FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of l934
December 31, 1994 0-12385
For Quarter Ended Commission File No.
AARON RENTS, INC.
(Exact name of registrant as
specified in its charter)
Georgia 58-0687630
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
309 East Paces Ferry Road, N.E.
Atlanta, Georgia 30305-2377
(Address of principal executive offices) (Zip Code)
(404) 231-0011
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and
former fiscal year, if changed
since last report)
Indicate by check mark whether registrant (l) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of l934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Shares Outstanding as of
Title of Each Class February 9, 1995
Class A Common Stock, $.50 Par Value 4,100,513
Class B Common Stock, $.50 Par Value 5,603,030
<PAGE>
Part 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
AARON RENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, March 31,
1994 1994
------------ --------
(in thousands)
ASSETS:
Cash $ 92 $ 86
Accounts Receivable 10,052 8,023
Rental Merchandise 169,269 152,289
Less: Accumulated Depreciation (49,488) (38,690)
------- --------
119,781 113,599
Property, Plant and Equipment, Net 23,532 18,819
Prepaid Expenses and Other Assets 2,477 4,390
------- --------
Total Assets $155,934 $144,917
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Dividends Payable $ 362 $
Accounts Payable and Accrued Expenses 17,144 20,891
Current Income Taxes Payable 504
Deferred Income Taxes Payable 4,139 5,216
Customer Deposits and Advance Payments 5,977 5,353
Bank Debt 46,678 51,451
Other Debt 216 1,672
------- -------
74,516 85,087
Shareholders' Equity:
Common Stock, Class A, Par Value $.50 Per
Share-Authorized 25,000,000 shares:
5,361,761 Shares Issued 2,681 2,681
Common Stock, Class B, Par Value $.50 Per
Share-Authorized 25,000,000 shares:
6,636,761 Shares Issued at December 31,
1994 and 5,361,761 Shares Issued at
March 31, 1994 3,318 2,681
Additional Paid in Capital 14,700 1,101
Retained Earnings 73,877 66,595
------- --------
94,576 73,058
Less Treasury Shares at Cost,
Class A Common Stock, 1,217,653 Shares
at December 31, 1994 and 1,226,653
Shares at March 31, 1994 (7,349) (7,329)
Class B Common Stock, 1,043,731 Shares
at December 31, 1994 and 1,059,831
Shares at March 31, 1994 (5,809) (5,899)
------- -------
81,418 59,830
------- --------
Total Liabilities and Shareholders' Equity $155,934 $144,917
======= ========
See Notes to Consolidated Financial Statements
<PAGE>
AARON RENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
December 31, December 31,
------------------ -----------------
1994 1993 1994 1993
----------------- -----------------
(in thousands, except per share amounts)
REVENUES:
Rentals and Fees $ 43,648 $ 33,224 $127,995 $ 91,864
Sales 12,283 12,303 39,875 39,037
Other 580 174 1,471 867
------- ------- ------- -------
56,511 45,701 169,341 131,768
------- ------- ------- -------
COSTS AND EXPENSES:
Cost of Sales 8,830 8,964 28,772 28,674
Operating Expenses 28,788 22,688 85,464 65,023
Depreciation of
Rental Merchandise 13,481 9,831 39,912 26,257
Interest 774 551 2,185 1,445
------ ------- ------- -------
51,873 42,034 156,333 121,399
------- ------- ------- -------
EARNINGS BEFORE TAXES 4,638 3,667 13,008 10,369
INCOME TAXES 1,765 1,477 5,021 4,292
------- ------- ------- -------
NET EARNINGS $ 2,873 $ 2,190 $ 7,987 $ 6,077
------- ------- ------- -------
EARNINGS PER SHARE $ .29 $ .25 $ .81 $ .70
------- ------- ------- -------
CASH DIVIDENDS DECLARED
PER SHARE
Class A Common Stock $ .02 $ .03 $ .05 $ .06
------- ------- ------- -------
Class B Common Stock $ .05 $ .04 $ .09 $ .08
------- ------- ------- -------
WEIGHTED AVERAGE
SHARES OUTSTANDING 10,033 8,699 9,884 8,713
======= ======= ======= =======
See Notes to Consolidated Financial Statements
<PAGE>
AARON RENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
-----------------
December 31,
-----------------
1994 1993
------- -------
(in thousands)
OPERATING ACTIVITIES:
Net earnings $ 7,987 $ 6,077
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 43,317 28,914
(Decrease) increase in deferred taxes (1,077) 171
Decrease in accounts payable
and accrued expenses (4,584) (948)
(Increase) decrease in accounts receivable (2,047) 103
Other changes, net 2,609 1,466
------ ------
Cash provided by operating activities 46,205 35,783
------ ------
INVESTING ACTIVITIES:
Additions to property, plant and equipment (9,133) (6,471)
Book value of property retired or sold 709 529
Additions to rental merchandise (75,021) (73,980)
Book value of rental merchandise sold 29,610 38,115
Contracts and other assets acquired (10,861)
------ ------
Cash used by investing activities (53,835) (52,668)
------ ------
FINANCING ACTIVITIES:
(Decrease) increase in bank debt (4,773) 19,153
Decrease in other debt (1,456) (1,185)
Acquisition of treasury stock (143) (1,042)
Sale of common stock 14,140
Issuance of stock under stock option plan 215 260
Dividends paid (347) (295)
------ ------
Cash provided by financing activities 7,636 16,891
------ ------
INCREASE IN CASH $ 6 $ 6
------ ------
See Notes to Consolidated Financial Statements
<PAGE>
AARON RENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Principles of Consolidation:
The consolidated financial statements include the accounts of
Aaron Rents, Inc. ("the Company") and its wholly-owned
subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Interim Financial Statements:
The Consolidated Balance Sheet as of December 31, 1994, and
the Consolidated Statements of Earnings and Cash Flows for the
nine months ended December 31, 1994 and 1993, have been prepared
without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of
operations and cash flows at December 31, 1994 and for all
periods presented have been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission for the year ended March
31, 1994. The results of operations for the period ended
December 31, 1994, are not necessarily indicative of the
operating results for the full year.
Public Offering of Stock:
On May 2, 1994, the Company issued through a public offering,
1,275,000 shares of Class B Common Stock. The net proceeds to
the Company after deducting underwriting discounts and offering
expenses were $14.1 million. The net proceeds were used to
reduce bank debt.
Amendment to Revolving Credit Agreement:
On January 6, 1995, the Company amended its Revolving Credit
Agreement adding a third bank and increasing available borrowings
from $60,000,000 to $75,000,000, and changed certain covenants in
the credit agreement. The terms and pricing under the credit
agreement remained either unchanged or were at new terms more
favorable to the Company.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations
Results of Operations:
Third quarter of fiscal year 1995 compared to third quarter of
fiscal year 1994:
Total revenues for the third quarter of fiscal year 1995
increased $10.8 million (23.7%) to $56.5 million from $45.7
million for the same period a year ago. This increase in
revenues is primarily due to a $10.4 million (31.4%) increase in
rentals and fees income. Of this increase in rentals and fees
income, $6.3 million is attributed to Aaron's Rental Purchase
stores in which rental revenues increased 50.7% to $18.8 million
in the third quarter of 1995 compared to $12.5 million for the
same quarter a year ago. Rental revenues from the Company's
rent-to-rent operations increased $4.1 million (19.8%) during the
same period.
Revenues from sales decreased $20,000 to $12.3 million
compared to $12.3 million for the same period last year.
Other revenues in the third quarter 1995 were $580,000
compared to $174,000 a year ago. Included in other revenues is
franchise and royalty fee income from franchised operations.
This income for the current quarter was $226,000 compared to
$84,000 for the same period a year ago.
Cost of sales decreased $134,000 to $8.8 million compared to
$9.0 million for the third quarter last year. As a percentage of
sales, cost of sales were 71.9% in the third quarter of fiscal
year 1995 compared to 72.9% for the quarter a year ago. This
lower percentage is due to better margins in fiscal year 1995 on
the sale of rental return furniture.
Operating expenses increased $6.1 million (26.9%) to $28.8
million compared to $22.7 million a year ago. As a percentage of
total revenues, operating expenses were 50.9% in the third
quarter of fiscal year 1995 compared to 49.6% for the same
quarter a year ago. The higher percentage in fiscal year 1995 is
primarily due to the growth of the Company's rental purchase
operations, which has higher operating expenses as a percentage
of revenues than the Company's other operations. The higher
operating expenses in the rental purchase division is due to
expenditures related to the opening of new stores.
Depreciation of rental merchandise increased $3.7 million
(37.1%) to $13.5 million from $9.8 million last year, and as a
percentage of total rentals and fees increased to 30.9% in the
current quarter from 29.6% for the same quarter a year ago. This
increase is primarily due to the growth of the Company's rental
purchase operations, in which merchandise is depreciated at
faster rates to coincide with shorter contract terms.
Interest expense increased $223,000 (40.5%) to $774,000 in the
third quarter for fiscal year 1995 compared to $551,000 for the
same quarter last year. The increase in interest expense was due
to increased borrowing rates in the current quarter.
Income tax expense increased $288,000 (19.5%) to $1.8 million
compared to $1.5 million a year ago, and the Company's effective
tax rate was 38.1% for the third quarter of fiscal year 1995
compared to 40.3% in the previous year's quarter. The decrease
in the effective tax rate is due to lower amounts provided in
fiscal year 1995 for permanent differences.
As a result, net earnings increased $683,000 (31.2%) to $2.9
million in the third quarter of fiscal year 1995 compared to $2.2
million a year ago. As a percentage of total revenues, net
earnings were 5.1% in the current year quarter compared to 4.8% a
year ago.
The weighted average number of shares outstanding during the
third quarter of fiscal year 1995 was 10,033,000 compared to
8,699,000 for the same period last year. The increase in the
number of shares is due to the issuance of 1,275,000 shares of
Class B Common Stock on May 2, 1994.
Nine months of fiscal year 1995 compared to nine months of fiscal
year 1994:
Total revenues for the nine months of fiscal year 1995
increased $37.6 million (28.5%) to $169.3 million from $131.8
million for the same period a year ago. This increase in
revenues is primarily due to a $36.1 million (39.3%) increase in
rentals and fees income. Of this increase in rentals and fees
income, $20.9 million is attributed to Aaron's Rental Purchase
stores in which rental revenues increased 65.3% to $53.0 million
in the first nine months of 1995 compared to $32.1 million for
the same period a year ago. Rental revenues from the Company's
rent-to-rent operations increased $15.2 million (25.4%) during
the same period.
Revenues from sales increased $838,000 (2.1%) to $39.9 million
compared to $39.0 million for the same period last year. This
increase is due to increased sales of rental return furniture.
Other revenues in the nine months of 1995 were $1.5 million
compared to $867,000 a year ago. Included in other revenues is
franchise and royalty fee income from franchised operations.
This income for the first nine months of fiscal year 1995 was
$551,000 compared to $290,000 for the same period a year ago.
Cost of sales increased $98,000 to $28.8 million compared to
$28.7 million for the nine months last year, and as a percentage
of sales decreased to 72.2% from 73.5%. The improvement in gross
margins is primarily due to improved margins on the sale of
rental return furniture.
Operating expenses increased $20.4 million (31.4%) to $85.5
million compared to $65.0 million a year ago. As a percentage of
total revenues, operating expenses were 50.5% for the first nine
months of fiscal year 1995 compared to 49.3% for the same period
a year ago. This increase was primarily due to the Company
selling its Ball Stalker subsidiary in June 1993, which had lower
operating expenses as a percentage of revenues than the Company's
rental and rental purchase operations.
Depreciation of rental merchandise increased $13.7 million
(52.0%) to $39.9 million from $26.3 million last year, and as a
percentage of total rentals and fees increased to 31.2% for the
nine month period from 28.6% for the same period a year ago.
This increase is primarily due to the growth of the Company's
rental purchase operations, in which merchandise is depreciated
at faster rates to coincide with shorter contract terms.
Interest expense increased $740,000 (51.2%) to $2.2 million
for the first nine months of fiscal year 1995 compared to $1.4
million for the same period last year. The increase in interest
expense is due to higher debt levels and increased borrowing
rates in the first nine months of fiscal year 1995.
Income tax expense increased $729,000 (17.0%) to $5.0 million
compared to $4.3 million a year ago, and the Company's effective
tax rate was 38.6% for the first nine months of fiscal year 1995
compared to 41.4% in the previous year's period. The decrease in
the effective tax rate is due to lower amounts provided in fiscal
year 1995 for permanent differences.
As a result, net earnings increased $1.9 million (31.4%) to
$8.0 million for the first nine months of fiscal year 1995
compared to $6.1 million a year ago. As a percentage of total
revenues, net earnings were 4.7% in the current year period
compared to 4.6% during the same period a year ago.
The weighted average number of shares outstanding during the
first nine months of fiscal year 1995 was 9,884,000 compared to
8,713,000 for the first nine month period last year. The
increase in the number of shares is due to the issuance of
1,275,000 shares of Class B Common Stock on May 2, 1994.
Liquidity and Capital Resources:
On May 2, 1994, the Company issued through a public offering
1,275,000 shares of Class B Common Stock. The net proceeds to
the Company after deducting underwriting discounts and offering
expenses were $14.1 million. The net proceeds were used to
reduce bank debt.
During the first quarter of fiscal year 1995, the Company
declared a semi-annual dividend payable on July 7, 1994 of $.03
per share on Class A Common Stock and $.04 per share on Class B
Common Stock.
During the third quarter of fiscal year 1995, the Company
declared a semi-annual dividend payable on January 2, 1995 of
$.02 per share on Class A Common Stock and $.05 per share on
Class B Common Stock.
On January 6, 1995, the Company amended its Revolving Credit
Agreement adding a third bank and increasing available borrowings
from $60,000,000 to $75,000,000, and changed certain covenants in
the credit agreement. The terms and pricing under the credit
agreement remained either unchanged or were at new terms more
favorable to the Company.
Management believes its expected cash flow from operations,
proceeds from the sale of rental return merchandise, bank
borrowings, and vendor credit are adequate to supply short-term
capital needs, and that it has the ability to obtain additional
long-term capital if needed.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) The following exhibits are furnished herewith:
Exhibit
Number Description of Exhibit Page No.
10(a) Amended and Restated Revolving Credit
and Term Loan Agreement, dated January
6, 1995
10(b) Letter agreements dated November 14,
1994, between Trust Company Bank and
the Company and November 21, 1994
between Bank of America and the
Company regarding an Interest
Rate Swap Transaction
11 Computation of Earnings Per Share
27 Final Data Schedule
(b) No reports on Form 8-K were filed by the Registrant
during the nine months ended December 31, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
l934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AARON RENTS, INC.
(Registrant)
Date - February 13, 1995 /s/ GILBERT L. DANIELSON
Gilbert L. Danielson
Vice President, Finance
Chief Financial Officer
Date - February 13, 1995 /s/ ROBERT P. SINCLAIR, JR.
Robert P. Sinclair, Jr.
Controller
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AARON RENTS, INC.
(Registrant)
Date - February 13, 1995 /s/
Gilbert L. Danielson
Vice President, Finance
Chief Financial Officer
Date - February 13, 1995 /s/
Robert P. Sinclair, Jr.
Controller
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED REVOLVING CREDIT AND
TERM LOAN AGREEMENT (the "Agreement") dated as of January 6, 1995
by and among AARON RENTS, INC., a Georgia corporation (the
"Company"), FIRST UNION NATIONAL BANK OF GEORGIA, a national
banking association ("First Union"), TRUST COMPANY BANK, a
Georgia banking corporation ("TCB"), and BANK OF AMERICA
ILLINOIS, an Illinois banking corporation ("Bank of America")
(collectively, the "Banks" and individually, a "Bank"), and TRUST
COMPANY BANK, as agent for the Banks (in such capacity, including
its successors, the "Agent");
W I T N E S S E T H:
WHEREAS, the Company, First Union and TCB, individually
and as Agent, are parties to an Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of May 27, 1992, as
thereafter amended (the "1992 Credit Agreement");
WHEREAS, it is the intention of the parties that Bank
of America become a party thereto for an additional commitment of
$15,000,000 and that Trust Company Bank establish a $3,000,000
cash management line of credit for the Company thereunder;
WHEREAS, the Company and the Banks desire to amend and
restate the 1992 Credit Agreement to set forth more accurately
herein their mutual understanding; and
WHEREAS, the Company has applied for and the Banks have
committed to make Revolving Credit Loans, convertible into Term
Loans at the option of the Banks, and Cash Management Loans on
the terms and conditions set out in this Agreement; and
WHEREAS, the Banks desire to designate TCB as their
agent to act on their behalf as set out in this Agreement;
NOW, THEREFORE, in consideration of the premises and
for other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Company, the Agent and the
Banks hereby amend and restate the 1992 Credit Agreement in its
entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. In addition to the other
terms defined herein, the following terms used herein shall have
the meanings herein specified (to be equally applicable to both
the singular and plural forms of the terms defined):
"Adjusted LIBO Rate" shall mean, with respect to each
Interest Period for a Eurodollar Advance, the rate obtained by
dividing (A) LIBOR for such Interest Period by (B) a percentage
equal to 1 minus the then stated maximum rate (stated as a
decimal) of all reserves requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as defined
in Regulation D (or against any successor category of liabilities
as defined in Regulation D).
