Document:

Exhibit

10(t)

 

 

 

AARON RENTS, INC.

and certain other Obligors

 

 

 

 

NOTE PURCHASE AGREEMENT

 

 

 

 

DATED

AS OF AUGUST 15, 2002

 

 

 

$50,000,000 6.88% SENIOR

NOTES DUE AUGUST 15, 2009

 

 

 

 

TABLE OF CONTENTS

 

	

  1.

  	

  AUTHORIZATION OF

  ISSUE OF NOTES

  
	

   

  	

   

  
	

  2.

  	

  PURCHASE AND SALE OF

  NOTES

  
	

   

  	

   

  
	

  3.

  	

  CONDITIONS

  OF CLOSING

  
	

   

  	

   

  
	

   

  	

  3A.

  	

  Execution and

  Delivery of Documents

  
	

   

  	

  3B.

  	

  Opinion of

  Purchaser’s Special Counsel

  
	

   

  	

  3C.

  	

  Purchase

  Permitted By Applicable Laws

  
	

   

  	

  3D.

  	

  Payment of

  Fees

  
	

   

  	

  3E.

  	

  Sale to Other Purchasers

  
	

   

  	

  3F.

  	

  Changes in

  Corporate Structure

  
	

   

  	

  3G.

  	

  Private Placement Number

  
	

   

  	

  3H.

  	

  Performance; No Default

  
	

   

  	

  3I.

  	

  Representations and

  Warranties

  
	

   

  	

  3J.

  	

  Waivers

  
	

   

  	

   

  	

   

  
	

  4.

  	

  PREPAYMENTS

  
	

   

  	

   

  
	

   

  	

  4A.

  	

  Required

  Prepayments

  
	

   

  	

  4B.

  	

  Optional

  Prepayment With Yield-Maintenance Amount

  
	

   

  	

  4C.

  	

  Notice of Optional

  Prepayment

  
	

   

  	

  4D.

  	

  Partial Payments Pro

  Rata

  
	

   

  	

  4E.

  	

  Retirement

  of Notes

  
	

   

  	

   

  	

   

  
	

  5.

  	

  AFFIRMATIVE COVENANTS

  
	

   

  	

   

  
	

   

  	

  5A.

  	

  Financial

  Statements

  
	

   

  	

  5B.

  	

  Information

  Required by Rule 144A

  
	

   

  	

  5C.

  	

  Inspection

  of Property

  
	

   

  	

  5D.

  	

  Corporate

  Existence, Etc

  
	

   

  	

  5E.

  	

  Payment of Taxes and

  Claims

  
	

   

  	

  5F.

  	

  Line of

  Business

  
	

   

  	

  5G.

  	

  Maintenance

  of Most Favored Lender Status

  
	

   

  	

  5H.

  	

  Covenant

  Relating to Domestic Subsidiaries

  
	

   

  	

  5I.

  	

  Compliance

  with Laws

  
	

   

  	

  5J.

  	

  Notices of Material

  Events

  
	

   

  	

  5K.

  	

  Payment

  of Obligations

  
	

   

  	

  5L.

  	

  Books

  and Records

  
	

   

  	

  5M.

  	

  Maintenance

  of Properties; Insurance

  
	

   

  	

  5N.

  	

  Covenant

  Relating to Foreign Subsidiaries

  

 

i

 

	

  6.

  	

  NEGATIVE COVENANTS

  
	

   

  	

   

  
	

   

  	

  6A.

  	

  Fixed Charges

  Coverage Ratio

  
	

   

  	

  6B.

  	

  Total Debt to EBITDA

  Ratio

  
	

   

  	

  6C.

  	

  Total

  Adjusted Debt to Total Adjusted Capitalization Ratio

  
	

   

  	

  6D.

  	

  Minimum

  Consolidated Net Worth

  
	

   

  	

  6E.

  	

  Indebtedness

  
	

   

  	

  6F.

  	

  Liens

  
	

   

  	

  6G.

  	

  Sale of Assets

  
	

   

  	

  6H.

  	

  Restricted

  Payments

  
	

   

  	

  6I.

  	

  Restricted Investments

  
	

   

  	

  6J.

  	

  Restrictive Agreements

  
	

   

  	

  6K.

  	

  Amendments to

  Material Documents

  
	

   

  	

  6L.

  	

  Accounting

  Changes

  
	

   

  	

  6M.

  	

  Fundamental

  Changes

  
	

   

  	

  6N.

  	

  Transactions with

  Affiliates

  
	

   

  	

  6O.

  	

  Sale and Leaseback

  Transactions

  
	

   

  	

   

  
	

  7.

  	

  EVENTS OF DEFAULT

  
	

   

  	

   

  
	

   

  	

  7A.

  	

  Acceleration

  
	

   

  	

  7B.

  	

  Rescission of

  Acceleration

  
	

   

  	

  7C.

  	

  Notice of

  Acceleration or Rescission

  
	

   

  	

  7D.

  	

  Other

  Remedies

  
	

   

  	

   

  
	

  8.

  	

  REPRESENTATIONS, COVENANTS AND WARRANTIES

  
	

   

  	

   

  
	

   

  	

  8A.

  	

  Organization

  
	

   

  	

  8B.

  	

  Financial

  Statements

  
	

   

  	

  8C.

  	

  Actions

  Pending

  
	

   

  	

  8D.

  	

  Outstanding Indebtedness

  
	

   

  	

  8E.

  	

  Title

  to Properties

  
	

   

  	

  8F.

  	

  Taxes

  
	

   

  	

  8G.

  	

  Conflicting

  Agreements and Other Matters

  
	

   

  	

  8H.

  	

  Offering

  of Notes

  
	

   

  	

  8I.

  	

  Use of

  Proceeds

  
	

   

  	

  8L.

  	

  ERISA

  
	

   

  	

  8M.

  	

  Governmental

  Consent

  
	

   

  	

  8N.

  	

  Compliance

  with Laws

  
	

   

  	

  8O.

  	

  Environmental Compliance

  
	

   

  	

  8P.

  	

  Utility

  Company Status

  
	

   

  	

  8Q.

  	

  Investment Company

  Status

  
	

   

  	

  8R.

  	

  Rule 144A

  
	

   

  	

  8S.

  	

  Disclosure

  
	

   

  	

  8T.

  	

  Foreign

  Assets Control Regulations, etc

  

 

ii

 

	

  9.

  	

  REPRESENTATIONS OF

  THE PURCHASER

  
	

   

  	

   

  
	

   

  	

  9A.

  	

  Nature

  of Purchase

  
	

   

  	

  9B.

  	

  Source of

  Funds

  
	

   

  	

   

  	

   

  
	

  10.

  	

  DEFINITIONS;

  ACCOUNTING MATTERS

  
	

   

  	

   

  
	

   

  	

  10A.

  	

  Yield-Maintenance Terms

  
	

   

  	

  10B.

  	

  Other Terms

  
	

   

  	

  10C.

  	

  Accounting

  and Legal Principles, Terms and 

  Determinations

  
	

   

  	

   

  	

   

  
	

  11.

  	

  MISCELLANEOUS

  
	

   

  	

   

  
	

   

  	

  11A.

  	

  Note Payments

  
	

   

  	

  11B.

  	

  Expenses

  
	

   

  	

  11C.

  	

  Consent

  to Amendments

  
	

   

  	

  11D.

  	

  Form,

  Registration, Transfer and Exchange of Notes; Lost Notes

  
	

   

  	

  11E.

  	

  Persons

  Deemed Owners; Participations

  
	

   

  	

  11F.

  	

  Survival

  of Representations and Warranties; Entire Agreement

  
	

   

  	

  11G.

  	

  Successors and Assigns

  
	

   

  	

  11H.

  	

  Confidential Information

  
	

   

  	

  11I.

  	

  Notices

  
	

   

  	

  11J.

  	

  Payments due on

  Non-Business Days

  
	

   

  	

  11K.

  	

  Satisfaction Requirement

  
	

   

  	

  11L.

  	

  Governing Law

  
	

   

  	

  11M.

  	

  Consent

  to Jurisdiction; Waiver of Immunities

  
	

   

  	

  11N.

  	

  Severability

  
	

   

  	

  11O.

  	

  Descriptive

  Headings

  
	

   

  	

  11P.

  	

  Counterparts

  
	

   

  	

  11Q.

  	

  Independence of

  Covenants

  
	

   

  	

  11R.

  	

  Waiver

  of Jury Trial

  
	

   

  	

  11S.

  	

  Severalty of Obligations

  
	

   

  	

  11T.

  	

  Independent

  Investigation

  
	

   

  	

  11U.

  	

  Directly or Indirectly

  

 

iii

 

Schedules and Exhibits

 

 

Schedule A                                —                                   Purchaser Schedule

 

Schedule 3F                               —                                   Changes in Corporate

Structure

Schedule 6E                               —                                   Existing

Indebtedness

Schedule 6F                               —                                   Existing Liens

Schedule 6I                                  —                                   Existing Investments

Schedule 8G                              —                                   Restrictions on

Indebtedness

Schedule 8I                                  —                                   Use of Proceeds

 

Exhibit

A                                               —                                   Form of Note

Exhibit B                                               —                                   Payment

Instructions

Exhibit C                                                 —                                   Form

of Opinion of Counsel for the Obligors

Exhibit D                                                —                                   Form

of Joinder Agreement

Exhibit E                                                  —                                   Forms

of Waivers

 

iv

 

AARON RENTS, INC.

and certain other Obligors

1100 Aaron Building

309 East Paces Ferry

Road, NE

Atlanta, GA  30305-2377

 

Dated as of August

15, 2002

 

To Each of the Purchasers named on

the attached Purchaser Schedule

 

Ladies and Gentlemen:

 

Each of AARON RENTS, INC., a Georgia corporation

(together with its successors and assigns, the “Company”), AARON RENTS,

INC. PUERTO RICO, a Puerto Rico corporation (together with its

successors and assigns, “ARPR”) and AARON INVESTMENT COMPANY, a

Delaware corporation (together with its successors and assigns, “AIC”,

and, together with the Company and ARPR, the “Obligors”) hereby agrees with

each Purchaser as follows:

 

1.                                      AUTHORIZATION OF ISSUE OF NOTES.

 

The Obligors will authorize the issue of their senior

promissory notes in the aggregate principal amount of $50,000,000, to be dated

the date of issue thereof, to mature August 15, 2009, to bear interest on the

unpaid balance thereof from the date thereof until the principal thereof shall

have become due and payable at the rate of 6.88% per annum and on overdue

payments at the rate specified therein, and to be substantially in the form of

Exhibit A attached hereto.  The term “Notes”

as used herein shall include each such senior promissory note delivered

pursuant to any provision of this Agreement and each such senior promissory

note delivered in substitution or exchange for any other Note pursuant to any

such provision.

 

2.                                      PURCHASE AND SALE OF NOTES.

 

The Obligors hereby agree to sell to each Purchaser

and, subject to the terms and conditions herein set forth, each Purchaser

agrees to purchase from the Obligors Notes in the aggregate principal amount

set forth opposite such Purchaser’s name on the Purchaser Schedule hereto at

100% of such aggregate principal amount. 

The Obligors will deliver to each Purchaser, at the offices of Bingham

McCutchen LLP at 399 Park Avenue, New York, NY 10022, one or more Notes

registered in its name, evidencing the aggregate principal amount of Notes to

be purchased by such Purchaser and in the denomination or denominations

specified in the Purchaser Schedule attached hereto, against payment of the

purchase price thereof by transfer of immediately available funds for credit to

the Obligors’ accounts held at such bank as shall be identified in a written

instruction of the Obligors in the form of Exhibit B attached hereto, delivered

to each Purchaser on or before the date of closing, which shall be August 15,

2002 or any other date on or before August 16, 2002 upon which the parties

hereto may mutually agree (herein called the “Closing” or the “Date of

Closing”).

 

 

3.                                      CONDITIONS OF CLOSING.

 

The obligation of each Purchaser to purchase and pay

for the Notes to be purchased by it hereunder is subject to the satisfaction,

on or before the Date of Closing, of the following conditions:

 

3A.                             Execution

and Delivery of Documents.

 

Such Purchaser shall have received the following, each

to be dated the Date of Closing unless otherwise indicated:

 

(i)                                   the

Note(s) to be purchased by such Purchaser;

 

(ii)                                a

favorable opinion of Kilpatrick Stockton LLP, special counsel for the Obligors

(or such other counsel designated by the Obligors and acceptable to each

Purchaser) satisfactory to each Purchaser and substantially in the form of

Exhibit C attached hereto and as to such other matters as a Purchaser may

reasonably request.  The Obligors hereby

direct each such counsel to deliver such opinion, agree that the issuance and

sale of any Notes will constitute a reconfirmation of such direction, and

understand and agree that each Purchaser will and hereby is authorized to rely

on such opinion;

 

(iii)                               the

Articles/Certificate of Incorporation of each of the Obligors, each certified

as of a recent date by the Secretary of State of their respective jurisdictions

of incorporation;

 

(iv)                              the

Bylaws of each of the Obligors, certified by each of their respective

Secretaries;

 

(v)                                 

an incumbency certificate from each Obligor signed by the Secretary or an

Assistant Secretary and one other officer (who is not signing any other

document or agreement in connection herewith) of each of the Obligors, certifying

as to the names, titles and true signatures of the officers of the Obligors

authorized to sign this Agreement and the Notes and the other documents to be

delivered hereunder;

 

(vi)                               a

certificate of the Secretary of each of the Obligors (A) attaching resolutions

of the board of directors of the Obligors evidencing approval of the

transactions contemplated by this Agreement and the issuance of the Notes and

the execution, delivery and performance thereof, and authorizing certain

officers to execute and deliver the same, and certifying that such resolutions

were duly and validly adopted and have not since been amended, revoked or

rescinded, and (B) certifying that no dissolution or liquidation proceedings as

to the Obligors have been commenced or are contemplated;

 

(vii)                           an

Officer’s Certificate from the Company certifying that the conditions specified

in paragraphs 3F, 3H and 3I have been satisfied;

 

2

 

(viii)                        corporate

and tax good standing certificates as to each Obligor from their respective

jurisdictions of incorporation; and

 

(ix)                                such

additional documents or certificates with respect to such legal matters or

corporate or other proceedings related to the transactions contemplated hereby

as may be reasonably requested by such Purchaser.

 

3B.                             Opinion

of Purchaser’s Special Counsel.

 

Such Purchaser shall have received from Bingham

McCutchen LLP a favorable opinion satisfactory to such Purchaser as to such

matters incident to the matters herein contemplated as it may reasonably

request.

 

3C.                             Purchase

Permitted By Applicable Laws.

 

The purchase of and payment for the Notes to be

purchased by such Purchaser on the Date of Closing on the terms and conditions

herein provided (including the use of the proceeds of such Notes by the

Obligors) shall not violate any applicable law or governmental regulation

(including, without limitation, section 5 of the Securities Act or Regulation

T, U or X of the Board of Governors of the Federal Reserve System) and shall not

subject such Purchaser to any tax, penalty, liability or other onerous

condition under or pursuant to any applicable law or governmental regulation,

and such Purchaser shall have received such certificates or other evidence as

such Purchaser may request to establish compliance with this condition.

 

3D.                             Payment

of Fees.

 

The Obligors shall have paid the reasonable fees and

expenses of Bingham McCutchen LLP, as set forth in a statement to be delivered

to the Company no later than two Business Days prior to the Date of Closing.

 

3E.                               Sale

to Other Purchasers.

 

The Obligors shall have sold to the other Purchasers

the Notes to be purchased by them at the closing and shall have received

payment in full therefor.

 

3F.                               Changes

in Corporate Structure.

 

Except as set forth on Schedule 3F hereto, no Obligor

shall have changed its jurisdiction of incorporation or been a party to any

merger or consolidation, nor shall any Obligor have succeeded to all or any

substantial part of the liabilities of any other entity, at any time following

the date of the most recent financial statements.  There shall have been no Material Adverse Effect since December

31, 2001.

 

3

 

3G.                             Private

Placement Number.

 

A Private Placement number issued by Standard &

Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation

Office of the National Association of Insurance Commissioners) shall have been

obtained for the Notes.

 

3H.                             Performance;

No Default.

 

The Obligors shall have performed and complied with

all agreements and conditions contained in this Agreement required to be

performed or complied with by them prior to or at the Closing and after giving

effect to the issue and sale of the Notes (and the application of the proceeds thereof

as contemplated by paragraph 8I) no Default or Event of Default shall have

occurred and be continuing.

 

3I.                                  Representations

and Warranties.

 

The representations and warranties of the Obligors in

this Agreement shall be correct when made and at the time of Closing.

 

3J.                               Waivers.

 

The Company shall have delivered a true and correct

copy, attached hereto as Exhibit E, of any waivers to permit the Company to

enter into the transactions contemplated by this Agreement and the Notes that

shall be necessary under the SunTrust Agreement, including, without limitation,

waivers of Section 7.1 and Section 7.8 thereof.

 

4.                                      PREPAYMENTS.

 

The Notes shall be subject to prepayment with respect

to the required prepayments specified in paragraph 4A and the optional prepayments

permitted by paragraph 4B.

 

4A.                             Required

Prepayments.

 

Until the Notes shall be paid in full, the Obligors

shall apply to the prepayment of the Notes, without Yield-Maintenance Amount,

the sum of $10,000,000 on August 15 in each of the years 2005 to 2009,

inclusive, and such principal amounts of the Notes, together with interest

thereon to the prepayment dates, shall become due on such prepayment dates; provided

that upon any partial prepayment of the Notes pursuant to paragraph 4B or

purchase of the Notes pursuant to paragraph 4E the principal amount of each

required prepayment of the Notes becoming due under this paragraph 4A on and

after the date of such prepayment or purchase shall be reduced in the same

proportion as the aggregate unpaid principal amount of the Notes is reduced as

a result of such prepayment or purchase. 

