor shall assume the obligations of the Servicer thereunder, and
         (ii) disburse all amounts held in the Cash Collateral Account to repay
         the Funded Participant's Interest to each Participant in full, together
         with all Commitment Fees, interest and other amounts owing to the
         Participants hereunder and all Servicing Fees and other amounts owing
         to the Servicer pursuant to the Operative Documents, and shall return
         any excess amounts to the Sponsor.

9.2      Obligations with Respect to Defaulted Loans.

         Notwithstanding the amount on deposit in the Cash Collateral Account,
         following the occurrence of a Change of Control, the Sponsor shall
         continue to honor its obligations pursuant to the Operative Documents
         to repurchase Defaulted Loans and take the other actions required
         hereunder with respect thereto, including without limitation, the
         obligations of the Sponsor set forth in Section 10.3(a) and (b), with
         the express understanding that the Sponsor shall be required to make
         cash payments to the Servicer with respect to such obligations
         regardless of the amount on deposit in the Cash Collateral Account.

9.3      Effect of Credit Event Following Change of Control.

         Nothing set forth in this Article 9 shall be deemed to affect the
         Sponsor's obligation upon the occurrence of a Credit Event to
         immediately repurchase all Startup Franchisee Loans and Startup
         Franchisee Loan Commitments and to immediately deposit an amount equal
         to the Maximum Established Franchisee Recourse Amount with the Servicer
         to be placed in the Cash Collateral Account and to continue to comply
         with the provisions of Section 10.3(a) and (b) with respect thereto.
         Following the occurrence of a Credit Event, the Servicer shall continue
         to make the payments required pursuant to Section 9.1 and upon such
         time as the total amounts on deposit in the Cash Collateral Account
         (including the Maximum Established Franchisee Recourse Amount) equals
         or exceeds the aggregate Loan Indebtedness, the Servicer shall assign
         the Loans and Loan Commitments to the Sponsor as provided in Section
         9.1.

9.4      Deposit of Maximum Established Franchisee Recourse Amount Following
         Credit Event.

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<PAGE>   59
         In the event of the occurrence of a Credit Event where a Change of
         Control has not occurred, the Sponsor shall deposit the Maximum
         Established Franchisee Recourse Amount in the Cash Collateral Account
         as required by Article 8. Thereafter, the Servicer shall apply amounts
         on deposit in the Cash Collateral Account to satisfy Sponsor's
         obligations pursuant to Section 10.3(c) and Sponsor shall have no
         further obligation with respect thereto but the Servicer shall continue
         to have the option to require the Sponsor to satisfy its obligations
         pursuant to Section 10.3(a) and (b).

                  10.      GUARANTY

         In addition to its obligations upon the occurrence of a Credit Event or
a Change of Control and its other obligations pursuant to the Operative
Documents, the Sponsor hereby agrees as follows:

10.1     Unconditional Guaranty.

         The Sponsor hereby unconditionally and irrevocably guarantees to the
         Servicer, each Participant and any transferee of the Participants, the
         full and prompt payment of all of the Guaranteed Obligations relating
         to the Loans and all costs, charges and expenses (including reasonable
         attorneys' fees) actually incurred or sustained by the Servicer or any
         Participant in enforcing the obligations of the Sponsor hereunder or
         the obligations of the Borrowers under the applicable Loan Documents,
         subject, in the case of the Loans outstanding pursuant to the Startup
         Franchisee Commitment, to the limitations set forth in Section 10.2
         below and subject, in the case of Loans outstanding pursuant to the
         Established Franchisee Commitment, to the limitations set forth in
         Section 10.3 below. If any portion of the Loan Indebtedness with
         respect to any Defaulted Loan is not paid by the date specified herein,
         Sponsor hereby agrees to and will immediately pay the same, without
         resort by Servicer or any Participant to any other person or party. The
         obligation of Sponsor to Servicer and the Participants hereunder is
         primary, absolute and unconditional, except as may be specifically set
         forth herein. This is a guaranty of payment and not of collection. The
         obligations of the Sponsor pursuant to this Article 10 constitute a
         guarantee which is continuing in nature.

         The Servicer may, with the consent of the Required Participants and
         shall, upon the written request of the Required Participants, in the
         event that the obligations of the Sponsor with respect to a Defaulted
         Loan have arisen hereunder, request that the Sponsor purchase the
         Defaulted Loan from the Servicer prior to the acceleration of the
         Defaulted Loan pursuant to the terms of the applicable Loan Documents
         for an amount equal to the Loan Indebtedness with respect to such
         Defaulted Loan and such purchase by the Sponsor shall be deemed to be a
         payment hereunder in such amount.

10.2     Limitation on Guaranty of Startup Franchisee Loans.

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<PAGE>   60
         The obligation of the Sponsor pursuant to this Article 10 with respect
         to the Startup Franchisee Loans shall be limited, as of any date of
         determination, to an amount (the "Maximum Amount") equal to the greater
         of (a) fifty percent (50%) of the aggregate outstanding principal
         amount of the Startup Franchisee Loans on such date (after giving
         effect to any payments, recoveries on Collateral or other recoveries
         made by the Servicer or any Participant on such date with respect to
         the Startup Franchisee Loans), (b) three (3) times the largest
         aggregate amount of all Loan Commitments (or if the Loan Commitments
         have been terminated, all outstanding Loans) made to any Startup
         Franchisee Borrower and its Borrower Group and (c) $7,000,000; provided
         that, the Maximum Amount shall not on any date of determination exceed
         the aggregate outstanding Loan Indebtedness of the Startup Franchisee
         Loans. As a material inducement to the Servicer's and each
         Participant's entering into this Agreement, the parties hereto
         expressly agree that the Maximum Amount shall be redetermined (and the
         obligation of the Sponsor to pay such replenished Maximum Amount shall
         be enforceable by the Servicer and the Participants hereunder) on each
         day that any Loan Indebtedness remains outstanding pursuant to any
         Startup Franchisee Loan regardless of (i) any previous payments made by
         the Sponsor hereunder on any prior date, whether or not constituting
         the Maximum Amount payable on such prior date, or (ii) the number of
         prior demands made by the Servicer or the Participants hereunder;
         provided that, for purposes of calculating the Maximum Amount, (x) any
         Defaulted Loan for which a demand has previously been made, or deemed
         to have been made, pursuant to this Section 10.2 shall not be deemed to
         be outstanding and (y) demand shall be deemed to have been made with
         respect to each Defaulted Loan on the date on which the Servicer is
         authorized to make a demand on the Sponsor with respect to such
         Defaulted Loan pursuant to Section 4.3 or Section 4.4 of this Agreement
         unless such Loan Default arises solely from the occurrence of a Credit
         Event in which case demand shall be deemed to be made only upon receipt
         of written request from the Servicer.

         The foregoing limitation shall not in any way limit the obligation of
         the Sponsor with respect to the Established Franchisee Loans or the
         obligation of the Sponsor to purchase the Startup Franchisee Loans and
         assume the Loan Commitments relating thereto upon the occurrence of a
         Credit Event without regard to any limitations set forth in this
         Article 10.

10.3     Obligations of Sponsor With Respect to Established Franchisee Loans.

                  (a) During any Response Period for an Established Franchisee
        Loan of a Defaulted Borrower, the Sponsor may elect either to (i) waive
        or cure any Loan Payment Default, or waive any other Loan Default, with
        respect to such Established Franchisee Loan pursuant to Section 4.2 of
        this Agreement, or (ii) use its reasonable efforts to exercise its
        rights pursuant to the applicable Franchise Agreement with such
        Defaulted Borrower to assume the operation of the stores of such
        Defaulted Borrower. During any

                                       55
<PAGE>   61
        period that Sponsor operates the stores of any Defaulted Borrower,
        Sponsor shall make all payments due and owing to the Servicer pursuant
        to the applicable Loan Documents.

                  (b) If the Sponsor assumes operation of the stores of any
        Defaulted Borrower, the Sponsor will use its reasonable efforts to
        locate a purchaser for such stores. In the event that the Sponsor has
        not resold the franchise and inventory of such Defaulted Borrower within
        sixty (60) days after assuming operation thereof in accordance with the
        terms to the applicable Franchise Agreement for a purchase price equal
        to or in excess of the Minimum Purchase Price (which amount shall be
        paid directly to the Servicer in return for the assignment to the
        Sponsor of the Defaulted Loan, the related Loan Commitment and the Liens
        of the Servicer thereon, and applied by the Servicer to the Sponsor's
        purchase of the outstanding Loan Indebtedness of such Defaulted Loan,
        with any deficiency recovered pursuant to the next paragraph), Sponsor
        shall purchase the outstanding Loan Indebtedness of such Defaulted Loan
        and any related Loan Commitment from the Servicer for the Minimum
        Purchase Price and any deficiency amount may be collected by the
        Servicer, for the benefit of the Participants, pursuant to subsection
        (c) below.

                  (c) In the event that (i) during the Response Period for any
        Established Franchisee Loan of a Defaulted Borrower, the Sponsor has not
        waived or cured any Loan Payment Default, or waived any other Loan
        Default, and has not assumed the operation of the stores of the
        Defaulted Borrower, or (ii) the Sponsor has not resold the franchise and
        inventory of the Defaulted Borrower within sixty (60) days after
        assuming operation of the stores of the Defaulted Borrower in accordance
        with the terms of the applicable Franchise Agreement, then the Sponsor
        will purchase, upon demand by the Servicer, the Established Franchisee
        Loan and the related Loan Commitment of such Defaulted Borrower for an
        amount equal to the outstanding Loan Indebtedness of the Defaulted Loan
        pursuant to its guaranty set forth above; provided, however, that the
        aggregate amount paid by the Sponsor pursuant to this Section 10.3(c)
        with respect to all Defaulted Loans outstanding pursuant to the
        Established Franchisee Commitment shall not exceed the Maximum
        Established Franchisee Recourse Amount.

                   (d) Notwithstanding the foregoing, to the extent that the
        Sponsor is prohibited by applicable law, court order or other legal
        impediment from exercising the options set forth in subsection (a) or
        (b) above, the Servicer may, with the consent of the Required
        Participants and shall, upon the written request of the Required
        Participants, require that the Sponsor repurchase the Loan pursuant to
        subsection (c) above.

10.4     Continuing Guaranty.

         The obligations of the Sponsor pursuant to this Article 10 constitute a
         guarantee which is continuing in nature and shall be effective with
         respect to the full amount outstanding

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<PAGE>   62
         under all Guaranteed Obligations, now existing or hereafter made or
         extended, regardless of the amount, subject only to the limitations set
         forth in the preceding Sections 10.2 and 10.3.

10.5     Waivers.

         The Sponsor hereby waives notice of Servicer's and each Participant's
         acceptance of this Agreement and the creation, extension or renewal of
         any Loans or other Guaranteed Obligations. Sponsor hereby consents and
         agrees that, at any time or times, without notice to or further
         approval from Sponsor, and without in any way affecting the obligations
         of Sponsor hereunder, Servicer and the Participants may, with or
         without consideration (i) release, compromise with, or agree not to
         sue, in whole or in part, any Borrower or any other obligor, guarantor,
         endorser or surety on any Loans or any other Guaranteed Obligations,
         (ii) renew, extend, accelerate, or increase or decrease the principal
         amount of any Loans or other Guaranteed Obligations, either in whole or
         in part, (iii) amend, waive, or otherwise modify any of the terms of
         any Loans or other Guaranteed Obligations or of any mortgage, deed of
         trust, security agreement, or other undertaking of any of the Borrowers
         or any other obligor, endorser, guarantor or surety in connection with
         any Loans or other Guaranteed Obligations, and (iv) apply any payment
         received from Borrowers or from any other obligor, guarantor, endorser
         or surety on the Loans or other Guaranteed Obligations to any of the
         liabilities of Borrowers or of such other obligor, guarantor, endorser,
         or surety which Servicer may choose, subject, however, to the rights of
         Sponsor to bring a separate action for any breach of the Operative
         Documents pursuant to Section 10.12.

10.6     Additional Actions.

         Subject to Section 10.12, Sponsor hereby consents and agrees that the
         Servicer may at any time or times, either with or without
         consideration, surrender, release or receive any property or other
         Collateral of any kind or nature whatsoever held by it or for its
         account securing any Loans or other Guaranteed Obligations, or
         substitute any Collateral so held by Servicer for other Collateral of
         like or different kind, without notice to or further consent from
         Sponsor, and such surrender, receipt, release or substitution shall not
         in any way affect the obligations of Sponsor hereunder. Subject to
         Section 10.12, Servicer shall have full authority to adjust,
         compromise, and receive less than the amount due upon any such
         Collateral, and may enter into any accord and satisfaction agreement
         with respect to the same as Servicer may deem advisable without
         affecting the obligations of Sponsor hereunder. Servicer shall be under
         no duty to undertake to collect upon such Collateral or any part
         thereof, and Sponsor's obligations hereunder shall not be affected by
         Servicer's alleged negligence or mistake in judgment in handling,
         disposing of, obtaining, or failing to collect upon or perfect a
         security interest in, any such Collateral.

10.7     Additional Waivers.

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         Sponsor hereby waives presentment, demand, protest, and notice of
         dishonor of any of the liabilities guaranteed hereby. Neither Servicer
         nor any Participant shall have any duty or obligation (i) to proceed or
         exhaust any remedy against any Borrower, any other obligor, guarantor,
         endorser, or surety on any Loans or other Guaranteed Obligations, or
         any other security held by Servicer or any Participant for any Loans or
         other Guaranteed Obligations, or (ii) to give any notice whatsoever to
         Borrowers, Sponsor, or any other obligor, guarantor, endorser, or
         surety on any Loans or other Guaranteed Obligations, before bringing
         suit, exercising rights to any such security or instituting proceedings
         of any kind against Sponsor, any Borrower, or any of them, and Sponsor
         hereby waives any requirement for such actions by Servicer or any
         Participant. Upon default by any Borrower and Servicer's demand to
         Sponsor hereunder, Sponsor shall be held and bound to Servicer and each
         Participant directly as principal debtor in respect of the payment of
         the amounts hereby guaranteed, such liability of Sponsor being joint
         and several with each Borrower and all other obligors, guarantors,
         endorsers and sureties on the Loans or other Guaranteed Obligations,
         subject, however, to the rights of Sponsor to bring a separate action
         for any breach of the Operative Documents pursuant to Section 10.12.