"Advance" shall mean any principal amount advanced and
remaining outstanding at any time under Revolving Credit Loans or
the Term Loans, which Advance shall be made or outstanding as a
Base Rate Advance, CD Rate Advance or Eurodollar Advance, as the
case may be, or under the Cash Management Loans, which Advance
shall be made or outstanding as an Overnight Rate Advance.
"Affiliate" of any Person means any other Person
directly or indirectly controlling, controlled by, or under
common control with, such Person, whether through the ownership
of voting securities, by contract or otherwise. For purposes of
this definition, "control" (including with correlative meanings,
the terms "controlling", "controlled by", and "under common
control with") as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person.
"Agent" shall mean Trust Company Bank, a Georgia
banking corporation, and any successor agent appointed pursuant
to Section 12.10 hereto.
"Agreement" shall mean this Credit Agreement, as
hereafter amended, restated, supplemented or otherwise modified
from time to time.
"Applicable Margin" shall mean, with respect to all CD
Rate Advances and Eurodollar Advances outstanding pursuant to the
Revolving Credit Commitments and the Term Loans, the relevant
percentage indicated below for the Company's Funded Debt Ratio,
as determined quarterly for the immediately preceding four fiscal
quarters based upon the financial statements delivered to the
Banks pursuant to Section 8.01(b) or Section 8.01(c) hereof, as
the case may be, with such Applicable Margin to be effective with
respect to calculations based upon the financial statements
delivered pursuant to Section 8.01(b) as of the first day of the
second fiscal quarter immediately following the fiscal quarter
for which such financial statements are delivered and with such
Applicable Margin to be effective with respect to calculations
based upon the financial statements delivered pursuant to Section
8.01(c) on the earlier of (y) delivery of such financial
statements and (z) the date which is 90 days after the end of
each fiscal year of the Company:
If the Borrower's The Applicable Margin is
Funded Debt Ratio is: Eurodollar Advances CD Rate Advances
> 3.0:1.0 1.00% 1.125%
< 3.0:1.0 and > 2.0:1.0 .75% .875%
< 2.0:1.0 .50% .625%
"Bankruptcy Code" shall mean The Bankruptcy Code of
1978, as amended and in effect from time to time (11 U.S.C. sec.101
et seq.).
"Bankruptcy Law" shall have the meaning set forth in
Section 10.07.
"Base Rate" shall mean (with any change in the Base
Rate to be effective as of the date of change), with respect to
the Revolving Credit Loans and Term Loans, the higher of (a) the
rate which the Agent publicly announces from time to time to be
its prime lending rate, as in effect from time to time, and (b)
the Federal Funds Rate, as in effect from time to time, plus
one-half of one percent (0.50%) per annum. The Agent's prime
lending rate is a reference rate and does not necessarily
represent the lowest or best rate charged to customers; the Agent
may make commercial loans or other loans at rates of interest at,
above or below the Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance made or
outstanding as a Revolving Credit Loan or a portion of the Term
Loans, as the case may be, bearing interest based on the Base
Rate.
"Borrowing" shall mean the incurrence by the Company
under any Facility of Advances of one Type concurrently having
the same Interest Period, or the continuation or conversion of an
existing Borrowing or Borrowings in whole or in part. All
Borrowings consisting of Base Rate Advances under the Revolving
Credit Commitments and the Term Loans shall be deemed to be a
single Borrowing hereunder.
"Business Day" shall mean any day excluding Saturday,
Sunday and any other day on which banks are required or
authorized to close in Atlanta, Georgia or New York, New York
and, if the applicable Business Day relates to Eurodollar Ad-
vances, on which trading is not carried on by and between banks
in the London interbank market.
"Cash Management Lender" shall mean one of the Banks
designated by the Company as Cash Management Lender hereunder;
the Company hereby initially designates Trust Company Bank, a
Georgia banking corporation, as the Cash Management Lender.
"Cash Management Line of Credit Commitment" shall mean,
at any time for the Cash Management Lender, an amount equal to
$3,000,000, as the same may be increased or decreased from time
to time as a result of any reduction thereof pursuant to Section
4.03, any assignment thereof pursuant to Section 12.06, or any
amendment hereof pursuant to Section 12.02.
"Cash Management Line of Credit Note" shall mean the
promissory note evidencing the Cash Management Line of Credit
Commitment in the form attached hereto as Exhibit D, either as
originally executed or as hereafter amended, modified or
supplemented from time to time.
"Cash Management Loans" shall mean, as to the Cash
Management Lender, the loans made to the Company from time to
time by the Cash Management Lender under the Cash Management Line
of Credit Commitment.
"Cash Management Loan Termination Date" shall mean
December 31, 1995.
"CD Rate" shall mean, with respect to any Interest
Period, the rate of interest, adjusted for reserves and FDIC
insurance and expressed as a percentage, available at 9:00 a.m.
(Atlanta, Georgia time), or as soon thereafter as practicable, on
the day that is two Business Days prior to the first day of the
Interest Period, identified on the Telerate as the consensus bid
rate for secondary certificates of deposit in an aggregate amount
approximately comparable to the advance to which such rate is to
be applicable with a maturity equal to such Interest Period (said
consensus bid rate currently being shown on page 5 of Telerate).
If the foregoing rate is unavailable on Telerate for any reason,
then such rate shall be determined by the Agent from the
comparable rate quoted on another interest rate reporting service
of recognized standing as designated by the Agent to Borrower and
Lenders.
"CD Rate Advance" shall mean an Advance made or
outstanding as a Revolving Credit Loan or a portion of the Term
Loans, as the case may be, bearing interest based on the CD Rate.
"Change in Control" shall mean (i) any person or group
of persons (other than the Loudermilk Family) (within the meaning
of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the SEC under said Act) of
50% or more in voting power of the outstanding Voting Stock of
the Company or (ii) members of the Board of Directors of the
Company on the date hereof, plus any additional members of such
Board whose nomination for election or election to such Board is
recommended or approved by the then current members of such Board
or by Robert Charles Loudermilk, Sr., shall at any time fail to
constitute a majority of such Board.
"Change in Control Date" shall mean a date on which a
Change in Control occurs.
"Closing Date" shall mean the date on or before January
6, 1995, on which the initial Loans are made and the conditions
set forth in Section 6.01 are satisfied or waived in accordance
with Section 12.02.
"Contractual Obligation" of any Person shall mean any
provision of any security issued by such Person or of any
agreement, instrument or undertaking under which such Person is
obligated or by which it or any of the property owned by it is
bound.
"Conversion Date" shall mean, with respect to any Bank,
the date on which it terminates its Revolving Credit Commitment
pursuant to Section 2.04(b), and all principal amounts
outstanding under its Revolving Credit Note are converted into
Term Loans pursuant to Section 3.01.
"Conversion Notice" shall have the meaning provided in
Section 2.04(b).
"Credit Parties" shall mean, collectively, each of the
Company, the Guarantors, and every other Person who from time to
time becomes a party to the Guaranty Agreement.
"Default" shall mean any condition or event which, with
notice or lapse of time or both, would constitute an Event of
Default.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean
lawful money of the United States of America.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended and in effect from time to time,
and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any
Person, each trade or business (whether or not incorporated)
which is a member of a group of which that Person is a member and
which is under common control within the meaning of the
regulations promulgated under Section 414 of the Tax Code.
"Eurodollar Advance" shall mean an Advance made or
outstanding as a Revolving Credit Loan or a portion of the Term
Loans, as the case may be, bearing interest based on the Adjusted
LIBO Rate.
"Event of Default" shall have the meaning provided in
Article X.
"Executive Officer" shall mean, with respect to any
Person, the President, Vice Presidents, Chief Financial Officer,
Treasurer, Secretary and any Person holding comparable offices or
duties.
"Facility" or "Facilities" shall mean the Revolving
Credit Commitments, the Term Loans or the Cash Management Line of
Credit Commitment, as the context may indicate.
"Factoring Agreement" shall mean that certain
Collection Factoring Agreement, dated as of February 12, 1993,
between the Company and Barclays Commercial Corporation, as
assigned by Barclays Commercial Corporation to The CIT Group/BBC,
Inc.
"Federal Funds Rate" shall mean for any period, a
fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight
Federal funds transactions with member banks of the Federal
Reserve System arranged by Federal funds brokers, as published
for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of Atlanta,
or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent.
"Fixed Rate Advance" shall mean any CD Rate Advance or
any Eurodollar Advance.
"Funded Debt" shall mean all indebtedness for money
borrowed, plus purchase money mortgages, capitalized leases,
conditional sales contracts and similar title retention debt
instruments (including any current maturities of such debt) which
by its terms matures more than one year from the date of the
calculation hereof and/or which is renewable or extendable for
such a period.
"Funded Debt Ratio" shall mean, as to the Company for
any period, a ratio of (i) its Funded Debt to (ii) the sum of its
net income before income taxes, plus interest expense for such
period.
"GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"Guarantors" shall mean, collectively, Aaron
Enterprises, Inc., Aaron Investment Company, and all other
Subsidiaries of the Company that from time to time become parties
to the Guaranty Agreement, and their respective successors and
permitted assigns.
"Guaranty Agreement" shall mean, collectively, the
Guaranty Agreement executed by each of the Guarantors in favor of
the Banks and the Agent, substantially in the form of Exhibit A,
as hereafter amended, restated, supplemented or otherwise
modified from time to time.
"Interest Period" shall have the meaning set forth in
Section 5.04.
"Lending Office" shall mean for each Bank the office
such Bank may designate in writing from time to time to the
Company and the Agent with respect to each Type of Loan.
"LIBOR" shall mean, for any Interest Period, with
respect to Eurodollar Advances, the offered rate for deposits in
Dollars determined by the Agent, for a period comparable to the
Interest Period and in an amount comparable to the Agent's
portion of such Advances, appearing on the Telerate Page 3750.
If the foregoing rate is unavailable from the Telerate for any
reason, then such rate shall be determined by the Agent from the
Reuters Screen LIBO Page as of 11:00 a.m. (London, England time)
on the day that is two Business Days prior to the first day of
the Interest Period; if two or more of such rates appear on the
Reuters Screen LIBO Page, the rate shall be the arithmetic mean
of such rates. If the foregoing rate is also unavailable from
the Reuters Screen for any reason, then such rate shall be
determined by the Agent on any other interest rate reporting
service of recognized standing designated in writing by the Agent
to the Company and the other Banks, in any such case rounded, if
necessary, to the next higher 1/16 of 1.0%, if the rate is not
such a multiple.
"Lien" shall mean any mortgage, pledge, security
interest, encumbrance, lien, charge, hypothecation, assignment,
deposit arrangement, title retention, preferential property
right, trust or other arrangement having the practical effect of
the foregoing (including any agreement to give any of the
foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, including any lease
or similar arrangement with a public authority executed in
connection with the issuance of industrial revenue bonds or
pollution control revenue bonds, and the filing of or agreements
to give any financing statement under the Uniform Commercial Code
of any jurisdiction).
"Loan Documents" shall mean, collectively, this
Agreement, the Notes and the Guaranty Agreement.
"Loans" shall mean, collectively, the Revolving Credit
Loans, the Term Loans and the Cash Management Loans.
"Loudermilk Family" shall mean, collectively, Robert
Charles Loudermilk, Sr., his spouse, his children, his
grandchildren and any trust which may be now or hereafter
established for the sole benefit of any of the foregoing persons.
"Margin Regulations" shall mean Regulation G,
Regulation T, Regulation U and Regulation X of the Board of
Governors of the Federal Reserve System, as the same may be in
effect from time to time.
"Materially Adverse Effect" shall mean any materially
adverse change in (i) the business, results of operations,
financial condition, assets or prospects of the Company and its
Subsidiaries, taken as a whole, (ii) the ability of the Company
to perform its obligations under this Agreement, or (iii) the
ability of the Guarantors (taken as a whole) to perform their
respective obligations under the Guaranty Agreement.
"Multiemployer Plan" shall have the meaning set forth
in Section 4001(a)(3) of ERISA.
"Net Book Value of the Company's Rental Equipment and
Furniture Inventory" shall mean the cost of the Company's rental
equipment and furniture inventory held for rent or sale to the
public, less accumulated depreciation, all determined in
accordance with generally accepted accounting principles
applicable to enterprises in the retail furniture and equipment
rental business.
"Notes" shall mean, collectively, the Revolving Credit
Notes, the Term Notes and the Cash Management Line of Credit
Note.
"Notice of Borrowing" shall have the meaning provided
in Section 5.01(a)(i).
"Notice of Cash Management Borrowing" shall have the
meaning provided in Section 5.01(a)(ii).
"Notice of Continuation/Conversion" shall have the
meaning provided in Section 5.01(b).
"Obligations" shall mean all amounts owing to the Agent
or any Bank pursuant to the terms of this Agreement or any other
Loan Document, including without limitation, all Loans (including
all principal and interest payments due thereunder), fees,
expenses, indemnification and reimbursement payments,
indebtedness, liabilities, and obligations of the Credit Parties,
direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising, together with
all renewals, extensions, modifications or refinancings thereof.
"Overnight Rate" shall mean (with any change in the
Overnight Rate to be effective as of the date of change), with
respect to the Cash Management Loans, the Federal Funds Rate, as
in effect from time to time, plus three-quarters of one percent
(0.75%) per annum.
"Overnight Rate Advance" shall mean an Advance made or
outstanding as a Cash Management Loan bearing interest based on
the Overnight Rate.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation, or any successor thereto.
"Person" shall mean any individual, partnership, firm,
corporation, association, joint venture, trust or other entity,
or any government or political subdivision or agency, department
or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as
defined in Section 3(3) of ERISA), including, but not limited to,
any defined benefit pension plan, profit sharing plan, money
purchase pension plan, savings or thrift plan, stock bonus plan,
employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical
(including post-retirement medical), hospitalization, accident,
sickness, disability, or life insurance benefits.
"Prior Collateral Documents" shall mean the Amended and
Restated Security Agreement, dated as of May 27, 1992, among the
Company, TCB, First Union and TCB as Agent, the Security
Agreement, dated as of October 27, 1987, among the Company,
MacTavish Office Furniture, Inc. and TCB, the Security Agreement,
dated as of July 9, 1980, among the Company, TCB and Bank of
America, the Security Agreement, dated as of September 17, 1982,
among the Company, TCB and Wachovia Bank of Georgia, N.A., the
Amended and Restated Security Agreement, dated as of May 27,
1992, among Aaron Investment Company, TCB, First Union and TCB as
Agent, the Security Agreement, dated as of April 1, 1988, among
Aaron Investment Company, TCB and Wachovia Bank of Georgia, N.A.,
the Trademark Security Agreement, dated as of May 27, 1992, among
Aaron Investment Company, TCB, First Union and TCB as Agent, and
the Agreement, dated February 13, 1993, among the Company,
Barclays Commercial Corporation, TCB and First Union.
"Prior Liens" shall mean any and all security interests
or other Liens in any of the personal property or other assets of
the Company or any of the Guarantors which may have been granted
to TCB, First Union or the Agent under any or all of the Prior
Collateral Documents.
"Pro Rata Share" shall mean, with respect to the
Revolving Credit Commitment or Term Loan, as the case may be, of
each Bank, each Loan to be made by and each payment (including,
without limitation, any payment of principal, interest or fees)
to be made to each Bank, the percentage designated as such Bank's
"Pro Rata Share" of such Revolving Credit Commitments, such Loans
or such payments, as applicable, set forth under the name of such
Bank on the respective signature page for such Bank, in each case
as such Pro Rata Share may change from time to time as a result
of assignments or amendments made pursuant to this Agreement.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be in
effect from time to time.
"Rental Income" shall mean the gross revenues of the
Company and its Subsidiaries from rentals to the public from the
Company's furniture inventory and rental equipment (excluding
customer deposits, advance rent payments and proceeds from the
sale of inventory).
"Reportable Event" shall have the meaning assigned to
such term in ERISA.
"Required Banks" shall mean, at any time, Banks holding
at least 66-2/3% of (i) the amount of the outstanding Revolving
Credit Commitments plus (ii) the principal amount of all
Revolving Credit Loans and Term Loans for any Bank whose
Revolving Credit Commitment has been terminated.