The remaining principal amount of the Notes, together with interest

accrued thereon, shall become due on the maturity date of the Notes.

 

4

 

4B.                             Optional

Prepayment With Yield-Maintenance Amount.

 

The Notes shall be subject to prepayment, in whole at

any time or from time to time in part (in a minimum amount of $1,000,000 and in

integral multiples of $500,000) at the option of the Obligors, at 100% of the

principal amount so prepaid plus interest thereon to the prepayment date and

the Yield-Maintenance Amount, if any, with respect to each Note.  Any partial prepayment of the Notes pursuant

to this paragraph 4B shall be applied in satisfaction of required payments of

principal on a pro rata basis.

 

4C.                             Notice

of Optional Prepayment.

 

The Obligors shall give the holder of each Note

irrevocable written notice of any prepayment pursuant to paragraph 4B not less

than 10 Business Days prior to the prepayment date, specifying such prepayment

date and the principal amount of the Notes, and of the Notes held by such

holder, to be prepaid on such date and stating that such prepayment is to be

made pursuant to paragraph 4B.  Notice

of prepayment having been given as aforesaid, the principal amount of the Notes

specified in such notice, together with interest thereon to the prepayment date

and together with the Yield-Maintenance Amount, if any, with respect thereto,

shall become due and payable on such prepayment date.  The Obligors shall, on or before the day on which it gives

written notice of any prepayment pursuant to paragraph 4B, give telephonic

notice of the principal amount of the Notes to be prepaid and the prepayment

date to each Significant Holder  which shall have designated a recipient of such notices

in the Purchaser Schedule attached hereto or by notice in writing to the

Obligors.

 

4D.                             Partial

Payments Pro Rata.

 

Upon any partial prepayment of the Notes pursuant to

paragraph 4A or 4B, the principal amount so prepaid shall be allocated to all

Notes at the time outstanding in proportion to the respective outstanding

principal amounts thereof.

 

4E.                               Retirement

of Notes.

 

The Obligors shall not, and shall not permit any of

their Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in

part prior to their stated final maturity (other than by prepayment pursuant to

paragraph 4A or 4B or upon acceleration of such final maturity pursuant to

paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes

held by any holder unless such Obligor or such Subsidiary or Affiliate shall

have offered to prepay or otherwise retire or purchase or otherwise acquire, as

the case may be, the same proportion of the aggregate principal amount of Notes

held by each other holder of Notes at the time outstanding upon the same terms

and conditions.  Any Notes so prepaid or

otherwise retired or purchased or otherwise acquired by the Obligors or any of

their Subsidiaries or Affiliates shall not be deemed to be outstanding for any

purpose under this Agreement.

 

5

 

5.                                      AFFIRMATIVE COVENANTS.

 

5A.                             Financial

Statements.

 

The Company covenants that it will deliver to each

Significant Holder in duplicate:

 

(i)                                     

as soon as practicable and in any event within 45 days after the end of each

quarterly period (other than the last quarterly period) in each fiscal year,

consolidated statements of income, cash flows and changes in financial position

of the Company and its Subsidiaries for the period from the beginning of the

current fiscal year to the end of such quarterly period, and a consolidated

balance sheet of the Company and its Subsidiaries as at the end of such

quarterly period, setting forth in each case in comparative form figures for

the corresponding period in the preceding fiscal year, all in reasonable detail

and satisfactory in form to the Required Holder(s) and certified by an

authorized financial officer of the Company, subject to changes resulting from

year-end adjustments; provided, however, that delivery pursuant

to clause (iii) below of copies of the Quarterly Report on Form 10-Q of the

Company for such quarterly period filed with the Securities and Exchange

Commission shall be deemed to satisfy the requirements of this clause (i) with

respect to consolidated statements;

 

(ii)                                  

as soon as practicable and in any event within 90 days after the end of each

fiscal year, consolidated statements of income, cash flows and changes in

financial position for the Company and its Subsidiaries for such year, and a

consolidated balance sheet of the Company and its Subsidiaries as at the end of

such year, setting forth in each case in comparative form corresponding

consolidated figures from the preceding annual audit, all in reasonable detail

and satisfactory in form to the Required Holder(s) and, as to the consolidated

statements, reported on by independent public accountants of recognized

national standing selected by the Company whose report shall be without

limitation as to the scope of the audit and satisfactory in substance to the

Required Holder(s); provided, however, that delivery pursuant to

clause (iii) below of copies of the Annual Report on Form 10-K of the Company

for such fiscal year filed with the Securities and Exchange Commission shall be

deemed to satisfy the requirements of this clause (ii) with respect to

consolidated statements;

 

(iii)                               

promptly upon transmission thereof, copies of all such financial statements,

proxy statements, notices and reports as it shall send to its public

stockholders and copies of all registration statements (without exhibits) and

all reports which it files with the Securities and Exchange Commission (or any

governmental body or agency succeeding to the functions of the Securities and

Exchange Commission);

 

(iv)                              promptly

upon receipt thereof, a copy of each other report submitted to the Company or

any Subsidiary by independent accountants in connection with any annual,

interim or special audit made by them of the books of the Company or any

Subsidiary;

 

6

 

(v)                                 as

soon as available and in any event within 30 days after the end of each fiscal

year of the Company, a forecasted income statement, balance sheet, and

statement of cash flows for the following fiscal year, provided that, the Company

shall not be required to deliver such financial statements so long as the

Company is not required to provide such information to any other lender,

whether pursuant to the SunTrust Agreement or otherwise;

 

(vi)                              with

reasonable promptness, such other information and documents as such Significant

Holder may reasonably request.

 

Together with each delivery of financial statements required by clauses

(i) and (ii) above, the Company will deliver to each Significant Holder an

Officer’s Certificate demonstrating (with computations in reasonable detail)

compliance by the Company and its Subsidiaries with the provisions of

paragraphs 6A through 6D, inclusive and stating that there exists no Event of

Default or Default, or, if any Event of Default or Default exists, specifying

the nature and period of existence thereof and what action the Company proposes

to take with respect thereto.  Together

with each delivery of financial statements required by clause (ii) above, the

Company will deliver to each Significant Holder a certificate of such

accountants stating that, in making the audit necessary for their report on

such financial statements, they have obtained no knowledge of any Event of

Default or Default, or, if they have obtained knowledge of any Event of Default

or Default, specifying the nature and period of existence thereof.  Such accountants, however, shall not be

liable to anyone by reason of their failure to obtain knowledge of any Event of

Default or Default which would not be disclosed in the course of an audit

conducted in accordance with generally accepted auditing standards.

 

5B.                             Information

Required by Rule 144A.

 

The Obligors covenant that they will, upon the request

of the holder of any Note, provide such holder, and any qualified institutional

buyer designated by such holder, such financial and other information as such

holder may reasonably determine to be necessary in order to permit compliance

with the information requirements of Rule 144A under the Securities Act in

connection with the resale of Notes, except at such times as the Obligors are

subject to the reporting requirements of section 13 or 15(d) of the Exchange

Act.  For the purpose of this paragraph

5B, the term “qualified institutional buyer” shall have the meaning specified

in Rule 144A under the Securities Act.

 

5C.                             Inspection

of Property.

 

The Company shall permit the representatives of each

Significant Holder that is an Institutional Investor:

 

(a)                                  No

Default — if no Default or Event of Default then exists, at the expense of such

Significant Holder and upon reasonable prior notice to the Company, to visit

the principal executive office of the Company, to discuss the affairs, finances

and accounts of the Company and its Subsidiaries with the Company’s officers,

and (with the consent of the Company, which consent will not be unreasonably

withheld) its independent public

 

7

 

accountants, and (with the consent of the Company, which

consent will not be unreasonably withheld) to visit the other offices and

properties of the Company and each Subsidiary, all at such reasonable times and

as often as may be reasonably requested in writing; and

 

(b)                                 Default

— if a Default or Event of Default then exists, at the expense of the Company

to visit and inspect any of the offices or properties of the Company or any

Subsidiary, to examine all their respective books of account, records, reports

and other papers, to make copies and extracts therefrom, and to discuss their

respective affairs, finances and accounts with their respective officers and

independent public accountants (and by this provision the Company authorizes

said accountants to discuss the affairs, finances and accounts of the Company

and its Subsidiaries), all at such times and as often as may be requested.

 

5D.                             Corporate

Existence, Etc.

 

Each Obligor will at all times preserve and keep in

full force and effect its corporate existence. 

Subject to paragraphs 6G and 6M, the Company will at all times preserve

and keep in full force and effect the corporate existence of each of its

Subsidiaries and all rights and franchises of the Company and its Subsidiaries

unless, in the good faith judgment of the Company, the termination of or failure

to preserve and keep in full force and effect such corporate existence, right

or franchise would not, individually or in the aggregate, have a Material

Adverse Effect.

 

5E.                               Payment

of Taxes and Claims.

 

The Company will and will cause each of its Subsidiaries

to file all tax returns required to be filed in any jurisdiction and to pay and

discharge all taxes shown to be due and payable on such returns and all other

taxes, assessments, governmental charges, or levies imposed on them or any of

their properties, assets, income or franchises, to the extent such taxes and

assessments have become due and payable and before they have become delinquent

and all claims for which sums have become due and payable that have or might

become a Lien on properties or assets of the Company or any Subsidiary, provided

that neither the Company nor any Subsidiary need pay any such tax or

assessment or claims if (i) the amount, applicability or validity thereof is

contested by the Company or such Subsidiary on a timely basis in good faith and

in appropriate proceedings, and the Company or a Subsidiary has established

adequate reserves therefor in accordance with GAAP on the books of the Company

or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in

the aggregate could not reasonably be expected to have a Material Adverse

Effect.

 

5F.                               Line

of Business.

 

The Company will not, and will not permit any of its

Subsidiaries to, engage in any business if, as a result, the general nature of

the business in which the Company and its Subsidiaries, taken as a whole, would

then be engaged would be substantially changed from the

 

8

 

general nature of the

business in which the Company and its Subsidiaries, taken as a whole, are

engaged on the date of this Agreement.

 

5G.                             Maintenance

of Most Favored Lender Status.

 

The Obligors hereby

covenant that if the Obligors shall enter into any credit facility or loan

agreement (including, without limitation, any amendment to the SunTrust

Agreement or the SouthTrust Agreement) pursuant to which the credit commitments

available to the Obligors, individually or in the aggregate to one or more of

the Obligors under such credit facility or loan agreement, and/or outstanding

principal indebtedness incurred equals or exceeds $25,000,000 and which

provides for the benefit of the lenders thereunder any covenants which are more

favorable to such lenders than the covenants provided for in paragraphs 5 or 6

hereof for the benefit of the holders of the Notes then, and in each and any

such event, the covenants in this Agreement shall be and shall be deemed to be,

notwithstanding paragraph 11C and without any further action on the part of the

Obligors or any other Person being necessary or required, amended to afford the

holders of the Notes the same benefits and rights as such amendments to, or

other agreements, provide the lenders thereof. 

The Obligors will promptly deliver to each holder of Notes a copy of each

such agreement or amendment, or any waiver or modification thereof.  Notwithstanding the foregoing, the Obligors

agree to enter into such documentation as the Required Holders may reasonably

request to evidence the amendments provided for in this paragraph 5G.

 

5H.                             Covenant

Relating to Domestic Subsidiaries.

 

The Company shall not permit any Domestic Subsidiary

to enter into any Guarantee of the obligations under the SunTrust Agreement,

the SunTrust Loan Facility Agreement or the SouthTrust Agreement unless at the

time of entering into such Guarantee, such Domestic Subsidiary (an “Additional

Obligor”) contemporaneously therewith executes and delivers, to each

of the holders of the Notes (i) a duly authorized Joinder Agreement

substantially in the form of Exhibit D hereto pursuant to which such Additional

Obligor shall jointly and severally assume all obligations under this Agreement

and the Notes, and (ii) a certificate of such Domestic Subsidiary’s secretary

or another responsible officer certifying attached copies of such Domestic

Subsidiary’s constitutive documents and relevant resolutions, and an opinion of

counsel to such Person regarding the authorization, execution and delivery of

such Joinder Agreement and its enforceability, which opinion shall be

satisfactory in all respects to the Required Holders.  Upon execution and delivery of any such Joinder Agreement by an

Additional Obligor, this Agreement and the Notes shall be deemed to be amended

so that such Additional Obligor shall be an Obligor hereunder and under the

Notes without any further action on the part of the Additional Obligor, the

Obligors, or any other Person being necessary or required (notwithstanding

paragraph 11C).

 

5I.                                  Compliance

with Laws.

 

The Company will, and will cause each of its

Subsidiaries to, comply with all laws, ordinances or governmental rules or

regulations to which each of them is subject, including, without limitation,

Environmental Laws, and will obtain and maintain in effect all licenses,

certificates, permits, franchises and other governmental authorizations

necessary to the ownership of their respective properties or to the conduct of

their respective businesses, in each

 

9

 

case to the extent

necessary to ensure that non-compliance with such laws, ordinances or

governmental rules or regulations or failures to obtain or maintain in effect

such licenses, certificates, permits, franchises and other governmental

authorizations would not reasonably be expected, individually or in the

aggregate, to have a Material Adverse Effect. 

Without limitation of the foregoing, the Company will, and will cause

each of its Subsidiaries to, not be a Person described in section 1 of the

Anti-Terrorism Order, and not knowingly engage in any dealings or transactions,

or otherwise knowingly be associated, with any such Person.

 

5J.                               Notices

of Material Events.

 

The Company will furnish to each Significant Holder

prompt written notice of the following:

 

(a)                                  the

occurrence of any Default or Event of Default;

 

(b)                                 the

filing or commencement of any action, suit or proceeding by or before any

arbitrator or Governmental Authority against the Company or any Subsidiary

which, if adversely determined, could reasonably be expected to result in a

Material Adverse Effect;

 

(c)                                  the

occurrence of any event or any other development by which the Company or any of

its Subsidiaries (i) fails to comply in any material respect with any

Environmental Law or to obtain, maintain or comply with any permit, license or

other approval required under any Environmental Law, (ii) becomes subject to

any Environmental Liability in excess of $500,000, (iii) receives notice of any

claim with respect to any Environmental Liability in excess of $500,000, or

(iv) becomes aware of any basis for any Environmental Liability in excess of

$500,000 and in each of the preceding clauses, which individually or in the

aggregate, could reasonably be expected to result in a Material Adverse Effect, provided

that, the Company shall not be required to deliver such information

set forth in this clause (c) so long as the Company is not required to provide

such information to any other lenders, whether pursuant to the SunTrust

Agreement or otherwise;

 

(d)                                 the

occurrence of any ERISA Event that alone, or together with any other ERISA

Events that have occurred, could reasonably be expected to result in liability

of the Company and its Subsidiaries in an aggregate amount exceeding

$1,000,000; and

 

(e)                                  any

other development known to the Company that results in, or could reasonably be

expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Paragraph 5J shall be accompanied by a

written statement of a Responsible Officer setting forth in reasonable details

a description of the event or development requiring such notice and any action

taken or proposed to be taken with respect thereto.

 

10

 

5K.                             Payment

of Obligations.

 

The Company will, and will cause each of its

Subsidiaries to, pay and discharge at or before maturity, all of its

obligations and liabilities before the same shall become delinquent or in

default, except where (a) the validity or amount thereof is being contested in

good faith by appropriate proceedings, (b) the Company or such Subsidiary has

set aside on its books adequate reserves with respect thereto in accordance

with GAAP and (c) the failure to make payment pending such contest could not

reasonably be expected to result in a Material Adverse Effect.

 

5L.                              Books

and Records.

 

The Company will, and will cause each of its

Subsidiaries to, keep proper books of record and account in which full, true

and correct entries shall be made of all dealings and transactions in relation

to its business and activities to the extent necessary to prepare the

consolidated financial statements of the Company in conformity with GAAP.

 

5M.                           Maintenance

of Properties; Insurance.

 

The Company will, and will cause each of its

Subsidiaries to, (a) keep and maintain all property material to the conduct of

its business in good working order and condition, ordinary wear and tear

excepted, except where the failure to do so, either individually or in the

aggregate, could not reasonably be expected to result in a Material Adverse

Effect and (b) maintain with financially sound and reputable insurance

companies, insurance (including self-insurance in amounts not exceeding the

customary amounts maintained by similarly situated companies and for which

adequate reserves are maintained) with respect to its properties and business,

and the properties and business of its Subsidiaries, against loss or damage of

the kinds customarily insured against by companies in the same or similar

businesses operating in the same or similar locations.  In addition, and not in limitation of the

foregoing, the Company shall maintain and keep in force insurance coverage on

its inventory, as is consistent with best industry practices.

 

5N.                             Covenant

Relating to Foreign Subsidiaries.

 

The Company shall not acquire or form any additional

Foreign Subsidiaries; provided, however, that the Company may acquire or form

additional Subsidiaries incorporated under the laws of Canada so long as the

Company, within ten (10) business days after any such Foreign Subsidiary is

acquired or formed (i) notifies each Significant Holder thereof (ii) delivers

stock certificates and related pledge agreements, in form satisfactory to a

collateral agent acceptable to the Required Holders, evidencing the pledge of

66% (or such greater percentage which would not result in material adverse tax

consequences) of the issued and outstanding capital stock entitled to vote

(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the

issued and outstanding capital stock not entitled to vote (within the meaning

of Treas. Reg. Section 1.956-2(c)(2)) of each such Subsidiary directly owned by

the Company or any Domestic Subsidiary to secure the obligations under this

Agreement and the Notes, (iii) causes such 

Subsidiary to deliver simultaneously therewith similar documents

applicable to such Foreign Subsidiary described in Paragraph 3 hereof as

reasonably requested by the Required Holders, and (iv) the holders of the Notes

enter into an intercreditor agreement, in form and substance satisfactory to

 

11

 

the Required Holders,

with all other creditors of the Company having a similar covenant with the

Company.  Notwithstanding the foregoing,

the Company shall not be required to comply with the provisions of this paragraph

5N so long as the Company is not required to comply with similar provisions

with regard to Foreign Subsidiaries pursuant to any credit facility or loan

agreement to which the Company or any of its Subsidiaries is a party,

including, without limitation, the provisions of section 5.10(b) of the

SunTrust Agreement.