10.8     Postponement of Obligations.

         Until the Loan and other Guaranteed Obligations of any Borrower to the
         Servicer and the Participants have been paid in full (i) all present
         and future indebtedness of such Borrower to Sponsor (the "Subordinated
         Debt") is hereby postponed to the present and future indebtedness of
         such Borrower to Servicer and each Participant, and all monies received
         from such Borrower or for its account by Sponsor with respect to such
         Subordinated Debt shall be received in trust for Servicer and the
         Participants, and promptly upon receipt, shall be paid over to Servicer
         for distribution to the Participants in accordance herewith until such
         Borrower's indebtedness to Servicer and the Participants is fully paid
         and satisfied, all without prejudice to and without in any way
         affecting the obligations of Sponsor hereunder; provided that unless a
         Loan Default or Loan Payment Default has occurred and is continuing,
         the Sponsor may accept and retain any payments made by any Borrower to
         the Sponsor in the ordinary course of business, and (ii) Sponsor shall
         not have any rights of subrogation or otherwise to participate in any
         security held by the Servicer for any Loan to such Borrower or any
         other Guaranteed Obligations arising therefrom, and Sponsor hereby
         waives such rights until such time as such Loan and other Guaranteed
         Obligations have been paid in full to the Servicer and each Participant
         (whether by repurchase by the Sponsor, pursuant to this Article 10 or
         otherwise).

10.9     Effect on Additional Guaranties.

         The obligations of the Sponsor pursuant to this Article 10 are in
         addition to, and are not intended to supersede or be a substitute for
         any other guarantee, suretyship agreement, or

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         instrument which Servicer may hold in connection with any Loans or
         other Guaranteed Obligations.

10.10    Reliance on Guaranty and Purchase Obligation; Disclaimer of Liability.

         Sponsor expressly acknowledges and agrees that each of the Servicer and
         the Participants, in making its credit decision with regard to the
         funding of the Loans, will rely solely upon the guaranty and purchase
         obligation of Sponsor set forth above and in Article 10 and that
         neither the Servicer nor any Participant is under any obligation or
         duty to perform any credit analysis or investigation with regard to the
         creditworthiness of any Borrower. In addition, the Servicer expressly
         disclaims any responsibility or liability for the authenticity of
         signatures on any of the Loan Documents (other than the Servicer's),
         the authority of the Persons executing the Loan Documents (other than
         the Servicer) or the enforceability or compliance with laws of any of
         the Loan Documents.

         SPONSOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT SPONSOR'S GUARANTY
         OBLIGATIONS TO PURCHASE LOANS UNDER THIS AGREEMENT ARE ABSOLUTE AND
         UNCONDITIONAL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
         SPONSOR'S OBLIGATION SHALL NOT BE AFFECTED BY THE EXISTENCE OF ANY
         DEFAULT BY ANY BORROWER UNDER THE APPLICABLE LOAN DOCUMENTS, ANY
         EXCHANGE, RELEASE OR NONPERFECTION OF ANY LIEN WITH RESPECT TO ANY
         COLLATERAL SECURING PAYMENT OF ANY LOAN, THE SUBSTITUTION OR RELEASE OF
         ANY ENTITY PRIMARILY OR SECONDARILY LIABLE FOR ANY LOAN, ANY LACK OF
         ENFORCEABILITY OF ANY LOAN DOCUMENT, ANY LAW, REGULATION, OR ORDER OF
         ANY JURISDICTION AFFECTING ANY LOAN OR LOAN DOCUMENT OR THE RIGHTS OF
         THE HOLDER THEREOF, ANY CHANGE IN THE CONDITION OR PROSPECTS OF THE
         BORROWER, INCLUDING WITHOUT LIMITATION, INSOLVENCY, BANKRUPTCY,
         REORGANIZATION OR SIMILAR PROCEEDING, OR ANY OTHER CIRCUMSTANCE WHICH
         MIGHT, BUT FOR THE PROVISIONS OF THIS PARAGRAPH, CONSTITUTE A LEGAL OR
         EQUITABLE DISCHARGE OF SPONSOR'S OBLIGATIONS HEREUNDER. SPONSOR'S
         OBLIGATIONS HEREUNDER SHALL NOT BE AFFECTED BY ANY SET-OFF OR CLAIM
         WHICH IT MIGHT HAVE AGAINST THE SERVICER OR ANY PARTICIPANT, WHETHER
         ARISING OUT OF THIS AGREEMENT OR OTHERWISE, BUT SUBJECT TO SECTION
         10.12 BELOW.

10.11    Reinstatement of Obligations.

         The obligations of the Sponsor pursuant to the Operative Documents
         shall continue to be effective or be reinstated, as the case may be, if
         at any time payment or any part thereof, of principal of, interest on
         or any other amount with respect to any Loan or any obligation

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         of Sponsor pursuant to the Operative Documents is rescinded or must
         otherwise be restored by the Servicer or any Participant upon the
         bankruptcy or reorganization of Sponsor, any Borrower or any guarantor
         or otherwise.

10.12    Right to Bring Separate Action.

         Nothing contained in this Article 10 shall be construed to affect any
         other right that Sponsor may otherwise have under this Agreement, or
         any Operative Document or Loan Documents, at law or in equity to
         institute an action or assert a claim against the Servicer or any
         Participant based upon a breach of Servicer's or such Participant's
         obligations set forth in the Operative Documents or Loan Documents or
         to assert a compulsory counterclaim with respect thereto and any waiver
         of notice or other matter set forth in this Article 10 shall not affect
         Sponsor's right to seek damages arising from the failure of the
         Servicer to give such notice otherwise required by the terms of the
         Operative Documents or Loan Documents.

10.13    Subordination of Liens.

         The Sponsor hereby subordinates the lien and priority of the Sponsor's
         existing and future liens and other interests, if any, in and to the
         Collateral to the Servicer's existing and future interest in the
         Collateral under the Loan Documents notwithstanding the time of
         attachment of the interests of the Sponsor or the Servicer or the time
         the Loan Indebtedness or the Subordinated Debt is incurred.
         Notwithstanding anything to the contrary contained in this Agreement,
         under applicable law or otherwise, in the event that the liens of the
         Servicer are at any time unperfected with respect to any or all of the
         Collateral, the lack of perfection by the Servicer as to any such
         Collateral shall not affect the validity, enforceability or priority of
         any lien on the Collateral in favor of the Sponsor. In any such event,
         the liens of the Sponsor shall have priority over any and all other
         Liens in favor of any third party with respect to the Collateral
         (including, but not limited to any trustee under the Bankruptcy Code)
         and the Sponsor shall be, and is hereby constituted, as the Servicer's
         agent and bailee for purposes of perfection of the Liens of the
         Servicer in the Collateral such that the Lien in favor of the Sponsor
         shall be held by the Sponsor for the benefit of the Servicer and the
         proceeds of any disposition of the Collateral of any Borrower shall be
         and are in all respects subject to the priority of right to payment and
         satisfaction of first, the Loan Indebtedness of such Borrower and then,
         the Subordinated Debt with respect to such Borrower. The lien
         priorities provided in this Section shall not be altered or otherwise
         affected by any amendment, modification, supplement, extension,
         renewal, restatement or refinancing of either the applicable Loan
         Indebtedness or the Subordinated Debt, nor by any action or inaction
         which either the Servicer or the Sponsors may take or fail to take in
         respect of the Collateral, except as otherwise provided above in this
         subsection.

10.14    Exercise of Remedies With Respect to Collateral.

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                     (a) Until the Loan Indebtedness of any Borrower has been
         fully and indefeasibly paid in cash, the Sponsor shall not, without the
         prior written consent of the Servicer, ask, demand, assign, declare a
         default under, sue for, liquidate, sell, foreclose, set off, collect,
         accept a surrender, petition, commence or otherwise initiate any
         bankruptcy action (or join any other Person in so doing) against the
         Borrower or its assets or otherwise realize or seek to realize upon all
         or any part of the Collateral without the prior written consent of the
         Servicer or as expressly authorized hereunder. In the event that
         following the occurrence of a Loan Default, the Servicer may from time
         to time execute releases, partial releases, terminations,
         reconveyances, subordinations or other documents releasing or otherwise
         limiting the Servicer's interests in the Collateral in connection with
         the exercise of the Servicer's remedies or the refinancing of the
         Defaulted Loan, the Sponsor agrees to execute and deliver at such time
         such further documents as the Servicer may require to effect a
         corresponding change to the Sponsor's position in the same Collateral.

                     (b) In the event that the Loan Indebtedness of any
         Defaulted Loan is not repaid or repurchased by the Sponsor as set forth
         herein, the Servicer, on behalf of the Participants, shall have the
         exclusive right to exercise and enforce all privileges and rights with
         respect to the Collateral according to the Servicer's discretion and
         the exercise of its business judgment, including, without limitation,
         the exclusive right to take or retake control or possession of such
         Collateral and to hold, prepare for sale, process, sell, lease, dispose
         of, or liquidate such Collateral.

                     (c) Only the Servicer, acting on behalf of the
         Participants, shall have the right to restrict or permit, or approve or
         disapprove, the sale, transfer or other disposition of Collateral
         following the occurrence of a Loan Default where the Loan Indebtedness
         is not repaid or repurchased by the Sponsor in accordance with the
         terms hereof. In the event the Servicer releases its Liens on all or
         any part of the Collateral, the Sponsor will, immediately upon the
         request of the Servicer, release its Liens upon the same Collateral,
         but only to the extent such Collateral is sold or otherwise disposed of
         by the Borrower with the consent of the Servicer or in a commercially
         reasonable manner by the Servicer or its agents. The Sponsor will
         immediately deliver such releases, acknowledgments and other documents
         as the Servicer may require in connection therewith.

                     (d) (i) In exercising its rights pursuant to this Section
         10.14, the Servicer agrees that it will not release Liens or Collateral
         or commence enforcement actions under the Loan Documents without the
         direction of the Required Participants. The Servicer agrees to
         administer the Loan Documents and the Collateral and to make such
         demands and give such notices thereunder as the Required Participants
         may request and to take such action to enforce the Loan Documents and
         to realize upon, collect and dispose of the Collateral as the Required
         Participants may direct. The Servicer shall not be required to take any
         action that is, in its opinion, contrary to law or the terms of the
         Loan Documents

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         or the Operative Documents or that would, in the opinion of the
         Servicer, subject it or any of its officers, employees, agents or
         directors to liability and the Servicer shall not be required to take
         any action unless and until it is indemnified to its satisfaction by
         the Participants for any loss, cost or liability resulting from any
         required action.

                           (ii) The Servicer may at any time request directions
         from the Required Participants as to any course of action or other
         matter relating hereto or relating to any of the Loan Documents. Except
         as otherwise provided in this Agreement, directions of the Required
         Participants shall be binding on all Participants hereunder.

                           (iii) Nothing set forth in this Section 10.14 shall
         modify the rights of the Servicer set forth in Section 3.1.

10.15    Rights Of Sponsor Upon Payment; Cooperation By Servicer.

         Upon receipt by the Servicer of payment in full of the Loan
         Indebtedness of a Defaulted Loan by Sponsor, Sponsor shall be
         subrogated to the rights of the Servicer with respect to the Loan and
         the Servicer shall be deemed to have assigned to Sponsor, and Sponsor
         shall, to the extent permitted by applicable law, automatically,
         immediately and without further action by any Person, be entitled to,
         all rights and remedies that the Servicer may have had against the
         Defaulted Borrower and any other Persons primarily or secondarily
         liable on such Defaulted Loan, including without limitation the right
         to resort to any and all Collateral which secures the Defaulted Loan.
         The Servicer agrees that, upon receipt of payment in full of the Loan
         Indebtedness, the Servicer shall:

                     (a) execute on a timely basis, without recourse,
         representation or warranty of any kind (except as to its own title),
         all such instruments and documents as are reasonably requested in order
         to evidence Sponsor's rights hereunder or permit Sponsor to exercise
         such rights;

                     (b) permit Sponsor at reasonable times and as often as may
         be reasonably requested to discuss with appropriate Servicer employees
         and officers the Servicer's experience, relationships, books, accounts
         and files and to review the Servicer's loan files relating to the
         purchased Defaulted Loan (and Sponsor hereby agrees to keep all such
         information confidential); and

                     (c) otherwise reasonably cooperate with Sponsor in the
         exercise of Sponsor's rights.

         Sponsor shall reimburse the Servicer for its expenses reasonably and
         actually incurred in complying with this Section.

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                           11.      INDEMNIFICATION

11.1     Indemnification.

                  (a) In addition to the other rights of the Servicer and the
         Participants hereunder, Sponsor hereby agrees to protect, indemnify and
         save harmless the Servicer, each Participant, and the officers,
         directors, shareholders, employees, agents and representatives thereof
         (each an "Indemnified Party") from and against any and all liabilities,
         obligations, losses, damages, penalties, actions, judgments, suits,
         costs (including, without limitation, reasonable attorney's fees and
         costs actually incurred), expenses or disbursements of any kind or
         nature whatsoever, whether direct, indirect, consequential or
         incidental, with respect to or in connection with or arising out of (i)
         the execution and delivery of this Agreement, any other Operative
         Document or any agreement or instrument contemplated hereby or thereby,
         including without limitation, the Loan Documents, the performance by
         the parties hereto or thereto of their respective obligations hereunder
         or thereunder or the consummation of the transactions contemplated
         hereby, (ii) the making or administration of the Loan Commitments, the
         Loans or any of them, including any violation of federal or state usury
         or other laws, provided that with respect to clauses (i) and (ii),
         Sponsor shall have no obligation to indemnify the Servicer and all
         Participants for more than one (1) counsel's reasonable fees and
         expenses, (iii) the enforcement, performance and administration of this
         Agreement or the Loan Documents or any powers granted to the Servicer
         hereunder or under any Loan Documents, (iv) any misrepresentation of
         the Sponsor hereunder, (v) any matter arising pursuant to any
         Environmental Laws as a result of the Collateral or (vi) any actual or
         prospective claim, litigation, investigation or proceeding relating to
         any of the foregoing, whether based on contract, tort or any other
         theory, whether or not the Indemnified Party is a named party thereto,
         except to the extent that such losses, claims, damages, liabilities or
         related expenses are determined by a court of competent jurisdiction by
         final and nonappealable judgment to have resulted from the gross
         negligence or willful misconduct of such Indemnified Party or arise
         solely from the nonpayment of any Loan Indebtedness notwithstanding the
         performance by Sponsor of all of its obligations under the Operative
         Documents relating to such Loan Indebtedness.