"Requirement of Law" for any person shall mean the
articles or certificate of incorporation and by-laws or other
organizational or governing documents of such Person, and any
law, treaty, rule or regulation, or determination of an
arbitrator or a court or other governmental authority, in each
case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is
subject.
"Reuters Screen" shall mean, when used in connection
with any designated page and LIBOR, the display page so
designated on the Reuter Monitor Money Rates Service (or such
other page as may replace that page on that service for the
purpose of displaying rates comparable to LIBOR).
"Revolving Credit Commitment" shall mean, at any time
for any Bank, the amount set forth opposite such Bank's name on
the signature pages hereof as its "Revolving Credit Commitment",
as the same may be increased or decreased from time to time as a
result of any reduction thereof pursuant to Sections 2.03, any
assignment thereof pursuant to Section 12.06, or any amendment
thereof pursuant to Section 12.02.
"Revolving Credit Loans" shall mean, as to each Bank,
the loans made to the Company from time to time by such Bank
under its Revolving Credit Commitment pursuant to Section 2.01.
"Revolving Credit Notes" shall mean, collectively, the
promissory notes evidencing the Revolving Credit Loans in the
form attached hereto as Exhibit B, as hereafter amended,
restated, renewed, extended or otherwise modified from time to
time.
"Revolving Credit Termination Date" shall mean the date
on which the Company terminates the Revolving Credit Commitments
pursuant to Section 2.04(a) hereof.
"Section 3.02(b) Notice" shall have the meaning
provided in Section 3.02(b).
"Subsidiary" shall mean, with respect to any Person,
any corporation or other entity (including, without limitation,
partnerships, joint ventures, and associations) regardless of its
jurisdiction of organization or formation, at least a majority of
the total combined voting power of all classes of voting stock or
other ownership interests of which shall, at the time as of which
any determination is being made, be owned by such Person, either
directly or indirectly through one or more other Subsidiaries.
"Taxes" shall mean any present or future taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings or
other charges of whatever nature, including without limitation,
income, receipts, excise, property, sales, transfer, license,
payroll, withholding, social security and franchise taxes now or
hereafter imposed or levied by the United States, or any state,
local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and
all interest, penalties, additions to tax and similar liabilities
with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the
Dow Jones Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying rates
comparable to LIBOR).
"Term Loan Maturity Date" shall mean, as to any Term
Loan, the earlier of (i) the date as of which such Term Loan
becomes due and payable in full by its terms and (ii) the date on
which all amounts outstanding under this Agreement shall have
been declared or have automatically become due and payable
pursuant to the provisions of Article X.
"Term Loans" shall mean, with respect to any Bank, term
loans made to the Company by such Bank pursuant to Section 3.01
hereof in repayment of the principal amount outstanding under
such Bank's Revolving Credit Commitment as of the respective
Conversion Date.
"Term Notes" shall mean, collectively, the promissory
notes evidencing the Term Loans in the form of Exhibit C, as
hereafter amended, restated, renewed, extended or otherwise
modified from time to time.
"Type" of Borrowing shall mean a Borrowing consisting
of Base Rate Advances, CD Rate Advances, Eurodollar Advances or
Overnight Rate Advances.
"Voting Stock" shall mean the securities of any class
or classes of the Company the holders of which are ordinarily, in
the absence of contingencies, entitled to elect a majority of the
corporate directors of the Company (or persons performing similar
functions).
Section 1.02. Accounting Terms and Determination.
Unless otherwise defined or specified herein, all accounting
terms shall be construed herein, all financial statements
required to be delivered hereunder shall be prepared, and all
financial records shall be maintained, in accordance with GAAP.
All financial calculations made pursuant to this Agreement shall
be calculated on a consolidated basis in accordance with GAAP,
both as to amounts and classification of items, applied on a
basis consistent with the financial statements identified in
Section 7.06.
Section 1.03. Other Definitional Terms. The words
"hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
Article, Section, Schedule, Exhibit and like references are to
this Agreement unless otherwise specified.
Section 1.04. Exhibits and Schedules. All Exhibits
and Schedules attached hereto are by reference made a part
hereof.
ARTICLE II
REVOLVING CREDIT LOANS
Section 2.01. Commitment; Use of Proceeds.
(a) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make to the
Company from time to time on and after the Closing Date, but
prior to the earlier of (i) the Revolving Credit Termination Date
and (ii) its Conversion Date, with respect to its Revolving
Credit Commitment, Revolving Credit Loans in an aggregate amount
outstanding at any time not to exceed such Bank's Revolving
Credit Commitment. The Company shall be entitled to repay and
reborrow Revolving Credit Loans in accordance with the provisions
hereof.
(b) Each Revolving Credit Loan shall be made or
continued as, or converted into, part of one or more Borrowings
consisting entirely of Base Rate Advances, CD Rate Advances or
Eurodollar Advances. The aggregate principal amount of each
Borrowing consisting of Fixed Rate Advances of Revolving Credit
Loans shall be not less than $1,000,000 or a greater integral
multiple of $100,000. At no time shall the number of Borrowings
outstanding under this Section 2.01 or under the Term Loans
exceed five; provided that, for the purpose of determining the
number of Borrowings outstanding under this Section 2.01 and
under the Term Loans and the minimum amount for Borrowings
resulting from conversions or continuations, all Borrowings
consisting of Base Rate Advances under the Revolving Credit
Commitments and the Term Loans shall be considered as one
Borrowing.
(c) The proceeds of Revolving Credit Loans shall be
used solely for general corporate purposes.
Section 2.02. Notes; Repayment of Principal.
(a) The Company's obligations to pay the principal of,
and interest on, the Revolving Credit Loans to each Bank shall be
evidenced by the records of the Agent and such Bank and by the
Revolving Credit Note payable to such Bank (or the assignor of
such Bank) completed in conformity with this Agreement.
(b) All outstanding principal amounts under the
Revolving Credit Loans shall be due and payable in full on the
earlier of (i) the Revolving Credit Termination Date and (ii) the
Conversion Date, subject to the provisions of Section 3.01
hereof.
Section 2.03. Reductions of Revolving Credit
Commitments.
(a) The aggregate Revolving Credit Commitments shall
not exceed the least of the following:
(i) an amount equal to 700% of the Company's
Rental Income for the most recent calendar month;
(ii) an amount equal to 70% of the Net Book Value
of the Company's Rental Equipment and Furniture
Inventory as of the most recent calendar month; or
(iii) $75,000,000.
(b) Upon at least three (3) Business Days' prior
written notice (or telephonic notice promptly confirmed in
writing) to the Agent, the Company shall have the right, without
premium or penalty, to reduce voluntarily the Revolving Credit
Commitments in part, provided that (i) any such voluntary
reduction shall apply proportionally and permanently to reduce
the Revolving Credit Commitments of each of the Banks, (ii) any
voluntary reduction pursuant to this Section 2.03(b) shall be in
an amount of at least $1,000,000 and integral multiples thereof,
and (iii) no such reduction shall be permitted if prohibited
hereunder or without payment of all costs required to be paid
hereunder with respect to a prepayment, including, without
limitation all amounts due under Section 5.12 hereof.
(c) If the aggregate outstanding amount of the
Revolving Credit Loans for any Bank at any time exceeds the
amount of its Revolving Credit Commitment as reduced pursuant to
paragraphs (a) or (b) above, the Company shall immediately repay
such Bank's Revolving Credit Loans by an amount equal to such
excess, together with all accrued but unpaid interest on such
excess amount and any amounts due under Section 5.12 hereof.
Section 2.04. Termination of Revolving Credit
Commitment.
(a) Termination by the Company. The Company may
terminate the Revolving Credit Commitments by giving the Agent
written notice of the Revolving Credit Termination Date, which
shall be a Business Day and which shall not be less than 90 days
after the date of delivery of such notice, and on the Revolving
Credit Termination Date specified in such notice, the Revolving
Credit Commitments shall terminate and the unpaid principal
balances of the Revolving Credit Notes and all accrued interest
thereon together with all accrued and unpaid fees hereunder shall
be immediately due and payable in full.
(b) Termination by the Banks. Any Bank may in its
discretion, with or without cause, at any time terminate its
Revolving Credit Commitment by giving the Company, the Agent and
the other Banks written notice thereof specifying a Conversion
Date (the "Conversion Notice"). The Conversion Date shall be a
Business Day and shall not be less than 180 days after the date
of delivery of the Conversion Notice to the Company; provided,
however, that if the Conversion Notice is delivered to the
Company and the Agent within 60 days after the date such Bank
receives actual notice that a Change in Control has occurred
(through a notice delivered to it by the Company pursuant to
Section 8.14 or otherwise), the Conversion Date may occur
immediately after delivery of the Conversion Notice. On the
Conversion Date specified in the Conversion Notice, such Bank's
Revolving Credit Commitment shall terminate and the unpaid
principal balance of such Bank's Revolving Credit Note and all
accrued interest thereon together with all accrued and unpaid
fees hereunder shall become payable as provided in Section 3.01.
ARTICLE III
CONVERSION OF REVOLVING CREDIT LOANS TO TERM LOANS
Section 3.01. Term Loans.
(a) Upon the termination of any Bank's Revolving
Credit Commitment pursuant to Section 2.04(b) above, the Company
shall satisfy its obligation to repay the principal amount then
outstanding under such Bank's Revolving Credit Note by executing
and delivering to such Bank a Term Note, subject to and upon the
terms and conditions herein set forth, in accordance with the
provisions of paragraph (b) below. The Company shall pay all
accrued and unpaid interest on the Revolving Credit Note,
together with all accrued and unpaid fees hereunder, on the
relevant Conversion Date.
(b) Each Term Note shall be dated as of the Conversion
Date and shall be payable to the applicable Bank in a principal
amount equal to the principal amount outstanding as of the
Conversion Date under such Bank's Revolving Credit Note.
Section 3.02. Repayment of Principal. The Company
shall repay the Term Loans in sixty (60) consecutive equal
monthly installments of principal on the last Business Day of
each calendar month beginning on the last Business Day of the
calendar month next following the calendar month in which the
relevant Conversion Date occurs, provided, however:
(a) if the total amount outstanding under any Bank's
Term Note as of the last Business Day of any calendar month
exceeds the amount which would have been available under
such Bank's Revolving Credit Commitment, as reduced pursuant
to Section 2.03, then the Company shall immediately repay
such excess together with its monthly principal payment; any
such payments in excess of the monthly principal payment
shall reduce remaining installments of principal in the
inverse order of their maturity;
(b) if a Change in Control has occurred and any Bank
has converted all of its outstanding Revolving Credit Loans
to Term Loans pursuant to Section 2.04(b) hereof, such Bank
may elect, by giving written notice (the "Section 3.02(b)
Notice") to the Agent and the Company within 60 days after
the date such Bank receives actual notice that such Change
in Control has occurred (through a notice delivered to it by
the Company pursuant to Section 8.14 or otherwise), to have
the Company repay the outstanding principal amount under
such Bank's Term Note in twenty-four (24) consecutive equal
monthly installments on the last Business Day of each
calendar month, beginning on the last Business Day of the
calendar month in which the Company and the Agent receive
the Section 3.02(b) Notice from such Bank; and
(c) upon the occurrence and during the continuance of
an Event of Default, any Bank may accelerate the maturity of
its Term Note in the manner provided in Article X.
ARTICLE IV
CASH MANAGEMENT LOANS
Section 4.01. Cash Management Line of Credit
Commitment; Use of Proceeds.
(a) Subject to and upon the terms and conditions
herein set forth, the Cash Management Lender agrees to make to
the Company from time to time on and after the Closing Date, but
prior to the Cash Management Loan Termination Date, Cash
Management Loans in an aggregate amount outstanding at any one
time not to exceed the Cash Management Line of Credit Commitment.
The Company shall be entitled to repay and reborrow Cash
Management Loans in accordance with the provisions hereof.
(b) Each Cash Management Loan shall be made and
continued as a single Borrowing consisting of an Overnight Rate
Advance.
(c) The proceeds of each of the Cash Management Loans
shall be used solely for the working capital needs of the
Company.
Section 4.02. Note; Repayment of Principal.
(a) The Company's obligation to pay the principal of,
and interest on, the Cash Management Loans to the Cash Management
Lender shall be evidenced by the records of the Cash Management
Lender and by the Cash Management Line of Credit Note payable to
the Cash Management Lender and completed in conformity with this
Agreement.
(b) All outstanding principal amounts under the Cash
Management Loans shall be due and payable in full on the earlier
of (i) the Cash Management Loan Termination Date and (ii) the
date on which all amounts outstanding under this Agreement shall
have been declared or have automatically become due and payable
pursuant to the provisions of Article X.
Section 4.03. Reduction of Cash Management Line of
Credit Commitment. Upon at least three (3) Business Days' prior
written notice (or telephonic notice promptly confirmed in
writing) to the Cash Management Lender, the Company shall have
the right, without premium or penalty, to terminate the
unutilized portion of the Cash Management Line of Credit
Commitment, in part or in whole, provided that any partial
termination pursuant to this Section 4.03 shall be in an amount
of at least $1,000,000 and integral multiples of $100,000. If
the aggregate outstanding amount of the Cash Management Loans
exceeds the amount of the Cash Management Line of Credit
Commitment as so reduced, the Company shall immediately repay the
Cash Management Loans by an amount equal to such excess, together
with all accrued but unpaid interest on such excess amount.
ARTICLE V
GENERAL LOAN TERMS
Section 5.01. Funding Notices.
(a) (i) Whenever the Company desires to make a
Borrowing with respect to the Revolving Credit Commitments (other
than one resulting from a conversion or continuation pursuant to
Section 5.01(b)(i)), it shall give the Agent prior written notice
(or telephonic notice promptly confirmed in writing) of such
Borrowing (a "Notice of Borrowing"), such Notice of Borrowing to
be given at its Payment Office prior to 10:00 a.m. (Atlanta,
Georgia time) (i) two Business Days prior to the requested date
of such Borrowing in the case of Fixed Rate Advances, or (ii) on
the requested date of such Borrowing in the case of Base Rate
Advances. Notices received after 10:00 a.m. shall be deemed
received on the next Business Day. Each Notice of Borrowing
shall be irrevocable and shall specify the aggregate principal
amount of the Borrowing, the date of Borrowing (which shall be a
Business Day), whether the Borrowing is to consist of Base Rate
Advances, CD Rate Advances or Eurodollar Advances and, in the
case of Fixed Rate Advances, the Interest Period to be applicable
thereto.
(ii) Borrowings under the Cash Management Line of
Credit Commitment shall be made by the Company either (a) through
a controlled disbursement account maintained with the Cash
Management Lender, governed by the Controlled Disbursement
Agreement between the Cash Management Lender and the Company, or
(b) by written notice (or telephonic notice promptly confirmed in
writing) to the Cash Management Lender of any requested Borrowing
under the Cash Management Line of Credit Commitment (a "Notice of
Cash Management Borrowing"), such Notice of Cash Management
Borrowing to be given prior to 10:00 a.m. (Atlanta, Georgia time)
at the Payment Office of the Cash Management Lender on the
requested date of such Borrowing. Notices received after 10:00
a.m. shall be deemed received on the next Business Day. Each
Notice of Cash Management Borrowing shall be irrevocable and
shall specify the principal amount of the Cash Management Loan
and the date of such Cash Management Loan (which shall be a
Business Day).
(b) Whenever the Company desires to convert all or a
portion of an outstanding Borrowing under the Revolving Credit
Commitments or constituting the Term Loans, which Borrowings
consist of Base Rate Advances, CD Rate Advances or Eurodollar
Advances into one or more Borrowings consisting of Advances of
another Type, or to continue outstanding a Borrowing consisting
of CD Rate Advances or Eurodollar Advances for a new Interest
Period, it shall give the Agent at least two Business Days' prior
written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing being converted into or continued as
CD Rate Advances or Eurodollar Advances. Such notice (a "Notice
of Conversion/Continuation") shall be given to the Agent at its
Payment Office prior to 10:00 a.m. (Atlanta, Georgia time). Each
such Notice of Conversion/Continuation shall be irrevocable and
shall specify the date of such conversion or continuation, the
aggregate principal amount of the Advances to be converted or
continued, the date of such conversion or continuation, whether
the Advances are being converted into or continued as CD Rate
Advances or Eurodollar Advances and the Interest Period
applicable thereto. If, upon the expiration of an Interest
Period in respect of Borrowings consisting of Fixed Rate
Advances, the Company shall have failed to deliver the Notice of
Conversion/Continuation, the Company shall be deemed to have
elected to convert such Borrowing to a Borrowing consisting of
Base Rate Advances. So long as any Executive Officer of the
Company has knowledge that any Default or Event of Default shall
have occurred and be continuing, no Borrowings may be converted
into or continued as (upon expiration of the current Interest
Period) Fixed Rate Advances unless the Agent and each of the
Banks shall have otherwise consented in writing.