 

6.                                      NEGATIVE COVENANTS.

 

So long as any Note or amount owing under this

Agreement shall remain unpaid, each Obligor covenants as follows that:

 

6A.                             Fixed

Charges Coverage Ratio.

 

The Company will not permit the Consolidated Fixed Charge

Coverage Ratio to be less than (i) 1.75 to 1.00 at any time prior to and

including September 30, 2002, and (ii) 2.00 to 1.00 at any time thereafter.

 

6B.                             Total

Debt to EBITDA Ratio.

 

The Company will not, at any time, permit the Total

Debt to EBITDA Ratio to be greater than 3.00 to 1.00.

 

6C.                             Total

Adjusted Debt to Total Adjusted Capitalization Ratio.

 

The Company will not, at any time, permit the Total

Adjusted Debt to Total Adjusted Capital Ratio to be greater than 0.60 to 1.00.

 

6D.                             Minimum

Consolidated Net Worth.

 

The Company will not permit Consolidated Net Worth to

be less than the sum of (i) $235,232,000, plus (ii) 50% of cumulative positive

Consolidated Net Income accrued during each fiscal quarter plus (iii) 100% of the net

proceeds from any public or private offering of common stock of the Company

after the Date of Closing, calculated quarterly on the last day of each fiscal

quarter; provided, that if Consolidated Net Income is negative in any

fiscal quarter the amount added for such fiscal quarter shall be zero and such

negative Consolidated Net Income shall not reduce the amount of Consolidated

Net Income added from any previous fiscal quarter.  Promptly upon the consummation of any offering of common stock of

the Company, the Company shall notify each holder of the Notes in writing of

the amount of the net proceeds thereof.

 

6E.                               Indebtedness.

 

The Company will not, and will not permit any of its

Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness, except:

 

12

 

(a)                                  Indebtedness

created pursuant to this Agreement and the Notes;

 

(b)                                 Indebtedness

of any Subsidiary owing to any Obligor or any Wholly Owned Subsidiary of any

Obligor;

 

(c)                                  Indebtedness

of the Company or any Subsidiary incurred after the Date of Closing to finance

the acquisition, construction or improvement of any fixed or capital assets,

including Capital Lease Obligations and any Indebtedness assumed in connection

with the acquisition of any such assets or secured by a Lien on any such assets

prior to the acquisition thereof; provided, that such Indebtedness is

incurred prior to or within 90 days after such acquisition or the completion of

such construction or improvements or extensions, renewals, and replacements of

any such Indebtedness that do not increase the outstanding principal amount

thereof (immediately prior to giving effect to such extension, renewal or

replacement) or shorten the maturity or the weighted average life thereof; provided

further, that the aggregate principal amount of such Indebtedness does not

exceed $20,000,000 at any time outstanding;

 

(d)                                 Guarantees

by the Company of Indebtedness of any other Obligor and Guarantees by any

Obligor of Indebtedness of the Company;

 

(e)                                  Indebtedness

or contingent liability under the Synthetic Lease Documents, provided that

the aggregate outstanding principal amount of all such Indebtedness does not

exceed $25,000,000 at any one time;

 

(f)                                    Guarantees

by the Company of Indebtedness of certain franchise operators of the Company,

provided such guarantees are given by the Company pursuant to (1) the SunTrust

Loan Facility Agreement (2) the SouthTrust Agreement in an aggregate principal

amount not to exceed $5,000,000 and (3) loans made by SunTrust to finance the acquisition

of equity interests in certain franchisees of the Company, in an aggregate

principal amount not to exceed $5,000,000;

 

(g)                                 Endorsed

negotiable instruments for collection in the ordinary course of business;

 

(h)                                 Guarantees

by the Company of Indebtedness of Foreign Subsidiaries, provided that

the sum of the aggregate principal amount of such Guarantees, together with the

principal amount of any loans from the Company to Foreign Subsidiaries

permitted pursuant to paragraph 6I(f) hereof does not exceed $10,000,000 in the

aggregate at any time;

 

(i)                                     Indebtedness

existing on the Date of Closing and set forth on Schedule 6E and extensions,

renewals and replacements of any such Indebtedness that do not increase the

outstanding principal amount thereof (immediately prior to giving effect to

such extension, renewal or replacement) or shorten the maturity or the weighted

average life thereof;

 

13

 

(j)                                     Indebtedness

under the SunTrust Agreement; and

 

(k)                                  other

unsecured Indebtedness incurred in the ordinary course of business provided

that no Default or Event of Default shall exist as a result of the

incurrence, assumption or maintenance of such Indebtedness.

 

6F.                               Liens.

 

The Company will not, and will not permit any of its

Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of

its assets or property now owned or hereafter acquired, except:

 

(a)                                  Liens

on any property or asset of the Company or any Subsidiary existing on the Date

of Closing set forth on Schedule 6F; provided, that such Lien shall not

apply to any property or asset of the Company or any Subsidiary not encumbered

thereby, on the date hereof;

 

(b)                                 Liens

for taxes, assessments, governmental charges or levies, statutory Liens of landlords

and Liens of carriers, warehousemen, mechanics and materialmen and other

similar Liens, in each case, incurred in the ordinary course of business for

sums not yet due or the payment of which is not at the time required by

paragraph 5E;

 

(c)                                  Liens

(other than any Lien imposed by ERISA) incurred or deposits made in the

ordinary course of business (i) in connection with workers’ compensation,

unemployment insurance and other types of social security or retirement

benefits, or (ii) to secure (or to obtain letters of credit that secure) the

performance of tenders, statutory obligations, surety bonds, appeal bonds,

bids, leases (other than leases providing for Capital Lease Obligations),

performance bonds, purchase, construction or sales contracts or other similar

obligations, in each case not incurred or made in connection with the borrowing

of money, the obtaining of advances or credit or the payment of a deferred

purchase price, and which do not, in the aggregate, materially detract from the

value of the Company’s property or assets or impair the use thereof or

operation of its business;

 

(d)                                 Liens

on property or assets of the Company or any Subsidiary securing obligations of

such Obligor or Subsidiary to the Company or a Wholly Owned Subsidiary of the

Company;

 

(e)                                  Liens

on insurance policies owned by the Company on the lives of its officers

securing policy loans obtained from the insurers under such policies, provided

that (i) the aggregate amount borrowed on each policy shall not exceed the

loan value thereof, and (ii) the Company shall not incur any liability to repay

any such loans;

 

(f)                                    Subject

to compliance with paragraph 6E(c), Liens granted under the Synthetic Lease

Documents in the real or personal property financed thereunder, and in certain

related rights of the Company to secure the Company’s indebtedness and

liabilities under the Synthetic Lease Documents;

 

14

 

(g)                                 Liens

in respect of purchase money obligations in any fixed or capital assets to secure

the purchase price or the cost of construction or improvement of such fixed or

capital assets or to secure Indebtedness incurred solely for the purpose of

financing the acquisition, construction or improvement of such fixed or capital

assets (including Liens securing any Capital Lease Obligations); provided, that

(i) such Lien secures Indebtedness permitted by paragraph 6E(c), (ii) such Lien

attaches to such asset concurrently or within 90 days after the acquisition,

improvement or completion of the construction thereof; (iii) such Lien does not

extend to any other asset; and (iv) the Indebtedness secured thereby does not

exceed the cost of acquiring, constructing or improving such fixed or capital

assets together with all interest, fees and costs incurred in connection

therewith;

 

(h)                                 Liens

(i) existing on any asset of any Person at the time such Person becomes a

Subsidiary of the Company, (ii) existing on any asset of any Person at the time

such Person is merged with or into the Company or any Subsidiary of the Company

or (iii) existing on any asset prior to the acquisition thereof by the Company

or any Subsidiary of the Company; provided, that any such Lien was not

created in contemplation of any of the foregoing and any such Lien secures only

those obligations which it secures on the date that such Person becomes a

Subsidiary or the date of such merger or the date of such acquisition;

 

(i)                                     Liens

on shares of stock of any Foreign Subsidiary, only to the extent that the Notes

and the obligations relating thereto are secured pari passu with any other

Indebtedness or obligations secured thereby;

 

(j)                                     judgment

Liens not giving rise to an Event of Default or Liens created by or existing

from any litigation or legal proceedings that are currently being contested in

good faith for which adequate reserves have been established; and

 

(k)                                  easements,

zoning restrictions, rights-of-way and similar encumbrances on real property

imposed by law or arising in the ordinary course of business that do not secure

any monetary obligations and do not materially detract from the value of the

affected property or materially interfere with the ordinary conduct of business

of any Obligor or any Subsidiary.

 

6G.                             Sale

of Assets.

 

The Company will not, and will not permit any of its

Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose of,

any of its assets, business or property, whether now owned or hereafter

acquired, or, in the case of any Subsidiary, issue or sell any shares of such

Subsidiary’s common stock to any Person other than an Obligor (or to qualify

directors if required by applicable law), except (a) the sale or other

disposition for fair market value of obsolete or worn out property or other

property not necessary for operations, disposed of in the ordinary course of

business; (b) the sale, lease or other disposition of inventory and Permitted

Investments in the ordinary course of business, (c) sales and dispositions

permitted under

 

15

 

paragraph 6M and (d)

other sales of assets not to exceed $10,000,000 in book value in the aggregate.

 

6H.                             Restricted

Payments.

 

The Company will not, and will not permit its

Subsidiaries to, declare or make, or agree to pay or make, directly or

indirectly, any dividend on any class of its stock, or make any payment on

account of, or set apart assets for a sinking or other analogous fund for, the

purchase, redemption, retirement, defeasance or other acquisition of, any

shares of common stock or Indebtedness subordinated to the obligations of the

Obligors under the Notes or any options, warrants, or other rights to purchase

such common stock or such subordinated Indebtedness, whether now or hereafter

outstanding (each, a “Restricted Payment”), except for  (i) dividends payable by the Company solely

in shares of any class of its common stock, (ii) Restricted Payments made by

any Subsidiary to any Obligor, and (iii) so long as no Default or Event of

Default has occurred and is continuing, or results from such dividend, at the time

such dividend is paid or redemption or stock repurchase is made, dividends,

distributions, redemptions and stock repurchases paid in cash which do not

exceed fifty percent (50%) of Consolidated Net Income (if greater than $0) for

the immediately preceding fiscal year of the Company; provided, that if

the aggregate amount of all such dividends and distributions paid in cash in

such fiscal year are less than the amount permitted by clause (iii) above, the

excess permitted amount for such year may be carried forward once to the next

succeeding fiscal year of the Company.

 

6I.                                  Restricted

Investments.

 

The Company will not, and will not permit any of its

Subsidiaries to, purchase, hold or acquire (including pursuant to any merger

with any Person that was not a Wholly Owned Subsidiary prior to such merger),

any common stock, evidence of Indebtedness or other securities (including any

option, warrant, or other right to acquire any of the foregoing) of, make or

permit to exist any loans or advances to, any obligations of, or make or permit

to exist any investment or any other interest in, any other Person (all of the

foregoing being collectively called “Investments”), or purchase or otherwise

acquire (in one transaction or a series of transactions) any assets of any

other Person that constitute a business unit, or create or form any Subsidiary,

except:

 

(a)                                  Permitted

Investments;

 

(b)                                 Permitted

Acquisitions;

 

(c)                                  Investments

made by any Obligor in any other Obligor;

 

(d)                                 loans

in the ordinary course of business to officers, stockholders and directors

provided that the aggregate amount of all such loans does not exceed $1,000,000

at any time;

 

16

 

(e)                                  (i)

loans to franchise operators and owners of franchises acquired or funded

pursuant to the SunTrust Loan Facility Agreement and (ii) other adequately

secured and properly monitored loans to franchise operators and owners of

franchises in an aggregate principal amount outstanding, together with loans

outstanding under clause (i) of this paragraph 6I(e), not to exceed $90,000,000

at any time, provided that if the commitments under the SunTrust Loan

Facility Agreement are increased, such aggregate limitation shall be increased

in a like amount, but shall not exceed, in any event, $130,000,000;

 

(f)                                    loans

by the Company to Foreign Subsidiaries, provided that the amount of such loans

together with the aggregate principal amount of Guarantees permitted pursuant

to paragraph 6E(h) hereof does not exceed $10,000,000 in the aggregate at any

time;

 

(g)                                 Investments

(other than Permitted Investments) existing on the date hereof and set forth on

Schedule 6I (including Investments in Subsidiaries); and

 

(h)                                 Other

Investments not to exceed $2,500,000 in the aggregate at any time.

 

6J.                               Restrictive

Agreements.

 

The Company will not, and will not permit any

Subsidiary to, directly or indirectly, enter into, incur or permit to exist any

agreement that prohibits, restricts or imposes any condition upon (a) the

ability of the Company or any Subsidiary to create, incur or permit any Lien

upon any of its assets or properties, whether now owned or hereafter acquired,

or (b) the ability of any Subsidiary to pay dividends or other distributions

with respect to its common stock, to make or repay loans or advances to the

Company or any other Subsidiary, to Guarantee Indebtedness of the Company or

any other Subsidiary or to transfer any of its property or assets to the

Company or any Subsidiary of the Company; provided, that (i) the

foregoing shall not apply to restrictions or conditions imposed by law or by

this Agreement, the SunTrust Agreement, the SunTrust Loan Facility Agreement,

the Synthetic Lease Documents or the Industrial Revenue Bonds, (ii) the

foregoing shall not apply to customary restrictions and conditions contained in

agreements relating to the sale of a Subsidiary pending such sale, provided

such restrictions and conditions apply only to the Subsidiary that is sold and

such sale is permitted hereunder, (iii) clause (a) shall not apply to restrictions

or conditions imposed by any agreement relating to secured Indebtedness

permitted by this Agreement if such restrictions and conditions apply only to

the property or assets securing such Indebtedness, and (iv) clause (a) shall

not apply to customary provisions in leases restricting the assignment thereof.

 

6K.                             Amendments

to Material Documents.

 

The Company will not, and will not permit any

Subsidiary to, amend, modify or waive any of its rights in a manner that would

have a Material Adverse Effect under their respective certificates of

incorporation, bylaws or other organizational documents.

 

17

 

6L.                              Accounting Changes.

 

The Company will not, and will not permit any

Subsidiary to, (a) make any significant change in accounting treatment or

reporting practices other than those permitted by GAAP (each a “Permitted

Change”), provided that Permitted Changes shall only be

permitted to the extent that (i) if such Permitted Change had not occurred, no

Event of Default would have existed as at the last day of the next succeeding

fiscal quarter of the Company, and (ii) if such Permitted Change had already

occurred, no Event of Default would have existed as at the last day of the

immediately preceding fiscal quarter of the Company, or , or (b) change the

fiscal year of the Company or of any Subsidiary, except to change the

fiscal year of a Subsidiary to conform its fiscal year to that of the Company.

 

6M.                           Fundamental

Changes.

 

(a)                                  The

Company will not, and will not permit any Subsidiary to, merge into or

consolidate into any other Person, or permit any other Person to merge into or

consolidate with it, or sell, lease, transfer or otherwise dispose of (in a

single transaction or a series of transactions) all or substantially all of its

assets (in each case, whether now owned or hereafter acquired) or all or

substantially all of the stock of any of its Subsidiaries (in each case,

whether now owned or hereafter acquired) or liquidate or dissolve; provided,

that if at the time thereof and immediately after giving effect thereto, no

Default or Event of Default shall have occurred and be continuing (i) the

Company or any Subsidiary may merge with a Person if the Company (or such

Subsidiary if the Company is not a party to such merger) is the surviving

Person, (ii) any Subsidiary may merge into another Subsidiary or the Company; provided,

however, that if the Company is a party to such merger, the Company shall

be the surviving Person, provided, further, that if any Subsidiary to

such merger is an Obligor, the Obligor shall be the surviving Person, (iii) any

Subsidiary may sell, transfer, lease or otherwise dispose of all or

substantially all of its assets to the Company or to an Obligor, (iv) ARPR, AIC

or any Additional Obligor may liquidate or dissolve into the Company if such

liquidation or dissolution does not have a Material Adverse Effect, (v) any

other Subsidiary may liquidate or dissolve if the Company determines in good

faith that such liquidation or dissolution does not have a Material Adverse

Effect and such Subsidiary liquidates or dissolves into another Obligor or the

Company; provided, that any such merger involving a Person that is not a

wholly-owned Subsidiary immediately prior to such merger shall not be permitted

unless also permitted by paragraph 6I.

 

(b)                                 The

Company will not, and will not permit any Subsidiary to, engage in any business

other than businesses of the type conducted by the Company and its Subsidiaries

on the date hereof and businesses reasonably related thereto.

 

6N.                             Transactions

with Affiliates.

 

The Company will not, and will not permit any of its

Subsidiaries to, sell, lease or otherwise transfer any property or assets to,

or purchase, lease or otherwise acquire any property or assets from, or

otherwise engage in any other transactions with, any of its Affiliates, except

(a)

 

18

 

in the ordinary course of

business at prices and on terms and conditions not less favorable to the

Company or such Subsidiary than could be obtained on an arm’s-length basis from

unrelated third parties, (b) transactions between or among the Company and its

wholly-owned Subsidiaries not involving any other Affiliates, (c) any

Restricted Payment permitted by paragraph 6H and (d) transactions permitted

under paragraph 6I(d).

 

6O.                            Sale

and Leaseback Transactions.