                     (b) Without limiting the generality of the foregoing, and
         separate and apart from any obligation of Sponsor pursuant to Article
         10, Sponsor agrees to indemnify and hold harmless each Indemnified
         Party from and against, and on demand will pay or reimburse any
         Indemnified Party for, any and all (i) liabilities arising from a
         breach of any representation or warranty made by Sponsor hereunder
         (whether or not Sponsor's obligations under Article 10 have been
         satisfied), (ii) any breach by Sponsor of its agreements with the
         Borrowers, (iii) any overadvance to any Borrower caused by the transfer
         of ACH transfer instructions from the ATAC System to the Servicer by
         Sponsor resulting in aggregate advances to such Borrower in excess of
         the Loan Commitment to

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         such Borrower, and (iv) any breach by Sponsor of the terms of its
         MicroACH Service Agreement with the Servicer or any failure by Sponsor
         to maintain such agreement in full force and effect.

                  (c) This indemnity shall survive the termination of this
         Agreement.

11.2     Notice Of Proceedings; Right To Defend

                     (a) Any Person with an indemnification claim (or potential
         claim) pursuant to Section 11.1 ("Potential Indemnitee") agrees to
         notify Sponsor (the "Potential Indemnitor") in writing within a
         reasonable time after receipt by it of written notice of the
         commencement of any administrative, legal or other proceeding, suit or
         action by a Person (other than Indemnitee or an affiliate thereof), if
         a claim for indemnification may be made by the Potential Indemnitee
         against the Potential Indemnitor under this Article 11.

                     (b) Following receipt by the Potential Indemnitor of any
         such notice from a Potential Indemnitee, (an "Indemnity Notice"), the
         Potential Indemnitor shall be entitled at its own cost and expense to
         investigate and participate in the proceeding, suit or action referred
         to in the Indemnity Notice. At such time as the Potential Indemnitor
         shall have acknowledged in writing to the Potential Indemnitee that it
         will pay any judgment, damages, or losses incurred by the Potential
         Indemnitee in the proceeding, suit or action referred to in the
         Indemnity Notice other than those for gross negligence or willful
         misconduct on the part of the Potential Indemnitee (at which time the
         "Potential Indemnitor" shall be deemed to be the "Indemnitor" and the
         "Potential Indemnitee" shall be deemed to be the "Indemnitee"), the
         Indemnitor shall be entitled, to the extent that it shall desire, to
         assume the defense of such proceeding, suit or action, with counsel
         reasonably satisfactory to the Indemnitee. If the Indemnitor shall so
         assume the defense of such proceeding, suit or action, the Indemnitor
         shall conduct such defense with due diligence and at its own cost and
         expense.

                     (c) In the event that the Indemnitor so assumes the defense
         of such proceeding, suit or action, the Indemnitor shall not be
         entitled to settle such proceeding, suit or action without the written
         consent of the Indemnitee, provided that in the event that the
         Indemnitee does not consent to such settlement not to be unreasonably
         withheld or delayed (i) the Indemnitor's indemnification liability in
         connection with such proceeding, suit or action shall not exceed the
         amount of such proposed settlement and (ii) Indemnitee shall assume and
         pay all costs and expenses, including reasonable attorneys' fees,
         incurred by Indemnitor from the date that the Indemnitor presented the
         Indemnitee the terms of the proposed settlement. An Indemnitor shall
         not be liable to an Indemnitee for any settlement of a claim in any
         proceeding, suit or other action referred to in an Indemnity Notice,
         consented to by the Indemnitee without the consent of the Indemnitor.

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                     (d) A Potential Indemnitor shall be liable to a Potential
         Indemnitee for a settlement of a claim in any proceeding, suit or other
         action referred to in an Indemnity Notice consented to by such
         Potential Indemnitee only if (i) such Potential Indemnitor first had a
         reasonable opportunity to investigate such claim and participate in
         such proceeding, suit or action, (ii) the Potential Indemnitee gave the
         Potential Indemnitor at least ten (10) Business Days notice of the
         proposed terms of such settlement prior to entering into such
         settlement and (iii) the Potential Indemnitor did not acknowledge in
         writing to the Potential Indemnitee, by the expiration of such ten (10)
         Business Days period, or such longer period as may be agreed to by the
         Potential Indemnitee and Potential Indemnitor that it would pay any
         judgment, damages or losses incurred by the Potential Indemnitee in
         such proceeding suit or action.

11.3     Third Party Beneficiaries

         No Persons shall be deemed to be third party beneficiaries of this
         Agreement. Except as expressly otherwise provided in this Agreement,
         this Agreement is solely for the benefit of Sponsor and the Servicer,
         the Participants and their respective successors and permitted assigns,
         and no other Person shall have any right, benefit, priority or interest
         under, or because of the existence of, this Agreement.

                           12.      SURVIVAL OF LOAN FACILITY

         The terms of this Loan Facility Agreement shall survive the termination
of the Commitments hereunder and the termination of any Loan Commitment
established pursuant the terms hereof until the indefeasible payment in full of
each of the Loans outstanding hereunder and Article 11 shall survive the
termination of this Agreement upon such repayment.

                           13.      CONDITIONS PRECEDENT

         The effectiveness of this Agreement and the amendment and restatement
of the Existing Facility Agreement, as well as the obligation of the Servicer to
establish the initial Loan Commitment pursuant to this Agreement, is subject to
satisfaction of the following conditions:

13.1     Receipt of Documents.

         The Servicer shall have received the following, each dated as of the
         Effective Date, in form and substance satisfactory to the Servicer and
         (except in the case of the Fee Letter) the Participants:

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         (a) Duly executed counterparts of this Agreement.

         (b) Duly executed counterparts of the Servicing Agreement and the Fee
Letter.

         (c) Duly executed counterparts of the Guaranty Agreement.

         (d) A duly executed closing certificate of Sponsor, in form and
substance satisfactory to the Servicer and each Participant.

         (e) A duly executed certificate of Sponsor identifying the Authorized
Signatories, in form and substance satisfactory to the Servicer and each
Participant;

         (f) 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.

         (g) 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 the Guaranty
Agreement, this Agreement, the Servicing Agreement 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.

         (h) A favorable written opinion of Kilpatrick Stockton, LLP, counsel
for Sponsor and Guarantors, in a form satisfactory to the Servicer and each
Participant and covering such matters relating to the transactions contemplated
hereby as the Servicer may reasonably request.

         (i) 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.

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

                           14.      THE SERVICER

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14.1     Appointment of Servicer as Agent.

         To the extent of its ownership interest in the Loans, each Participant
         hereby designates Servicer as its agent to administer all matters
         concerning the Loans and to act as herein specified. Each Participant
         hereby irrevocably authorizes the Servicer to take such actions on its
         behalf under the provisions of this Agreement, the other Operative
         Documents, and all other instruments and agreements referred to herein
         or therein, and to exercise such powers and to perform such duties
         hereunder and thereunder as are specifically delegated to or required
         of the Servicer by the terms hereof and thereof and such other powers
         as are reasonably incidental thereto. The Servicer may perform any of
         its duties hereunder by or through its agents or employees.

14.2     Nature of Duties of Servicer.

         The Servicer shall have no duties or responsibilities except those
         expressly set forth in this Agreement and the other Operative
         Documents. None of the Servicer nor any of its respective officers,
         directors, employees or agents shall be liable for any action taken or
         omitted by it as such hereunder or in connection herewith, unless
         caused by its or their gross negligence or willful misconduct. The
         Servicer shall not have by reason of this Agreement a fiduciary
         relationship in respect of any Participant; and nothing in this
         Agreement, express or implied, is intended to or shall be so construed
         as to impose upon the Servicer any obligations in respect of this
         Agreement or the other Operative Documents except as expressly set
         forth herein.

14.3     Lack of Reliance on the Servicer.

                  (a) Independently and without reliance upon the Servicer, each
         Participant, to the extent it deems appropriate, has made and shall
         continue to make (i) its own independent investigation of the financial
         condition and affairs of the Credit Parties in connection with the
         taking or not taking of any action in connection herewith, and (ii) its
         own appraisal of the creditworthiness of the Credit Parties, and,
         except as expressly provided in this Agreement, the Servicer shall have
         no duty or responsibility, either initially or on a continuing basis,
         to provide any Participant with any credit or other information with
         respect thereto, whether coming into its possession before the making
         of the Loans or at any time or times thereafter.

                  (b) The Servicer shall not be responsible to any Participant
         for any recitals, statements, information, representations or
         warranties herein or in any document, certificate or other writing
         delivered in connection herewith or for the execution, effectiveness,
         genuineness, validity, enforceability, collectibility, priority or
         sufficiency of this Agreement, the Guaranty Agreement, and Loan
         Document or any other documents contemplated hereby or thereby, or the
         financial condition of the Credit Parties or any

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         Borrower, or be required to make any inquiry concerning either the
         performance or observance of any of the terms, provisions or conditions
         of this Agreement, the Guaranty Agreement or the other documents
         contemplated hereby or thereby, or the financial condition of the
         Credit Parties or any Borrower, or the existence or possible existence
         of any Unmatured Credit Event or Credit Event.

14.4     Certain Rights of the Servicer.

         If the Servicer shall request instructions from the Required
         Participants with respect to any action or actions (including the
         failure to act) in connection with this Agreement, the Servicer shall
         be entitled to refrain from such act or taking such act, unless and
         until the Servicer shall have received instructions from the Required
         Participants; and the Servicer shall not incur liability in any Person
         by reason of so refraining. Without limiting the foregoing, no
         Participant shall have any right of action whatsoever against the
         Servicer as a result of the Servicer acting or refraining from acting
         hereunder in accordance with the instructions of the Required
         Participants.

14.5     Reliance by Servicer.

         The Servicer shall be entitled to rely, and shall be fully protected in
         relying, upon any note, writing, resolution, notice, statement,
         certificate, telex, teletype or telecopier message, cable gram,
         radiogram, order or other documentary, teletransmission or telephone
         message believed by it to be genuine and correct and to have been
         signed, sent or made by the proper Person. The Servicer may consult
         with legal counsel (including counsel for any Credit Party),
         independent public accountants and other experts selected by it and
         shall not be liable for any action taken or omitted to be taken by it
         in good faith in accordance with the advice of such counsel,
         accountants or experts.

14.6     Indemnification of Servicer.

         To the extent the Servicer is not reimbursed and indemnified by the
         Credit Parties, each Participant will reimburse and indemnify the
         Servicer, ratably according to the respective Pro Rata Shares, in
         either case, for and against any and all liabilities, obligations,
         losses, damages, penalties, actions, judgments, suits, costs, expenses
         (including counsel fees and disbursements) or disbursements of any kind
         or nature whatsoever which may be imposed on, incurred by or asserted
         against the Servicer in performing its duties hereunder, in any way
         relating to or arising out of this Agreement or the other Operative
         Documents; provided that no Participant shall be liable to the Servicer
         for any portion of such liabilities, obligations, losses, damages,
         penalties, actions, judgments, suits, costs, expenses or disbursements
         resulting from the Servicer's gross negligence or willful misconduct.

14.7     The Servicer in its Individual Capacity.

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         With respect to its obligations under this Agreement and the amounts
         advanced by it, the Servicer shall have the same rights and powers
         hereunder as any other Participant and may exercise the same as though
         it were not performing the duties specified herein; and the terms
         "Participants", "Required Participants", or any similar terms shall,
         unless the context clearly otherwise indicates, include the Servicer in
         its individual capacity. The Servicer may accept deposits from, lend
         money to, and generally engage in any kind of banking, trust, financial
         advisory or other business with the Consolidated Companies or any
         affiliate of the Consolidated Companies as if it were not performing
         the duties specified herein, and may accept fees and other
         consideration from the Consolidated Companies for services in
         connection with this Agreement and otherwise without having to account
         for the same to the Participants.

14.8     Holders of Participation Certificates.

         The Servicer may deem and treat the payee of any Participation
         Certificate as the owner thereof for all purposes hereof unless and
         until a written notice of the assignment or transfer thereof shall have
         been filed with the Servicer. Any request, authority or consent of any
         Person who, at the time of making such request or giving such authority
         or consent, is the holder of any Participation Certificate shall be
         conclusive and binding on any subsequent holder, transferee or assignee
         of such Participation Certificate or of any Participation Certificate
         or Certificates issued in exchange therefor.

                           15.      MISCELLANEOUS

15.1     Notices.

         All notices, requests and other communications to any party hereunder
         shall be in writing (including bank wire, telex, telecopy or similar
         teletransmission or writing) and shall be given to such party at its
         address or applicable teletransmission number set forth on the
         signature pages hereof, or such other address or applicable
         teletransmission number as such party may hereafter specify by notice
         to the Servicer and Sponsor. Each such notice, request or other
         communication shall be effective (i) if given by telex, when such telex
         is transmitted to the telex number specified in this Section and the
         appropriate answerback is received, (ii) if given by mail, 72 hours
         after such communication is deposited in the mails with first class
         postage prepaid, addressed as aforesaid, (iii) if given by telecopy,
         when such telecopy is transmitted to the telecopy number specified in
         this Section and the appropriate confirmation is received, or (iv) if
         given by any other means (including, without limitation, by air
         courier), when delivered or received at the address specified in this
         Section; provided that notices to the Servicer shall not be effective
         until received.

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15.2     Amendments, Etc.