(c) Without in any way limiting the Company's obliga-
tion to confirm in writing any telephonic notice, the Agent or
the Cash Management Lender may act without liability upon the
basis of telephonic notice believed by the Agent or the Cash
Management Lender (as the case may be) in good faith to be from
the Company prior to receipt of written confirmation. In each
such case, the Company hereby waives the right to dispute the
records of the Agent or the Cash Management Lender (as the case
may be) of the terms of such telephonic notice.
(d) The Agent shall promptly give each Bank notice by
telephone (confirmed in writing) or by telex, telecopy or
facsimile transmission of the matters covered by the notices
given to the Agent pursuant to this Section 5.01 with respect to
the Revolving Credit Commitments and the Term Loans.
Section 5.02. Disbursement of Funds.
(a) No later than 12:00 noon (Atlanta, Georgia time)
on the date of each Borrowing pursuant to the Revolving Credit
Commitments (other than one resulting from a conversion or
continuation pursuant to Section 5.01(b)), each Bank will make
available its Pro Rata Share of the amount of such Borrowing in
immediately available funds at the Payment Office of the Agent.
The Agent will make available to the Company the aggregate of the
amounts (if any) so made available by the Banks to the Agent in a
timely manner by crediting such amounts to the Company's demand
deposit account maintained with the Agent or, at the Company's
option, to effect a wire transfer of such amounts to the
Company's account specified by the Agent, by the close of
business on such Business Day. In the event that the Banks do
not make such amounts available to the Agent by the time
prescribed above, but such amount is received later that day,
such amount may be credited to the Company in the manner
described in the preceding sentence on the next Business Day
(with interest on such amount to begin accruing hereunder on such
next Business Day).
(b) No later than 12:00 noon (Atlanta, Georgia time)
on the date of each Cash Management Loan requested by a Notice of
Cash Management Borrowing, the Cash Management Lender will make
available the amount of such Cash Management Loan in immediately
available funds by crediting such amount to the Company's demand
deposit account maintained with the Cash Management Lender or, at
the Company's option, by affecting a wire transfer of such
amounts to the Company's account specified by the Company. Cash
Management Loans made pursuant to the Controlled Disbursement
Agreement between the Cash Management Lender and the Company
shall be made available pursuant to the terms of such agreement.
(c) Unless the Agent shall have been notified by any
Bank prior to the date of a Borrowing under the Revolving Credit
Commitments that such Bank does not intend to make available to
the Agent such Bank's portion of the Borrowing to be made on such
date, the Agent may assume that such Bank has made such amount
available to the Agent on such date and the Agent may make
available to the Company a corresponding amount. If such
corresponding amount is not in fact made available to the Agent
by such Bank on the date of Borrowing, the Agent shall be
entitled to recover such corresponding amount on demand from such
Bank together with interest at the Federal Funds Rate. If such
Bank does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent shall promptly notify the
Company, and the Company shall immediately pay such corresponding
amount to the Agent together with interest at the rate specified
for the Borrowing which includes such amount paid and any amounts
due under Section 5.12 hereof. Nothing in this subsection shall
be deemed to relieve any Bank from its obligation to fund its
Revolving Credit Commitment hereunder or to prejudice any rights
which the Company may have against any Bank as a result of any
default by such Bank hereunder.
(d) All Borrowings under the Revolving Credit
Commitments shall be loaned by the Banks on the basis of their
Pro Rata Share of the Revolving Credit Commitments. All
Borrowings under the Cash Management Line of Credit Commitment
shall be loaned by the Cash Management Lender. No Bank shall be
responsible for any default by any other Bank in its obligations
hereunder, and each Bank shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of
any other Bank to fund its Revolving Credit Commitment or Term
Loans hereunder or of the Cash Management Lender to fund the Cash
Management Line of Credit Commitment.
Section 5.03. Interest.
(a) The Company agrees to pay interest in respect of
all unpaid principal amounts of the Revolving Loans and the Term
Loans from the respective dates such principal amounts were
advanced to maturity (whether by acceleration, notice of
prepayment or otherwise) at rates per annum equal to the
applicable rates indicated below:
(i) For Eurodollar Advances--The relevant
Adjusted LIBO Rate plus the Applicable Margin;
(ii) For CD Rate Advances--The relevant CD Rate
plus the Applicable Margin; and
(iii) For Base Rate Advances--The Base Rate in
effect from time to time.
(b) The Company agrees to pay interest in respect of
all unpaid principal amounts of the Cash Management Loans made to
the Company from the respective dates such principal amounts were
advanced to maturity (whether by acceleration, notice of
prepayment or otherwise) at the Overnight Rate for each such Cash
Management Loan.
(c) Overdue principal and, to the extent not
prohibited by applicable law, overdue interest, in respect of the
Loans, and all other overdue amounts owing hereunder, shall bear
interest from each date that such amounts are overdue:
(i) in the case of overdue principal and interest
with respect to all Loans outstanding as Fixed Rate
Advances, at the rate otherwise applicable for the
then-current Interest Period plus an additional two
percent (2.0%) per annum; thereafter at the rate in
effect for Base Rate Advances plus an additional two
percent (2.0%) per annum; and
(ii) in the case of overdue principal and interest
with respect to all Loans outstanding as Base Rate
Advances or Overnight Rate Advances, and all other
Obligations hereunder (other than Loans), at a rate
equal to the applicable Base Rate plus an additional
two percent (2.0%) per annum;
provided that no Loan shall bear interest after maturity, whether
by non-payment at scheduled due date, acceleration, notice of
prepayment or otherwise) at a rate per annum less than two
percent (2.0%) per annum in excess of the rate of interest
applicable thereto at maturity.
(d) Interest on each Loan shall accrue from and
including the date of such Loan to but excluding the date of any
repayment thereof; provided that, if a Loan is repaid on the same
day made, one day's interest shall be paid on such Loan.
Interest on all outstanding Base Rate Advances shall be payable
quarterly in arrears on the first Business Day of the next
succeeding calendar quarter of the Company in each year.
Interest on all outstanding Fixed Rate Advances shall be payable
on the last day of each Interest Period applicable thereto, and,
in the case of Fixed Rate Advances having an interest period in
excess of 90 days (in the case of CD Rate Advances) or three
months (in the case of Eurodollar Advances), on each day which
occurs every 90 days or three months, as the case may be, after
the initial date of such Interest Period. Interest on all
outstanding Overnight Rate Advances shall be payable quarterly in
arrears on the first day of each calendar quarter of the Company
in each year. Interest on all Revolving Credit Loans and Term
Loans shall also be payable on any conversion of Advances
comprising such Loans into Advances of another Type, prepayment
(on the amount prepaid), at maturity (whether by acceleration,
notice of prepayment or otherwise) and, after maturity, on
demand.
(e) The Agent, upon determining the CD Rate or the
Adjusted LIBO Rate for an Interest Period, shall promptly notify
by telephone (confirmed in writing) or in writing the Company and
the other Banks. Any such determination shall, absent manifest
error, be final, conclusive and binding for all purposes.
Section 5.04. Interest Periods.
(a) In connection with the making or continuation of,
or conversion into, a Borrowing of Fixed Rate Advances, the
Company shall select an Interest Period (each an "Interest
Period") to be applicable to such Fixed Rate Advances, which
Interest Period shall (x) in the case of CD Rate Advances, be
either a 30, 60, 90 or 180 day period, and (y) in the case of
Eurodollar Advances, be either a 1, 2, 3 or 6 month period;
provided that:
(a) The initial Interest Period for such
Borrowing shall commence on the date of such Borrowing
(including the date of any conversion from Borrowings
consisting of Advances of another Type) and each
Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next
preceding Interest Period expires;
(b) If any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business
Day, provided that if any Interest Period in respect of
Eurodollar Advances would otherwise expire on a day
that is not a Business Day but is a day of the month
after which no further Business Day occurs in such
month, such Interest Period shall expire on the next
preceding Business Day;
(c) Any Interest Period in respect of Eurodollar
Advances which begins on a day for which there is no
numerically corresponding day in the calendar month at
the end of such Interest Period shall, subject to part
(d) below, expire on the last Business Day of such
calendar month;
(d) No Interest Period shall extend beyond any
date upon which any principal payment is due with
respect to the Term Loans, unless the aggregate
principal amount of Term Loans that are Base Rate
Advances, or that have Interest Periods which will
expire on or before the date of the respective payment
or prepayment, is equal to or in excess of the amount
of any principal payment to be made;
(e) No Interest Period with respect to the
Revolving Credit Loans shall extend beyond the
Revolving Credit Termination Date, and no Interest
Period with respect to the Term Loans shall extend
beyond the Term Loan Maturity Date.
Section 5.05. Fees.
(a) The Company shall pay to the Agent, for the
account of and distribution to each Bank with a Revolving Credit
Commitment, an unused commitment fee for the period commencing on
the Closing Date to and including the earlier of (i) the
Revolving Credit Termination Date and (ii) the Conversion Date
for such Bank, at a rate equal to twenty-two basis points (0.22%)
per annum (calculated on the basis of a year of 360 days and
payable for the actual number of days elapsed) on the average
daily unused portion of such Bank's Revolving Credit Commitment,
such fee being payable quarterly in arrears on the first Business
Day of April, July, October and January in each year, and on the
Conversion Date for such Bank or the Revolving Credit Termination
Date, as the case may be.
(b) The Company shall pay to the Agent an annual
administrative fee, in advance, in the respective amount and on
the dates previously agreed in writing by the Company with the
Agent.
Section 5.06. Voluntary Prepayments of Borrowings.
(a) The Company may, at its option, prepay Borrowings
under the Revolving Credit Commitment or the Term Loans at any
time in whole, or from time to time in part in an aggregate
amount of at least $1,000,000 and multiples of $100,000 thereof,
by paying the principal amount to be prepaid, together with
interest accrued and unpaid thereon to the date of prepayment,
and, in the case of the prepayment of Borrowings consisting of
Fixed Rate Advances, all compensation payments pursuant to
Section 5.12 if such prepayment is made on a date other than the
last day of an Interest Period applicable thereto. The Company
may, at its option, prepay Borrowings under the Cash Management
Line of Credit Commitment at any time in whole or from time to
time in part, by paying the principal amount to be prepaid,
together with interest accrued and unpaid thereon to the date of
prepayment. The Company may prepay Borrowings under the Cash
Management Line of Credit Commitment with the proceeds of
Borrowings made under the Revolving Credit Commitments pursuant
to Section 5.01 hereof to the extent the Company is permitted to
make Borrowings under the Revolving Credit Commitments under the
terms of this Agreement. Each such optional prepayment shall be
applied in accordance with Section 5.06(c) below.
(b) The Company shall give written notice (or tele-
phonic notice confirmed in writing) to the Agent of any intended
prepayment of the Revolving Credit Loans or the Term Loans not
less than five days prior to any voluntary prepayment. The
Company shall give written notice (or telephonic notice promptly
confirmed in writing) to the Cash Management Lender of any
intended prepayment of the Cash Management Loans on or prior to
the date of such voluntary prepayment. Such notice shall specify
whether Revolving Credit Loans, Term Loans or Cash Management
Loans are to be prepaid and, once given, such notice shall be
irrevocable. Upon receipt of such notice of prepayment pursuant
to the first sentence of this paragraph (b), the Agent shall
promptly notify each Bank of the contents of such notice and of
such Bank's share of such prepayment.
(c) The Company, when providing notice of prepayment
pursuant to Section 5.06(b), may designate the Types of Advances
and the specific Borrowing or Borrowings which are to be prepaid,
provided that (i) if any prepayment of Fixed Rate Advances made
pursuant to a single Borrowing of Revolving Credit Loans or Term
Loans shall reduce the outstanding Advances made pursuant to such
Borrowing to an amount less than $1,000,000, such Borrowing shall
immediately be converted into Base Rate Advances; and (ii) each
prepayment made pursuant to a single Borrowing of Revolving
Credit Loans or Term Loans shall be applied pro rata among such
Revolving Credit Loans and Term Loans comprising such Borrowing.
In the absence of a designation by the Company of the Types of
Advances and the specific Borrowing or Borrowings to be prepaid,
the Agent, with respect to Revolving Credit Loans and Term Loans,
or the Cash Management Lender, with respect to the Cash
Management Loans, shall, subject to the foregoing, make such
designation in its sole discretion. All voluntary prepayments of
Revolving Credit Loans, Term Loans or Cash Management Loans shall
be applied to the payment of any unpaid interest thereon before
application to principal and shall be applied against scheduled
amortization payments in the inverse order of maturity.
Section 5.07. Payments, etc.
(a) (i) Except as otherwise specifically provided
herein, all payments under this Agreement and the other Loan
Documents, other than the payments specified in clause (ii)
below, shall be made without defense, set-off or counterclaim to
the Agent not later than 11:00 a.m. (Atlanta, Georgia time) on
the date when due and shall be made in Dollars in immediately
available funds at its Payment Office.
(ii) Except as otherwise specifically provided herein,
all payments under this Agreement with respect to the Cash
Management Loans and the Cash Management Line of Credit Note
shall be made without defense, set-off or counterclaim to the
Cash Management Lender not later than 11:00 a.m. (Atlanta,
Georgia time) on the date when due and shall be made in Dollars
in immediately available funds at its Payment Office.
(b) (i) All such payments shall be made free and clear
of and without deduction or withholding for any Taxes in respect
of this Agreement, the Notes or other Loan Documents, or any
payments of principal, interest, fees or other amounts payable
hereunder or thereunder (but excluding, except as provided in
paragraph (ii) hereof, any Taxes imposed on the overall net
income of the Banks pursuant to the laws of the jurisdiction in
which the principal executive office or appropriate Lending
Office of such Bank is located). If any Taxes are so levied or
imposed, the Company agrees (A) to pay the full amount of such
Taxes, and such additional amounts as may be necessary so that
every net payment of all amounts due hereunder and under the
Notes and other Loan Documents, after withholding or deduction
for or on account of any such Taxes (including additional sums
payable under this Section 5.07), will not be less than the full
amount provided for herein had no such deduction or withholding
been required, (B) to make such withholding or deduction and (C)
to pay the full amount deducted to the relevant authority in
accordance with applicable law. The Company will furnish to the
Agent and each Bank, within 30 days after the date the payment of
any Taxes is due pursuant to applicable law, certified copies of
tax receipts evidencing such payment by the Company. The Company
will indemnify and hold harmless the Agent and each Bank, and
will reimburse the Agent and each Bank upon written request, for
the amount of any Taxes so levied or imposed and paid by the
Agent or such Bank and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or illegally asserted.
A certificate as to the amount of such payment by such Bank or
the Agent, absent manifest error, shall be final, conclusive and
binding for all purposes.
(ii) The Company shall also reimburse the Agent and
each Bank, upon written request, for any Taxes imposed
(including, without limitation, Taxes imposed on the overall net
income of the Agent or such Bank or its applicable Lending Office
pursuant to the laws of the jurisdiction in which the principal
executive office or the applicable Lending Office of the Agent or
such Bank is located) as the Agent or such Bank shall determine
are payable by the Agent or such Bank in respect of amounts paid
by or on behalf of the Company to or on behalf of the Agent or
such Bank pursuant to paragraph (i) hereof.
(c) Subject to Section 5.04(b), whenever any payment
to be made hereunder or under any Note shall be stated to be due
on a day which is not a Business Day, the due date thereof shall
be extended to the next succeeding Business Day and, with respect
to payments of principal, interest thereon shall be payable at
the applicable rate during such extension.
(d) All computations of interest and fees shall be
made on the basis of a year of 360 days for the actual number of
days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are
payable (to the extent computed on the basis of days elapsed).
Interest on Base Rate Advances and Overnight Rate Advances shall
be calculated based on the Base Rate and the Overnight Rate,
respectively, from and including the date of such Loan to but
excluding the date of the repayment or conversion thereof.
Interest on Fixed Rate Advances shall be calculated as to each
Interest Period from and including the first day thereof to but
excluding the last day thereof. Each determination by the Agent
of an interest rate or fee hereunder shall be made in good faith
and, except for manifest error, shall be final, conclusive and
binding for all purposes.
(e) Payment by the Company to the Agent in accordance
with the terms of this Agreement shall, as to the Company,
constitute payment to the Banks under this Agreement.
Section 5.08. Interest Rate Not Ascertainable, etc.