 

The Company will not, and will not permit any of its

Subsidiaries to, enter into any arrangement, directly or indirectly, whereby it

shall sell or transfer any property, real or personal, used or useful in its

business, whether now owned or hereinafter acquired, and thereafter rent or

lease such property or other property that it intends to use for substantially

the same purpose or purposes as the property sold or transferred; provided,

however, the Company may engage in such sale and leaseback transactions so long

as the aggregate fair market value of all assets sold and leased back does not

exceed $30,000,000 during the term of this Agreement.

 

7.                                      EVENTS OF DEFAULT.

 

7A.                             Acceleration.

 

If any of the following events shall occur and be

continuing for any reason whatsoever (and whether such occurrence shall be

voluntary or involuntary or come about or be effected by operation of law or

otherwise):

 

(i)                                     the

Obligors default in the payment of any principal of or Yield-Maintenance Amount

payable with respect to any Note or any fee that may be due in connection with

any of the matters specified in paragraph 11B(ii)(C) when the same shall become

due, either by the terms thereof or otherwise as herein provided; or

 

(ii)                                  the

Obligors defaults in the payment of any interest on any Note for more than 3

days after the date due; or

 

(iii)                               any

Obligor or any Subsidiary defaults (whether as primary obligor or as guarantor

or other surety) in any payment of principal of or interest on Indebtedness (or

any Capitalized Lease Obligation, any obligation under a conditional sale or

other title retention agreement, any obligation issued or assumed as full or

partial payment for property whether or not secured by a purchase money

mortgage or any obligation under notes payable or drafts accepted representing

extensions of credit, including, without limitation, the SunTrust Agreement,

the SunTrust Loan Facility Agreement and the SouthTrust Agreement) beyond any

period of grace provided with respect thereto, or the Obligors or any

Subsidiary fail to perform or observe any other agreement, term or condition

contained in any agreement under which any such obligation is created (or if

any other event thereunder or under any such agreement shall occur and be

continuing) and the effect of such failure or other event 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 any stated

maturity, or any such obligation shall be

 

19

 

declared to be due and payable; or required to be

prepaid or redeemed (other than a regularly scheduled required prepayment or

redemption), purchased or defeased, or any offer to prepay, redeem, purchase,

repurchase or defease such obligation shall be required to be made, in each

case prior to the stated maturity thereof; or

 

(iv)                              any

representation or warranty made by or on behalf of any Obligor or by any

officer of any Obligor herein or in any other writing furnished in connection

with or pursuant to this Agreement or the transactions contemplated hereby

shall be false in any material respect on the date as of which made; or

 

(v)                                 the

Company fails to perform or observe any agreement contained in paragraph 6 or

paragraphs 5A or 5J(a); or

 

(vi)                              the

Company fails to perform or observe any other agreement, term or condition

contained herein and such failure shall not be remedied within 30 days after

the earlier of (A) any Responsible Officer obtaining actual knowledge thereof

or (B) notice thereof being given to the Obligors by any Purchaser; or

 

(vii)                           the

Company or any Subsidiary makes an assignment for the benefit of creditors or

is generally not paying its debts as such debts become due; or

 

(viii)                        any decree

or order for relief in respect of the Company or any Subsidiary is entered

under any bankruptcy, reorganization, compromise, arrangement, insolvency,

readjustment of debt, dissolution or liquidation or similar law, whether now or

hereafter in effect (herein called the “Bankruptcy Law”), of any jurisdiction; or

 

(ix)                                the

Company or any Subsidiary petitions or applies to any tribunal for, or consents

to, the appointment of, or taking possession by, a trustee, receiver,

custodian, liquidator or similar official of the Company or any Subsidiary, or

of any substantial  part of the assets

of the Company or any Subsidiary, or commences a voluntary case under the

Bankruptcy Law of the United States or any proceedings relating to the Company

or any Subsidiary under the Bankruptcy Law of any other jurisdiction; or

 

(x)                                   any

such petition or application is filed, or any such proceedings are commenced,

against the Company or any Subsidiary and the Company or such Subsidiary by any

act indicates its approval thereof, consent thereto or acquiescence therein, 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

 

(xi)                                any

order, judgment or decree is entered in any proceedings against the

Company  decreeing the dissolution of

the Company and such order, judgment or decree remains unstayed and in effect

for more than 60 days; or

 

20

 

(xii)                             any

order, judgment or decree is entered in any proceedings against the Company or

any Subsidiary decreeing a split-up of the Company or such Subsidiary which

requires the divestiture of assets representing a substantial part, or the

divestiture of the stock of a Subsidiary whose assets represent a substantial

part, of the consolidated assets of the Company and its Subsidiaries

(determined in accordance with GAAP) or which requires the divestiture of

assets, or stock of a Subsidiary, which shall have contributed a substantial

part of the consolidated net income of the Company and its Subsidiaries (determined

in accordance with GAAP) for any of the three fiscal years then most recently

ended, and such order, judgment or decree remains unstayed and in effect for

more than 60 days ( as used in this clause (xii), “substantial” shall mean in

excess of 20% of consolidated assets or consolidated net income, as the case

may be); or

 

(xiii)                          any

judgment in an amount in excess of $1,000,000, or any two or more judgments in

an aggregate amount in excess of $5,000,000, is or are rendered against the

Company or any Subsidiary and either (a) enforcement proceedings have been

commenced by any creditor upon any such judgment or judgments or (b) within 30

days after entry thereof, any such judgment or judgements is or are not

discharged or execution thereof stayed pending appeal, or within 30 days after

the expiration of any such stay, any such judgment or judgments is or are not

discharged; or

 

(xiv)                         (A) any

Plan shall fail to satisfy the minimum funding standards of ERISA or the Code

for any plan year or part thereof or a waiver of such standards or extension of

any amortization period is sought or granted under section 412 of the Code, (B)

a notice of intent to terminate any Plan shall have been or is reasonably

expected to be filed with the PBGC or the PBGC shall have instituted

proceedings under ERISA section 4042 to terminate or appoint a trustee to

administer any Plan or the PBGC shall have notified the Company or any ERISA

Affiliate that a Plan may become a subject of such proceedings, (C) the

aggregate “amount of unfunded benefit liabilities” (within the meaning of

section 4001(a)(18) of ERISA) under all Plans, determined in accordance with

Title IV of ERISA, shall exceed $1,000,000, (D) the Company or any ERISA

Affiliate shall have incurred or is reasonably expected to incur any liability

pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of

the Code relating to employee benefit plans, (E) the Company or any ERISA

Affiliate withdraws from any Multiemployer Plan, or (F) the Company or any Subsidiary

establishes or amends any employee welfare benefit plan that provides

post-employment welfare benefits in a manner that would increase the liability

of the Company or any Subsidiary thereunder; and any such event or events

described in clauses (A) through (F) above, either individually or together

with any other such event or events, could reasonably be expected to have a

Material Adverse Effect; or

 

(xv)                            a

Change in Control shall occur or exist.

 

then (a) if such event is an Event of Default specified in clause (i)

or (ii) of this paragraph 7A, the holder of any Note (other than the Obligors

or any of their Subsidiaries or Affiliates) may at its option during the

continuance of such Event of Default, by notice in writing to the Obligors,

declare such Note to be, and such Note shall thereupon be and become,

immediately due and

 

21

 

payable at par, together with interest accrued thereon, without

presentment, demand, protest or other notice of any kind, all of which are

hereby waived by the Obligors, (b) if such event is an Event of Default

specified in clause (viii), (ix) or (x) of this paragraph 7A with respect to

any Obligor, all of the Notes at the time outstanding shall automatically

become immediately due and payable, together with interest accrued thereon and

the Yield-Maintenance Amount, if any, with respect to each Note, without

presentment, demand, protest or notice of any kind, all of which are hereby

waived by the Obligors, and (c) with respect to any event constituting an Event

of Default (including an event described in clause (a), above), the Required

Holder(s) may at its or their option, by notice in writing to the Obligors,

declare all of the Notes to be, and all of the Notes shall thereupon be and

become, immediately due and payable together with interest accrued thereon and

together with the Yield-Maintenance Amount, if any, with respect to each Note,

without presentment, demand, protest or other notice of any kind, all of which

are hereby waived by the Obligors.

 

The Obligors acknowledge, and the parties hereto agree, that each

holder of a Note has the right to maintain its investment in the Notes free

from repayment by the Obligors (except as herein specifically provided for) and

that the provision for payment of the Yield-Maintenance Amount by the Obligors

in the event that the Notes are prepaid or are accelerated as a result of an

Event of Default, is intended to provide compensation for the deprivation of

such right under such circumstances.

 

7B.                             Rescission

of Acceleration.

 

At any time after any or all of the Notes shall have

been declared immediately due and payable pursuant to paragraph 7A, the

Required Holder(s) may, by notice in writing to the Obligors, rescind and annul

such declaration and its consequences if (i) the Obligors shall have paid all

overdue interest on the Notes, the principal of and Yield-Maintenance Amount,

if any, payable with respect to any Notes which have become due otherwise than

by reason of such declaration, and interest on such overdue interest and

overdue principal and Yield-Maintenance Amount at the rate specified in the

Notes, (ii) the Obligors shall not have paid any amounts which have become due

solely by reason of such declaration, (iii) all Events of Default and Defaults,

other than non-payment of amounts which have become due solely by reason of

such declaration, shall have been cured or waived pursuant to paragraph 11C,

and (iv) no judgment or decree shall have been entered for the payment of any

amounts due pursuant to the Notes or this Agreement.  No such rescission or annulment shall extend to or affect any

subsequent Event of Default or Default or impair any right arising therefrom.

 

7C.                             Notice

of Acceleration or Rescission.

 

Whenever any Note shall be declared immediately due

and payable pursuant to paragraph 7A or any such declaration shall be rescinded

and annulled pursuant to paragraph 7B, the Obligors shall forthwith give

written notice thereof to the holder of each Note at the time outstanding.

 

22

 

7D.                             Other

Remedies.

 

If any Event of Default or Default shall occur and be

continuing, the holder of any Note may proceed to protect and enforce its

rights under this Agreement and such Note by exercising such remedies as are

available to such holder in respect thereof under applicable law, either by

suit in equity or by action at law, or both, whether for specific performance

of any covenant or other agreement contained in this Agreement or in aid of the

exercise of any power granted in this Agreement.  No remedy conferred in this Agreement upon the holder of any Note

is intended to be exclusive of any other remedy, and each and every such remedy

shall be cumulative and shall be in addition to every other remedy conferred

herein or now or hereafter existing at law or in equity or by statute or

otherwise.

 

8.                                      REPRESENTATIONS, COVENANTS AND WARRANTIES.

 

Each Obligor represents, covenants and warrants as

follows:

 

8A.                             Organization.

 

Each Obligor and each of their Subsidiaries is a

corporation duly organized and existing in good standing under the respective

laws of the jurisdictions of incorporation, and are duly qualified as foreign

corporations and are in good standing in each jurisdiction in which such qualification

is required by law, other than those jurisdictions as to which the failure to

be so qualified or in good standing could not, individually or in the

aggregate, reasonably be expected to have a Material Adverse Effect.  Each of the Obligors has the corporate

power and authority to own or hold under lease the properties it purports to

own or hold under lease, to transact the business it transacts and proposes to

transact, to execute and deliver this Agreement and the Notes and to perform

the provisions hereof and thereof.

 

8B.                             Financial

Statements.

 

The Company has furnished each Purchaser with the

following financial statements, identified by a principal financial officer of

the Company:  (i) a consolidated balance

sheet of the Company and its Subsidiaries as at December 31 in each of the

years 1999 to 2001, inclusive, and consolidated statements of income, cash

flows and changes in financial position of the Company and its Subsidiaries for

each such year, all reported on by Ernst & Young; and (ii) a consolidated

balance sheet of the Company and its Subsidiaries as at March 31 in each of the

years 2001 and 2002 and consolidated statements of income, cash flows and

changes in financial position for the three-month period ended on each such

date, prepared by the Company.  Such

financial statements (including any related schedules and/or notes) are true

and correct in all material respects (subject, as to interim statements, to

changes resulting from audits and year-end adjustments), have been prepared in

accordance with GAAP consistently followed throughout the periods involved and

show all liabilities, direct and contingent, of the Company and its

Subsidiaries required to be shown in accordance with such principles.  The balance sheets fairly present the condition

of the Company and its Subsidiaries as at the dates thereof, and the statements

of income, cash flows and changes in financial position fairly present the

results of the operations of the Company and its Subsidiaries and their cash

flows for the periods indicated. 

 

23

 

There has been no change

in the business, condition (financial or otherwise) or operations of the

Company and its Subsidiaries taken as a whole that would have a Material

Adverse Effect since December 31, 2001.

 

8C.                             Actions

Pending.

 

There is no action, suit, investigation or proceeding

pending or, to the knowledge of the Obligors, threatened against the Company or

any of its Subsidiaries, or any properties or rights of the Company or any of

its Subsidiaries, by or before any court, arbitrator or administrative or

governmental body which the Company believes would result in a Material Adverse

Effect.

 

8D.                             Outstanding

Indebtedness.

 

Neither the Company nor any of its Subsidiaries has

outstanding any Indebtedness except as permitted by paragraph 6E.  There exists no default under the provisions

of any instrument evidencing such Indebtedness or of any agreement relating

thereto.

 

8E.                               Title

to Properties.

 

The Company and each of its Subsidiaries has good and

marketable title to each of their respective real properties (other than

properties which it leases) and good title to all other respective properties

and assets, including the properties and assets reflected in the balance sheet

as at December 31, 2001 referred to in paragraph 8B (other than properties and

assets disposed of in the ordinary course of business), subject to no Lien of

any kind except Liens permitted by paragraph 6F.  All leases necessary in any material respect for the conduct of

their respective businesses of the Company and its Subsidiaries are valid and

subsisting and are in full force and effect.

 

8F.                               Taxes.

 

The Company and each of its Subsidiaries has filed all

federal, state and other income tax returns which, to the knowledge of the

officers of the Company, are required to be filed, and each has paid all taxes

as shown on such returns and on all assessments received by it to the extent

that such taxes have become due, except such taxes as are being contested in

good faith by appropriate proceedings for which adequate reserves have been

established in accordance with GAAP.

 

8G.                             Conflicting

Agreements and Other Matters.

 

Neither the Company nor any of its Subsidiaries is a

party to any contract or agreement or subject to any charter or other corporate

restriction which materially and adversely affects its business, property or

assets, or financial condition.  Neither

the execution nor delivery of this Agreement or the Notes, nor the offering,

issuance and sale of the Notes, nor fulfillment of nor compliance with the

terms and provisions hereof and of the Notes will conflict with, or result in a

breach of the terms, conditions or provisions of, or constitute a default

under, or result in any violation of, or result in the creation of any Lien

upon any of the properties or assets of the Company or any of its Subsidiaries

pursuant to, the charter or by-laws of the Company or any of

 

24

 

its Subsidiaries, any

award of any arbitrator or any agreement (including any agreement with

stockholders but excluding the agreements listed on Schedule 8G), instrument,

order, judgment, decree, statute, law, rule or regulation to which the Company

or any of its Subsidiaries is subject. 

Neither the Company nor any of its Subsidiaries is a party to, or

otherwise subject to any provision contained in, any instrument evidencing

Indebtedness of the Company or such Subsidiary, any agreement relating thereto

or any other contract or agreement (including its charter) which limits the

amount of, or otherwise imposes restrictions on the incurring of, Indebtedness

of the Company of the type to be evidenced by the Notes except as set forth in

the agreements listed in Schedule 8G attached hereto.  The Company has obtained waivers, attached hereto as Exhibit E,

with respect to the agreements set forth in Schedule 8G, therein waiving all

restrictions on the incurrence of Indebtedness of the Company with respect to

each such agreement as the result of the Obligors’ entering into the

transactions contemplated hereby, except where the failure to obtain

such waiver would not result in a Material Adverse Effect.

 

8H.                             Offering

of Notes.

 

Neither the Obligors nor any agent acting on their

behalf has, directly or indirectly, offered the Notes or any similar security

of the Obligors for sale to, or solicited any offers to buy the Notes or any

similar security of the Obligors from, or otherwise approached or negotiated

with respect thereto with, any Person other than the Purchaser(s), and neither

the Obligors nor any agent acting on their behalf has taken or will take any

action which would subject the issuance or sale of the Notes to the provisions

of section 5 of the Securities Act or to the provisions of any securities or

Blue Sky law of any applicable jurisdiction.

 

8I.                                  Use

of Proceeds.

 

The Obligors will apply the proceeds of the sale of

the Notes as set forth in Schedule 8I. 

No part of the proceeds from the sale of the Notes hereunder will be

used, directly or indirectly, for the purpose of buying or carrying any margin

stock within the meaning of Regulation U of the Board of Governors of the

Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying

or trading in any Securities under such circumstances as to involve the

Obligors in a violation of Regulation X of said Board (12 CFR 224) or to

involve any broker or dealer in a violation of Regulation T of said Board (12

CFR 220).  Margin stock does not

constitute more than 1% of the value of the assets of the Company and its

Subsidiaries and none of the Obligors has any present intention that margin

stock will constitute more than 1% of the value of such assets.  As used in this paragraph, the terms “margin

stock” and “purpose of buying or carrying” shall have

the meanings assigned to them in said Regulation U.

 

8L.                              ERISA.

 

No accumulated funding deficiency (as defined in

section 302 of ERISA and section 412 of the Code), whether or not waived,

exists with respect to any Plan (other than a Multiemployer Plan).  No liability to the PBGC has been or is

expected by the Company or any ERISA Affiliate to be incurred with respect to

any Plan (other than a Multiemployer Plan) by the Company, any Subsidiary or

any ERISA Affiliate which is or would be materially adverse to the business,

condition (financial or otherwise) or operations of the Company and its

Subsidiaries taken as a

 

25

 

whole.  Neither the Company, any Subsidiary nor any

ERISA Affiliate has incurred or presently expects to incur any withdrawal

liability under Title IV of ERISA with respect to any Multiemployer Plan which

is or would be materially adverse to the business, condition (financial or

otherwise) or operations of the Company and its Subsidiaries taken as a

whole.  The execution and delivery of

this Agreement and the issuance and sale of the Notes will be exempt from, or

will not involve any transaction which is subject to, the prohibitions of

section 406 of ERISA and will not involve any transaction in connection with

which a penalty could be imposed under section 502(i) of ERISA or a tax could

be imposed pursuant to section 4975 of the Code.  The representation by the Company in the next preceding sentence

is made in reliance upon and subject to the accuracy of the representation in

paragraph 9B.