         No amendment or waiver of any provision of this Agreement or the other
         Operative Documents, nor consent to any departure by any Credit Party
         therefrom, shall in any event be effective unless the same shall be in
         writing and signed by the Required Participants (and in the case of any
         amendment, the applicable Credit Party), and then such waiver or
         consent shall be effective only in the specific instance and for the
         specific purpose for which given; provided that no amendment, waiver or
         consent shall, unless in writing and signed by all the Participants do
         any of the following: (i) waive any of the conditions specified in
         Section 2.1 or 11.1, (ii) increase the Participating Commitment Amounts
         or contractual obligations of the Participants to Servicer or Sponsor
         under this Agreement, (iii) reduce the principal of, or interest on,
         the Participation Certificates or any fees hereunder, (iv) postpone any
         date fixed for the payment in respect of principal of, or interest on,
         the Participation Certificates or any fees hereunder, (v) agree to
         release any Guarantor from its obligations under any Guaranty Agreement
         or the Sponsor from its obligations pursuant to this Agreement, (vi)
         modify the definition of "Required Participants," or (vii) modify
         Section 2.9, Article 4, Article 9, Article 10 or this Section 15.2.
         Notwithstanding the foregoing, no amendment, waiver or consent shall,
         unless in writing and signed by the Servicer in addition to the
         Participants required hereinabove to take such action, affect the
         rights or duties of the Servicer under this Agreement or under any
         other Operative Document or Loan Document. In addition, notwithstanding
         the foregoing, the Servicer and the Sponsor may, without the consent of
         or notice to the Participants, enter into amendments, modifications or
         waivers with respect to the Servicing Agreement and the Fee Letter as
         long as such amendments or modifications do not conflict with the terms
         of this Agreement.

15.3     No Waiver; Remedies Cumulative.

         No failure or delay on the part of the Servicer or any Participant in
         exercising any right or remedy hereunder or under any other Operative
         Document, and no course of dealing between any Credit Party and the
         Servicer or any Participant shall operate as a waiver thereof, nor
         shall any single or partial exercise of any right or remedy hereunder
         or under any other Operative Document preclude any other or further
         exercise thereof or the exercise of any other right or remedy hereunder
         or thereunder. The rights and remedies herein expressly provided are
         cumulative and not exclusive of any rights or remedies which the
         Servicer or any Participant would otherwise have. No notice to or
         demand on any Credit Party not required hereunder or under any other
         Operative Document in any case shall entitle any Credit Party to any
         other or further notice or demand in similar or other circumstances or
         constitute a waiver of the rights of the Servicer or the Participants
         to any other or further action in any circumstances without notice or
         demand.

15.4     Payment of Expenses, Etc.  Sponsor shall:

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<PAGE>   76
                  (a) whether or not the transactions hereby contemplated are
         consummated, pay all reasonable, out-of-pocket costs and expenses of
         the Servicer in the administration (both before and after the execution
         hereof and including reasonable expenses actually incurred relating to
         advice of counsel as to the rights and duties of the Servicer and the
         Participants with respect thereto) of, and in connection with the
         preparation, execution and delivery of, preservation of rights under,
         enforcement of, and, after a Unmatured Credit Event or Credit Event,
         refinancing, renegotiation or restructuring of, this Agreement and the
         other Operative Documents and the documents and instruments referred to
         therein, and any amendment, waiver or consent relating thereto
         (including, without limitation, the reasonable fees actually incurred
         and disbursements of counsel for the Servicer), and in the case of
         enforcement of this Agreement or any Operative Document after an Credit
         Event, all such reasonable, out-of-pocket costs and expenses
         (including, without limitation, the reasonable fees actually incurred
         and reasonable disbursements and changes of counsel), for any of the
         Participants; and

                  (b) Pay and hold the Servicer and each of the Participants
         harmless from and against any and all present and future stamp,
         documentary, and other similar Taxes with respect to this Agreement,
         the Participation Certificates, the Loan Documents and any other
         Operative Documents, any collateral described therein, or any payments
         due thereunder, and save the Servicer and each Participant harmless
         from and against any and all liabilities with respect to or resulting
         from any delay or omission to pay such Taxes.

15.5     Right of Setoff.

         In addition to and not in limitation of all rights of offset that any
         Participant may have under applicable law, each Participant shall, upon
         the occurrence of any Credit Event and whether or not such Participant
         has made any demand or any Credit Party's obligations have matured,
         have the right to appropriate and apply to the payment of any Credit
         Party's obligations hereunder and under the other Operative Documents,
         all deposits of any Credit Party (general or special, time or demand,
         provisional or final) then or thereafter held by and other indebtedness
         or property then or thereafter owing by such Participant or other
         holder to any Credit Party, whether or not related to this Agreement or
         any transaction hereunder.

15.6     Benefit of Agreement; Assignments; Participations.

                     (a) This Agreement shall be binding upon and inure to the
         benefit of and be enforceable by the respective successors and assigns
         of the parties hereto, provided that Sponsor may not assign or transfer
         any of its interest hereunder without the prior written consent of the
         Participants.

                     (b) Any Participant may make, carry or transfer Loans at,
         to or for the account of, any of its branch offices or the office of an
         Affiliate of such Participant.

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<PAGE>   77
                     (c) Each Participant may assign all of its interests,
         rights and obligations under this Agreement (including all of its
         Participating Commitments and the Funded Participant's Interest at the
         time owing to it and the Participation Certificates held by it) to any
         Eligible Assignee; provided, however, that (i) the Sponsor and the
         Servicer shall each have given its prior written consent to such
         assignment (which consent shall not be unreasonably withheld or
         delayed) unless such assignment is an Affiliate of the assigning
         Participant or, in the case of the Sponsor, unless a Credit Event has
         occurred and is continuing hereunder, (ii) unless the Participant is
         assigning its entire Participating Commitment, the Participating
         Commitment Amount of the assigning Participant subject to each
         assignment (determined as of the date the assignment and acceptance
         with respect to such assignment is delivered to the Servicer) shall not
         be less than the lesser of (x) 50% of the amount of its Original
         Participating Commitment or (y) $5,000,000 and shall be divided pro
         rata between the two Facilities, and (iii) the parties to each such
         assignment shall execute and deliver to the Servicer an Assignment and
         Acceptance, together with the Participation Certificate subject to such
         assignment and, unless such assignment is to an Affiliate of such
         Participant, a processing and recordation fee of $2,500. Within ten
         (10) Business Days after receipt of the notice and the Assignment and
         Acceptance, Servicer shall execute and deliver, in exchange for the
         surrendered Participation Certificate, a new Participation Certificate
         to the order of the assignor and such assignee in a principal amount
         equal to the applicable Participating Commitment Amount retained and
         assumed by it, respectively, pursuant to such Assignment and
         Acceptance. Such new Participation Certificate shall be in an aggregate
         principal amount equal to the aggregate principal amount of such
         surrendered Participation Certificate, shall be dated the date of the
         surrendered Participation Certificate which it replaces, and shall
         otherwise be in substantially the form attached hereto.

                     (d) Each Participant may, without the consent of Sponsor or
         the Servicer, sell participations to one or more banks or other
         entities in all or a portion of its rights and obligations under this
         Agreement (including all or a portion of its Participating Commitment
         and the Funded Participant's Interest owing to it), provided, however,
         that (i) no Participant may sell a participation in its Participating
         Commitment (after giving effect to any permitted assignment hereof)
         unless it retains an aggregate exposure of 25% of its original
         Participating Commitment Amount, provided, however, sales of
         participations to an Affiliate of such Participant shall not be
         included in such calculation; provided, however, no such maximum amount
         shall be applicable to any such participation sold at any time there
         exists an Credit Event hereunder, (ii) such Participant's obligations
         under this Agreement shall remain unchanged, (iii) such Participant
         shall remain solely responsible to the other parties hereto for the
         performance of such obligations, and (iv) the participating bank or
         other entity shall not be entitled to the benefit (except through its
         selling Participant) of the cost protection provisions contained in
         Article 2 of this Agreement, and (v) Sponsor, Servicer and the other
         Participants shall continue to deal solely and directly with each
         Participant in connection

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<PAGE>   78
         with such Participant's rights and obligations under this Agreement and
         the other Operative Documents, and such Participant shall retain the
         sole right to enforce the obligations of Sponsor relating to the Loans
         and to approve any amendment, modification or waiver of any provisions
         of this Agreement (other than an amendment requiring approval of 100%
         of the Participants). Each Participant shall promptly notify in writing
         the Servicer and the Sponsor of any sale of a participation hereunder
         and shall certify to Sponsor and Servicer its compliance with the terms
         hereof.

                     (e) Any Participant or participant may, in connection with
         the assignment or participation or proposed assignment or
         participation, pursuant to this Section, disclose to the assignee or
         participant or proposed assignee or participant any information
         relating to Sponsor or the other Consolidated Companies furnished to
         such Participant by or on behalf of Sponsor or any other Consolidated
         Company. With respect to any disclosure of confidential, non-public,
         proprietary information, such proposed assignee or participant shall
         agree to use the information only for the purpose of making any
         necessary credit judgments with respect to this credit facility and not
         to use the information in any manner prohibited by any law, including
         without limitation, the securities laws of the United States. The
         proposed participant or assignee shall agree not to disclose any of
         such information except (i) to directors, employees, auditors or
         counsel to whom it is necessary to show such information, each of whom
         shall be informed of and shall acknowledge the confidential nature of
         the information, (ii) in any statement or testimony pursuant to a
         subpoena or order by any court, governmental body or other agency
         asserting jurisdiction over such entity, or as otherwise required by
         law (provided prior notice is given to Sponsor and the Servicer unless
         otherwise prohibited by the subpoena, order or law), and (iii) upon the
         request or demand of any regulatory agency or authority with proper
         jurisdiction. The proposed participant or assignee shall further agree
         to return all documents or other written material and copies thereof
         received from any Participant, the Servicer or Sponsor relating to such
         confidential information unless otherwise properly disposed of by such
         entity.

                     (f) Any Participant may at any time assign all or any
         portion of its rights in this Agreement to a Federal Reserve Bank;
         provided that no such assignment shall release the Participant from any
         of its obligations hereunder.

                     (g) Notwithstanding any provision of this Agreement to the
         contrary, the Servicer, together with its Affiliates, shall at all
         times retain a Participating Commitment in an amount at least equal to
         25% of the aggregate principal amount of all outstanding Loan
         Commitments.

15.7     Governing Law; Submission to Jurisdiction.

                  (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
         PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE

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         WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT
         OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.

                  (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
         AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT MAY BE BROUGHT IN THE
         SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE
         STATE OF GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
         DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
         SPONSOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
         GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
         COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND
         SPONSOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
         LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
         GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
         THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
         JURISDICTIONS.

                  (c) Nothing herein shall affect the right of the Servicer, any
         Participant, or any Credit Party to commence legal proceedings or
         otherwise proceed against Sponsor in any other jurisdiction.

15.8     Counterparts.

         This Agreement may be executed in any number of counterparts and by the
         different parties hereto on separate counterparts, each of which when
         so executed and delivered shall be an original, but all of which shall
         together constitute one and the same instrument.

15.9     Severability.

         In case any provision in or obligation under this Agreement or the
         other Operative Documents shall be invalid, illegal or unenforceable,
         in whole or in part, in any jurisdiction, the validity, legality and
         enforceability of the remaining provisions or obligations, or of such
         provision or obligation in any other jurisdiction, shall not in any way
         be affected or impaired thereby.

15.10    Independence of Covenants.

         All covenants hereunder shall be given independent effect so that if a
         particular action or condition is not permitted by any of such
         covenants, the fact that it would be permitted by

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         an exception to, or be otherwise within the limitation of, another
         covenant, shall not avoid the occurrence of a Unmatured Credit Event or
         an Credit Event if such action is taken or condition exists.

15.11    No Joint Venture.

         Nothing in this Agreement, the Servicing Agreement or any of the Loan
         Documents shall be construed as constituting Sponsor and the Servicer
         or any Participant as partners or joint venturers or as creating the
         relationship of employer and employee, master and servant, principle
         and agent, or franchisor or franchisee between Sponsor and the Servicer
         or any Participant. Neither Sponsor nor Servicer or any Participant
         shall have any right or authority to bind the other party or to assume
         or create any obligation or responsibility, express or implied, on
         behalf of the other party or in the other party's name. All rights,
         duties and obligations under this Agreement and the Operative Documents
         are exclusively for the benefit of Sponsor and the Servicer and
         Participants, as the case may be, and shall not be deemed to affect any
         agreement between either of such parties and any third party
         (including, without limitation, any Borrower).

15.12     Repurchase Right.

         Sponsor may at any time (upon thirty (30) days' prior written notice to
         Servicer) purchase from Servicer all Loans and Loan Commitments and all
         rights, titles and interests of the Servicer and the Participants in
         and to the Loan Documents and the Collateral relating thereto for a
         purchase price (payable in immediately available funds) equal to the
         aggregate Loan Indebtedness, plus all amounts otherwise owing by the
         Sponsor pursuant to the Operative Documents, and the Servicer shall
         assign, without recourse, representation or warranty (except as to its
         own title), its right, title and interest therein to Sponsor upon the
         Servicer's receipt of such purchase price. Thereafter, Servicers shall
         have no responsibility with respect to any Loans or Loan Commitments.

15.13    Effect on Existing Facility Agreement; Execution of New Loan Documents.

         Upon the Effective Date, all "Franchisee Loans" and related "Loan
         Commitments" (as defined under the Existing Facility Agreement)
         outstanding pursuant to the Existing Facility Agreement shall be deemed
         to be Startup Franchisee Loans and Startup Franchisee Loan Commitments
         outstanding hereunder pursuant to the Startup Franchisee Commitment,
         all "Qualified Franchisee Loans" and related "Loan Commitments" (as
         defined under the Existing Facility Agreement) outstanding pursuant to
         the Existing Facility Agreement shall be deemed to be Established
         Franchisee Loans and Established Franchisee Loan Commitments
         outstanding hereunder pursuant to the Established Franchisee
         Commitment, and the Existing Facility Agreement shall be of no further
         force and effect, except to the extent that certain indemnities set
         forth therein are deemed to expressly survive the termination thereof.

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15.14    Confidentiality.