In the event that the Agent shall have determined (which
determination shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding upon all parties)
that on any date for determining the CD Rate or the Adjusted LIBO
Rate for any Interest Period, by reason of any changes arising
after the date of this Agreement affecting the United States
secondary certificate of deposit market, the London interbank
market or the Agent's position in such markets, adequate and fair
means do not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of CD Rate or Ad-
justed LIBO Rate, then, and in any such event, the Agent shall
forthwith give notice (by telephone confirmed in writing) to the
Company and to the Banks, of such determination and a summary of
the basis for such determination. Until the Agent notifies the
Company that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Banks to
make or permit portions of the Revolving Credit Loans or Term
Loans to remain outstanding past the last day of the then current
Interest Periods as CD Rate Advances or Eurodollar Advances shall
be suspended, and such affected Advances shall bear the same
interest as Base Rate Advances.
Section 5.09. Illegality.
(a) In the event that any Bank shall have determined
(which determination shall be made in good faith and, absent
manifest error, shall be final, conclusive and binding upon all
parties) at any time that the making or continuance of any Fixed
Rate Advance has become unlawful by compliance by such Bank in
good faith with any applicable law, governmental rule,
regulation, guideline or order (whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful), then, in any such event, the Bank shall give prompt
notice (by telephone confirmed in writing) to the Company and to
the Agent of such determination and a summary of the basis for
such determination (which notice the Agent shall promptly
transmit to the other Banks).
(b) Upon the giving of the notice to the Company
referred to in subsection (a) above, (i) the Company's right to
request and such Bank's obligation to make CD Rate Advances or
Eurodollar Advances shall be immediately suspended, and such Bank
shall make an Advance as part of the requested Borrowing of CD
Rate Advances or Eurodollar Advances as a Base Rate Advance,
which Base Rate Advance shall, for all other purposes, be
considered part of such Borrowing, and (ii) if the affected Fixed
Rate Advance or Advances are then outstanding, the Company shall
immediately, or if permitted by applicable law, no later than the
date permitted thereby, upon at least one Business Day's written
notice to the Agent and the affected Bank, convert each such
Advance into an Advance or Advances of a different Type with an
Interest Period ending on the date on which the Interest Period
applicable to the affected Fixed Rate Advance expires, provided
that if more than one Bank is affected at any time, then all
affected Banks must be treated the same pursuant to this Section
5.09(b).
Section 5.10. Increased Costs.
(a) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any
change by way of imposition or increase of reserve requirements)
in or in the interpretation of any law or regulation, or (y) the
compliance with any guideline or request from any central bank or
other governmental authority or quasi-governmental authority
exercising control over banks or financial institutions generally
(whether or not having the force of law):
(i) any Bank (or its applicable Lending Office)
shall be subject to any tax, duty or other charge with
respect to its Fixed Rate Advances or its obligation to
make Fixed Rate Advances, or the basis of taxation of
payments to any Bank of the principal of or interest on
its Fixed Rate Advances or its obligation to make Fixed
Rate Advances shall have changed (except for changes in
the tax on the overall net income of such Bank or its
applicable Lending Office imposed by the jurisdiction
in which such Bank's principal executive office or
applicable Lending Office is located); or
(ii) any reserve (including, without limitation,
any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of,
or credit extended by, any Bank's applicable Lending
Office shall be imposed or deemed applicable or any
other condition affecting its Fixed Rate Advances or
its obligation to make Fixed Rate Advances shall be
imposed on any Bank or its applicable Lending Office or
the London interbank market or the United States
secondary certificate of deposit market;
and as a result thereof there shall be any increase in the cost
to such Bank of agreeing to make or making, funding or
maintaining Fixed Rate Advances (except to the extent already
included in the determination of the applicable CD Rate for CD
Rate Advances or the applicable Adjusted LIBO Rate for Eurodollar
Advances), or there shall be a reduction in the amount received
or receivable by such Bank or its applicable Lending Office, then
the Company shall from time to time (subject, in the case of
certain Taxes, to the applicable provisions of Section 5.07(b)),
upon written notice from and demand by such Bank on the Company
(with a copy of such notice and demand to the Agent), pay to the
Agent for the account of such Bank within five Business Days
after the date of such notice and demand, additional amounts
sufficient to indemnify such Bank against such increased cost. A
certificate as to the amount of such increased cost, submitted to
the Company and the Agent by such Bank in good faith and
accompanied by a statement prepared by such Bank describing in
reasonable detail the basis for and calculation of such increased
cost, shall, except for manifest error, be final, conclusive and
binding for all purposes.
(b) If any Bank shall advise the Agent that at any
time, because of the circumstances described in clauses (x) or
(y) in Section 5.10(a) or any other circumstances beyond such
Bank's reasonable control arising after the date of this
Agreement affecting such Bank or the London interbank market,
that the CD Rate or the Adjusted LIBO Rate as determined by the
Agent will not adequately and fairly reflect the cost to such
Bank of funding its Fixed Rate Advances, then, and in any such
event:
(i) the Agent shall forthwith give notice (by
telephone confirmed in writing) to the Company and to the
other Banks of such advice;
(ii) the Company's right to request and such Bank's
obligation to make or permit portions of the Revolving
Credit Loans and the Term Loans to remain outstanding past
the last day of the then current Interest Periods as CD Rate
Advances or Eurodollar Advances, as the case may be, shall
be immediately suspended; and
(iii) such Bank shall make a Revolving Credit Loan or
Term Loan as part of the requested Borrowing of CD Rate
Advances or Eurodollar Advances, as the case may be, as a
Base Rate Advance, which such Base Rate Advance shall, for
all other purposes, be considered part of such Borrowing.
Section 5.11. Lending Offices. Each Bank agrees that,
if requested by the Company, it will use reasonable efforts
(subject to overall policy considerations of such Bank) to
designate an alternate Lending Office with respect to any of its
Fixed Rate Advances affected by the matters or circumstances
described in Sections 5.07(b), 5.08, 5.09 or 5.10 to reduce the
liability of the Company or avoid the results provided
thereunder, so long as such designation is not disadvantageous to
such Bank as determined by such Bank, which determination if made
in good faith, shall be conclusive and binding on all parties
hereto. Nothing in this Section 5.11 shall affect or postpone
any of the obligations of the Company or any right of any Bank
provided hereunder.
Section 5.12. Funding Losses. The Company shall
compensate each Bank, upon its written request to the Company
(which request shall set forth the basis for requesting such
amounts in reasonable detail and which request shall be made in
good faith and, absent manifest error, shall be final, conclusive
and binding upon all of the parties hereto), for all losses,
expenses and liabilities (including, without limitation, any
interest paid by such Bank to lenders of funds borrowed by it to
make or carry its Fixed Rate Advances, in either case to the
extent not recovered by such Bank in connection with the
reemployment of such funds and including loss of anticipated
profits), which the Bank may sustain: (i) if for any reason
(other than a default by such Bank) a borrowing of, or conversion
to or continuation of, Fixed Rate Advances to the Company does
not occur on the date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation (whether or not withdrawn),
(ii) if any repayment (including mandatory prepayments and any
conversions pursuant to Section 5.09(b)) of any Fixed Rate
Advances to the Company occurs on a date which is not the last
day of an Interest Period applicable thereto, or (iii) if, for
any reason, the Company defaults in its obligation to repay its
Fixed Rate Advances when required by the terms of this Agreement.
Section 5.13. Assumptions Concerning Funding of
Eurodollar Advances. Calculation of all amounts payable to a
Bank under this Article IV shall be made as though that Bank had
actually funded its relevant Fixed Rate Advances through the
purchase of deposits in the relevant market bearing interest at
the rate applicable to such Fixed Rate Advances in an amount
equal to the amount of the Fixed Rate Advances and having a
maturity comparable to the relevant Interest Period and, in the
case of Eurodollar Advances, through the transfer of such
Eurodollar Advances from an offshore office of that Bank to a
domestic office of that Bank in the United States of America;
provided however, that each Bank may fund each of its Fixed Rate
Advances in any manner it sees fit and the foregoing assumption
shall be used only for calculation of amounts payable under this
Article V.
Section 5.14. Apportionment of Payments. Aggregate
principal and interest payments in respect of Revolving Credit
Loans and Term Loans and payments in respect of unused commitment
fees for the Revolving Credit Commitments shall be apportioned
among all outstanding Revolving Credit Commitments and Term Loans
to which such payments relate, proportionately to the Banks'
respective Pro Rata Shares of such outstanding Revolving Credit
Commitments and Term Loans. The Agent shall promptly distribute
to each Bank at its payment office set forth beside its name on
the appropriate signature page hereof, or such other address as
any Bank may request, its share of all such payments received by
the Agent.
Section 5.15. Sharing of Payments, Etc. If any Bank
shall obtain any payment or reduction (including, without
limitation, any amounts received as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code) of
the Obligations (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its
Pro Rata Share of payments or reductions on account of all
Obligations obtained by all the Banks, such Bank shall forthwith
(i) notify each of the other Banks and Agent of such receipt, and
(ii) purchase from the other Banks such participations in the
affected obligations as shall be necessary to cause such
purchasing Bank to share the excess payment or reduction, net of
costs incurred in connection therewith, ratably with each of
them, provided that if all or any portion of such excess payment
or reduction is thereafter recovered from such purchasing Bank or
additional costs are incurred, the purchase shall be rescinded
and the purchase price restored to the extent of such recovery or
such additional costs, but without interest unless the Bank
obligated to return such funds is required to pay interest on
such funds. The Company agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 5.15
may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect
to such participation as fully as if such Bank were the direct
creditor of the Company in the amount of such participation.
Section 5.16. Capital Adequacy. Without limiting any
other provision of this Agreement, in the event that any Bank
shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy not currently in effect or fully
applicable as of the Closing Date, or any change therein or in
the interpretation or application thereof after the Closing Date,
or compliance by such Bank with any request or directive
regarding capital adequacy not currently in effect or fully
applicable as of the Closing Date (whether or not having the
force of law and whether or not failure to comply therewith would
be unlawful) from a central bank or governmental authority or
body having jurisdiction, does or shall have the effect of
reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that
which such Bank could have achieved but for such law, treaty,
rule, regulation, guideline or order, or such change or
compliance (taking into consideration such Bank's policies with
respect to capital adequacy) by an amount deemed by such Bank to
be material, then within ten (10) Business Days after written
notice and demand by such Bank (with copies thereof to the
Agent), the Company shall from time to time pay to such Bank
additional amounts sufficient to compensate such Bank for such
reduction (but, in the case of outstanding Base Rate Advances,
without duplication of any amounts already recovered by such Bank
by reason of an adjustment in the applicable Base Rate). Each
certificate as to the amount payable under this Section 5.16
(which certificate shall set forth the basis for requesting such
amounts in reasonable detail), submitted to the Company by any
Bank in good faith, shall, absent manifest error, be final,
conclusive and binding for all purposes.
Section 5.17. Benefits to Guarantors. In
consideration for the execution and delivery by the Guarantors of
this Agreement, the Company agrees to make the benefit of
extensions of credit hereunder available to the Guarantors.
Section 5.18. Release of Prior Liens. The Cash
Management Lender, First Union and the Agent hereby release and
terminate the Prior Liens and agree to execute and deliver to the
Company any and all termination statements or other similar Lien
release documents as the Company may reasonably request from time
to time to evidence or give public notice of such release and
terminations.
ARTICLE VI
CONDITIONS TO BORROWINGS
The obligations of each Bank to make Advances to the
Company under its Revolving Credit Commitment and to accept a
Term Note on the Conversion Date are subject to the satisfaction
of the following conditions:
Section 6.01. Conditions Precedent to Initial Loans.
At the time of making the initial Loans hereunder on the Closing
Date, and any Term Loan on any Conversion Date, all obligations
of the Company hereunder incurred prior to the initial Loans and
any Term Loan, as the case may be, shall have been paid in full,
and the Agent shall have received the following, in form and
substance reasonably satisfactory in all respects to the Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Revolving Notes evidencing the
Revolving Credit Commitments and, on any Conversion Date,
the duly executed Term Note;
(c) the Guaranty Agreement;
(e) certificates of the Company and the Guarantors in
substantially the form of Exhibit E-1 and Exhibit E-2
attached hereto and appropriately completed;
(f) certificates of the Secretary or Assistant
Secretary of each of the Credit Parties attaching and
certifying copies of the resolutions of the boards of
directors of the Credit Parties, authorizing the execution,
delivery and performance of the Loan Documents, as
applicable;
(g) certificates of the Secretary or an Assistant
Secretary of each of the Credit Parties certifying (i) the
name, title and true signature of each officer of such
entities executing the Loan Documents, and (ii) the bylaws
or comparable governing documents of such entities;
(h) certified copies of the certificate or articles of
incorporation of each Credit Party certified by the
Secretary of State or the Secretary or Assistant Secretary
of such Credit Party, together with certificates of good
standing or existence, as may be available from the
Secretary of State of the jurisdiction of incorporation or
organization of such Credit Party;
(i) the favorable opinion of Kilpatrick & Cody,
general counsel to the Credit Parties, substantially in the
form of Exhibit F addressed to the Agent and each of the
Banks; and
(j) the Agent shall have received such other documents
or legal opinions as the Agent or any Bank may reasonably
request, all in form and substance reasonably satisfactory
to the Agent.
In addition to the foregoing, the following conditions shall have
been satisfied or shall exist, all to the satisfaction of the
Agent, as of the time the initial Loans are, or any Term Loan is,
made hereunder:
(x) the Loans and the use of proceeds thereof shall
not contravene, violate or conflict with, or involve the
Agent or any Bank in a violation of, any law, rule,
injunction, or regulation, or determination of any court of
law or other governmental authority; and
(y) all corporate proceedings and all other legal
matters in connection with the authorization, legality,
validity and enforceability of the Loan Documents shall be
reasonably satisfactory in form and substance to the
Required Banks.
Section 6.02. Conditions to All Loans. At the time of
the making of all Loans, including the initial Loans and the Term
Loans (before as well as after giving effect to such Loans and to
the proposed use of the proceeds thereof), the following
conditions shall have been satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by the Company
contained herein and by the Guarantors in the Guaranty
Agreement shall be true and correct in all material respects
with the same effect as though such representations and
warranties had been made on and as of the date of such
Loans;
(c) after giving effect to the Borrowing, the
aggregate principal amount of outstanding Revolving Credit
Loans does not exceed the aggregate Revolving Credit
Commitments;
(d) since the date of the most recent financial
statements of the Company and its Subsidiaries described in
Section 8.01, there shall have been no change which has had
or could reasonably be expected to have a Materially Adverse
Effect;
(e) there shall be no action or proceeding instituted
or pending before any court or other governmental authority
or, to the knowledge of the Company, threatened (i) which
reasonably could be expected to have a Materially Adverse
Effect, or (ii) seeking to prohibit or restrict one or more
Credit Party's ownership or operation of any portion of its
business or assets, or to compel one or more Credit Party to
dispose of or hold separate all or any portion of its
businesses or assets, where such portion or portions of such
business(es) or assets, as the case may be, constitute a
material portion of the total businesses or assets of the
Company and its Subsidiaries; and
(f) the Loans to be made and the use of proceeds
thereof shall not contravene, violate or conflict with, or
involve the Agent or any Bank in a violation of, any law,
rule, injunction, or regulation, or determination of any
court of law or other governmental authority applicable to
the Company.
Without limiting the foregoing, the Company shall have
no right to make a Borrowing under the Revolving Credit
Commitment to repay a Cash Management Loan if a Default or Event
of Default exists.
Each request for a Borrowing, the acceptance by the
Company of the proceeds thereof and the execution of the Term
Notes shall constitute a representation and warranty by the
Company, as of the date of the Loans comprising such Borrowing,
that the applicable conditions specified in Sections 6.01 and
6.02 have been satisfied.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants as of the date
hereof and is deemed to represent and warrant as of the date of
each Loan hereunder that:
Section 7.01. Organization and Qualification. The
Company and its Subsidiaries are corporations duly organized,
validly existing and in good standing under the laws of the State
of Georgia and the State of Delaware, as applicable; the Company
and its Subsidiaries have the corporate power to own their
property and to carry on their business as now being conducted;
and the Company and its Subsidiaries are duly qualified as
foreign corporations to do business and are in good standing in
every jurisdiction in which the nature of the business conducted
by them makes such qualification necessary and where failure to
qualify would have a Materially Adverse Effect.
Section 7.02. Company's Powers. The execution,
delivery and payment of the Notes and the execution, delivery and
performance of this Agreement, the Guaranty Agreement and any
instrument or agreement required hereunder are within the
Company's or the Guarantors' corporate powers, as the case may
be, have been duly authorized by all necessary shareholder or
corporate action, and do not and will not contravene or conflict
with the terms of any charter, by-law or other organizational
papers of the Company or any of its Subsidiaries, or any
indenture, agreement or undertaking to which the Company or any
of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound or affected.