 

8M.                           Governmental

Consent.

 

Neither the nature of the Company or of any

Subsidiary, nor any of their respective businesses or properties, nor any

relationship between the Company or any Subsidiary and any other Person, nor

any circumstance in connection with the offering, issuance, sale or delivery of

the Notes is such as to require any authorization, consent, approval, exemption

or other action by or notice to or filing with any court or administrative or

governmental body (other than routine filings after the Date of Closing with

the Securities and Exchange Commission and/or state blue sky authorities) in

connection with the execution and delivery of this Agreement, the offering,

issuance, sale or delivery of the Notes or fulfillment of or compliance with

the terms and provisions hereof or of the Notes.

 

8N.                             Compliance

with Laws.

 

The Company and its Subsidiaries and all of their

respective properties and facilities have complied at all times and in all respects

with all federal, state, local and regional statutes, laws, ordinances and

judicial or administrative orders, judgments, rulings and regulations,

including those relating to protection of the environment except, in any such

case, where failure to comply would not result in a Material Adverse Effect.

 

8O.                            Environmental

Compliance.

 

The Company and its Subsidiaries and all of their

respective properties and facilities have complied at all times and in all

respects with all foreign, federal, state, local and regional statutes, laws,

ordinances and judicial or administrative orders, judgments, rulings and

regulations relating to protection of the environment except, in any

such case, where failure to comply would not result in a Material Adverse

Effect.

 

8P.                              Utility

Company Status.

 

Neither the Company nor any Subsidiary is a (i)

“holding company,” a “subsidiary company” of a “holding company” or an

“affiliate” of a “holding company” or of a “subsidiary company” of a “holding

company,” as such terms are defined in the Public Utility Holding Company Act

of 1935, as amended or (ii) public utility within the meaning of the Federal

Power Act, as amended.

 

26

 

8Q.                            Investment

Company Status.

 

Neither the Company nor any Subsidiary is an

“investment company” or a company “controlled” by an “investment company”

within the meaning of the Investment Company Act of 1940, as amended, or an

“investment adviser” within the meaning of the Investment Advisers Act of 1940,

as amended.

 

8R.                             Rule

144A.

 

The Notes are not of the same class as securities of

the Obligors, if any, listed on a national securities exchange, registered

under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer

quotation system.

 

8S.                              Disclosure.

 

Neither this Agreement nor any other document,

certificate or statement furnished to any Purchaser by or on behalf of the

Obligors in connection herewith contains any untrue statement of a material

fact or omits to state a material fact necessary in order to make the

statements contained herein and therein not misleading.  There is no fact peculiar to the Company or

any of its Subsidiaries which has or in the future may (so far as the Company

can now foresee) have a Material Adverse Effect and which has not been set

forth in this Agreement or in the other documents, certificates and statements

furnished to each Purchaser by or on behalf of the Obligors prior to the date

hereof in connection with the transactions contemplated hereby.

 

8T.                              Foreign

Assets Control Regulations, etc.

 

Neither the sale of the Notes by the Obligors

hereunder nor its use of the proceeds thereof will violate the Trading with the

Enemy Act, as amended, or any of the foreign assets control regulations of the

United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)

or any enabling legislation or executive order relating thereto.  Whether or not, in each case, the Company or

any Subsidiary is subject to the jurisdiction thereof, the Company and the

Subsidiaries are in full compliance with the provisions of the Anti-Terrorism

Order.

 

9.                                      REPRESENTATIONS OF THE PURCHASER.

 

Each Purchaser represents as follows:

 

9A.                             Nature

of Purchase.

 

Such Purchaser is not acquiring the Notes to be

purchased by it hereunder with a view to or for sale in connection with any

distribution thereof within the meaning of the Securities Act, provided that

the disposition of its property shall at all times be and remain within its

control.

 

27

 

9B.                             Source

of Funds.

 

At least one of the following statements is an

accurate representation as to each source of funds (a “Source”) to be used by

such Purchaser to pay the purchase price of the Notes to be purchased by such

Purchaser hereunder:

 

(i)                                     the Source is an “insurance company

general account” (as the term is defined in the United States Department of

Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the

reserves and liabilities (as defined by the annual statement for life insurance

companies approved by the National Association of Insurance Commissioners (the

“NAIC Annual Statement”)) for the general account contract(s) held by or on

behalf of any employee benefit plan together with the amount of the reserves and

liabilities for the general account contract(s) held by or on behalf of any

other employee benefit plans maintained by the same employer (or affiliate

thereof as defined in PTE 95-60) or by the same employee organization in the

general account do not exceed 10% of the total reserves and liabilities of the

general account (exclusive of separate account liabilities) plus surplus as set

forth in the NAIC Annual Statement filed with such Purchaser’s state of

domicile; or

 

(ii)                                  the

Source is a separate account that is maintained solely in connection with such

Purchaser’s fixed contractual obligations under which the amounts payable, or

credited, to any employee benefit plan (or its related trust) that has any

interest in such separate account (or to any participant or beneficiary of such

plan (including any annuitant)) are not affected in any manner by the

investment performance of the separate account; or

 

(iii)                               the

Source is either (a) an insurance company pooled separate account, within the

meaning of PTE 90-1 or (b) a bank collective investment fund, within the

meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the

Company in writing pursuant to this clause (iii), no employee benefit plan or

group of plans maintained by the same employer or employee organization

beneficially owns more than 10% of all assets allocated to such pooled separate

account or collective investment fund; or

 

(iv)                              the

Source constitutes assets of an “investment fund” (within the meaning of Part V

of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset

manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no

employee benefit plan’s assets that are included in such investment fund, when

combined with the assets of all other employee benefit plans established or

maintained by the same employer or by an affiliate (within the meaning of

Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee

organization and managed by such QPAM, exceed 20% of the total client assets

managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption

are satisfied, neither the QPAM nor a person controlling or controlled by the

QPAM (applying the definition of “control” in Section V(e) of the QPAM

Exemption) owns a 5% or more interest in the Company and (a) the identity of

such QPAM and (b) the names of all employee benefit plans whose

 

28

 

assets are included in

such investment fund have been disclosed to the Company in writing pursuant to

this clause (iv); or

 

(v)                                 the

Source constitutes assets of a “plan(s)” (within the meaning of Section IV of

PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or

“INHAM” (within the meaning of Part IV of the INHAM exemption), the conditions

of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the

INHAM nor a person controlling or controlled by the INHAM (applying the

definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5% or more

interest in the Company and (a) the identity of such INHAM and (b) the name(s)

of the employee benefit plan(s) whose assets constitute the Source have been

disclosed to the Company in writing pursuant to this clause (v); or

 

(vi)                              the

Source is a governmental plan; or

 

(vii)                           the

Source is one or more employee benefit plans, or a separate account or trust

fund comprised of one or more employee benefit plans, each of which has been

identified to the Company in writing pursuant to this clause (vii); or

 

(viii)                        the Source

does not include assets of any employee benefit plan, other than a plan exempt

from the coverage of ERISA.

 

As used in this paragraph 9B, the terms “employee benefit plan,”

“governmental plan,” and “separate account” shall have the respective meanings

assigned to such terms in Section 3 of ERISA.

 

10.                               DEFINITIONS;

ACCOUNTING MATTERS.

 

For the purpose of this Agreement, the terms defined

in paragraphs 10A and 10B (or within the text of any other paragraph) shall

have the respective meanings specified therein and all accounting matters shall

be subject to determination as provided in paragraph 10C.

 

10A.                      Yield-Maintenance

Terms.

 

“Business Day” shall mean any day other

than a Saturday, a Sunday or a day on which commercial banks in New York City

are required or authorized to be closed.

 

“Called Principal” shall mean, with

respect to any Note, the principal of such Note that is to be prepaid pursuant

to paragraph 4B or has become or is declared to be immediately due and payable

pursuant to paragraph 7A , as the context requires.

 

“Discounted Value” shall mean, with

respect to the Called Principal of any Note, the amount obtained by discounting

all Remaining Scheduled Payments with respect to such Called Principal from

their respective scheduled due dates to the Settlement Date with respect to

such Called Principal, in accordance with accepted financial practice and at a

discount factor (as converted to reflect the periodic basis on which interest

on the Notes is payable, if interest is

 

29

 

payable other than on a semi-annual basis) equal to the Reinvestment

Yield with respect to such Called Principal.

 

“Reinvestment Yield” shall mean, with

respect to the Called Principal of any Note, 0.50% over the yield to maturity

implied by (i) the yields reported as of 10:00 a.m. (New York City local time)

on the Business Day next preceding the Settlement Date with respect to such

Called Principal for actively traded U.S. Treasury securities having a maturity

equal to the Remaining Average Life of such Called Principal as of such

Settlement Date on the Treasury Yield Monitor page of Standard & Poor’s MMS

–Treasury Market Insight (or, if Standard & Poor’s shall cease to report

such yields in MMS – Treasury Market Insight or shall cease to be Prudential

Capital Group’s customary source of information for calculating

yield-maintenance amounts on privately placed notes, then such source as is

then Prudential Capital Group’s customary source of such information), or if such

yields shall not be reported as of such time or the yields reported as of such

time shall not be ascertainable, (ii) the Treasury Constant Maturity Series

yields reported, for the latest day for which such yields shall have been so

reported as of the Business Day next preceding the Settlement Date with respect

to such Called Principal, in Federal Reserve Statistical Release H.15(519) (or

any comparable successor publication) for actively traded U.S. Treasury

securities having a constant maturity equal to the Remaining Average Life of

such Called Principal as of such Settlement Date.  Such implied yield shall be determined, if necessary, by (a)

converting U.S. Treasury bill quotations to bond equivalent yields in accordance

with accepted financial practice and (b) interpolating linearly between yields

reported for various maturities.  The

Reinvestment Yield shall be rounded to that number of decimal places as appears

in the coupon of the applicable Note.

 

“Remaining Average Life” shall mean, with

respect to the Called Principal of any Note, the number of years (calculated to

the nearest one-twelfth year) obtained by dividing (i) such Called Principal

into (ii) the sum of the products obtained by multiplying (a) each Remaining

Scheduled Payment of such Called Principal (but not of interest thereon) by (b)

the number of years (calculated to the nearest one-twelfth year) which will

elapse between the Settlement Date with respect to such Called Principal and

the scheduled due date of such Remaining Scheduled Payment.

 

“Remaining Scheduled Payments”

shall mean, with respect to the Called Principal of any Note, all payments of

such Called Principal and interest thereon that would be due on or after the

Settlement Date with respect to such Called Principal if no payment of such

Called Principal were made prior to its scheduled due date.

 

“Settlement Date” shall mean, with

respect to the Called Principal of any Note, the date on which such Called

Principal is to be prepaid pursuant to paragraph 4B or has become or is declared

to be immediately due and payable pursuant to paragraph 7A, as the context

requires.

 

“Yield-Maintenance Amount” shall mean,

with respect to any Note, an amount equal to the excess, if any, of the

Discounted Value of the Called Principal of such Note over the sum of (i) such

Called Principal plus (ii) interest accrued thereon as of (including interest

due on) the

 

30

 

Settlement Date with respect to such Called Principal.  The Yield-Maintenance Amount shall in no

event be less than zero.

 

10B.                      Other Terms.

 

“Acquisition” shall mean means any

transaction in which the Company or any of its Subsidiaries directly or

indirectly (i) acquires any ongoing business, (ii) acquires all or

substantially all of the assets of any Person or division thereof, whether

through a purchase of assets, merger or otherwise, (iii) acquires (in one

transaction or as the most recent transaction in a series of transactions)

control of at least a majority of the voting stock of a corporation, other than

the acquisition of voting stock of a Wholly Owned Subsidiary solely in

connection with the organization and capitalization of that Subsidiary by any

Obligor, or (iv) acquires control of more than 50% ownership interest in any partnership,

joint venture or limited liability company.

 

“Additional Obligor” shall have the meaning

specified in paragraph 5H hereto.

 

“Affiliate” shall mean any Person directly

or indirectly controlling, controlled by, or under direct or indirect common control

with, the Obligors, except a Subsidiary. 

A Person shall be deemed to control a corporation if such Person

possesses, directly or indirectly, the power to direct or cause the direction

of the management and policies of such corporation, whether through the

ownership of voting securities, by contract or otherwise.

 

“Agreement, this” shall mean this Note

Purchase Agreement, as amended from time to time.

 

“Anti-Terrorism Order” means Executive

Order No. 13,224, 66 Fed. Reg. 49,079 (2001) issued by the President of the

U.S. (Executive Order Blocking Property and Prohibiting Transactions with

Persons Who Commit, Threaten to Commit, or Support Terrorism).

 

“AIC” shall have the meaning specified in

the introduction hereto.

 

“ARPR” shall have the meaning specified in

the introduction hereto.

 

“Bankruptcy Law” shall have the meaning

specified in paragraph 7A(viii).

 

“Capitalized Lease Obligation” of

any Person shall mean all obligations of such Person to pay rent or other

amounts under any lease (or other arrangement conveying the right to use) real

or personal property, or a combination thereof, which obligations are required

to be classified and accounted for as capital leases on a balance sheet of such

Person under GAAP, and the amount of such obligations shall be the capitalized

amount thereof determined in accordance with GAAP.

 

“Change in Control” shall mean the

occurrence of one or more of the following events: (a) any sale, lease,

exchange or other transfer (in a single transaction or a series of related

transactions) of all or substantially all of the assets of the Company to any

Person or “group”

 

31

 

(within the meaning of the Securities Exchange Act of 1934 and the

rules of the Securities and Exchange Commission thereunder in effect on the

date hereof), (b) the acquisition of ownership, directly or indirectly,

beneficially or of record, by any Person or “group” (within the meaning of the

Securities Exchange Act of 1934 and the rules of the Securities and Exchange

Commission thereunder as in effect on the date hereof) other than the

Loudermilk Family of 33 1/3% or more of the total voting power of shares of

stock entitled to vote in the election of directors of the Company; or (c)

occupation of a majority of the seats (other than vacant seats) on the board of

directors of the Company by Persons who were neither (i) nominated by the

current board of directors or (ii) appointed by directors so nominated.

 

“Closing” shall have the meaning specified

in paragraph 2 hereof.

 

“Company” shall have the meaning specified

in the introduction hereto.

 

“Code” shall mean the Internal Revenue Code

of 1986, as amended.

 

“Consolidated EBITDA” shall mean, for the

Company and its Subsidiaries for any period, an amount equal to the sum of (a)

Consolidated Net Income for such period plus (b) to the extent deducted in

determining Consolidated Net Income for such period, (i) Consolidated Interest

Expense, (ii) income tax expense, (iii) depreciation (excluding depreciation of

rental merchandise) and amortization and (iv) all other non-cash charges,

determined on a consolidated basis in accordance with GAAP in each case for

such period.

 

“Consolidated EBITDAR” shall mean, for the

Company and its Subsidiaries for any period, an amount equal to the sum of (a)

Consolidated EBITDA and (b) Consolidated Lease Expense.

 

“Consolidated Fixed Charge Coverage Ratio”

shall mean, at any date of determination, the ratio of (a) Consolidated

EBITDAR for the period of four consecutive fiscal quarters of the Company

ending on, or most recently ended as of, such date, to (b) Consolidated Fixed

Charges for such period.

 

“Consolidated Fixed Charges” shall mean,

for the Company and its Subsidiaries for any period, determined on a

consolidated basis in accordance with GAAP, the sum (without duplication) of

(a) Consolidated Interest Expense for such period and (b) Consolidated Lease

Expense for such period.

 

“Consolidated Interest Expense” shall mean

shall mean, for the Company and its Subsidiaries for any period, determined on

a consolidated basis in accordance with GAAP, total cash interest expense,

including without limitation the interest component of any payments in respect

of Capitalized Lease Obligations capitalized or expensed during such period

(whether or not actually paid during such period).

 

32

 

“Consolidated Lease Expense” shall mean,

for any period, the aggregate amount of fixed and contingent rentals payable by

the Company and its Subsidiaries with respect to leases of real and personal

property (excluding Capitalized Lease Obligations) determined on a consolidated

basis in accordance with GAAP for such period.

 

“Consolidated Net Income” shall mean, for

any period, the net income (or loss) of the Company and its Subsidiaries for

such period determined on a consolidated basis in accordance with GAAP, but

excluding therefrom (to the extent otherwise included therein) (i) any

extraordinary gains or losses, (ii) any gains attributable to write-ups of assets

and (iii) any equity interest of the Company and its Subsidiaries in the

unremitted earnings of any Person that is not the Company or a Subsidiary, and

(iv) any income (or loss) of any Person accrued prior to the date it becomes a

Subsidiary of any Company or is merged into or consolidated with the Company or

a Subsidiary on the date that such Person’s assets are acquired by the Company

or its Subsidiaries.

 

“Consolidated Net Worth” shall mean, as of

any date of determination, the total shareholders’ equity of the Company and

its Subsidiaries on a consolidated basis, determined in accordance with GAAP.

 

“Consolidated Total Adjusted Capital” shall

mean, as of any date of determination, the sum of (i) Consolidated Total

Adjusted Debt as of such date and (ii) Consolidated Net Worth as of such date.