         Each Participant agrees that it will maintain in confidence and will
         not disclose, publish or disseminate, to any Person, any confidential
         information which it has or shall acquire during the term of this
         Agreement relating to the business, operations and condition, financial
         or otherwise of the Sponsor or any Borrower, except that such
         information may be disclosed by such Participant if and to the extent
         that:

                  (i) such information is in the public domain at the time of
         disclosure;

                  (ii) such information is required to be disclosed by subpoena
         or similar process of applicable law or regulations;

                  (iii) such information is required to be disclosed to any
         regulatory or administrative body or commission to whose jurisdiction
         such Participant or any of its Affiliates may be subject;

                  (iv) such information is disclosed to counsel, auditors or
         other professional advisors to such Participant or to affiliates of
         such Participant provided that such affiliates agree to keep such
         information confidential as set forth herein;

                  (v) such information is disclosed with the prior written
         consent of the Sponsor or the relevant Borrower, as the case may be,
         which consent shall not be unreasonably withheld or delayed;

                  (vi) such information is disclosed in connection with any
         litigation or dispute between such Participant and the Sponsor or any
         Borrower concerning the Operative Documents or the Loan Documents of
         such Borrower;

                  (vii) such information is disclosed in connection with a
         prospective assignment, grant of a participation interest in or other
         transfer by such Participant of any of its interest in the Operative
         Documents, provided that the Person to whom such information shall be
         disclosed shall have agreed to keep such information confidential as
         set forth herein;

                  (viii) such information was in the possession of such Person
         or such Person's affiliates without obligation of confidentiality prior
         to such Participant furnishing it to such Person; or

                  (ix) such information is received by such Participant, without
         restriction as to its disclosure or use, from a Person, who, to such
         Participant's knowledge or reasonable belief, was not prohibited from
         disclosing it by any duty of confidentiality.

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<PAGE>   82
         Each Participant agrees to use its best efforts to give the Sponsor
         prompt notice of any subpoena or similar process referred to in clause
         (ii) above, provided that such Participant shall have no liability in
         event such notice is not given.

15.15    Headings Descriptive; Entire Agreement.

         The headings of the several sections and subsections of this Agreement
         are inserted for convenience only and shall not in any way affect the
         meaning or construction of any provision of this Agreement. This
         Agreement, the other Operative Documents, and the agreements and
         documents required to be delivered pursuant to the terms of this
         Agreement constitute the entire agreement among the parties hereto and
         thereto regarding the subject matters hereof and thereof and supersede
         all prior agreements, representations and understandings related to
         such subject matters.

                       [Signatures Set Forth on Next Page]

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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

Address for Notices:                     AARON RENTS, INC.

309 East Paces Ferry Road, NE            By:____________________________________
Atlanta, Georgia  30305                      Gilbert L. Danielson
Attn:  Gilbert L. Danielson                  Executive Vice President and
Telecopy:  404-240-6584                      Chief Financial Officer

                                         Attest:________________________________
                                                Name: __________________________
                                                Title: _________________________

                                                [Corporate Seal]

                                       78
<PAGE>   84
Address for Notices:                     SUNTRUST BANK, ATLANTA, as
                                            Servicer
303 Peachtree Street NE, 2nd Floor
Atlanta, Georgia 30308
Attention: Aaron Rents Program Manager   By:____________________________________
Telecopy No. (404) 724-3716                 Title:

with a copy to:

303 Peachtree Street NE, 3rd Floor
Atlanta, Georgia 30308
Attention: Michael Dunlap
Telecopy No. (404) 724-3716

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<PAGE>   85
Address for Notices:                     SUNTRUST BANK, ATLANTA

303 Peachtree Street, NE, 2nd Floor
Atlanta, Georgia  30308
Attention: Aaron Rents Program Manager   By:____________________________________
Telecopy No.: (404) 724-3716                Name:
                                            Title:
with a copy to:

303 Peachtree Street NE, 3rd Floor
Atlanta, Georgia 30308
Attention: Michael Dunlap
Atlanta, Georgia 30308

Participating Commitment: $14,000,000
Pro Rata Share: 26.9231%

                                       80
<PAGE>   86
Address for Notices:                      BANK ONE, NA

1 Bank One Plaza
Suite No. 0324, 10th Floor
Chicago, Illinois  60670                  By:___________________________________
Attn:  Mr. Curtis A. Price                   Title:
Telecopy:  (312) 732-2991

Participating Commitment Amount: $12,666,667
Pro Rata Share: 24.3590%

                                       81
<PAGE>   87
Address for Notices:                       FIRST UNION NATIONAL BANK

999 Peachtree Street
12th Floor
Atlanta, Georgia 30309
Attention:  Gil Reese                      By:__________________________________
Telecopy:  (404) 225-4286                     Title:

Participating Commitment Amount: $12,666,667
Pro Rata Share: 24.3590%

                                       82
<PAGE>   88
Address for Notices:                       SOUTHTRUST BANK, N.A.

600 West Peachtree Street
22nd Floor
Atlanta, Georgia  30308                    By:__________________________________
Attention:  Ronald Fontenot                   Title:
Telecopy:  (404) 853-5766

Participating Commitment Amount: $12,666,667
Pro Rata Share: 24.3590%

                                       83
<PAGE>   89
                               SERVICING AGREEMENT

         THIS SERVICING AGREEMENT (this "Servicing Agreement") dated as of this
3rd day of November, 1999, by and between AARON RENTS, INC., a Georgia
corporation ("Sponsor"), and SUNTRUST BANK, ATLANTA, a Georgia banking
corporation (the "Servicer").

                                    PREAMBLE

         WHEREAS, Sponsor and Servicer, in order to make available a loan
facility to certain franchisees of Sponsor, entered into that certain Amended
and Restated Loan Facility Agreement and Guaranty, dated as of November 3, 1999
(as hereafter amended or modified, the "Loan Facility Agreement"), by and among
Sponsor, Servicer and the other financial institutions from time to time party
thereto (the "Participants");

         WHEREAS, in order to expedite the ongoing operations of the loan
facility, Sponsor and Servicer wish to enter into an agreement to set forth
certain procedures and other operational matters, as well as certain agreements
regarding fees;

         WHEREAS, Sponsor and Servicer wish to enter into this Agreement to set
forth their understandings regarding such matters, all as more particularly set
forth below;

         NOW, THEREFORE, upon the terms and conditions hereinafter stated, the
parties, intending to be legally bound, hereby agree as follows:

                           1.       DEFINITIONS

         In addition to the other terms defined herein, the following terms used
herein shall have the meanings herein specified (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

                  "ACH Authorization" means an authorization from a Borrower to
         automatically debit Loan payments from a deposit account of such
         Borrower, substantially in the form of Exhibit A.

                  "Agreement" means this Servicing Agreement, either as
         originally executed or as it may hereafter be amended, modified or
         supplemented from time to time.

                  "Approved Invoice" means an invoice for the aggregate purchase
         price of Merchandise purchased by a Franchisee Borrower with a purchase
         order approved by the Sponsor as provided in this Agreement.
<PAGE>   90
                  "Asset Disposition Invoice" shall have the meaning set forth
         in Section 2.5 hereof.

                  "ATAC System" means Sponsor's proprietary software accounting
         system, as modified from time to time, used by Sponsor and the
         Borrowers.

                  "Authorized Signatory" means an officer of the Sponsor named
         in the most recent Certificate Regarding Authorized Signatories
         delivered to Servicer.

                  "Calculation Period" means, initially, the period commencing
         on June 30, 1999 and ending on September 30, 1999 and thereafter, the
         period commencing on the last day of the preceding Calculation Period
         and ending on the third Payment Date thereafter.

                  "Commitment Letter" means a letter from Servicer to a
         Franchisee named in a Funding Approval Notice, substantially in the
         form of Exhibit B, in the case of a Startup Franchisee Loan Commitment,
         whereby Servicer agrees to establish a Loan Commitment in favor of such
         Franchisee upon the terms and conditions set forth therein and in the
         Operative Documents.

                  "Corporate Authorization" means, with respect to any Borrower
         which is a corporation, certifications as to authorized signatories and
         corporate action with respect to the Loan in the form attached hereto
         as Exhibit C.

                  "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, (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.

                  "Debt Service" means, for any particular Borrower and period,
         the total required payments of principal, interest and fees made by
         such Borrower with respect to its Debt during such period to the extent
         that such Debt arises pursuant to such Borrower's Loan Agreement or any
         other financing arrangement with respect to Merchandise.

                  "Default Interest Rate" means the annual percentage interest
         rate applied to any principal amount outstanding pursuant to a Loan
         Commitment not paid when due under the terms of the applicable Loan
         Documents, which rate shall equal the sum of 2% per annum above the
         Borrower Rate.

                  "Default Waiver Request" means written instructions to
         Servicer from Sponsor, in substantially the form set forth as Exhibit D
         hereto, requiring Servicer to waive a Loan

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<PAGE>   91
         Default which is not a Loan Payment Default or a Loan Default described
         in Section 4.2 or Section 4.4 of the Loan Facility Agreement as not
         being subject to waiver by Sponsor, any such waiver to be limited to
         the specific time and circumstances set forth in such instructions,
         unless otherwise expressly provided in such instructions.

                  "EBIT" means, 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.

                  "Financing Statement" means, with respect to a Loan, a
         document which among other things, describes the Borrower and the
         Collateral, the proper filing of which perfects a security interest in
         the Collateral described therein under the laws of the state in which
         such document is filed.

                  "Funding Approval Notice" means a written notice to Servicer
         from Sponsor setting forth the conditions of a proposed Loan
         Commitment, consistent with the requirements therefor as set forth in
         this Agreement, and containing such information and in substantially
         such form as Exhibit E attached hereto.

                  "Legal Forms" shall have the meaning set forth in Section 2.2.

                  "Loan Account" means the internal bank loan account
         established by Servicer for each Franchisee Borrower.

                  "Net Book Value" means, for any item of Merchandise, the cost
         of such Merchandise less accumulated depreciation as calculated in
         accordance with the ATAC System.

                  "Personal Guaranty" means any guaranty from a principal or
         member of a Borrower substantially in the form of Exhibit F attached
         hereto.

                  "Prime Rate" means the per annum rate of interest designated
         from time to time by Servicer 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 Servicer on the day of such
         change. The Prime Rate is a reference rate and does not necessarily
         represent the lowest or best rate of interest that is being offered by
         Servicer to its borrowers.

                  "Servicing Fee" shall have the meaning set forth in Section
         2.14 hereof.

                  "Sponsor's Fee" shall have the meaning set forth in Section
         2.14 hereof.

                  "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 Servicer.

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<PAGE>   92
                  "State" means any State of the United States of America and
         the District of Columbia.

                  "Store Opening Information Sheet" shall mean a document
         substantially in the form of Exhibit G, completed by Aaron with respect
         to a Borrower.

                  "Subordination Agreement" shall have the meaning set forth in
         Section 2.2(e) hereof.

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

                  "Total Liabilities" means, with respect to any Borrower, as of
         any date of determination, total liabilities determined in accordance
         with GAAP consistently applied, but excluding therefrom, Debt of such
         Borrower which is subordinated to the Loan Indebtedness owing to
         Servicer pursuant to a Subordination Agreement.

                  "UCC" means the Uniform Commercial Code of the relevant State,
         as the same may be amended from time to time.

         The above definitions apply equally to both the singular and the plural
of the terms defined. All terms used herein and not otherwise shall have the
meaning ascribed to such terms in the Loan Facility Agreement.

                           2.       PRE-FUNDING MATTERS; CLOSING OF LOANS

2.1      Approval Process.

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

                           (i)  the Franchisee's legal name;

                           (ii)  the amount of the Loan Commitment;

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<PAGE>   93
                           (iii) a copy of the Franchisee's executed franchise
           application authorizing release of all information set forth therein
           or delivered in connection therewith to Servicer;

                           (iv) a copy of the Franchisee's executed Franchise
           Agreement;

                           (v) the Franchisee's federal tax identification
           number or social security number;

                           (vi) pro forma financial statements for the
           Franchisee for the next 2 years, in form satisfactory to Servicer and
           if available, historical annual financial statements for the
           Franchisee for each of the last three years;

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

                           (viii) copies of the filed income tax returns of the
           Franchisee and any proposed Guarantor for the two (2) years most
           recently ended and copies of all credit bureau reports obtained by
           Sponsor with respect to the Franchisee and any Guarantor;

                           (ix) if the proposed Borrower is a corporation,
           copies of the Borrower's Articles or Certificate of Incorporation,
           certified by the Secretary of State of its incorporation, copies of
           the Borrower's by-laws and current incumbency certificate, if the
           Borrower is a partnership, a copy of the current partnership
           agreement, if the Borrower is a limited liability company, a copy of
           the current operating or limited liability company agreement and if
           the Borrower is a sole proprietor, a Statement of Sole Proprietorship
           in the form provided by Servicer;

                           (x) good standing certificate from the Secretary of
           State in which the Borrower is organized or formed; and

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

                           (xii) such other information as Servicer shall
         reasonably request.

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

                (b) Upon receipt of the Funding Approval Notice, Servicer shall:

                                       5
<PAGE>   94
                           (i) as soon as practicable, notify Sponsor if the
         Funding Approval Notice fails to contain any of the items described in
         the preceding Section, or if it has any questions relating to such
         Funding Approval Notice or the information submitted therewith; and

                           (ii) endeavor to send to the Franchisee that is not
         currently a Borrower, within three (3) Business Days of its receipt of
         a completed Funding Approval Notice with respect to a Startup
         Franchisee Loan Commitment, a Commitment Letter which shall provide
         that the applicable Franchisee must sign and return the Commitment
         Letter within fourteen (14) days after the date of such Commitment
         Letter.

                  (c) Sponsor shall forward to Servicer a completed Store
         Opening Information Sheet (i) together with the Funding Approval Notice
         with respect to any Startup Franchisee or Established Franchisee that
         already a Borrower and (ii) at least ten (10) Business Days prior to
         the anticipated Closing Date with respect to any Startup Franchisee or
         Established Franchisee that is not presently is a Borrower, in each
         case together with the following additional documents:

                  (1) a duly executed Landlord's Waiver for each leased location
                  listed on the Store Opening Information Sheet where the
                  financed Merchandise is located, substantially in the form of
                  Exhibit H;

                  (2) complete legal descriptions for each leased location
                  listed on the Store Opening Information Sheet where the
                  financed Merchandise is located; and

                  (3) complete copies of the leases for each leased location
                  listed on the Store Opening Information Sheet where the
                  financed Merchandise is located.