Section 7.03. Enforceability of Agreement. This
Agreement is a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, and
the Notes, the Guaranty Agreement and any other instrument or
agreement required hereunder, when executed and delivered, will
be similarly legal, valid, binding and enforceable against the
Company and its Subsidiaries, as applicable, in accordance with
their terms.
Section 7.04. Consent. No consent, permission,
authorization, order or license of any governmental authority is
necessary in connection with the execution, delivery, performance
or enforcement of this Agreement, the Notes, the Guaranty
Agreement or any other instrument or agreement required
hereunder, except as may have been obtained and certified copies
of which have been delivered to each Bank.
Section 7.05. Statutes, Judgments. There is no law,
statute, rule or regulation, nor is there any judgment, decree or
order of any court or agency binding on the Company or any of its
Subsidiaries, which would be contravened by the execution,
delivery or performance of this Agreement, the Notes, the
Guaranty Agreement or any other instrument or agreement required
hereunder.
Section 7.06. Financial Statements. The Company has
furnished each Bank with the following financial statements,
identified by a principal financial officer of the Company:
Audited Consolidated Financial and Operating Statements
for Aaron Rents, Inc. and its Subsidiaries (when
applicable) for the years ended March 31, 1991 through
1994, inclusive, and audit opinions with respect to
such statements of Ernst & Young; and unaudited
financial and operating statements for the six-month
period ended September 30, 1994.
The above financial statements (including any related schedules
and/or notes) are true and correct in all material respects and
have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the
periods involved and show all known liabilities, direct and
contingent, of the entities covered thereby required to be shown
in accordance with such principles. The balance sheets fairly
present the condition of the entities covered thereby as at the
dates thereof, and the profit and loss and surplus statements
fairly present the results of the operations of the entities
covered thereby for the periods indicated. There has been no
material adverse change in the business, condition or operations
(financial or otherwise) of the Company and its Subsidiaries
since September 30, 1994.
Section 7.07. Actions Pending. There is no action,
suit, investigation or proceeding pending or, to the knowledge of
the Company, threatened against or affecting the Company or any
of its Subsidiaries, or any properties or rights of the Company
or any of its Subsidiaries, before any court, arbitrator or
administrative or governmental body which is reasonably likely to
result in any material adverse change in the business, condition
or operations of the Company or any of its Subsidiaries.
Section 7.08 Outstanding Debt. Neither the Company
nor any of its Subsidiaries has outstanding any indebtedness
except debt permitted hereunder. There exists no default under
the provisions of any instrument evidencing such indebtedness or
of any agreement relating thereto.
Section 7.09. Title to Properties. The Company and
each of its Subsidiaries have good and marketable title to their
respective real properties, subject only to Liens permitted under
Section 9.01, and good title to all of its other respective
properties and assets, including the properties and assets
reflected in the balance sheet as of September 30, 1994
hereinabove described (other than properties and assets disposed
of in the ordinary course of business), subject to no Lien of any
kind except Liens permitted under Section 9.01. The Company and
its Subsidiaries enjoy full and undisturbed possession of all
leases necessary in any material respect for the operation of
their respective properties and assets, none of which contains
any unusual or burdensome provisions which might materially
affect or impair the operation of such properties and assets.
All such leases are valid and subsisting and are free from
defaults by the Company or respective landlords and in full force
and effect.
Section 7.10 Taxes. The Company has and each of its
Subsidiaries has filed all federal and state income tax returns
which, to the best knowledge of the officers of the Company, are
required to be filed, and each has paid all taxes as shown on
said returns and on all assessments received by it to the extent
such taxes have become due, except to the extent expressly
permitted by Section 9.01(a) hereof.
Section 7.11 Regulation U, Etc. Neither the Company
nor any of its Subsidiaries own or have any present intention of
acquiring any "margin security" as defined in Regulation U of the
Board of Governors of the Federal Reserve System (herein called a
"margin security"). The proceeds of the Notes will be used to
finance inventories and rental equipment and accounts receivable,
to provide funds for general operational expenses and working
capital. None of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
security or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry a
margin security or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of said
Regulation U.
Section 7.12. No Event of Default. No Event of
Default specified in Article X hereof, and no event which with
notice or lapse of time or both would become such an Event of
Default, has occurred and is continuing or will occur as a result
of the incurring of any obligation under this Agreement.
Section 7.13. ERISA. No fact or circumstance,
including but not limited to any Reportable Event, exists in
connection with any Plan of the Company or its Subsidiaries which
might constitute grounds for the termination of any such Plan by
the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer any such Plan. For
purposes of this representation and warranty, if the Company is
not the Plan administrator, it shall nonetheless be deemed to
have knowledge of all facts attributable to the Plan
administrator designated pursuant to ERISA.
Section 7.14. Pollution and Environmental Control.
Each of the Company and its Subsidiaries has obtained all
permits, licenses and other authorizations which are required
under, and is in material compliance with, all federal, state,
and local laws and regulations relating to pollution,
reclamation, or protection of the environment, including laws
relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic
materials or wastes into air, water, or land, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or
wastes.
Section 7.15. Possession of Franchises, Licenses, Etc.
The Company and its Subsidiaries possess all franchises,
certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities,
and all patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome
restrictions, that are necessary for the ownership, maintenance
and operation of any of their respective properties and assets,
and neither the Company nor any of its Subsidiaries is in
violation in any material respect of any thereof.
Section 7.16. Contingent Liabilities. After due
inquiry, there exists no material contingent liability or
obligation assertable against the Company or its Subsidiaries
that is not identified and disclosed to the Banks in the
consolidated financial statements delivered pursuant to Sections
7.06 or 8.01 hereof or in Schedule 7.16 attached hereto.
Section 7.17. Compliance with Laws. Each of the
Company and its Subsidiaries is in compliance in all material
respects with all applicable federal, state and local laws,
rules, regulations and orders, including, without limitation, all
federal, state and local laws, rules, regulations and orders
relating to pollution, reclamation or protection of the
environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or
hazardous or toxic materials or wastes into air, water, or land,
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic
materials or wastes, and all federal, state and local laws,
rules, regulations and orders relating to franchising activities.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Company covenants and agrees so long as any of the
Revolving Credit Commitments of any Bank, or the Cash Management
Line of Credit Commitment of the Cash Management Lender, shall
remain available, or any Revolving Credit Loans, Term Loans or
Cash Management Loans are outstanding, and until the full and
final payment of all indebtedness incurred hereunder and unless
otherwise consented to in writing by the Required Banks:
Section 8.01. Financial Statements, Reports and Other
Financial Data. The Company will deliver to each Bank:
(a) as soon as practicable and in any event within
twenty (20) days after the end of each calendar month in
each fiscal year, a certificate of the Chief Financial
Officer of the Company certifying that the aggregate
principal amount of all outstanding Revolving Credit Loans
as of such date does not exceed the aggregate Revolving
Credit Commitments as reduced pursuant to Section 2.03, and
setting forth in reasonable detail (i) the amount equal to
700% of the Company's Rental Income for such month and
(ii) the amount equal to 70% of the Net Book Value of the
Company's Rental Equipment and Furniture Inventory as of the
last day of such month;
(b) as soon as practicable and in any event within 45
days after the end of each calendar quarter (other than the
last calendar quarter) in each fiscal year, consolidated and
consolidating statements of income, cash flow and retained
earnings of the Company and its Subsidiaries for the period
from the beginning of the current fiscal year to the end of
such calendar quarter, and consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at the
end of such calendar quarter, setting forth in each case in
comparative form figures for the corresponding period in the
preceding fiscal year, all in reasonable detail and
certified by the Chief Financial Officer of the Company,
subject to changes resulting from year-end adjustments;
(c) as soon as practicable and in any event within 90
days after the end of each fiscal year or as soon as made
available by the Company's independent public accountants if
availability is delayed beyond such 90-day period for
reasons beyond the Company's control, audited consolidated
and unaudited consolidating statements of income, cash flow
and retained earnings of the Company and its Subsidiaries
for such year, and an audited consolidated and unaudited
consolidating balance sheet of the Company and its
Subsidiaries as at the end of such year, setting forth in
each case in comparative form corresponding figures from the
preceding annual statements, all in reasonable detail and
reasonably satisfactory in scope to Banks, and the
consolidated financial statements shall be certified by
independent public accountants of recognized standing,
selected by the Company, whose report shall be in scope and
substance reasonably satisfactory to Banks, and both
consolidated and consolidating financial statements shall be
certified by the Chief Financial Officer of the Company;
(d) along with the quarterly and annual reports
required by clauses (ii) and (iii) above, a certificate of
the Chief Financial Officer of the Company certifying that
no Event of Default exists and that no event exists which
with notice or the lapse of time or both would become such
an Event of Default, which certificate shall also
demonstrate in reasonable detail, with respect to both
quarterly reports and annual reports, the Company's
compliance with the covenants set out in Sections 8.04,
8.05, 8.07, 9.02 and 9.03;
(e) promptly upon receipt thereof, copies of any
detailed reports submitted to the Company by its independent
public accountants in connection with each annual audit or
interim review of the books of the Company or its
Subsidiaries made by such accountants;
(f) promptly upon transmission thereof, copies of all
financial statements, proxy statements, notices and reports
as the Company shall send to its shareholders and of all
regular or periodic reports which it is or may be required
to file with the Securities and Exchange Commission or any
governmental department, bureau, commission or agency
succeeding to the functions of the Securities and Exchange
Commission; and
(g) with reasonable promptness, such other financial
data as any Bank may reasonably request.
Section 8.02. Inspection of Property. The Company
will permit any Person designated by a Bank in writing, to visit
and inspect any of the properties, corporate books and financial
records of the Company and its Subsidiaries and to make copies
thereof and take extracts therefrom and to discuss the affairs,
finances and accounts of any such corporations with the principal
officers of the Company or its Subsidiaries, all at such
reasonable times and as often as such Bank may reasonably
request.
Section 8.03. Maintenance of Insurance. The Company
and each Subsidiary will maintain insurance in such amounts and
against such liabilities and hazards as customarily is maintained
by other companies operating similar businesses and, upon any
Bank's written request, the Company will promptly provide to the
Agent an insurance certificate naming the Agent as loss payee
under such insurance.
Section 8.04. Funded Debt Ratio. The Company shall
maintain and operate its business in a manner to insure that its
Funded Debt Ratio measured at the end of each fiscal quarter for
the four consecutive quarters ending on such date is less than
4.00:1.00.
Section 8.05. Leverage Ratio. The Company shall
maintain and operate its business in such a manner to insure a
ratio measured at the end of each fiscal quarter of (i) Funded
Debt to (ii) the sum of Funded Debt plus the consolidated net
worth of the Company and its Subsidiaries, of less than 0.50:1.00
(i.e., 50%).
Section 8.06. Account Verification. Upon the request
of any Bank, made at reasonable intervals and on a reasonable
basis, the Company will mail letters to selected lease customers
or account debtors requesting them to verify the status of their
leases or accounts, with responses to be returned directly to
each Bank.
Section 8.07. Fixed Charge Coverage. The Company will
operate its business in such a manner to insure that the
summation of (i) net income before income taxes, plus
(ii) interest expense, plus (iii) rental and lease expense are
greater than 150% of the summation of (i) interest expense, plus
(ii) rental and lease expense, all determined on a consolidated
basis for the Company and its Subsidiaries. Compliance with the
aforementioned fixed charge coverage ratio will be determined at
the end of each fiscal quarter of the Company and taking into
account operations during the four consecutive fiscal quarters
ending on such date. The following mathematical formula
illustrates the Company's fixed charge coverage obligation:
Pretax Net Interest Rental and Lease
Income + Expense + Expense > 1.50
Interest Expense + Rental and Lease
Expense
Section 8.08. ERISA. The Company and each Subsidiary
will:
(a) At all times, make prompt payment of contributions
required to meet the minimum funding standard set forth in
ERISA with respect to its Plans;
(b) Notify Banks and the Agent immediately of any
fact, including, but not limited to, any Reportable Event
arising in connection with any of its Plans which might
constitute grounds for termination thereof by the PBGC or
for the appointment by the appropriate United States
District Court of a trustee to administer such Plan,
together with a statement, if requested by Banks, as to the
reasons therefor and the action, if any, which the Company
or any of its Subsidiaries proposes to take with respect
thereto; and
(c) Furnish to Banks or the Agent, upon request, such
additional information concerning any of its Plans as may be
reasonably requested.
Section 8.09. Payment. The Company will pay all sums
due under this Agreement according to the terms hereof and any
Note or Notes evidencing the same.
Section 8.10. Notice of Event of Default. The Company
will immediately give notice to the Agent and Banks of any Event
of Default or any event which with notice or lapse of time or
both would become such an Event of Default.
Section 8.11. Corporate Existence. The Company will
maintain and will cause each Subsidiary to maintain its corporate
existence and good standing in the jurisdiction of its
incorporation, and the Company will qualify and will cause each
Subsidiary to qualify and remain qualified to do business as a
foreign corporation in each jurisdiction in which the nature of
the business conducted by it or its ownership of property makes
such qualification necessary and where failure to qualify would
have a Materially Adverse Effect.
Section 8.12. Compliance with Laws, Etc. The Company
will comply, and cause each of its Subsidiaries to comply, in all
material respects with all applicable federal, state, and local
laws, rules, regulations and orders, including, without
limitation, all federal, state and local laws, rules, regulations
and orders relating to pollution, reclamation, or protection of
the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into air,
water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous
or toxic materials or wastes, and all federal, state and local
law, rules, regulations and orders relating to franchising
activities.
Section 8.13. Additional Guarantors. Promptly after
any Person which is not a Subsidiary as of the Closing Date
becomes a Subsidiary of the Company, the Company shall cause such
Person to execute and deliver to the Agent a Supplement to the
Guaranty Agreement, in the form of Exhibit 1 to the Guaranty
Agreement, together with related corporate authorization
documents, organizational documents, secretary's certificates and
opinions, all in form and substance satisfactory to the Agent and
the Required Banks.
Section 8.14. Notices. The Company shall immediately
give each Bank notice of any notice filing under Section 13 or 14
of the Securities Exchange Act of 1934, as amended, or notice of
the occurrence of any Change in Control.
ARTICLE IX
NEGATIVE COVENANTS
The Company covenants and agrees that, so long as any
of the Revolving Credit Commitments of any Bank, or the Cash
Management Commitment of the Cash Management Lender, shall remain
available or any Revolving Credit Loans, Term Loans or Cash
Managements Loans are outstanding, and until the full and final
payment of all indebtedness incurred hereunder and unless
otherwise consented to in writing by the Required Banks:
Section 9.01. Liens. The Company will not and will
not permit any of its Subsidiaries to create, assume or suffer to
exist any Lien upon any of its property or assets, whether now
owned or hereafter acquired, except:
(a) Liens for taxes not yet due or which are being
actively contested in good faith by appropriate proceedings;
(b) other Liens incidental to the conduct of its
business or the ownership of its property and assets which
were not incurred in connection with the borrowing of money
or the obtaining of advances or credit, and which do not in
the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in
the operation of its business;
(c) Liens on property or assets of a Subsidiary to
secure obligations of such Subsidiary to the Company or
another Subsidiary;
(d) 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 (A) the
aggregate amount borrowed on each policy shall not exceed
the loan value thereof, and (B) the Company shall not incur
any liability to repay any such loan;
(e) Liens on real property or equipment acquired by
the Company to secure (i) all or any portion of the purchase
price thereof or the financing of the purchase price
thereof, provided that the aggregate principal amount of
equipment loans secured by such Liens shall be limited to
$200,000 in aggregate or (ii) the costs of improvements
being constructed thereon or on real property leased by the
Company for use by the Company as stores or warehouses or as
a part thereof or the financing of such costs;
(f) Liens existing on the date hereof as set forth on
Schedule 9.01 attached hereto and incorporated herein;
(g) easements, rights of way, restrictive covenants
and similar encumbrances on or exceptions to title to real
property which do not materially and adversely affect the
value or the utility of the real property involved;
(h) Liens on the Company's accounts receivable created
pursuant to the Factoring Agreement, provided that the
amount of such accounts receivable does not exceed
$4,000,000 at any one time; and
(i) Liens assigned and granted by the Company to Trust
Company Bank in any existing or hereafter created lien or
security interest in favor of the Company in any property of
any franchisee or franchisees that participate in the
franchisee financing program permitted pursuant to Section
9.03(i) hereof, solely to the extent of any indebtedness
owing by such franchisee to Trust Company Bank under such
franchisee financing program.