 

“Consolidated Total Adjusted Debt” shall

mean, as of any date of determination, (i) Consolidated Total Debt, plus

(ii) to the extent not included in clause (i), all operating lease obligations

of the Company and its Subsidiaries measured at the present value of such

obligations (discounted annually at a rate of 10%).

 

“Consolidated Total Debt” shall mean, at

any time, all then currently outstanding obligations, liabilities and

indebtedness of the Obligors on a consolidated basis of the types described in

the definition of Indebtedness (other than as described in subsection (x)

thereof).  Notwithstanding anything

contained herein to the contrary, for purposes of calculating Consolidated

Total Debt as of any date, the obligations, liabilities and indebtedness of the

Company under the SunTrust Loan Facility Agreement shall be limited to fifty

percent (50%) of the aggregate outstanding principal amount of the Loans (as

such term is defined in the SunTrust Loan Facility Agreement) on such date.

 

“Date of Closing” shall have the meaning

specified in paragraph 2 hereof.

 

“Default” shall mean any of the events

specified in paragraph 7A, whether or not any requirement for such event to

become an Event of Default has been satisfied.

 

“Domestic Subsidiary” shall mean each

Subsidiary of the Company that is incorporated or organized under the laws of

any State of the United States of America, the District of Columbia or Puerto

Rico.

 

33

 

“Environmental Laws”  means any and all federal, state, local, and

foreign statutes, laws, regulations, ordinances, rules, judgments, orders,

decrees, permits, concessions, grants, franchises, licenses, agreements or

governmental restrictions relating to pollution and the protection of the

environment or the release of any materials into the environment, including but

not limited to those related to hazardous substances or wastes, air emissions

and discharges to waste or public systems.

 

“Environmental Liability”  means any liability, contingent or otherwise

(including any liability for damages, costs of environmental investigation and

remediation, costs of administrative oversight, fines, natural resource

damages, penalties or indemnities), of the Company or any Subsidiary directly

or indirectly resulting from or based upon (a) any actual or alleged violation

of any Environmental Law, (b) the generation, use, handling, transportation,

storage, treatment or disposal of any Hazardous Materials, (c) any actual or

alleged exposure to any Hazardous Materials, (d) the Release or threatened

Release of any Hazardous Materials or (e) any contract, agreement or other

consensual arrangement pursuant to which liability is assumed or imposed with

respect to any of the foregoing.

 

“ERISA” shall mean the Employee Retirement

Income Security Act of 1974, as amended.

 

“ERISA Affiliate” shall mean any

corporation which is a member of the same controlled group of corporations as

the Company within the meaning of section 414(b) of the Code, or any trade or

business which is under common control with the Company within the meaning of

section 414(c) of the Code.

 

“ERISA Event” shall mean (a) any

“reportable event”, as defined in Section 4043 of ERISA or the regulations

issued thereunder with respect to a Plan (other than an event for which the

30-day notice period is waived); (b) the existence with respect to any Plan of

an “accumulated funding deficiency” (as defined in Section 412 of the Code or

Section 302 of ERISA), whether or not waived; (c) the filing pursuant to

Section 412(d) of the Code or Section 303(d) of ERISA of an application for a

waiver of the minimum funding standard with respect to any Plan; (d) the

incurrence by the Company or any of its ERISA Affiliates of any liability under

Title IV of ERISA with respect to the termination of any Plan; (e) the receipt

by the Company or any ERISA Affiliate from the PBGC or a plan administrator

appointed by the PBGC of any notice relating to an intention to terminate any

Plan or Plans or to appoint a trustee to administer any Plan; (f) the

incurrence by the Company or any of its ERISA Affiliates of any liability with

respect to the withdrawal or partial withdrawal from any Plan or Multiemployer

Plan; or (g) the receipt by the Company or any ERISA Affiliate of any notice,

or the receipt by any Multiemployer Plan from the Company or any ERISA

Affiliate of any notice, concerning the imposition of Withdrawal Liability or a

determination that a Multiemployer Plan is, or is expected to be, insolvent or

in reorganization, within the meaning of Title IV of ERISA.

 

“Event of Default” shall mean any of the

events specified in paragraph 7A, provided that there has been satisfied any

requirement in connection with such event for the giving of notice, or the

lapse of time, or the happening of any further condition, event or act.

 

34

 

“Exchange Act” shall mean the Securities

Exchange Act of 1934, as amended.

 

“Foreign Subsidiary” shall mean any Subsidiary

that is not a Domestic Subsidiary.

 

“GAAP” shall have the meaning set forth in

paragraph 10C.

 

“Governmental Authority” shall mean the

government of the United States of America, any other nation or any political

subdivision thereof, whether state or local, and any agency, authority,

instrumentality, regulatory body, court, central bank or other entity

exercising executive, legislative, judicial, taxing, regulatory or

administrative powers or functions of or pertaining to government.

 

“Guarantee” of or by any Person (the “Guarantor”)

shall mean any obligation, contingent or otherwise, of the Guarantor

guaranteeing or having the economic effect of guaranteeing any Indebtedness or

other obligation of any other Person (the “Primary Obligor”) in any manner, whether

directly or indirectly and including any obligation, direct or indirect, of the

Guarantor (a) to purchase or pay (or advance or supply funds for the purchase

or payment of) such Indebtedness or other obligation or to purchase (or to

advance or supply funds for the purchase of) any security for the payment

thereof, (b) to purchase or lease property, securities or services for the

purpose of assuring the owner of such Indebtedness or other obligation of the

payment thereof, (c) to maintain working capital, equity capital or any other

financial statement condition or liquidity of the primary obligor so as to

enable the primary obligor to pay such Indebtedness or other obligation or (d)

as an account party in respect of any letter of credit or letter of guaranty

issued in support of such Indebtedness or obligation; provided that the

term “Guarantee” shall not include endorsements for collection or deposits in

the ordinary course of business. The amount of any Guarantee shall be deemed to

be an amount equal to the stated or determinable amount of the primary

obligation in respect of which Guarantee is made or, if not so stated or

determinable, the maximum reasonably anticipated liability in respect thereof

(assuming such Person is required to perform thereunder) as determined by such

Person in good faith. The term “Guarantee” used as a verb has a corresponding

meaning.

 

“Hazardous Materials” means all explosive

or radioactive substances or wastes and all hazardous or toxic substances,

wastes or other pollutants, including petroleum or petroleum distillates,

asbestos or asbestos containing materials, polychlorinated biphenyls, radon

gas, infectious or medical wastes and all other substances or wastes of any

nature regulated pursuant to any Environmental Law.

 

“including” shall mean, unless the context

clearly requires otherwise, “including without limitation”.

 

“Indebtedness” of any Person shall mean,

without duplication (i) all obligations of such Person for borrowed money, (ii)

all obligations of such Person evidenced by bonds, debentures, notes or other

similar instruments, (iii) all obligations of such Person in respect of the

deferred purchase price of property or services (other than trade payables

incurred in the ordinary course

 

35

 

of business; provided that for purposes of paragraph  7A(iii), trade

payables overdue by more than 120 days shall be included in this definition

except to the extent that any of such trade payables are being disputed in good

faith and by appropriate measures), (iv) all obligations of such Person under

any conditional sale or other title retention agreement(s) relating to property

acquired by such Person, (v) all Capitalized Lease Obligations of such Person,

(vi) all obligations, contingent or otherwise, of such Person in respect of

letters of credit, acceptances or similar extensions of credit, (vii) all

Guarantees of such Person of the type of Indebtedness described in clauses (i)

through (v) above, (viii) all Indebtedness of a third party secured by any Lien

on property owned by such Person, whether or not such Indebtedness has been

assumed by such Person, (ix) all obligations of such Person, contingent or

otherwise, to purchase, redeem, retire or otherwise acquire for value any

common stock of such Person, and (x) Off-Balance Sheet Liabilities.  The Indebtedness of any Person shall include

the Indebtedness of any partnership or joint venture in which such Person is a

general partner or a joint venturer, except to the extent that the terms of

such Indebtedness provide that such Person is not liable therefor.

 

“Industrial Revenue Bonds” shall mean the

Fort Bend Industrial Development Corporation Industrial Development Revenue

Bonds (Aaron Rents, Inc. Project), Series 2000.

 

“Institutional Investor” shall mean any

insurance company, commercial, investment or merchant bank, finance company,

mutual fund, registered money or asset manager, savings and loan association,

credit union, registered investment advisor, pension fund, investment company

or fund, licensed broker or dealer, “qualified institutional buyer” (as such

term is defined under Rule 144A promulgated under the Securities Act, or any

successor law, rule or regulation) or institutional “accredited investor” (as

such term is defined under Regulation D promulgated under the Securities Act,

or any successor law, rule or regulation).

 

“Investment” shall have the meaning

specified in paragraph 6I.

 

“Joinder Agreement(s)” shall mean those

certain Joinder Agreements executed pursuant to paragraph 5H hereof,

substantially in the form of Exhibit D hereto.

 

“Lien” shall mean any mortgage, pledge,

security interest, lien (statutory or otherwise), charge, encumbrance,

hypothecation, assignment, deposit arrangement, or other arrangement having the

practical effect of the foregoing or any preference, priority or other security

agreement or preferential arrangement of any kind or nature whatsoever

(including any conditional sale or other title retention agreement and any

capital lease having the same economic effect as any of the foregoing).  A covenant not to grant a Lien or a

“negative pledge” shall not be determined a Lien for purposes of this

Agreement.

 

“Loudermilk Family” shall mean,

collectively, Robert Charles Loudermilk, Sr., his spouse, his children, his

grandchildren and any trust which may now be or hereafter established for the

sole benefit of any of the foregoing persons.

 

36

 

“Material Adverse Effect” shall mean (i) a

material adverse effect on the business, assets, liabilities, operations or

financial condition of the Company and its Subsidiaries, taken as a whole, (ii)

material impairment of the Obligors’ ability to perform any of their respective

obligations under the Agreement and the Notes or (iii) material impairment of

the validity or enforceability of this Agreement or the Notes.

 

“Multiemployer Plan” shall mean any Plan

which is a “multiemployer plan” (as such term is defined in section 4001(a)(3)

of ERISA).

 

“Notes” shall have the meaning specified in

paragraph 1 hereto.

 

“Obligor” shall have the meaning specified

in the introduction hereto, and shall include any Additional Obligors made a

party to this Agreement pursuant to the terms of paragraph 5H hereof.

 

“Off-Balance Sheet Liabilities “ of any

Person shall mean (i) any repurchase obligation or liability of such Person

with respect to accounts or notes receivable sold by such Person, other than

indemnity obligations for any breach of any representation or warranty which are

customary in nonrecourse sales of such assets, (ii) any liability of such

Person under any sale and leaseback transactions which do not create a

liability on the balance sheet of such Person, (iii) any liability of such

Person under any so-called “synthetic” lease transaction or (iv) any obligation

arising with respect to any other transaction which is the functional

equivalent of or takes the place of borrowing but which does not constitute a

liability on the balance sheet of such Person.

 

“Officer’s Certificate” shall mean a

certificate signed in the name of the Company by its President, one of its Vice

Presidents or its Treasurer.

 

“PBGC” shall mean the Pension Benefit

Guaranty Corporation, or any successor or replacement entity thereto under

ERISA.

 

“Permitted Acquisitions”  shall mean any Acquisition so long as (a) at

the time of such Acquisition, no Default or Event of Default is in existence,

(b) after giving effect to such Acquisition, no Default or Event of Default is

in existence, (c) such Acquisition has been approved by the board of directors

of the Person being acquired prior to any public announcement thereof, (d) the

total consideration (including all cash, debt, stock and other property, and

assumption of obligations for borrowed money) of any single Acquisition or

series of related Acquisitions does not exceed $20,000,000, and (e) the total

consideration (including all cash, debt, stock and other property, and

assumption of obligations for borrowed money) of all Acquisitions during any

fiscal year does not exceed $40,000,000. 

As used herein, Acquisitions will be considered related Acquisitions if

the sellers under such Acquisitions are the same Person or any affiliate

thereof.

 

“Permitted Change”  shall have the meaning specified in paragraph 6L.

 

37

 

“Permitted Investments” shall mean:

 

(i)                                     direct

obligations of, or obligations the principal of and interest on which are

unconditionally guaranteed by, the United States (or by any agency thereof to

the extent such obligations are backed by the full faith and credit of the

United States), in each case maturing within one year from the date of

acquisition thereof;

 

(ii)                                  commercial

paper having an A or better rating, at the time of acquisition thereof, from

S& P’s or Moody’s Investors Service, Inc., and in either case maturing

within one year from the date of acquisition thereof;

 

(iii)                               certificates

of deposit, bankers’ acceptances and time deposits maturing within one year of

the date of acquisition thereof issued or guaranteed by or placed with, and

money market deposit accounts issued or offered by, any domestic office of any

commercial bank organized under the laws of the United States or any state

thereof which has a combined capital and surplus and undivided profits of not

less than $500,000,000;

 

(iv)                            fully

collateralized repurchase agreements with a term of not more than 30 days for

securities described in clause (i) above and entered into with a financial

institution satisfying the criteria described in clause (iii) above; and

 

(v)                                 mutual

funds investing solely in any one or more of the Permitted Investments

described in clauses (i) through (iv) above.

 

“Person” shall mean any individual,

partnership, corporation, limited liability company, association, trust,

unincorporated organization, or a government or agency or political subdivision

thereof.

 

“Plan” shall mean any employee pension

benefit plan (other than a Multiemployer Plan) subject to the provisions of

Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in

respect of which the Company or any ERISA Affiliate is (or, if such plan were

terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as

defined in Section 3(5) of ERISA.

 

“Purchaser” shall mean each Person named on

the Purchaser Schedule attached hereto.

 

“Purchaser Schedule” shall mean that

Purchaser Schedule attached as Schedule A hereto.

 

“Required Holder(s)” shall mean the holder

or holders of at least 51% of the aggregate principal amount of the Notes from

time to time outstanding.

 

38

 

“Release” shall mean any release, spill,

emission, leaking, dumping, injection, pouring, deposit, disposal, discharge,

dispersal, leaching or migration into the environment (including ambient air,

surface water, groundwater, land surface or subsurface strata) or within any

building, structure, facility or fixture.

 

“Responsible Officer” shall mean the chief

executive officer, chief operating officer, chief financial officer or chief

accounting officer of each of the Obligors or any other officer of the Obligors

involved principally in its financial administration or its controllership

function.

 

“Restricted Payment” shall have the meaning

specified in paragraph 6H hereto.

 

“S&P” shall mean Standard and Poor’s

Corporation, or any successor Person.

 

“Securities Act” shall mean the Securities

Act of 1933, as amended.

 

“Significant Holder” shall mean (i) each

Purchaser, so long as it shall hold (or be committed under this Agreement to

purchase) any Note, or (ii) any other holder of at least 5% of the aggregate

principal amount of the Notes from time to time outstanding.

 

“Subsidiary” shall mean any corporation,

partnership, joint venture, limited liability company, association or other

entity the accounts of which would be consolidated with those of the Company in

the Company’s consolidated financial statements if such financial statements

were prepared in accordance with GAAP as of such date, as well as any other corporation,

partnership, joint venture, limited liability company, association or other

entity of which securities or other ownership interests representing more than

50% of the equity or more than 50% of the ordinary voting power, or in the case

of a partnership, more than 50% of the general partnership interest are, as of

such date, owned, controlled or held, by the Company or one of more

subsidiaries of the Company.  Unless

otherwise indicated, all references to “Subsidiaries” herein shall mean a

Subsidiary of the Company.

 

“SouthTrust Agreement” shall mean that

certain Loan Facility Agreement and Guaranty, dated as of August 31, 2000,

among the Company, SouthTrust Bank and each of the lenders signatory thereto,

as amended, restated, supplemented, replaced, refinanced or otherwise modified

from time to time.

 

“SunTrust” shall mean SunTrust Bank,

together with its successors and assigns.

 

“SunTrust Agreement” means that certain

Revolving Credit Agreement, dated as of March 30, 2001, among the Company, ARPR

and the lenders signatory thereto, as amended, restated, supplemented,

replaced, refinanced or otherwise modified from time to time.

 

“SunTrust Loan Facility Agreement” means

that certain Loan Facility Agreement and Guaranty, dated as of March 30, 2001,

by and among the Company, SunTrust and the financial institutions party

thereto, as amended, restated, supplemented, replaced, refinanced or otherwise

modified from time to time.

 

39

 

“Synthetic Lease Documents” shall have the

meaning specified in the SunTrust Agreement.

 

“Total Adjusted Debt to Total Adjusted Capital Ratio”

shall mean, at any date of determination, the ratio of (a) Consolidated

Total Adjusted Debt as of such date to (b) Consolidated Total Adjusted Capital

as of such date.

 

“Total Debt to EBITDA Ratio” shall mean, at

any date of determination, the ratio of (a) Consolidated Total Debt as of

such date to (b) Consolidated EBITDA for the period of four consecutive fiscal

quarters of the Company ending on, or most recently ending as of, such date.

 

“Transferee” shall mean any direct or

indirect transferee of all or any part of any Note purchased under this

Agreement.

 

“Wholly Owned Subsidiary” shall mean any

Subsidiary, all of the stock of every class of which is, at the time as of

which any determination is being made, owned by the Company either directly or

through Wholly Owned Subsidiaries, and which has outstanding no options,

warrants, rights or other securities entitling the holder thereof (other than

the Company or a Wholly Owned Subsidiary) to acquire shares of capital stock of

such corporation.

 

“Withdrawal Liability” shall mean liability

to a Multiemployer Plan as a result of a complete or partial withdrawal from

such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of

Title IV of ERISA.

 

10C.                      Accounting

and Legal Principles, Terms and 

Determinations.

 

All references in this

Agreement to “GAAP” shall mean generally accepted accounting principles, as in

effect in the United States from time to time. 