2.2      Loan Documentation; Collateral.

         Upon receipt of a completed Store Opening Information Sheet, Servicer
         shall proceed to document the Loan and shall forward such documentation
         to the Borrower for signature within ten (10) Business Days after
         receipt of the Store Opening Information. Each Loan made pursuant to
         this Agreement shall be evidenced by the following documentation in
         such form as is set forth in the Exhibits to the Operative Documents
         for the applicable Facility (the "Legal Forms"), with such
         modifications as Sponsor and Servicer may agree upon from time to time
         in accordance with the terms hereof:

                  (a)      the Loan Agreement;

                  (b)      the Master Note;

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<PAGE>   95
                  (c) a Personal Guaranty of each Person specified as a
         Guarantor in the Funding Approval Notice for such Loan, and, if
         requested and to the extent not prohibited by law, the spouse of such
         Person; provided, however, that if such spouse is not providing a
         Personal Guaranty, a validly executed copy of a Spousal Consent;

                  (d) a Subordination Agreement from each other debtholder of
         the Franchisee substantially in the form of Exhibit I (each, a
         "Subordination Agreement");

                  (e) suitable Financing Statements to enable Servicer to
         perfect the security interest granted to it under the Loan Agreement;
         and

                  (f) a Certificate of Borrowing Authority in the form provided
         by Servicer duly executed by the Franchisee.

         To the extent that any of the foregoing items (other than the Loan
         Agreement or Master Note) have been provided by the relevant Franchisee
         in connection with a prior Loan, Servicer may waive the requirement
         that such documents be reexecuted. In addition, Servicer shall engage a
         nationally recognized service to perform searches of the Uniform
         Commercial Code jurisdictions as are set forth in the Funding Approval
         Notice. Prior to the Closing Date, Servicer shall prepare appropriate
         UCC-1 financing statements to be filed in connection with the Loan and
         forward the same to the Franchisee for execution. The Franchisee shall
         promptly execute and return such financing statements to Servicer for
         filing and, if requested by Sponsor in writing, Servicer, prior to
         making the initial Advance pursuant to the Master Note of such
         Franchisee, shall conduct lien searches in the jurisdictions noted on
         the Funding Approval Notice to confirm that Servicer's UCC-1 financing
         statements have been properly recorded and that no prior UCC-1
         financing statements or other liens or encumbrances are of record with
         respect to such Franchisee unless the applicable secured party has
         executed a Subordination Agreement.

         Servicer shall prepare and distribute the Loan Documents to the
         Borrower who shall execute the same, shall obtain the signatures of any
         Guarantor(s) on the documentation and shall forward duly executed Loan
         Documents to Servicer prior to the funding of the initial Advance. Upon
         receipt, Servicer shall execute the Loan Documents where required and
         forward copies of the executed documents to the Franchisee and, if
         requested by Sponsor, to Sponsor. In addition, Sponsor shall cause the
         Borrower to forward or to have forwarded to Servicer a Certificate of
         Insurance from an insurer acceptable to Servicer in form acceptable to
         Servicer evidencing the Borrower's ownership of adequate liability
         insurance and of property and casualty insurance in an amount not less
         than the greater of (i) the Loan Commitment, or (ii) the full
         replacement cost of the Collateral, which certificate shall name
         Servicer as sole loss payee and additional insured and shall also
         provide that Servicer shall receive thirty (30) days' prior written
         notice at

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<PAGE>   96
                                    SunTrust Bank, Atlanta
                                    Strategic Partners Program
                                    Attn: Aaron Rents Program Manager
                                    PO Box 4418
                                    Mail Code 1923
                                    Atlanta, GA 30302

         of any lapse, termination or cancellation of the insurance policies
         referenced on such certificate.

2.3      Interest on Loans; Terms of Loan Agreements.

                  (a) Each of the Loans shall bear interest at the Borrower Rate
         specified by the Sponsor in the applicable Funding Approval Notice and
         interest on the Loans shall be calculated based upon the actual number
         of days elapsed in a 365 or 366 day year.

                  (b) Each of the Startup Franchisee Loan Agreements shall
         require that the applicable Startup Franchisee Borrower thereunder
         comply with the following financial covenants:

                           (i) Rental Revenue to Debt Service. 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 the Borrower's Rental Revenue to Debt
         Service for such quarter shall not be less than 2.2:1.0;

                           (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 any 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 the Borrower's Debt to the 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 13th month following the Opening
         Date of the first store location of any Borrower, 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
         6.5:1.0.

                  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 Service and Debt attributable to such locations and
         deducted from the final calculations shall be

                                       8
<PAGE>   97
         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 covenant set forth
         in subsection (iii) above shall not be applicable to any Startup
         Franchisee Borrower until the first store location operated by such
         Startup Franchisee Borrower has been operating for 12 months. The
         financial covenants otherwise shall be calculated on a consolidated
         basis as to all store locations.

                  (c) Each Established Franchisee Loan Agreement shall require
         that the applicable Established Franchisee Borrower thereunder comply
         either with the financial covenants specified by Sponsor in the Funding
         Approval Notice or with the following financial covenants at the levels
         specified by Sponsor in the Funding Approval Notice:

                              (i) Debt to EBIT. Commencing on the first day of
                  calendar quarter in which the first day of the 19th month
                  following the Opening Date of the first store of such
                  Established Franchisee 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 such Established Franchisee
                  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 any Established Franchisee 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 such Established Franchisee
                  Borrower's Debt to the 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 13th month following the
                  Opening Date of the first store location of any Borrower,
                  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.

         In addition, each Established Franchisee Loan Agreement shall provide
         that the aggregate outstanding principal amount of all Advances made by
         Servicer with respect to any

                                       9
<PAGE>   98
         Established Franchisee Loan Commitment shall not at any time exceed an
         amount equal to the relevant Established Franchisee Borrowing Base.

         To the extent that the financial covenants and definitions are set
         forth by Sponsor in the Funding Approval Notice in lieu of specifying
         only the levels at which to set the financial covenants listed in
         clauses (i) through (iii) above, then the Established Franchisee
         Borrower shall be required to pay at closing an upfront fee of $5,000,
         of which $2,500 shall be remitted upon closing to Sponsor and $2,500
         shall be retained by Servicer, in addition to the closing fee of $500
         per store.

                  (d) Each of the Loan Agreements shall also provide that the
         applicable Borrower will submit to Servicer and Sponsor on a quarterly
         basis a Compliance Certificate, in the form attached as Exhibit C to
         the Loan Agreement, presenting the calculation of the financial
         covenants set forth above. The Borrowers shall also be required to
         submit to Servicer monthly, quarterly and annual financial statements,
         and personal financial statements of all Guarantors.

                  (e) The Sponsor shall deliver to the Servicer (x) a quarterly
         inventory reconciliation report showing the amount of Inventory of each
         Borrower by store as of the last day of each calendar quarter and (y) a
         quarterly revenue report showing the monthly and quarterly revenues of
         each Borrower by store during each calendar quarter.

2.4      Use of Loan Proceeds; Mechanics of Loan Program for Startup Franchisee
         Loans.

                  (a) No later than fifteen (15) days after Servicer's receipt
         of the executed Loan Documents, Servicer shall establish a DDA Account
         for the Franchisee and shall also establish Loan Account for the
         Franchisee.

                  (b) Upon establishment of the above-referenced accounts and
         receipt of the above-referenced Loan Documents, duly executed by the
         Startup Franchisee Borrower and each Guarantor, and if requested by
         Sponsor in writing, confirmation by Servicer of its first-priority
         security interest in the Collateral, Servicer shall notify the Startup
         Franchisee Borrower and Sponsor that the Startup Franchisee Borrower
         may request Advances pursuant to the Loan Commitment; provided,
         however, that the minimum amount of each Advance shall be $500. Each
         Advance shall be made by Servicer for the sole purpose of honoring
         requests from the Startup Franchisee Borrower, made through the ATAC
         System, for ACH transfers to suppliers of Merchandise in payment of
         Approved Invoices, for payment of state sales and use taxes and for
         payment of freight charges. The Startup Franchisee Borrowers shall not
         be authorized to use the DDA Account for any other purpose.

                  (c) No more frequently than twice each calendar week, each
         Startup Franchisee Borrower will submit purchase order requests for
         Merchandise to Sponsor. In the event that the purchase order is
         authorized pursuant to the Franchise Agreement, Sponsor will prepare
         the purchase order and submit the same to the appropriate supplier

                                       10
<PAGE>   99
         requested by the Startup Franchisee Borrower. The supplier will be
         instructed to ship all Merchandise directly to the Startup Franchisee
         Borrower and the Startup Franchisee Borrower will be responsible for
         inspecting all Merchandise and resolving all disputes regarding the
         Merchandise with such supplier. The supplier will invoice the Startup
         Franchisee Borrower for such Merchandise in accordance with normal
         industry practice. When the Startup Franchisee Borrower wishes to pay
         such invoice, the Startup Franchisee Borrower, subject to availability
         of its Loan Commitment and the minimum borrowing threshold, shall pay
         such invoice by directing Servicer, through the ATAC System, to pay
         such invoice by means of an ACH transfer from its DDA Account. Any
         directions for ACH transfers inputted by the Startup Franchisee
         Borrowers into the ATAC System prior to 12:00 Midnight (Atlanta,
         Georgia time) on any Business Day, shall be forwarded to Servicer
         pursuant to Sponsor's existing ACH access by 3:30 p.m. (Atlanta,
         Georgia time) on the next Business Day and, if properly forwarded to
         Servicer by Sponsor shall be paid by Servicer no later than the second
         Business Day thereafter, unless Sponsor is otherwise notified by
         Servicer.

                  (d) Sponsor hereby acknowledges and agrees that Servicer has
         no ability to halt an ACH transfer upon the inputting of such transfer
         request by Sponsor from the ATAC System into the ACH system (other than
         the ability to retrieve ACH transfers which are sent to the wrong party
         or otherwise manifestly erroneous as provided in the ACH Agreement with
         Sponsor) and Sponsor accepts full responsibility for any overadvance
         created by such inputting of information. Upon receipt of the request
         for an ACH transfer, Servicer shall honor such request by making an
         Advance pursuant to the Loan Commitment in the amount of such request
         into the Startup Franchisee Borrower's DDA Account and automatically
         forwarding such amount to the supplier by means of an ACH transfer in
         accordance with the instructions of the Startup Franchisee Borrower
         passed onto Servicer by Sponsor.

                  (e) Nothing set forth herein shall be deemed to vary the terms
         and conditions of the MicroACH Service Agreement by and between
         Servicer and Sponsor.

2.5      Tracking of Collateral for Startup Franchisee Borrowers; Asset
         Dispositions of Startup Franchisee Borrowers.

         All Merchandise financed by Servicer must be serialized via the ATAC
         System for appropriate reconciliation of Advances and receipt of
         Merchandise and for purposes of tracking Asset Dispositions. Each
         Startup Franchisee Borrower shall be obligated to furnish serial
         numbers for all Merchandise purchased, excluding all Electronic
         Equipment purchased, directly to Sponsor on a monthly basis (and, if
         available, on a weekly basis) by transmittal of Startup Franchisee
         Borrower's receiving report (containing ATAC numbers) directly to
         Sponsor on the ATAC System. Each Startup Franchisee Borrower shall be
         obligated to furnish serial numbers for all Electronic Equipment
         purchased, directly to Sponsor on a bi-monthly basis (and, if
         available, on a monthly basis) no later than the fifth business day of
         each month by transmittal of such Startup Franchisee Borrower's
         receiving report (containing ATAC numbers) directly to

                                       11
<PAGE>   100
         Sponsor on the ATAC System. As set forth more fully below, Sponsor will
         maintain and track such information as agent for Servicer, and Servicer
         shall at all times have access to such information.

         If an Asset Disposition occurs, the Startup Franchisee Borrower shall
         immediately report such Asset Disposition to Sponsor by means of the
         ATAC System, such information to include the ATAC numbers, and if
         assigned, the serial numbers of the Merchandise subject to the Asset
         Disposition, the Net Book Value of such Merchandise and the proceeds
         received by the Startup Franchisee Borrower therefrom and whether or
         not such Asset Disposition constituted an Electronic Equipment Asset
         Disposition. Sponsor on a monthly basis, shall transmit all such
         information to Servicer in summary form to be received by Servicer no
         later than the fifth Business Day of each month. In addition, the
         Sponsor shall transmit to the Servicer the date and dollar amount each
         Advance during the preceding month which constituted an Electronic
         Equipment Advance. Based solely on such information provided by Sponsor
         to Servicer, Servicer shall prepare and forward to each Startup
         Franchisee Borrower, on a monthly basis, an invoice for payment of the
         aggregate outstanding amount of the Franchisee Loan in an amount equal
         to the Net Book Value of the Asset Dispositions during the preceding
         month not applied to Advances made during such month (the "Asset
         Disposition Invoice"), unless Sponsor notifies the Bank in writing that
         it wishes to waive the payment reflected in the Asset Disposition
         Invoice, which notice must be received by the Bank at least five (5)
         Business Days prior to the date that the Asset Disposition Invoice is
         sent. If the Bank receives such notice in writing from Sponsor at least
         five (5) Business Days prior to the date that the Asset Disposition
         Invoice is otherwise to be sent, the Bank agrees to notify the
         applicable Borrower that the "Asset Disposition Prepayment" required
         under its Loan Agreement is waived. Otherwise, the Asset Disposition
         Invoice shall be forwarded to the Startup Franchisee Borrowers by
         Servicer by the 10th day of each calendar month and payment thereof
         shall be due on the next succeeding Payment Date.

         Based solely on such information provided by Aaron, the Bank will
         notify Borrower on a monthly basis, of the amount of the required
         prepayment (the "Asset Disposition Prepayment") of the aggregate
         outstanding amount of the Loan due on the next Payment Date which
         amount shall be equal to the Net Book Value of the Asset Dispositions
         during the preceding month not applied to Advances made during such
         month as set forth above, unless otherwise agreed to by the Bank. The
         Borrower shall be notified by the Bank by the 10th day of each calendar
         month of the Asset Disposition Prepayment and payment thereof shall be
         due on the next succeeding Payment Date.