Section 9.02. Dividends. The Company will neither pay
nor declare any dividend (other than a stock dividend payable
solely in the common stock of the Company), or make any payment
for the purchase, redemption or retirement of any shares of any
class of its common stock, if (i) the aggregate of all such
dividends and payments after April 1, 1991 exceeds an amount
equal to the sum of (x) 25% of the Company's aggregate net income
(and loss) after provisions for income taxes for the period from
April 1, 1991 through the last calendar quarter preceding the
date of any proposed dividend or payment plus (y) $3,000,000, or
(ii) the Company sustained a net loss in the calendar quarter
preceding the date of such proposed dividend or payment, or (iii)
if there has occurred and is continuing any Default or Event of
Default.
Section 9.03. Loans, Advances, Investments and
Contingent Liabilities. The Company will not and will not
permit any of its Subsidiaries to make or permit to remain
outstanding any loan or advance to, or extend credit to, or
guarantee, endorse or otherwise be or become contingently
liable, directly or indirectly, in connection with the
obligations, stock or dividends of, or own, purchase or
acquire any stock, obligations or securities of, or any
other interest in, or make any capital contributions to, any
Person, except that the Company or any of its Subsidiaries
may:
(a) create, incur, assure or suffer to exist, debt
evidenced by this Agreement and by the Notes;
(b) suffer to exist unsecured current liabilities (not
resulting from borrowing) incurred in the ordinary cause of
business for current purposes and not represented by a
promissory note or other evidence of indebtedness;
(c) permit to remain outstanding loans or advances to
or investments in any of its Subsidiaries existing on the
date of this Agreement;
(d) own, purchase or acquire stock, obligations or
securities of a Subsidiary or of a corporation which
immediately after such purchase or acquisition will be a
Subsidiary, provided, however, written consent of the Banks,
which any of them may withhold in their sole discretion, is
required for purchases and acquisitions with (A) a cash
purchase price greater than or equal to $5,000,000, or (B) a
total purchase price (including cash, stock of the Company
and any of its Subsidiaries and any other consideration)
greater than or equal to $10,000,000;
(e) acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary
course of business) owing to the Company or any of its
Subsidiaries;
(f) own, purchase or acquire (i) prime commercial
paper and certificates of deposit in United States
commercial banks (whose long-term debt is rated "A" or
better by Moody's Investors Service or Standard and Poor's
Corporation) (issued by banks having capital resources in
excess of $50,000,000), in each case due within one year
from the date of purchase and payable in the United States
in dollars, direct obligations of the United States
Government or any agency thereof, or obligations fully
guaranteed as to principal and interest by the United States
Government or any agency thereof, in each case maturing
within one year from the date of creation of such obligation
or (ii) up to an additional $500,000 of other securities or
investments at any one time;
(g) endorse negotiable instruments for collection in
the ordinary course of business;
(h) make or permit to remain outstanding loans or
advances to officers, stockholders, employees and directors
of the Company, provided that the aggregate principal amount
of such loans and advances shall not exceed $350,000 at any
time outstanding for the Company and all Subsidiaries, and
further provided that no Subsidiary shall make any loan or
advance to, or acquire any stock, obligations or securities
of, the Company;
(i) guarantee the indebtedness of obligations of
certain franchise operators, provided such guarantees are
(A) given by the Company in connection with such franchise
operators' purchase of furniture financed through a third
party lender, and (B) limited to $12,500,000 in aggregate
outstanding principal amount at any one time for all
franchise operators; and
(j) incur indebtedness or contingent liability under
the Factoring Agreement.
Section 9.04. Sale of Stock and Debt of Subsidiaries.
The Company will not sell or otherwise dispose of, or part with
control of, any shares of stock or debt of any of its
Subsidiaries of the Company without the prior written consent of
the Required Banks.
Section 9.05. Merger and Sale of Assets. The Company
will not merge or consolidate with any other corporation or sell,
lease or transfer or otherwise dispose of all or a substantial
part of its assets or the assets of a Subsidiary, or assets which
shall have contributed a substantial part of consolidated net
earnings for any of the three fiscal years then most recently
ended, to any Person, except that any of its Subsidiaries may
merge with or liquidate into the Company (provided that the
Company shall be the continuing or surviving corporation) or
merge with any one or more other Subsidiaries, provided that
immediately after giving effect to such merger or liquidation no
Event of Default shall exist.
Section 9.06. Additional Negative Pledges. The
Company shall not, and shall not permit any of its Subsidiaries
to, create or otherwise cause or suffer to exist or become
effective, directly or indirectly, any prohibition or restriction
on the creation or existence of any Lien upon any assets of the
Company or any of its Subsidiaries, other than pursuant to (a)
Section 9.01, (b) the terms of any agreement, instrument or other
document pursuant to which any debt permitted by Section 9.01(e)
is incurred by the Company or any of its Subsidiaries, so long as
such prohibition or restriction applies only to the property or
asset being financed by such debt, (c) the terms of the Factoring
Agreement and (d) any requirement of applicable law or any
regulatory authority having jurisdiction over the Company or any
of its Subsidiaries.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Upon the occurrence and during the continuance of any
of the following specified events (each an "Event of Default"):
Section 10.01. The Company defaults in the payment of
any principal or interest payment on any Note or any other sum
due hereunder in accordance with the terms thereof or otherwise
as herein provided; or
Section 10.02. The Company or any of its Subsidiaries
defaults in any payment of principal of or interest on any other
obligation for a material amount of money borrowed (or any
material obligation under conditional sale or other title
retention agreement or any material obligation secured by a
purchase money mortgage or any material obligation under notes
payable or drafts accepted representing extensions of credit) or
defaults in the performance of any other agreement, term or
condition contained in any agreement under which any such
material obligation is created (or if any other default under any
such agreement shall occur and be continuing) if the effect of
such default is to cause, or to permit the holder or holders of
such obligation (or a trustee on behalf of such holder or
holders) to cause, such obligation to become due prior to its
stated maturity (for purposes of this Section 10.02, an
obligation shall be material if the amount owed thereunder
exceeds $50,000); or
Section 10.03. Any representation or warranty made by
the Company herein or in any writing furnished in connection with
or pursuant to this Agreement shall be false or misleading in any
material respect on the date as of which made; or
Section 10.04. The Company defaults in the performance
or observance of any covenant or agreement contained in
Sections 8.04, 8.05, 8.07 or Article IX hereof; or
Section 10.05. The Company defaults in the performance
or observance of any other agreement, term or condition contained
herein and such default shall continue for 30 days after the
Company knows or has reason to know of any such default; or
Section 10.06. The Company or any of its Subsidiaries
makes an assignment for the benefit of creditors or fails to pay
its debts generally as they become due; or
Section 10.07. Any order, judgment or decree is
entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law (herein called the "Bankruptcy Law")
of any jurisdiction adjudicating the Company or any of its
Subsidiaries bankrupt or insolvent; or
Section 10.08. The Company or any of its Subsidiaries
petitions or applies to any tribunal for, or consents to, the
appointment of, or taking possession by, a trustee, receiver,
custodian or liquidator or similar official of the Company or any
of its Subsidiaries, or of any substantial part of the assets of
the Company or any of its Subsidiaries, or commences any
proceedings (other than proceedings for the voluntary liquidation
and dissolution of a Subsidiary) relating to the Company or any
of its Subsidiaries under the Bankruptcy Law of any jurisdiction,
whether now or hereafter in effect; or
Section 10.09. Any such petition or application is
filed, or any such proceedings are commenced, against the Company
or any of its Subsidiaries and the Company or such Subsidiary by
any act indicates its approval thereof, consent thereto or
acquiescence therein, or an order for relief is entered in an
involuntary case under the federal bankruptcy laws, as now or
hereafter constituted, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such
proceedings, and such order judgment, or decree remains unstayed
and in effect for more than 60 days; or
Section 10.10. 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
Section 10.11. Any order, judgment or decree is entered
in any proceedings against the Company or any of its Subsidiaries
decreeing a split-up of the Company or such Subsidiary which
requires the divestiture of a substantial part, or the
divestiture of assets, or stock of a Subsidiary, which shall have
contributed a substantial part of consolidated net earnings for
any of the three fiscal years most recently ended, and such
order, judgment or decree remains unstayed and in effect for more
than 60 days; or
Section 10.12. Any Reportable Event shall have
occurred, or any finding or determination shall be made with
respect to a Plan under Section 4041(c) or (e) of ERISA, or any
fact or circumstance shall occur with respect to a Plan which, in
the opinion of Banks, provides grounds for the commencement of
any proceeding under Section 4042 of ERISA, or any proceeding
shall be commenced with respect to a Plan under Section 4042 of
ERISA; or
Section 10.13. Any Event of Default under the Guaranty
Agreement shall have occurred and be continuing;
then, and in any such event, and at any time thereafter if any
Event of Default shall then be continuing, (A) the Agent may, and
upon the written or telex request of the Required Banks, shall,
by written notice to the Company, take any or all of the follow-
ing actions, without prejudice to the rights of the Agent, any
Bank or the holder of any Note to enforce its claims against the
Company or any other Credit Party: (i) declare all Revolving
Credit Commitments terminated, whereupon the Revolving Credit
Commitments of each Bank shall terminate immediately and any
commitment fee shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any
accrued interest on the Revolving Credit Loans and Term Loans,
and all other Obligations (other than Obligations relating to
Cash Management Loans) owing hereunder, to be, whereupon the same
shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Company; provided, that, if an Event of
Default specified in Sections 10.06, 10.07, 10.08 or 10.09 above
shall occur, the result which would occur upon the giving of
written notice by the Agent to any Credit Party, as specified in
clauses (i) and (ii) above, shall occur automatically without the
giving of any such notice; and (iii) may exercise any other
rights or remedies available under the Loan Documents, at law or
in equity; and (B) the Cash Management Lender may, by written
notice to the Company, take any or all of the following actions,
without prejudice to its rights, or the rights of the Agent, any
Bank or the holder of any Note, to enforce its claims against the
Company or any other Credit Party: (i) declare the Cash
Management Line of Credit Commitment terminated, whereupon the
Cash Management Line of Credit Commitment shall terminate
immediately; (ii) declare the principal of and any accrued
interest on the Cash Management Loans, and all other Obligations
relating to Cash Management Loans owing hereunder, to be,
whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Company; provided, that, if
an Event of Default specified in Sections 10.06, 10.07, 10.08 or
10.09 above shall occur, the result which would occur upon the
giving of written notice by the Cash Management Lender to any
Credit Party, as specified in clauses (i) and (ii) above, shall
occur automatically without the giving of any such notice; and
(iii) may exercise any other rights or remedies available under
the Loan Documents, at law or in equity.
ARTICLE XI
THE AGENT
Section 11.01. Appointment of Agent. Each Bank hereby
designates TCB as Agent to administer all matters concerning the
Revolving Credit Loans and the Term Loans and to act as herein
specified. Each Bank hereby irrevocably authorizes, and each
holder of any Revolving Credit Note and Term Note by the ac-
ceptance of such Note shall be deemed irrevocably to authorize,
the Agent to take such actions on its behalf under the provisions
of this Agreement, the other Loan Documents, and all other
instruments and agreements referred to herein or therein, and to
exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through their agents or employees.
Section 11.02. Authorization of Agent with Respect to
the Guaranty Agreement. (a) Each Bank hereby authorizes the
Agent to accept the Guaranty Agreement substantially in the form
attached hereto, and to take all action contemplated thereby.
All rights and remedies under the Guaranty Agreement may be
exercised by the Agent for the benefit of the Agent and the Banks
and the other beneficiaries thereof upon the terms thereof. The
Banks further agree that the Agent may assign its rights and
obligations under the Guaranty Agreement to any affiliate of the
Agent or to any trustee, if necessary or appropriate under
applicable law, which assignee in each such case shall (subject
to compliance with any requirements of applicable law governing
the assignment of such Guaranty Agreement) be entitled to all the
rights of the Agent under and with respect to the Guaranty
Agreement.
(b) In each circumstance where, under any provision of
the Guaranty Agreement, the Agent shall have the right to grant
or withhold any consent, exercise any remedy, make any
determination or direct any action by the Agent under such
Guaranty Agreement, the Agent shall act in respect of such
consent, exercise of remedies, determination or action, as the
case may be, with the consent of and at the direction of the
Required Banks; provided, however, that no such consent of the
Required Banks shall be required with respect to any consent,
determination or other matter that is, in the Agent's judgment,
ministerial or administrative in nature. In each circumstance
where any consent of or direction from the Required Banks is
required, the Agent shall send to the Banks a notice setting
forth a description in reasonable detail of the matter as to
which consent or direction is requested and the Agent's proposed
course of action with respect thereto. In the event the Agent
shall not have received a response from any Bank within five (5)
Business Days after such Bank's receipt of such notice, such Bank
shall be deemed to have agreed to the course of action proposed
by the Agent.
Section 11.03. Nature of Duties of Agent. The Agent
shall have no duties or responsibilities except those expressly
set forth in this Agreement and the other Loan Documents. None
of the Agent nor any of its respective officers, directors,
employees or agents shall be liable for any action taken or
omitted by it as such hereunder or in connection herewith, unless
caused by its or their gross negligence or willful misconduct.
The duties of the Agent shall be ministerial and administrative
in nature; the Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Bank; and nothing in
this Agreement, express or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect
of this Agreement or the other Loan Documents except as expressly
set forth herein.
Section 11.04. Lack of Reliance on the Agent.
(a) Independently and without reliance upon the Agent,
each Bank to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the
financial condition and affairs of the Credit Parties in
connection with the taking or not taking of any action in
connection herewith, and (ii) its own appraisal of the
creditworthiness of the Credit Parties, and, except as expressly
provided in this Agreement, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to
provide any Bank with any credit or other information with
respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Bank for
any recitals, statements, information, representations or
warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the
Notes, the Guaranty Agreement or any other documents contemplated
hereby or thereby, or the financial condition of the Credit
Parties, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or con-
ditions of this Agreement, the Notes, the Guaranty Agreement or
the other documents contemplated hereby or thereby, or the
financial condition of the Credit Parties, or the existence or
possible existence of any Default or Event of Default.
Section 11.05. Certain Rights of the Agent. If the
Agent shall request instructions from the Required Banks with re-
spect to any action or actions (including the failure to act) in
connection with this Agreement, the Agent shall be entitled to
refrain from such act or taking such act, unless and until the
Agent shall have received instructions from the Required Banks;
and the Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Bank shall
have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Banks; provided,
however, that the Agent shall not be required to act or not act
in accordance with any instructions of the Banks if to do so
would expose the Agent to personal liability or would be contrary
to any Loan Document or to applicable law.
Section 11.06. Reliance by Agent. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cable gram, radiogram,
order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person. The Agent may consult with
legal counsel (including in-house legal counsel and counsel for
any Credit Party), in-house accountants, independent public
accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants
or experts.
Section 11.07. Indemnification of Agent. To the ex-
tent the Agent is not reimbursed and indemnified by the Credit
Parties for amounts advanced with respect to the Revolving Credit
Commitments and the Term Loans, each Bank will reimburse and
indemnify the Agent, ratably according to the respective amounts
of the outstanding Revolving Credit Loans and Term Loans (or if
no amounts are outstanding, ratably in accordance with the
Revolving Credit Commitments), in either case, for and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel
fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted
against the Agent in performing its duties hereunder, in any way
relating to or arising out of this Agreement or the other Loan
Documents; provided that no Bank shall be liable to the Agent for
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct.
Section 11.08. The Agent in its Individual Capacity.
With respect to its obligation to lend under this Agreement, the
Loans made by it and the Notes issued to it, the Agent shall have
the same rights, obligations and powers hereunder as any other
Bank or holder of a Note and may exercise the same as though it
were not performing the duties specified herein; and the terms
"Banks", "Required Banks", "holders of Notes", or any similar
terms shall, unless the context clearly otherwise indicates,
include the Agent in its individual capacity. The Agent may
accept deposits from, lend money to, and generally engage in any
kind of banking, trust, financial advisory or other business with
the Companies, its Subsidiaries or any of their affiliates as if
it were not performing the duties specified herein, and may
accept fees and other consideration from the Company and its
Subsidiaries for services in connection with this Agreement and
otherwise without having to account for the same to the Banks.
Section 11.09. Holders of Notes. The Agent may deem
and treat the payee of any Note as the owner thereof for all
purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the
Agent. Any request, authority or consent of any Person who, at
the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
Section 11.10. Successor Agent.