Unless otherwise specified herein, all accounting terms used herein

shall be interpreted, all determinations with respect to accounting matters

hereunder shall be made, and all unaudited financial statements and

certificates and reports as to financial matters required to be furnished

hereunder shall be prepared, in accordance with GAAP, applied on a basis

consistent with the most recent audited consolidated financial statements of

the Company and its Subsidiaries delivered pursuant to paragraph 5A(i) or (ii)

or, if no such statements have been so delivered, the most recent audited

financial statements referred to in clause (i) of paragraph 8B.  Any reference herein to any specific

citation, section or form of law, statute, rule or regulation shall refer to

such new, replacement or analogous citation, section or form should such

citation, section or form be modified, amended or replaced.

 

40

 

11.                               MISCELLANEOUS.

 

11A.                      Note

Payments.

 

So long as any Purchaser

shall hold any Note, the Obligors will make payments of principal of, interest

on and any Yield-Maintenance Amount payable with respect to such Note, which

comply with the terms of this Agreement, by wire transfer of immediately available

funds for credit (not later than 12:00 noon, New York City time, on the date

due) to such Purchaser’s account or accounts as specified in the Purchaser

Schedule attached hereto, or such other account or accounts in the United

States as such Purchaser may designate in writing, notwithstanding any contrary

provision herein or in any Note with respect to the place of payment. Each

Purchaser agrees that, before disposing of any Note, it will make a notation

thereon (or on a schedule attached thereto) of all principal payments

previously made thereon and of the date to which interest thereon has been

paid.  The Obligors agree to afford the

benefits of this paragraph 11A to any Transferee which shall have made the same

agreement as the Purchasers have made in this paragraph 11A.

 

11B.                      Expenses.

 

Whether or not the

transactions contemplated hereby shall be consummated, the Obligors shall pay,

and save each Purchaser and any Transferee harmless against liability for the

payment of, all out-of-pocket expenses arising in connection with such

transactions, including:

 

(i)                                     (A)

all stamp and documentary taxes and similar charges, (B) costs of obtaining a

private placement number from S&P for the Notes and (C) fees and expenses

of brokers, agents, dealers, investment banks or other intermediaries or

placement agents, in each case as a result of the execution and delivery of

this Agreement or the issuance of the Notes;

 

(ii)                                  document

production and duplication charges and the reasonable fees and expenses of any

special counsel engaged by such Purchaser or such Transferee in connection with

(A) this Agreement and the transactions contemplated hereby, (B) the execution

and delivery of any Joinder Agreement by an Additional Obligor, and (C) any

subsequent proposed waiver, amendment or modification of, or proposed consent

under, this Agreement, whether or not such the proposed action shall be

effected or granted;

 

(iii)                             the

costs and expenses, including reasonable attorneys’ and financial advisory

fees, incurred by such Purchaser or such Transferee in enforcing (or

determining whether or how to enforce) any rights under this Agreement or the

Notes or in responding to any subpoena or other legal process or informal

investigative demand issued in connection with this Agreement or the

transactions contemplated hereby or by reason of your or such Transferee’s

having acquired any Note, including without limitation costs and expenses

incurred in any workout, restructuring or renegotiation proceeding or

bankruptcy case; and

 

41

 

(iv)                              any

judgment, liability, claim, order, decree, cost, fee, expense, action or

obligation resulting from the consummation of the transactions contemplated

hereby, including the use of the proceeds of the Notes by the Obligors.

 

The obligations of the

Obligors under this paragraph 11B shall survive the transfer of any Note or

portion thereof or interest therein by any Purchaser or Transferee and the

payment of any Note.

 

11C.                      Consent to

Amendments.

 

This Agreement may be

amended, and the Obligors may take any action herein prohibited, or omit to

perform any act herein required to be performed by it, if the Obligors shall

obtain the written consent to such amendment, action or omission to act, of the

Required Holder(s) except that, without the written consent of the holder or

holders of all Notes at the time outstanding, no amendment to this Agreement

shall change the maturity of any Note, or change the principal of, or the rate,

method of computation or time of payment of interest on or any

Yield-Maintenance Amount payable with respect to any Note, or affect the time,

amount or allocation of any 

prepayments, or change the proportion of the principal amount of the

Notes required with respect to any consent, amendment, waiver or

declaration.  Each holder of any Note at

the time or thereafter outstanding shall be bound by any consent authorized by

this paragraph 11C, whether or not such Note shall have been marked to indicate

such consent, but any Notes issued thereafter may bear a notation referring to

any such consent.  No course of dealing

between the Obligors and the holder of any Note nor any delay in exercising any

rights hereunder or under any Note shall operate as a waiver of any rights of

any holder of such Note.  As used herein

and in the Notes, the term “this Agreement” and references thereto shall mean

this Agreement as it may from time to time be amended or supplemented.

 

11D.                      Form,

Registration, Transfer and Exchange of Notes; Lost Notes.

 

The Notes are issuable as

registered notes without coupons in denominations of at least $1,000,000,

except as may be necessary to (i) reflect any principal amount not evenly

divisible by $1,000,000 or (ii) enable the registration of transfer by a holder

of its entire holding of Notes.  The

Company shall keep at its principal office a register in which the Company

shall provide for the registration of Notes and of transfers of Notes.  Upon surrender for registration of transfer

of any Note at the principal office of the Company, the Company shall, at its

expense, execute and deliver one or more new Notes of like tenor and of a like

aggregate principal amount, registered in the name of such transferee or

transferees.  At the option of the

holder of any Note, such Note may be exchanged for other Notes of like tenor

and of any authorized denominations, of a like aggregate principal amount, upon

surrender of the Note to be exchanged at the principal office of the

Company.  Whenever any Notes are so

surrendered for exchange, the Obligors shall, at their expense, execute and

deliver the Notes which the holder making the exchange is entitled to

receive.  Every Note surrendered for

registration of transfer or exchange shall be duly endorsed, or be accompanied

by a written instrument of transfer duly executed, by the holder of such Note

or such holder’s attorney duly authorized in writing.  Any Note or Notes issued in exchange for any Note or upon

transfer thereof shall carry the rights to unpaid interest and interest to

accrue

 

42

 

which were carried by the Note so exchanged or

transferred, so that neither gain nor loss of interest  shall result from any such transfer or

exchange.  Upon receipt of written

notice from the holder of any Note of the loss, theft, destruction or

mutilation of such Note and, in the case of any such loss, theft or

destruction, upon receipt of such holder’s unsecured indemnity agreement, or in

the case of any such mutilation upon surrender and cancellation of such Note,

the Obligors will make and deliver a new Note, of like tenor, in lieu of the

lost, stolen, destroyed or mutilated Note. 

The Company shall give to any holder of a Note that is an Institutional

Investor promptly upon request therefor, a complete and correct copy of the

names and addresses of all registered holders of Notes.

 

11E.                        Persons

Deemed Owners; Participations.

 

Prior to due presentment

for registration of transfer, the Obligors may treat the Person in whose name

any Note is registered as the owner and holder of such Note for the purpose of

receiving payment of principal of, interest on and any Yield-Maintenance Amount

payable with respect to such Note and for all other purposes whatsoever,

whether or not such Note shall be overdue, and the Obligors shall not be

affected by notice to the contrary. 

Subject to the preceding sentence, the holder of any Note may from time

to time grant participations in such Note to any Person on such terms and

conditions as may be determined by such holder in its sole and absolute

discretion.

 

11F.                        Survival

of Representations and Warranties; Entire Agreement.

 

All representations and

warranties contained herein or made in writing by or on behalf of the Obligors

in connection herewith shall survive the execution and delivery of this

Agreement and the Notes, the transfer by a Purchaser of any Note or portion

thereof or interest therein and the payment of any Note, and may be relied upon

by any Transferee, regardless of any investigation made at any time by or on

behalf of any Purchaser or any Transferee. 

Subject to the preceding sentence, this Agreement and the Notes embody

the entire agreement and understanding between the Purchasers and the Obligors

and supersede all prior agreements and understandings relating to the subject

matter hereof.

 

11G.                      Successors

and Assigns.

 

All covenants and other

agreements in this Agreement contained by or on behalf of either of the parties

hereto shall bind and inure to the benefit of the respective successors and

assigns of the parties hereto (including, without limitation, any Transferee)

whether so expressed or not.

 

11H.                      Confidential

Information.

 

For the purposes of this

paragraph 11H, “Confidential Information” means information delivered to you

by or on behalf of the Company or any Subsidiary in connection with the

transactions contemplated by or otherwise pursuant to this Agreement that is

proprietary in nature and that was clearly marked or labeled or otherwise

adequately identified when received by you as being confidential information of

the Company or such Subsidiary, provided that such term does not include

information that (a) was publicly known or otherwise known to you prior

 

43

 

to the time of such disclosure, (b) subsequently

becomes publicly known through no act or omission by you or any person acting

on your behalf, (c) otherwise becomes known to you other than through

disclosure by the Company or any Subsidiary or (d) constitutes financial

statements delivered to you under paragraph 5A that are otherwise publicly

available.  You will maintain the

confidentiality of such Confidential Information in accordance with procedures

adopted by you in good faith to protect confidential information of third

parties delivered to you,  provided that

you may deliver or disclose Confidential Information to (i) your directors,

officers, employees, agents, attorneys and affiliates (to the extent such

disclosure reasonably relates to the administration of the investment

represented by your Notes), (ii) your financial advisors and other professional

advisors who agree to hold confidential the Confidential Information

substantially in accordance with the terms of this paragraph 11H, (iii) any

other holder of any Note, (iv) any Institutional Investor to which you sell or

offer to sell such Note or any part thereof or any participation therein (if

such Person has agreed in writing prior to its receipt of such Confidential

Information to be bound by the provisions of this paragraph 11H), (v) any

Person from which you offer to purchase any security of the Company (if such

Person has agreed in writing prior to its receipt of such Confidential

Information to be bound by the provisions of this paragraph 11H), (vi) any

federal or state regulatory authority having jurisdiction over you, (vii) the

National Association of Insurance Commissioners or any similar organization, or

any nationally recognized rating agency that requires access to information

about your investment portfolio or (viii) any other Person to which such

delivery or disclosure may be necessary or appropriate (w) to effect compliance

with any law, rule, regulation or order applicable to you, (x) in response to

any subpoena or other legal process, (y) in connection with any litigation to which

you are a party or (z) if an Event of Default has occurred and is continuing,

to the extent you may reasonably determine such delivery and disclosure to be

necessary or appropriate in the enforcement or for the protection of the rights

and remedies under your Notes and this Agreement.  Each holder of a Note, by its acceptance of a Note, will be

deemed to have agreed to be bound by and to be entitled to the benefits of this

paragraph 11H as though it were a party to this Agreement.  On reasonable request by the Company in

connection with the delivery to any holder of a Note of information required to

be delivered to such holder under this Agreement or requested by such holder

(other than a holder that is a party to this Agreement or its nominee), such holder

will enter into an agreement with the Company embodying the provisions of this

paragraph 11H.

 

11I.                           Notices.

 

All written

communications provided for hereunder shall be sent by first class mail or

nationwide overnight delivery service (with charges prepaid) and (i) if to a

Purchaser, addressed to it at the address specified for such communications in

the Purchaser Schedule attached hereto, or at such other address as such

Purchaser shall have specified to the Company in writing, (ii) if to any other holder

of any Note, addressed to such other holder at such address as such other

holder shall have specified to the Company in writing or, if any such other

holder shall not have so specified an address to the Company, then addressed to

such other holder in care of the last holder of such Note which shall have so

specified an address to the Company, and (iii) if to the Obligors, addressed to

them at:

 

44

 

The Company:

 

1100 Aaron Building

309 East Paces Ferry Road,

NE

Atlanta, GA  30305-2377

Attention:               Gilbert L. Danielson

Telecopy No. 404.240.6520

 

ARPR:

 

1100 Aaron Building

309 East Paces Ferry

Road, NE

Atlanta, GA  30305-2377

Attention:               Gilbert L. Danielson

Telecopy No.:

404.240.6520

 

AIC:

 

Aaron Investment Company

Two

Greenville Crossing

4005 Kennett Pike, Suite

220

Greenville, Delaware  19807

Attention:                 Marianne Stearns and Linda Jones

Telecopy No.: 302.655.5209

 

With a copy to:

 

Aaron Investment Company

1100 Aaron Building

309 East Paces Ferry

Road, NE

Atlanta, GA  30305-2377

Attention:               Gilbert L. Danielson

Telecopy No.:

404.240.6520

 

or at such other address as the Obligors shall have specified to the

holder of each Note in writing; provided, however, that any such

communication to the Obligors may also, at the option of the holder of any

Note, be delivered by any other means either to the Obligors at the addresses

specified above or to any officer of the Obligors.

 

11J.                        Payments

due on Non-Business Days.

 

Anything in this

Agreement or the Notes to the contrary notwithstanding, any payment of

principal of or interest on any Note that is due on a date other than a

Business Day shall be made on the next succeeding Business Day.  If the date for any payment is extended to

the next succeeding Business Day by reason of the preceding sentence, the

period of such extension shall not be included in the computation of the

interest payable on such Business Day.

 

45

 

11K.                      Satisfaction

Requirement.

 

If any agreement, certificate

or other writing, or any action taken or to be taken, is by the terms of this

Agreement required to be satisfactory to any Purchaser or to the Required

Holder(s), the determination of such satisfaction shall be made by such

Purchaser or the Required Holder(s), as the case may be, in the sole and

exclusive judgment (exercised in good faith) of the Person or Persons making

such determination.

 

11L.                       Governing

Law.

 

This Agreement shall be

construed and enforced in accordance with, and the rights of the parties shall

be governed by, the law of the State of New York.

 

11M.                    Consent to

Jurisdiction; Waiver of Immunities.

 

The Obligors hereby

irrevocably submit to the jurisdiction of any New York state or Federal court

sitting in New York in any action or proceeding arising out of or relating to

this Agreement, and the Obligors hereby irrevocably agree that all claims in

respect of such action or proceeding may be heard and determined in New York

state or Federal court.  The Obligors

hereby irrevocably waive, to the fullest extent it may effectively do so, the

defense of an inconvenient forum to the maintenance of such action or

proceeding.  The Obligors agree and

irrevocably consent to the service of any and all process in any such action or

proceeding by the mailing, by registered or certified U.S. mail, or by any

other means or mail that requires a signed receipt, of copies of such process

to CT Corporation System at 1633 Broadway, New York, New York 10019.  The Obligors agree that a final judgment in

any such action or proceeding shall be conclusive and may be enforced in other

jurisdictions by suit on the judgment or in any other manner provided by

law.  Nothing in this paragraph 11M

shall affect the right of any holder of the Notes to serve legal process in any

other manner permitted by law or affect the right of any holder of the Notes to

bring any action or proceeding against the Obligors or their property in the

courts of any other jurisdiction.  To

the extent that the Obligors have or hereafter may acquire immunity from

jurisdiction of any court or from any legal process (whether through service of

notice, attachment prior to judgment, attachment in aid of execution, execution

or otherwise) with respect to themselves or their property, the Obligors hereby

irrevocably waive such immunity in respect of its obligations under this

agreement.

 

11N.                      Severability.

 

Any provision of this

Agreement which is prohibited or unenforceable in any jurisdiction shall, as to

such jurisdiction, be ineffective to the extent of such prohibition or

unenforceability without invalidating the remaining provisions hereof, and any

such prohibition or unenforceability in any jurisdiction shall not invalidate

or render unenforceable such provision in any other jurisdiction.

 

46

 

11O.                     Descriptive

Headings.

 

The descriptive headings

of the several paragraphs of this Agreement are inserted for convenience only

and do not constitute a part of this Agreement.

 

11P.                       Counterparts.

 

This Agreement may be

executed in any number of counterparts (or counterpart signature pages), each

of which counterparts shall be an original but all of which together shall

constitute one instrument.

 

11Q.                     Independence

of Covenants.

 

All covenants hereunder

shall be given independent effect so that if a particular action or condition

is prohibited by any one of such covenants, the fact that it would be permitted

by an exception to, or otherwise be in compliance within the limitations of,

another covenant shall not (i) avoid the occurrence of an Event of Default or

Default if such action is taken or such condition exists or (ii) in any way

prejudice an attempt by the holders to prohibit (through equitable action or

otherwise) the taking of any action by the Company or a Subsidiary which would

result in an Event of Default or Default.

 

11R.                      Waiver of

Jury Trial.

 

THE OBLIGORS AND THE

HOLDERS OF THE NOTES AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF

ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE

NOTES, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS

TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING

ESTABLISHED.  THE SCOPE OF THIS WAIVER

IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN

ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING

WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND

ALL OTHER COMMON LAW AND STATUTORY CLAIMS. 

THE HOLDERS OF THE NOTES AND THE OBLIGORS EACH ACKNOWLEDGE THAT THIS

WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS BUSINESS RELATIONSHIP, THAT

EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT

EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.  THE HOLDERS OF THE NOTES AND THE OBLIGORS

FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL

COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS

FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A

WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

47

 

11S.                       Severalty

of Obligations.

 

The sales of Notes to the

Purchasers are to be several sales, and the obligations of the Purchasers under

this Agreement are several obligations. 

Except as provided in paragraph 3E, no failure by any Purchaser to

perform its obligations under this Agreement shall relieve any other Purchaser

or any Obligor of any of its obligations hereunder, and no Purchaser shall be

responsible for the obligations of, or any action taken or omitted by, any

other Purchaser hereunder.

 

11T.                       Independent

Investigation.

 

Each Purchaser has made

its own independent investigation of the condition (financial and otherwise),

prospects and affairs of the Obligors in connection with its purchase of the

Notes hereunder and has made and shall continue to make its own appraisal of

the creditworthiness of the Obligors. 

No holder of Notes shall have any duty or responsibility to any other

holder of Notes, either initially or on a continuing basis, to make any such

investigation or appraisal or to provide any credit or other information with

respect thereto.  No holder of Notes is

acting as agent or in any other fiduciary capacity on behalf of any other

holder of Notes.