2.6      Amortization and Payment of Startup Franchisee Loans.

         No more than five (5) Business Days after the last day of each calendar
         month, Sponsor shall determine and report to Servicer the aggregate
         amount of (i) Electronic Equipment Advances made to each Startup
         Franchisee Borrower during such month, (ii) the Asset Dispositions made
         by each Startup Franchisee Borrower during such month and (iii) the
         Electronic Equipment Asset Dispositions made by each Startup Franchisee
         Borrowing

                                       12
<PAGE>   101
         during such month. Upon receipt of the foregoing report, Servicer shall
         determine the aggregate amount of Advances made to each Startup
         Franchisee Borrower during such month and shall subtract therefrom (i)
         the Electronic Equipment Advances made to such Startup Franchisee
         Borrower, (ii) payments received by Servicer from such Startup
         Franchisee Borrower with respect to Asset Dispositions (other than
         Electronic Equipment Asset Dispositions) made since the cut-off date
         for the last monthly invoice to such Startup Franchisee Borrower and
         (iii) the Excess Electronic Equipment Proceeds (as defined below). The
         remaining principal amount of Advances made during such month shall be
         amortized (in accordance with a straight-line amortization schedule),
         into eighteen (18) equal payments of principal due and payable on the
         Payment Dates. On the last day of each calendar month, Servicer shall
         subtract the payments received by Servicer from each Startup Franchisee
         Borrower with respect to Electronic Equipment Asset Dispositions made
         since the cut-off date for the last monthly invoice to such Startup
         Franchisee Borrower from the aggregate amount of Electronic Equipment
         Advances made to each Startup Franchisee Borrower (as reported by
         Sponsor) during such month. The remaining principal amount of
         Electronic Equipment Advances made during such month shall be amortized
         (in accordance with a straight-line amortization schedule), into
         twenty-four (24) equal payments of principal due and payable on the
         Payment Dates provided however that in the event Servicer terminates
         the Startup Franchisee Loan Commitment of such Franchisee Borrower, the
         remaining amount of such Startup Electronic Equipment Advances shall be
         due and payable on the eighteenth Payment Date thereafter. In the event
         that the amount of proceeds of Electronic Equipment Asset Dispositions
         received by Servicer during any month exceeds the amount of Electronic
         Equipment Advances made during such month, ("Excess Electronic
         Equipment Proceeds") such Excess Electronic Equipment Proceeds shall be
         applied to the outstanding Advances. On the tenth (10th) day of each
         calendar month, Servicer shall mail to each Startup Franchisee Borrower
         a detailed bill setting forth the total amount of principal and
         interest due and summarizing all account activity during the preceding
         month. Payments of such principal and interest amount shall be due and
         payable on the Payment Dates. Servicer shall have the exclusive right
         to collect and receive all such payments on the Loans from the Startup
         Franchisee Borrowers which are due and owing to Servicer. In the event
         that Sponsor receives any such payment with respect to the Loans
         pursuant to the Program (other than with respect to Loans purchased by
         Sponsor or where Sponsor has been subrogated to the rights of Servicer
         pursuant to the terms of the Sponsor Guaranty), such payments shall be
         accepted by Sponsor as agent for Servicer and Sponsor shall immediately
         endorse and forward the same to Servicer.

2.7      Prepayment of Startup Franchisee Loans.

         Each Startup Franchisee Borrower shall have the right to prepay its
         Loan in whole or in part upon at least two (2) Business Days' prior
         notice to Servicer. Partial prepayments of any Loan (other than
         proceeds of Asset Dispositions which shall be applied as set forth in
         the preceding Section) shall be applied to reduce the current month's
         Advance(s) to such Startup Franchisee Borrower with any excess
         prepayment applied to unpaid principal payments of the Loan in inverse
         order of maturity.

                                       13
<PAGE>   102
2.8      Use of Loan Proceeds; Mechanics of Loan Program for Established
         Franchisee Loans.

                  (a) Following the receipt of the executed Loan Documents with
         respect to a proposed Established Franchisee Borrower, but prior to the
         Closing Date of the proposed Loan Commitment, Servicer shall establish
         a DDA Account for the Franchisee and shall also establish Loan Account
         for the Franchisee.

                  (b) Upon establishment of the above-referenced accounts and
         receipt of the above-referenced Loan Documents, duly executed by the
         Established Franchisee Borrower and each Guarantor, and if requested by
         Sponsor, confirmation by Servicer of its first-priority security
         interest in the Collateral, Servicer shall notify the relevant
         Established Franchisee Borrower and Sponsor that the Established
         Franchisee Borrower may request Advances pursuant to the Loan
         Commitment; provided, however, that the minimum amount of each Advance
         shall be $500. Each Advance shall be made by Servicer for the sole
         purposes of (i) honoring requests from the Established Franchisee
         Borrower, made through the ATAC System, for ACH transfers to suppliers
         of Merchandise in payment of Approved Invoices, and (ii) honoring
         requests from the Established Franchisee Borrower for Advances made via
         ACH transfers to an operating account or other location specified by
         such Established Franchisee Borrower (and granted a vendor
         identification number by Sponsor) for working capital purposes. The
         Established Franchisee Borrowers shall not be authorized to use the DDA
         Account for any other purpose.

                  (c) No more frequently than twice each calendar week, each
         Established Franchisee Borrower will submit purchase order requests for
         Merchandise to Sponsor. In the event that the purchase order is
         authorized pursuant to the Franchise Agreement, Sponsor will prepare
         the purchase order and submit the same to the appropriate supplier
         requested by the Established Franchisee Borrower. The supplier will be
         instructed to ship all Merchandise directly to the Established
         Franchisee Borrower and the Established Franchisee Borrower will be
         responsible for inspecting all Merchandise and resolving all disputes
         regarding the Merchandise with such supplier. The supplier will invoice
         the Established Franchisee Borrower for such Merchandise in accordance
         with normal industry practice. When the Established Franchisee Borrower
         wishes to pay such invoice, the Established Franchisee Borrower,
         subject to availability of its Loan Commitment and the minimum
         borrowing threshold, shall pay such invoice by directing Servicer,
         through the ATAC System, to pay such invoice by means of an ACH
         transfer from its DDA Account. Any directions for ACH transfers
         inputted by the Established Franchisee Borrowers into the ATAC System
         prior to 12:00 Midnight (Atlanta, Georgia time) on any Business Day,
         shall be forwarded to Servicer pursuant to Sponsor's existing ACH
         access by 3:30 p.m. (Atlanta, Georgia time) on the next Business Day
         and, if properly forwarded to Servicer by Sponsor shall be paid by
         Servicer no later than the second Business Day thereafter, unless
         Sponsor is otherwise notified by Servicer.

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<PAGE>   103
                  (d) Sponsor hereby acknowledges and agrees that Servicer has
         no ability to halt an ACH transfer upon the inputting of such transfer
         request by Sponsor from the ATAC System into the ACH system (other than
         the ability to retrieve ACH transfers which are sent to the wrong party
         or otherwise manifestly erroneous as provided in the ACH Agreement with
         Sponsor) and Sponsor accepts full responsibility for any overadvance
         created by such inputting of information and has agreed to indemnify
         Servicer and Participants therefore pursuant to the terms of the Loan
         Facility Agreement. Upon receipt of the request for an ACH transfer,
         Servicer shall honor such request by making an Advance pursuant to the
         Loan Commitment in the amount of such request into the Established
         Franchisee Borrower's DDA Account and automatically forwarding such
         amount to the supplier by means of an ACH transfer in accordance with
         the instructions of the Established Franchisee Borrower passed onto
         Servicer by Sponsor.

                  (e) Nothing set forth herein shall be deemed to vary the terms
         and conditions of the MicroACH Service Agreement by and between
         Servicer and Sponsor.

2.9      Tracking of Collateral for Established  Franchisee Borrowers.

         All Merchandise financed by Servicer must be serialized via the ATAC
         System for appropriate reconciliation of Advances and receipt of
         Merchandise and for purposes of tracking Asset Dispositions. Each
         Established Franchisee Borrower shall be obligated to furnish serial
         numbers for all Merchandise purchased directly to Sponsor on a weekly
         basis by transmittal of the Established Franchisee Borrower's weekly
         (or, if available, daily) receiving report (containing ATAC numbers)
         directly to Sponsor on the ATAC System. As set forth more fully below,
         Sponsor will maintain and track such information as agent for Servicer,
         and Servicer shall at all times have access to such information.

2.10     Payments of Established Franchisee Loans; Borrowing Base.

         All outstanding Advances with respect to each Established Franchisee
         Loan shall be due and payable in full on the Maturity Date of such
         Loan, if not sooner accelerated in accordance with the terms of the
         applicable Loan Documents. In addition, the outstanding Advances
         pursuant to each Established Franchisee Loan shall not exceed the
         Established Franchisee Borrowing Base for such Established Franchisee
         Borrower, as determined by Sponsor on the fifth Business Day of each
         month (as determined on the last day of the preceding calendar month)
         and reported to Servicer on such date. Servicer shall be entitled to
         rely upon the calculation of the Established Franchisee Borrowing Base
         for each Established Franchisee Borrower submitted by Sponsor for all
         purposes hereunder. Upon receipt of the Established Franchisee
         Borrowing Base, Servicer shall input such information into Servicer's
         loan records to be effective as of the date which is two Business Days
         after receipt of such information. The statements prepared to be
         delivered to each Established Franchisee Borrower with respect to the
         next Payment Date shall be prepared requiring a repayment of any
         Advances outstanding on the fifth Business Day of such month in excess
         of relevant Established Franchisee Borrowing Base as delivered to
         Servicer by Sponsor on such date. In addition, however, Servicer,

                                       15
<PAGE>   104
         on the date which is two Business Days after receipt of such
         calculation from Sponsor, shall notify the Established Franchisee
         Borrowers in writing (including facsimile) of the new Established
         Franchisee Borrowing Base for such Borrower and shall require that such
         Established Franchisee Borrower repay on the next Payment Date any
         additional Advances made since the date of the preparation of the
         statement for such Payment Date if necessary to avoid any overadvance
         as of such date. On the next Payment Date, each Established Franchisee
         Borrower shall prepay its outstanding Advances in excess of the
         relevant Established Franchisee Borrowing Base.

2.11     Prepayment of Established Franchisee Loans.

         Each Established Franchisee Borrower shall have the right to prepay its
         Loan in whole or in part upon at least two (2) Business Days' prior
         notice to Servicer. Voluntary partial prepayments of any Loan
         (expressly excluding mandatory prepayments required in connection with
         the reduction of the applicable Established Franchisee Borrowing Base)
         must be in a minimum amount of $1,000.

2.12     Default Rate of Interest.

         If any Borrower shall fail to pay on the due date therefor (subject to
         any applicable grace period), whether by acceleration or otherwise, any
         principal owing by such Borrower under any of the Loan Documents, then
         interest shall accrue on such unpaid principal from the due date until
         and including the date on which such principal is paid in full at a
         rate of interest equal to the Default Rate.

2.13     Legal Expenses

         In the event that any requested Loan does not close, Servicer shall
         charge Sponsor for its reasonable out-of-pocket expenses arising from
         its review or preparation of the initial draft of the Loan Documents,
         Financing Statement filings and searches. In the event the Loan closes,
         Servicer shall be entitled to charge the Borrower for its reasonable
         out-of-pocket expenses incurred in connection with the closing of the
         Loan, including all documentary stamp tax, filing fees, UCC search
         costs and recording costs, and such amounts may be deducted from the
         initial Advance of such Loan. In the event that Servicer has not
         received payment from any Borrower for the expenses permitted in this
         Section 2.14 after diligent collection efforts, Sponsor shall pay
         Servicer such expenses, and Servicer shall assign to Sponsor any rights
         it may have against such Borrower for the payment of such expenses.

2.14     Servicing Fee and Sponsor's Fee.

         Servicer shall be entitled to a servicing fee for each Payment Period
         equal to the amount specified in the Fee Letter ("Servicing Fee"), and
         Sponsor shall be entitled to the amount specified in the Fee Letter
         (the "Sponsor's Fee") to the extent received by Servicer.

                                       16
<PAGE>   105
                          3.       SERVICING OF LOANS

3.1      Borrower Financial Statements

         Within twenty (20) days after each Reporting Date with respect to each
         Borrower's calendar year-end and first, second and third calendar
         quarters, (or, where Borrower does not provide such information by the
         applicable Reporting Date and such default is waived by Sponsor, after
         receipt) Sponsor shall (a) review the compliance certificate sent to it
         by each Borrower pursuant to the terms of such Borrower's Loan
         Documents, (b) review such Borrower's financial statements to verify
         the accuracy of the compliance certificate, (c) perform all
         calculations (based upon such financial statements) necessary to
         determine whether such Borrower is in compliance with the financial
         covenants contained in such Borrower's Loan Documents and (d) forward
         to Servicer the compliance certificate and Sponsor's calculations of
         the financial covenants contained in such Borrower's Loan Documents.

3.2      Notice of Loan Defaults

                  (a) Within fifteen (15) days after the occurrence of a Loan
         Payment Default or after Servicer obtains actual knowledge of any other
         Loan Default, Servicer shall send a notice of Loan Default to the
         applicable Borrower pursuant to Section 3.3(f) and notice to Sponsor
         pursuant to Section 3.3(i).

                  (b) Following the sending of such notice of Loan Default,
         Servicer shall as soon as is practicable, provide Sponsor with such
         other information relating to the Defaulted Borrower and the Defaulted
         Loan as Sponsor requests.

                  (c) Servicer shall not be required to take any remedial action
         against any Defaulted Borrower under a Defaulted Loan and shall not be
         entitled to take any remedial action during any applicable Response
         Period except as expressly provided in the Loan Facility Agreement or
         hereunder.