 

11U.                       Directly or

Indirectly.

 

Where any provision in

this Agreement refers to action to be taken by any Person, or which such Person

is prohibited from taking, such provision shall be applicable whether the

action in question is taken directly or indirectly by such Person.

 

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

 

48

 

Please sign the form of

acceptance on the enclosed counterpart of this letter and return the same to

the Obligors, whereupon this letter shall become a binding agreement between

the Obligors and each Purchaser.

 

	

   

  	

  Very truly yours,

  
	

   

  	

   

  
	

   

  	

  AARON

  RENTS, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/Gilbert L. Danielson

  	

   

  
	

   

  	

  Name:

  	

  Gilbert L. Danielson

  
	

   

  	

  Title:

  	

  Executive Vice President,

  Chief Financial Officer

  
	

   

  	

   

  
	

   

  	

  AARON

  RENTS, INC. PUERTO RICO

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/Gilbert L. Danielson

  	

   

  
	

   

  	

  Name:

  	

  Gilbert L. Danielson

  
	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  
	

   

  	

  AARON

  INVESTMENT COMPANY

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/Gilbert L. Danielson

  	

   

  
	

   

  	

  Name:

  	

  Gilbert L. Danielson

  
	

   

  	

  Title:

  	

  Vice President and Treasurer

  
	

   

  	

   

  
							

 

 

 

[Signature

Page to Note Purchase Agreement]

 

49

 

The foregoing Agreement is hereby accepted

as of the date first above written.

 

	

  THE

  PRUDENTIAL INSURANCE COMPANY OF AMERICA

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   /s/Thomas P.

  Hackett

  	

   

  
	

  Name:

  	

  Thomas P. Hackett

  	

   

  
	

  Title:

  	

  Vice President

  	

   

  
					

 

	

  GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY

  
	

  By:

  	

  Prudential Private

  Placement Investors, L.P.,

  as Investment Advisor

  
	

   

  	

  By:

  	

  Prudential Private

  Placement Investors, Inc.,

  General Partner

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By: 

  	

  /s/Thomas P. Hackett

  	

   

  
	

   

  	

  Name:

  	

  Thomas P. Hackett

  
	

   

  	

  Title:

  	

  Vice President

  
					

 

	

  GENERAL ELECTRIC LIFE AND ANNUITY ASSURANCE COMPANY

  
	

  By:

  	

  Prudential Private

  Placement Investors, L.P.,

  as Investment Advisor

  
	

   

  	

  By:

  	

  Prudential Private

  Placement Investors, Inc.,

  General Partner

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/Thomas P. Hackett

  	

   

  
	

   

  	

  Name:

  	

  Thomas P. Hackett

  
	

   

  	

  Title:

  	

  Vice President

  
					

 

 

50

 

	

  ING

  LIFE INSURANCE & ANNUITY COMPANY

  
	

  By:

  	

  Prudential Private

  Placement Investors, L.P.,

  as Investment Advisor

  
	

   

  	

  By:

  	

  Prudential Private

  Placement Investors, Inc.,

  General Partner

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/Thomas P. Hackett

  	

   

  
	

   

  	

  Name:

  	

  Thomas P. Hackett

  
	

   

  	

  Title:

  	

  Vice President

  
					

 

 

 

51

 

EXHIBIT

A

 

[FORM OF

NOTE]

 

 

AARON

RENTS, INC.

AARON

RENTS, INC. PUERTO RICO

AARON

INVESTMENT COMPANY

 

6.88%

SENIOR NOTE DUE AUGUST 15, 2009

 

	

  No.

  R-[        ]

  	

   

  	

  August 15, 2002

  
	

  $[                   ]

  	

   

  	

  PPN: 00253# AA 8

  

 

FOR VALUE RECEIVED,

the undersigned, AARON RENTS, INC. (together with its successors, herein called

the “Company”),

a corporation organized and existing under the laws of the State of Georgia, AARON RENTS,

INC. PUERTO RICO (together with its successors, herein called “ARPR”),

a corporation organized and existing under the laws of Puerto Rico, and AARON

INVESTMENT COMPANY (together with its successors, herein called “AIC”,

and together with the Company and ARPR, the “Obligors”), a corporation

organized and existing under the laws of Delaware, hereby promise to pay to [                                   ],

or registered assigns, the principal sum of [                                   ]

DOLLARS on August 15, 2009, with interest (computed on the basis of

a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at

the rate of 6.88% per annum from the date hereof, payable quarterly on the 15th

day of  February, May, August, and

November in each year, commencing with November 15, 2002 or the next such

payment date succeeding the date hereof, until the principal hereof shall have

become due and payable, and (b) on  any

overdue payment (including any overdue prepayment) of principal, any overdue

payment of interest and any overdue payment of any Yield-Maintenance Amount (as

defined in the Note Purchase Agreement referred to below), payable quarterly as

aforesaid (or, at the option of the registered holder hereof, on demand), at a

rate per annum from time to time equal to the greater of (i) 8.88% or (ii) 2.0%

over the rate of interest publicly announced by the Bank of New York from time

to time in New York City, New York as its “base” or “prime” rate.

 

Payments of principal of,

interest on and any Yield-Maintenance Amount payable with respect to this Note

are to be made at the main office of the Bank of New York in New York City or

at such other place as the holder hereof shall designate to the Company in

writing, in lawful money of the United States of America.

 

This Note is one of a

series of Senior Notes (herein called the “Notes”) issued pursuant to a Note Purchase

Agreement, dated as of August 15, 2002 (as from time to time amended, herein

called the “Note Purchase Agreement”), among the Obligors and the original

purchasers of the Notes named in the Purchaser Schedule attached thereto and is

entitled to the benefits thereof.

 

 

 

This Note is a registered

Note and, as provided in the Note Purchase Agreement, upon surrender of this

Note for registration of transfer, duly endorsed, or accompanied by a written

instrument of transfer duly executed, by the registered holder hereof or such

holder’s attorney duly authorized in writing, a new Note for a like principal

amount will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration of

transfer, the Obligors may treat the person in whose name this Note is

registered as the owner hereof for the purpose of receiving payment and for all

other purposes, and the Obligors shall not be affected by any notice to the

contrary.

 

The Obligors agree to

make required prepayments of principal on the dates and in the amounts

specified in the Note Purchase Agreement. This Note is also subject to optional

prepayment, in whole or from time to time in part, on the terms specified in

the Note Purchase Agreement.

 

In case an Event of

Default, as defined in the Note Purchase Agreement, shall occur and be

continuing, the principal of this Note may be declared or otherwise become due

and payable in the manner, at the price (including any applicable

Yield-Maintenance Amount) and with the effect provided in the Note Purchase

Agreement.

 

THIS NOTE IS INTENDED TO BE PERFORMED

IN THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH

THE INTERNAL LAW OF THE STATE OF NEW YORK.

 

	

   

  	

   

  
	

   

  	

  AARON

  RENTS, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  
	

   

  	

   

  
	

   

  	

  AARON

  RENTS, INC. PUERTO RICO

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  
	

   

  	

   

  
	

   

  	

  AARON

  INVESTMENT COMPANY

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:Exhibit 10.1

 

FIRST LOAN MODIFICATION AGREEMENT

 

This First

Loan Modification Agreement (this “Loan Modification Agreement’) is entered

into as of September 30, 2002, by and between SILICON

VALLEY BANK, a California-chartered bank, with its principal place

of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a

loan production office located at One Newton Executive Park, Suite 200, 2221

Washington Street, Newton, Massachusetts 02462, doing business under the name

“Silicon Valley East” (“Bank”) and ART

TECHNOLOGY GROUP, INC., a Delaware corporation with its principal

place of business at 25 First Street, Cambridge, Massachusetts 02141

(“Borrower”).

 

DESCRIPTION OF EXISTING

INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may

be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan

arrangement dated as of June 13, 2002, evidenced by, among other documents, a

certain Amended and Restated Loan and Security Agreement dated as of June 13,

2002, between Borrower and Bank (as amended, the “Loan Agreement”).  The Loan Agreement established a working

capital line of credit in favor of Borrower in the maximum principal amount of

Fifteen Million Dollars ($15,000,000.00) (the “Committed Revolving Line”).  Capitalized terms used but not otherwise

defined herein shall have the same meaning as in the Loan Agreement.

 

Hereinafter, all indebtedness

and obligations owing by Borrower to Bank shall be referred to as the

“Obligations”.

 

DESCRIPTION OF COLLATERAL. 

Repayment of the Obligations is secured by the Collateral as described

in the Loan Agreement (together with any other collateral security granted to

Bank, the “Security Documents”).

 

Hereinafter, the Security

Documents, together with all other documents evidencing or securing the

Obligations shall be referred to as the “Existing Loan Documents”.

 

DESCRIPTION OF CHANGE IN

TERMS.

 

Modifications

to Loan Agreement.

 

The Loan Agreement shall be amended by deleting the following

text, appearing in Section 6.2 thereof, in its entirety:

 

“(b)         Within thirty (30) days after the last

day of each month, Borrower shall deliver to Bank a Borrowing Base Certificate

signed by a Responsible Officer in the form of Exhibit C, with aged listings of accounts receivable (by

invoice date).”

 

and inserting

in lieu thereof the following:

 

“(b)         Within thirty (30) days after the last

day of each quarter, Borrower shall deliver to Bank a Borrowing Base

Certificate signed by a Responsible Officer in the form of Exhibit C, with aged listings of

accounts receivable (by invoice date).”

 

The Loan Agreement shall be amended by deleting the following

text, appearing in Section 6.7 thereof, in its entirety:

 

“(b)         Profitability.  Borrower

shall have quarterly net losses of not more than (i) $40,000,000.00  for the quarter ending December 31, 2001

(excluding all non-cash write off of deferred tax assets); (ii) $7,000,000.00  for the quarter ending March 31, 2002;

(iii) $6,000,000.00  for the

quarter ending June 30, 2002; (iv) $3,000,000.00  for the quarter ending September 30, 2002; and (v)

$2,000,000.00 for each quarter thereafter.”

 

and inserting

in lieu thereof the following:

 

“(b)         Profitability.  Borrower

shall have quarterly net losses of not more than (i) $40,000,000.00  for the quarter ending December 31, 2001

(excluding all non-cash write off of deferred tax assets); (ii) $7,000,000.00  for the quarter ending March 31, 2002;

(iii) $6,000,000.00  for the

quarter ending June 30, 2002; (iv) $4,500,000.00  for the quarter ending September 30, 2002; and (v)

$2,000,000.00 for each quarter thereafter.”

 

1

 

The Compliance Certificate appearing as Exhibit D

to the Loan Agreement is hereby replaced with the Compliance Certificate

attached as Exhibit A hereto.

 

FEES. 

The Borrower shall reimburse Bank for all legal fees and expenses

incurred in connection with this amendment to the Existing Loan Documents.

 

RATIFICATION OF

INTELLECTUAL PROPERTY SECURITY AGREEMENT.  Borrower

hereby ratifies, confirms and reaffirms, all and singular, the terms and

conditions of a certain Intellectual Property Security Agreement dated as of

December 29, 2000 between Borrower and Bank, and acknowledges, confirms and

agrees that said Intellectual Property Security Agreement contains an accurate

and complete listing of all Intellectual Property Collateral as defined

in said Intellectual Property Security Agreement, shall remain in full force

and effect.

 

RATIFICATION OF

PERFECTION CERTIFICATE.  Borrower hereby ratifies,

confirms and reaffirms, all and singular, the terms and disclosures contained

in a certain Perfection Certificate dated as of June 13, 2002 between Borrower

and Bank, and acknowledges, confirms and agrees the disclosures and information

above Borrower provided to Bank in the Perfection Certificate has not changed,

as of the date hereof.

 

CONSISTENT CHANGES. 

The Existing Loan Documents are hereby amended wherever necessary to

reflect the changes described above.

 

RATIFICATION OF LOAN

DOCUMENTS.  Borrower hereby ratifies, confirms, and

reaffirms all terms and conditions of all security or other collateral granted

to the Bank, and confirms that the indebtedness secured thereby includes,

without limitation, the Obligations.

 

NO DEFENSES OF BORROWER. 

Borrower agrees that, as of this date, it has no defenses against the

obligations to pay any amounts under the Obligations.

 

CONTINUING VALIDITY. 

Borrower understands and agrees that in modifying the existing

Obligations, Bank is relying upon Borrower’s representations, warranties, and

agreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to

this Loan Modification Agreement, the terms of the Existing Loan Documents

remain unchanged and in full force and effect. 

Bank’s agreement to modifications to the existing Obligations pursuant

to this  Loan Modification Agreement in

no way shall obligate Bank to make any future modifications to the

Obligations.  Nothing in this Loan

Modification Agreement shall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower to

retain as liable parties all makers of Existing Loan Documents, unless the

party is expressly released by Bank in writing.  No maker will be released by virtue of this Loan Modification

Agreement.

 

JURISDICTION/VENUE. 

Borrower accepts for itself and in connection with its properties,

unconditionally, the exclusive jurisdiction of any state or federal court of

competent jurisdiction in the Commonwealth of Massachusetts in any action,

suit, or proceeding of any kind against it which arises out of or by reason of

this Loan Modification Agreement; provided, however, that if for any reason

Bank cannot avail itself of the courts of the Commonwealth of Massachusetts,

then venue shall lie in Santa Clara County, California.  NOTWITHSTANDING THE FOREGOING,  THE BANK SHALL HAVE THE RIGHT TO BRING ANY

ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY

OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO

REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS AGAINST THE

BORROWER OR ITS PROPERTY.

 

2

 

COUNTERSIGNATURE. 

This Loan Modification Agreement shall become effective only when it

shall have been executed by Borrower and Bank (provided, however, in no event

shall this Loan Modification Agreement become effective until signed by an

officer of Bank in California).

 

[The remainder of this page is intentionally

left blank]

 

3

 

This Loan Modification Agreement is executed

as a sealed instrument under the laws of the Commonwealth of Massachusetts as

of the date first written above.

 

	

  BORROWER:

  	

  BANK:

  	

   

  
	

   

  	

   

  	

   

  
	

  ART TECHNOLOGY GROUP, INC.

  	

  SILICON VALLEY BANK, doing business as SILICON VALLEY EAST

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Paul

  Shorthose

  	

   

  	

  By:

  	

  /s/ Jonathan

  L. Gray

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Name

  	

  Paul

  Shorthose

  	

   

  	

  Name:

  Jonathan L. Gray

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Chief

  Executive Officer

  	

   

  	

  Title:

  Senior Vice President

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  SILICON VALLEY BANK

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Name:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

   

  
	

   

  	

  (signed in Santa Clara County, California)

  	

   

  
													

 

4

 

EXHIBIT A

COMPLIANCE CERTIFICATE

 

TO:         SILICON

VALLEY BANK

 

FROM:   ART

TECHNOLOGY GROUP, INC.

 

The undersigned authorized officer of ART

TECHNOLOGY GROUP, INC. certifies that under the terms and conditions of the

Amended and Restated Loan and Security Agreement between Borrower and Bank (the

“Agreement”), (i) Borrower is in complete compliance for the period ending

                       

with all required covenants except as noted below and (ii) all

representations and warranties in the Agreement are true and correct in all

material respects on this date. 

Attached are the required documents supporting the certification.  The Officer certifies that these are

prepared in accordance with Generally Accepted Accounting Principles (GAAP)

consistently applied from one period to the next except as explained in an

accompanying letter or footnotes.  The

Officer acknowledges that no borrowings may be requested at any time or date of

determination that Borrower is not in compliance with any of the terms of the

Agreement, and that compliance is determined not just at the date this

certificate is delivered.

 

Please indicate compliance status by circling

Yes/No under “Complies” column.

 

	

  Reporting

  Covenant

  	

   

  	

  Required

  	

   

  	

  Complies

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Monthly

  financial statements with CC

  	

   

  	

  Monthly

  within 30 days

  	

   

  	

  Yes

  	

   

  	

  No

  
	

  Quarterly

  financial statements with CC

  	

   

  	

  Quarterly

  within 45 days

  	

   

  	

  Yes

  	

   

  	

  No

  
	

  Annual (CPA

  Audited)

  	

   

  	

  FYE within

  120 days

  	

   

  	

  Yes

  	

   

  	

  No

  
	

  BBC A/R

  Agings

  	

   

  	

  Quarterly

  within 30 days

  	

   

  	

  Yes

  	

   

  	

  No

  

 

	

  Financial Covenant

  	

   

  	

  Required

  	

   

  	

  Actual

  	

   

  	

  Complies

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Maintain on a Monthly Basis:

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Minimum Liquidity

  	

   

  	

  $*

  	

   

  	

  $

  	

   

  	

   

  	

  Yes

  	

   

  	

  No

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Maintain on a Quarterly Basis:

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Profitability:

  	

   

  	

  $**

  	

   

  	

  $

  	

   

  	

   

  	

  Yes

  	

   

  	

  No

  	

   

  
												

 

*See Section 6.7(a) of the Agreement

**See Section 6.7(b) of the Agreement

 

Comments Regarding Exceptions:  See Attached.

 

	

   

  	

   

  	

  BANK USE ONLY

  
	

   

  	

   

  	

  Received by:

  

  	

   

  	

   

  
	

  Sincerely,

  	

   

  	

  AUTHORIZED

  SIGNER

  
	

   

  	

   

  
	

   

  	

   

  	

  Date: 

  	

   

  	

   

  
	

  SIGNATURE

  	

   

  
	

   

  	

  Verified:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  AUTHORIZED

  SIGNER

  
	

  TITLE

  	

   

  
	

   

  	

  Date:

  	

   

  	

   

  
	

   

  	

   

  	

  Compliance Status:

  	

  Yes

  	

  No

  
	

  DATE

  	

   

  	

   

  	

   

  
												

 

5

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