3.3      Servicing and Administration of Loans

         Servicer shall service and administer the Loans in accordance with the
         terms of this Agreement and its usual practices and procedures for
         loans of similar size and structure as determined by Servicer in its
         sole and absolute discretion. Notwithstanding the foregoing, so long as
         Sponsor is not in default hereunder and has a continuing obligation
         pursuant to the Loan Facility Agreement and this Agreement, Servicer
         shall be responsible for the following duties in connection with the
         service and administration of the Loans:

                  (a) making of Advances pursuant to each Loan Commitment as set
         forth above;

                                       17
<PAGE>   106
                  (b) review of the Loan files and forwarding the notices to
         Sponsor of the missing Loan Documents as set forth above and
         maintenance of the Loan files containing the Loan Documents forwarded
         to Servicer by Sponsor or a Borrower;

                  (c) receipt of loan payments via check or ACH wire transfer
         from the Borrowers and maintenance of adequate records of such payments
         (with the understanding that any ACH debit made by Servicer which is
         rejected will be reinitiated only once);

                  (d) notification to each Borrower, by deposit into regular
         U.S. Mail, ten (10) days prior to each Payment Date, of a notice that
         the installment is coming due on such Payment Date, if any, and the
         amount of interest due on such date (or the amount that will be debited
         in the case of a Borrower who has authorized ACH debits);

                  (e) notification to such Borrower, by deposit into regular
         U.S. Mail, ten (10) days after the Payment Date with respect to any
         installment, of a reminder notice that installment has not been
         received;

                  (f) within five (5) days from the date an installment is
         thirty (30) days delinquent, notification to such Borrower, by mailing
         by registered U.S. Mail, of a letter demanding immediate payment of the
         past due amount of principal and interest to avoid further collection
         action, with a copy of such letter to be simultaneously delivered to
         Sponsor;

                  (g) on each Business Day on which an Advance is made,
         notification to Sponsor by telecopy, of a report at the end of such
         Business Day summarizing the loan activity on such day and setting
         forth the available balance of the relevant Loan Commitment;

                  (h) notification to Sponsor on weekly basis of all Defaulted
         Loans pursuant to a weekly delinquency report in the form of Exhibit J,
         with such report to list all Loans which are fifteen (15) days or more
         past due and provide (1) the amount past due, (2) the total principal
         outstanding, and (3) the number of days past due;

                  (i) notification to Sponsor of any Loan Default (other than a
         Loan Payment Default) of which Center 1923 of Servicer has actual
         knowledge;

                  (j) delivery to the Established Franchisee Borrowers, within
         two Business Days after receipt of the calculation of the Established
         Franchisee Borrowing Base from Sponsor, of the amount of such
         Established Franchisee Borrowing Base and any additional required
         payments by the Borrower on the next Payment Date; and

                                       18
<PAGE>   107
                  (k) delivery to Sponsor of the "Quarterly Servicing Report"
         required by the Fee Letter and delivery to the Sponsor and the
         Participants of the Monthly Servicing Report and the Quarterly
         Servicing Report required by the Loan Facility Agreement.

3.4      Monthly Reporting Requirements of Servicer to Borrowers.

         Servicer shall generate, at the end of each calendar month, a monthly
         DDA Account statement in the form customarily used by Servicer for its
         commercial customers and a loan account statement which shall be sent
         to each Borrower.

3.5      Preservation of Lien Priorities; Assignment of Rights

         Until the earlier of Servicer's receipt of payment in full of a Loan
         and termination of the applicable Loan Commitment or the purchase by
         Sponsor of a Loan pursuant to the terms of the Loan Facility Agreement,
         Servicer shall, if the Loan is secured, (i) prepare and forward to the
         Borrowers or other required signatories for execution amendments to
         Financing Statements promptly upon receipt of written notice of change
         of name or address or location of debtors or the Collateral thereunder
         and file such amendments or a new financing statement, in the case of a
         change in the debtor's location or the location of the Collateral, in
         the appropriate location based on the information contained in such
         notice promptly upon return thereof by the debtor, provided, however,
         that Servicer shall use its reasonable efforts to obtain and file such
         amendments and any such new financing statement in a timely manner;
         (ii) timely file continuation statements pertaining to such Financing
         Statements; and (iii) take all other reasonable action requested by
         Sponsor to protect the priority of liens or security interests with
         respect to the Collateral securing each Loan. Upon the purchase by
         Sponsor of a Loan pursuant to the terms of the Loan Facility Agreement,
         or in the event that Sponsor reimburses Servicer or otherwise becomes
         obligated to Servicer for expenses (including without limitation,
         funding losses) of Servicer incurred in connection with a proposed loan
         which was never consummated that have not been reimbursed by the
         applicable Borrower, Servicer shall be deemed to have assigned to
         Sponsor all rights and remedies that Servicer may have had against the
         Borrower in accordance with and subject to the limitations of Section
         10.15 of the Loan Facility Agreement. Accordingly, Servicer agrees to
         execute on a timely basis all such instruments and documents as are
         reasonably requested in order to evidence Sponsor's rights or to permit
         Sponsor to exercise such rights, including without limitation, forms of
         assignments, all without recourse, representation or warranty.

                                       19
<PAGE>   108
3.6      Amendments to Loan Documents; Further Documentation

         Except to correct an immaterial ambiguity or manifest error, Servicer
         shall not agree to any amendment of the applicable Loan Documents after
         closing of any Loan without the prior written approval of Sponsor
         unless a Credit Event has occurred and is continuing or the Sponsor has
         no further obligations pursuant to its guaranty obligations with
         respect to such Loan. Upon receipt of either such approval, or written
         instructions from Sponsor directing Servicer to do so, Servicer shall
         timely prepare written amendments to the Loan Documents or other
         documents relating to the Loan in accordance with such approval or
         instructions, and shall use its reasonable efforts to obtain on a
         timely basis the signatures of the Borrower and/or other appropriate
         signatories to such Loan Documents or other documents; provided that,
         such amendments are not inconsistent with the terms of the Operative
         Documents (with the express understanding that to the extent that
         Servicer has any questions regarding such consistency, Servicer shall
         be entitled to refuse to prepare or execute such amendments until
         receipt of approval from the Participants pursuant to the Loan Facility
         Agreement). Within fifteen (15) days after obtaining such signatures,
         Servicer shall send Sponsor photocopies of the original fully executed
         documents. Servicer shall be entitled to charge Sponsor, or upon
         Sponsor's written instructions, the applicable Borrower, reasonable
         attorneys' fees actually incurred and other expenses relating to the
         preparation of such amendments or other documents.

3.7      Actions by Servicer

         Unless a Credit Event has occurred and is continuing or the Sponsor has
         no further obligation pursuant to its guaranty set forth in the Loan
         Facility Agreement, Servicer shall at all times endeavor to comply with
         the instructions of Sponsor and with the requirements set forth in this
         Servicing Agreement and the Loan Facility Agreement, provided that
         Servicer shall not be required to take any action which it reasonably
         determines would expose Servicer to unreasonable risk of liability or
         which is contrary to applicable law or which is contrary to the terms
         of the Operative Documents.

         4.       SPONSOR'S AUDIT AND REPORTING OBLIGATIONS WITH RESPECT TO
                                    FRANCHISEE LOANS.

         Each Startup Franchisee Loan Agreement shall authorize Servicer or
         representatives of Servicer, including Sponsor, to conduct periodic
         field audits of each Startup Franchisee Borrower. Unless otherwise
         instructed by Servicer, Sponsor hereby covenants and agrees with
         Servicer to audit each Startup Franchisee Borrower no less than once
         per each six

                                       20
<PAGE>   109
         month period and more frequently at the reasonable request of Servicer
         with respect to any Startup Franchisee Borrower as to whom a Loan
         Default has occurred (whether or not waived by Sponsor). In conducting
         the field audits of the Startup Franchisee Borrowers, Sponsor will
         examine the payment receipts, 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 Servicer or Sponsor by the Startup Franchisee
         Borrowers in connection with the Startup Franchisee Loans.

         At the request of Servicer, within thirty (30) Business Days of the
         completion of each field audit, Sponsor shall forward to Servicer a
         written audit report detailing the scope of Sponsor's audit, any
         discrepancies or other misstatements or misrepresentations of the
         relevant Startup Franchisee Borrower discovered in the course of the
         audit and containing a clear concise statement as to whether or not
         Sponsor believes that such Startup Franchisee Borrower is in compliance
         with the terms of the Loan Documents to which it is a party and if not,
         the nature of any default known to Sponsor and the course of action
         planned by the Startup Franchisee Borrower to remedy such default. The
         delivery of each field audit to Servicer by Sponsor shall constitute a
         representation and warranty by Sponsor that the information set forth
         therein is true and correct in all material respects to the best of
         Sponsor's knowledge and that Servicer shall be authorized to rely on
         such information in continuing to make Advances to such Startup
         Franchisee Borrower.

         Notwithstanding the foregoing, Servicer, in its sole discretion, may
         (at Servicer's expense, unless a Credit Event has occurred and is
         continuing and then at Sponsor's expense) at any time and from time to
         time, undertake to perform an independent field audit of any or all of
         the Startup Franchisee Borrowers (with such audit to be performed by
         officers or employees of Servicer or other persons retained by Servicer
         for such purpose). Sponsor shall cooperate fully with Servicer in
         connection with any such independent audit.

                           5.       MISCELLANEOUS

5.1      Communications

         Unless otherwise provided in the Loan Facility Agreement or under this
         Servicing Agreement, all communications under this Servicing Agreement
         shall be sent in accordance with the notice procedures set forth in
         Section 15.1 of the Loan Facility Agreement.

5.2      Waivers.

         No party hereto shall be deemed to have waived any of its rights under
         this Servicing Agreement unless such waiver is in writing and signed by
         the party for whose benefit

                                       21
<PAGE>   110
         such provision was intended. No delay or omission on the part of any
         party hereto 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.

5.3      Governing Law.

         THIS SERVICING AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE
         WITH THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE
         CONFLICT OF LAWS PROVISIONS THEREOF).

5.4      Successors and Assigns.

         This Servicing Agreement shall be binding upon and inure to the benefit
         of the parties hereto and their respective successors and assigns.
         Neither party may assign its rights or obligations hereunder without
         the prior written consent of the other party hereto.

5.5      Amendments; Consents.

         No amendment, modification, supplement, termination, or waiver of any
         provision of this Servicing Agreement and no consent to any departure
         by Sponsor therefrom, may in any event be effective unless in writing
         signed by Servicer, and then only in the specific instance and for the
         specific purpose given.

5.6      Indemnification by Servicer.

         Without limiting any other rights which Sponsor may have under the
         Operative Documents or under applicable law, and subject to the notice
         and other procedural requirements of Section 11.2 of the Loan Facility
         Agreement, Servicer hereby agrees to indemnify upon demand and hold
         Sponsor harmless from and against all damages, losses, claims,
         liabilities and related costs and expenses, including reasonable
         attorneys' fees actually incurred and disbursements as and when
         incurred, awarded against or incurred by Sponsor, which directly arise
         out of Servicer's gross negligence or willful misconduct in connection
         with its administration of the Franchisee Loan Program.

         Sponsor expressly acknowledges and agrees that Servicer shall exercise
         with respect to the Franchisee Loan Program the same standard of care
         and diligence in the performance of its duties, responsibilities and
         obligations under the Operative Documents as it generally exercises
         with respect to the loans in its own portfolio. Notwithstanding the
         foregoing, neither Servicer nor any of its directors, officers, agents
         or employees shall have any duty to ascertain, inquire into or verify
         (i) any statement, warranty or representation made in connection with
         the Operative Documents (other than any of the foregoing made by any of
         them), any Loan Document or any borrowing hereunder or thereunder, (ii)
         the performance or observance of any of the covenants or agreements of
         any Borrower, beyond the examination of periodic financial statements
         and compliance

                                       22
<PAGE>   111
         certificates received pursuant to the Loan Agreements; (iii) the
         satisfaction of any condition specified in Article 4 of the Loan
         Agreements, except receipt of items required to be delivered to
         Servicer; or (iv) the validity, effectiveness or genuineness of the
         Operative Documents or any of the Loan Documents or any other
         instrument or writing furnished in connection herewith or therewith,
         provided, however, that in each case Servicer, its directors, officers,
         agents and employees are acting in good faith and without actual
         knowledge of a defect in or invalidity of any of the foregoing; or if
         Servicer, its directors, officers, agents or employees do have
         knowledge of any such defect or invalidity, provided that Sponsor: (x)
         has been promptly notified by Servicer of such defect or invalidity;
         and (y) has expressly consented to any and all actions to be taken by
         Servicer, its directors, officers, agents or employees as a result of,
         which is attributable to, or otherwise relates to, such defect or
         invalidity. Servicer shall not incur any liability by acting in
         reliance upon any notice, consent, certificate, statement or other
         writing (which may be a wire, telex or similar writing) given in
         accordance with other provisions of this Agreement reasonably believed
         by it to be genuine or is otherwise in accordance with the instructions
         of Sponsor.

5.7      Entire Agreement.

         This Servicing Agreement and the other Operative Documents executed and
         delivered contemporaneously herewith, together with the exhibits and
         schedules attached hereto and thereto, constitute the entire
         understanding of the parties with respect to the subject matter hereof,
         and any other prior or contemporaneous agreements, whether written or
         oral, with respect thereto are expressly superseded hereby. The
         execution of this Servicing Agreement and the other Operative Documents
         by Sponsor was not based upon any facts or materials provided by
         Servicer, nor was Sponsor induced to execute this Servicing Agreement
         or any other related document by any representation, statement or
         analysis made by Servicer.

5.8      Captions.

         The captions in this Servicing Agreement are included for convenience
         only and shall not in any way affect the interpretation or construction
         of any of the provisions hereof.

5.9      Severability.

         If any one or more parts, terms, provisions, paragraphs, or Sections of
         this Servicing Agreement shall be held to be illegal or in conflict
         with state or federal law, the remaining shall continue in full force
         and effect.

5.10     Counterparts.

         This Servicing Agreement may be signed in any number of counterparts,
         each of which shall be an original, with the same effect as if the
         signatures thereto and hereto where upon the same instrument.

                                       23
<PAGE>   112
               WITNESS WHEREOF, the parties hereto have caused this Servicing
               Agreement to be duly executed as of the day and year first above
               written. AARON RENTS, INC.

                                        By: /s/ Gilbert L. Danielson
                                           _____________________________________
                                              Gilbert L. Danielson
                                              Executive Vice President and
                                              Chief Financial Officer

                                        SUNTRUST BANK, ATLANTA, as
                                                  Servicer

                                        By:_____________________________________
                                           Title:_______________________________

                                       24
<PAGE>   113
Exhibits to Servicing Agreement

Exhibit A - Form of ACH Authorization
Exhibit B - Form of Commitment Letter for Startup Franchisee Loans
Exhibit C - Form of Corporate Authorization
Exhibit D - Form of Default Waiver Request
Exhibit E - Form of Funding Approval Notice
Exhibit F - Form of Personal Guaranty
Exhibit G - Form of Store Opening Information Sheet
Exhibit H - Form of Landlord Waiver
Exhibit I - Form of Subordination Agreement
Exhibit J - Form of Weekly Delinquent Report

                                       25

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]