(a) The Agent may resign at any time by giving written
notice thereof to the Banks and the Company and may be removed at
any time with or without cause by Banks holding at least 51% of
(i) the amount of the outstanding Revolving Credit Commitments
plus (ii) the principal amount of all Revolving Credit Loans and
Term Loans for any Bank whose Revolving Credit Commitment has
been terminated (the "Agent Appointment Banks"); provided,
however, the Agent may not resign or be removed until a successor
Agent has been appointed and shall have accepted such
appointment. Upon any such resignation or removal, the Agent
Appointment Banks shall have the right to appoint a successor
Agent subject to the Company's prior written approval. If no
successor Agent shall have been so appointed by the Agent
Appointment Banks, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of
resignation or the Agent Appointment Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent subject to the Company's prior
written approval, which shall be a bank which maintains an office
in the United States, or a commercial bank organized under the
laws of the United States of America or any State thereof, or any
Affiliate of such bank, having a combined capital and surplus of
at least $100,000,000. In the event that the Agent is no longer
a Bank hereunder with respect to the Revolving Credit Commitments
or Term Loans, the Agent shall promptly resign as Agent.
(b) Upon the acceptance of any appointment as the
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article XI shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was an Agent under this
Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including bank wire, telex, telecopy or similar teletransmission
or writing) and shall be given to such party at its address set
forth on the signature pages hereof, or such other address as
such party may hereafter specify by notice to the Agent and the
Company. Each such notice, request or other communication shall
be effective if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or if given by any other means
(including, without limitation, by air courier), when delivered
or received at the address specified in this Section; provided
that notices to the Agent shall not be effective until received.
Section 12.02. Amendments, Etc. No amendment or
waiver of any provision of this Agreement or the other Loan
Documents, nor consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Banks, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided
that no amendment, waiver or consent shall, unless in writing and
signed by all the Banks do any of the following: (i) waive any
of the conditions specified in Section 6.01 or 6.02, (ii)
increase the Revolving Credit Commitments or other contractual
obligations to the Company under this Agreement, (iii) reduce the
principal of, or interest on, the Notes or any fees hereunder,
(iv) postpone any date fixed for the payment in respect of
principal of, or interest on, the Notes or any fees hereunder,
(v) change the percentage of the Revolving Credit Commitments or
of the aggregate unpaid principal amount of the Notes, or the
number or identity of Banks which shall be required for the Banks
or any of them to take any action hereunder, (vi) agree to re-
lease any Guarantor from its obligations under any Guaranty
Agreement, (vii) modify the definition of "Required Banks," or
(viii) modify this Section 12.02. Notwithstanding the foregoing,
no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Banks required hereinabove
to take such action, affect the rights or duties of the Agent
under this Agreement or under any other Loan Document.
Section 12.03. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Agent, any Bank or any holder
of a Note in exercising any right or remedy hereunder or under
any other Loan Document, and no course of dealing between any
Credit Party and the Agent, any Bank or the holder of any Note
shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy hereunder or under any
other Loan Document preclude any other or further exercise
thereof or the exercise of any other right or remedy hereunder or
thereunder. The rights and remedies herein expressly provided
are cumulative and not exclusive of any rights or remedies which
the Agent, any Bank or the holder of any Note would otherwise
have. No notice to or demand on any Credit Party not required
hereunder or under any other Loan Document in any case shall
entitle any Credit Party to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the
rights of the Agent, the Banks or the holder of any Note to any
other or further action in any circumstances without notice or
demand.
Section 12.04. Payment of Expenses, Etc. The Company
shall:
(i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable,
out-of-pocket costs and expenses of the Agent in the
administration (both before and after the execution hereof
and including reasonable expenses actually incurred relating
to advice of counsel as to the rights and duties of the
Agent and the Banks with respect thereto) of, and in
connection with the preparation, execution and delivery of,
preservation of rights under, enforcement of, and, after a
Default or Event of Default, refinancing, renegotiation or
restructuring of, this Agreement and the other Loan
Documents and the documents and instruments referred to
therein, and any amendment, waiver or consent relating
thereto (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel for the
Agent), and in connection with the release of the Prior
Liens (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel for the
Agent), and in the case of enforcement of this Agreement or
any Loan Document after an Event of Default, all such
reasonable, out-of-pocket costs and expenses (including,
without limitation, the reasonable fees actually incurred
and disbursements of both in-house and outside counsel), for
any of the Banks;
(ii) subject, in the case of certain Taxes, to the
applicable provisions of Section 5.07(b), pay and hold each
of the Banks harmless from and against any and all present
and future stamp, documentary, and other similar Taxes with
respect to this Agreement, the Notes and any other Loan
Documents, or any payments due thereunder, and save each
Bank harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay
such Taxes; and
(iii) indemnify the Agent and each Bank and their
respective officers, directors, employees, representatives
and agents from, and hold each of them harmless against, any
and all costs, losses, liabilities, claims, damages or
expenses incurred by any of them (whether or not any of them
is designated a party thereto) (an "Indemnitee") arising out
of or by reason of any investigation, litigation or other
proceeding related to any actual or proposed use of the
proceeds of any of the Loans or any Credit Party's entering
into and performing of the Agreement, the Notes, or the
other Loan Documents, including, without limitation, the
reasonable fees actually incurred and disbursements of
counsel (including foreign counsel) incurred in connection
with any such investigation, litigation or other proceeding;
provided, however, the Company shall not be obligated to
indemnify any Indemnitee for any of the foregoing arising
out of such Indemnitee's gross negligence or willful
misconduct.
If and to the extent that the obligations of the Company under
this Section 12.04 are unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under
applicable law.
Section 12.05. Right of Setoff. In addition to and
not in limitation of all rights of offset that any Bank or other
holder of a Note may have under applicable law, each Bank or
other holder of a Note shall, upon the occurrence of any Event of
Default and whether or not such Bank or such holder has made any
demand or any Credit Party's obligations are matured, have the
right to appropriate and apply to the payment of any Credit
Party's obligations hereunder and under the other Loan Documents,
all deposits of any Credit Party (general or special, time or
demand, provisional or final) then or thereafter held by and
other indebtedness or property then or thereafter owing by such
Bank or other holder to any Credit Party, whether or not related
to this Agreement or any transaction hereunder.
Section 12.06. Benefit of Agreement.
(a) This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Company may
not assign or transfer any of its interest hereunder without the
prior written consent of the Banks, and no Bank may assign or
transfer any of its interest hereunder without the prior written
consent of the Agent and the Company, except to any Affiliate of
such Bank.
(b) Any Bank may make, carry or transfer Loans at, to
or for the account of, the office of an Affiliate of such Bank.
Section 12.07. Notification of Event of Default. Upon
its receiving notice thereof, each Bank shall promptly notify the
other Banks and the Agent of the occurrence of an Event of
Default or an "Event of Default" under the terms of the Guaranty
Agreement or any other agreement, document or instrument required
hereunder.
Section 12.08. Governing Law; Submission to
Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF
GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR ANY
OTHER COURT OF THE STATE OF GEORGIA SITTING IN FULTON COUNTY OR
OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF
GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY
JURY, AND THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) Nothing herein shall affect the right of the
Agent, any Bank, any holder of a Note or any Credit Party to
serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
Section 12.09. Independent Nature of Banks' Rights.
The amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be entitled to
protect and enforce its rights pursuant to this Agreement and its
Notes, and it shall not be necessary for any other Bank to be
joined as an additional party in any proceeding for such purpose.
Section 12.10. Counterparts. This Agreement may be
executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
Section 12.11. Effectiveness; Survival.
(a) This Agreement shall become effective on the date
on which all of the parties hereto shall have signed a copy
hereof (whether the same or different copies) and shall have
delivered the same to the Agent pursuant to Section 12.01 or, in
the case of the Banks, shall have given to the Agent written or
telex notice (actually received) that the same has been signed
and mailed to them.
(b) The obligations of the Company under Sections
5.07(b), 5.10, 5.12, 5.13, 5.17 and 12.04 hereof shall survive
the payment in full of the Notes after the later of the Revolving
Credit Termination Date or the Term Loan Maturity Date. All
representations and warranties made herein, in the certificates,
reports, notices, and other documents delivered pursuant to this
Agreement shall survive the execution and delivery of this
Agreement, the other Loan Documents, and such other agreements
and documents, the making of the Loans hereunder, and the
execution and delivery of the Notes.
Section 12.12. Severability. In case any provision in
or obligation under this Agreement or the other Loan Documents
shall be invalid, illegal or unenforceable, in whole or in part,
in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 12.13. Independence of Covenants. All
covenants hereunder shall be given independent effect so that if
a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant,
shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
Section 12.14. Change in Accounting Principles, Fiscal
Year or Tax Laws. If (i) any preparation of the financial
statements referred to in Section 8.01 hereafter occasioned by
the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accounts (or
successors thereto or agencies with similar functions) result in
a material change in the method of calculation of financial
covenants, standards or terms found in this Agreement, (ii) there
is any change in the Company's fiscal quarter or fiscal year, or
(iii) there is a material change in federal tax laws which
materially affects any of the ability of the Company and its
Subsidiaries to comply with the financial covenants, standards or
terms found in this Agreement, the Company and the Required Banks
agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the de-
sired result that the criteria for evaluating any of the
financial condition of the Companies shall be the same after such
changes as if such changes had not been made. Unless and until
such provisions have been so amended, the provisions of this
Agreement shall govern.
Section 12.15. Headings Descriptive; Entire Agreement.
The headings of the several sections and subsections of this
Agreement are inserted for convenience only and shall not in any
way affect the meaning or construction of any provision of this
Agreement. This Agreement, the other Loan Documents, and the
agreements and documents required to be delivered pursuant to the
terms of this Agreement constitute the entire agreement among the
parties hereto and thereto regarding the subject matters hereof
and thereof and supersede all prior agreements, representations
and understandings related to such subject matters.
Section 12.16 Usury. It is the intent of the parties
hereto not to violate any federal or state law, rule or
regulation pertaining either to usury or to the contracting for
or charging or collecting of interest, and the Company and the
Banks agree that, should any provision of this Agreement or of
the Notes, or any act performed hereunder or thereunder, violate
any such law, rule or regulation, then the excess of interest
contracted for or charged or collected over the maximum lawful
rate of interest shall be applied to the outstanding principal
indebtedness due to the Banks by the Company under this
Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and attested to by their duly authorized
officers as of the date and year first above written.
COMPANY
Address for Notices: AARON RENTS, INC.
1100 Aaron Building
309 East Paces Ferry Road
Atlanta, Georgia 30305 By:________________________________
Attn: Gilbert L. Danielson Name:___________________________
Title:__________________________
[CORPORATE SEAL]
Attest:____________________________
Name:___________________________
Title:__________________________
AGENT:
Address for Notices: TRUST COMPANY BANK, as Agent for
the
Banks
Twenty Five Park Place
Atlanta, Georgia 30303
Attn: Willem-Jan O. Hattink By:________________________________
Name:___________________________
Title:__________________________
Payment Office:
Twenty Five Park Place By:________________________________
23rd Floor Name:___________________________
Atlanta, Georgia 30303 Title:__________________________
<PAGE>
BANKS:
Address for Notices: TRUST COMPANY BANK
Twenty Five Park Place
Atlanta, Georgia 30303
Attn: Willem-Jan O. Hattink By:________________________________
Name:___________________________
Title:__________________________
Payment Office:
Twenty Five Park Place By:________________________________
23rd Floor Name:___________________________
Atlanta, Georgia 30303 Title:__________________________
REVOLVING CREDIT COMMITMENT: $30,000,000.00
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 40%
CASH MANAGEMENT LINE OF CREDIT: $3,000,000
<PAGE>
Address for Notices: FIRST UNION NATIONAL BANK OF
GEORGIA
999 Peachtree Street
Suite 640, P.O. Box 740074
Atlanta, Georgia 30374 By:________________________________
Attn: Michael Dunlap Name:___________________________
Title:__________________________
Payment Office:
999 Peachtree Street
Suite 640, P.O. Box 740074
Atlanta, Georgia 30374
REVOLVING CREDIT COMMITMENT: $30,000,000.00
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 40%
<PAGE>
Address for Notices: BANK OF AMERICA ILLINOIS
______________________
______________________
Attn: By:________________________________
Name:___________________________
Title:__________________________
Payment Office
______________________
______________________
Attn:
REVOLVING CREDIT COMMITMENT: $15,000,000.00
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 20%
<PAGE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT
("Guaranty Agreement") dated as of January 6, 1995, by and among
AARON INVESTMENT COMPANY, a Delaware corporation (the
"Guarantor"), AARON ENTERPRISES, INC., a Georgia corporation and
all other Subsidiaries of Aaron Rents, Inc., a Georgia
corporation (the "Company"), now existing or hereafter created,
for the benefit of TRUST COMPANY BANK, a Georgia banking
corporation ("TCB"), FIRST UNION NATIONAL BANK OF GEORGIA, a
national banking association ("First Union") and Bank of America
Illinois, an Illinois banking corporation ("Bank of America")
(collectively, the "Banks" and individually, a "Bank"), and TRUST
COMPANY BANK, as agent for the Banks (in such capacity, the
"Agent");
W I T N E S S E T H:
WHEREAS, the Company and the
Banks have entered into that certain Second Amended and Restated
Revolving Credit and Term Loan Agreement dated as of the date
hereof (the "Loan Agreement"); capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in
the Loan Agreement;
WHEREAS, pursuant to the Loan
Agreement, the Banks have established a revolving credit in favor
of the Company not to exceed $75,000,000 in aggregate principal
at any one time outstanding, evidenced by three certain Revolving
Credit Notes (each a "Revolving Credit Note"), two in the
principal amount of $30,000,000, each dated as of the date
hereof, executed by the Company in favor of each of TCB and First
Union, and one in the principal amount of $15,000,000, dated as
of the date hereof, executed by the Company in favor of Bank of
America, all convertible into term loans evidenced by term notes
at the option of the Banks (the "Term Notes");
WHEREAS, Trust Company Bank
has established a cash management line of credit in favor of the
Company not to exceed $3,000,000 in principal amount at any one
time outstanding, evidenced by a certain Cash Management Line of
Credit Note, dated as of the date hereof, executed by the Company
in favor of Trust Company Bank (the Revolving Credit Notes, the
Term Notes and the Cash Management Line of Credit Note are
hereinafter collectively referred to as the "Notes");
WHEREAS, the Company owns one
hundred percent (100%) of the issued and outstanding capital
stock of the Guarantors, and although the Guarantors are separate
legal entities, the making of the advances by the Banks to the
Company and the other extensions of credit under the Loan
Agreement provide a direct, beneficial, economic advantage to the
Guarantors as a result of their relationship to the Company; and
WHEREAS, it is a condition
precedent to the making of Revolving Credit Loans and Cash
Management Loans under the Loan Agreement that the Guarantors
execute this Guaranty Agreement, and the Guarantors wish to
execute this Guaranty Agreement in satisfaction of said condition
precedent;
NOW, THEREFORE, in
consideration of the premises and for other valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the Guarantors hereby agree as follows:
ARTICLE I
Covenants and Agreements
Section 1.1. The Guarantors
hereby jointly and severally, unconditionally and irrevocably
guarantee to the Banks the full and prompt payment of all
advances and interest thereon under each of the Notes, and all
other amounts due and payable by the Company under the terms of
the Loan Agreement, when and as the same shall become due,
whether at the stated maturity thereof, by acceleration or
otherwise; and agree to pay all reasonable expenses and charges
(including court costs and actual and reasonable attorneys' fees
of both in-house counsel and outside counsel) paid or incurred by
the Agent or any Bank in realizing upon any of the payments
hereby guaranteed or in enforcing this Guaranty Agreement. All
payments by the Guarantors shall be paid in lawful money of the
United States of America.
If the Company shall at any
time default in making any of the payments required to be made
under the Loan Agreement as and when the same shall become due
and payable such that there shall have occurred an "Event of
Default" under the Loan Agreement, the Guarantors shall
immediately make such payments or cause such payments to be made.
Each and every default in
payment of the advances and the interest thereon under each of
the Notes shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder as each
cause of action arises. The obligations guaranteed by the
Guarantors under this Section 1.1 are sometimes hereinafter
collectively referred to as the "Guaranteed Obligations."
Section 1.2. The Guarantors
additionally hereby jointly and severally, unconditionally and
irrevocably guarantee the full and prompt performance by the
Company of all of the other covenants and obligations on the part
of the Company under the Loan Agreement. If the Company shall at
any time default in the performance of any such other covenant or
obligation contained in the Loan Agreement such that an "Event of
Default" under the Loan Agreement shall have occurred, the
Guarantors will immediately perform the same or cause the same to
be performed.
Section 1.3. The obligations
of the Guarantors under this Guaranty Agreement shall include the
obligation to reimburse the Banks for any preferential payments
received from the Company under or pursuant to the Loan Agreement
or this Guaranty Agreement in the event that the Company becomes
a debtor under the United States Bankruptcy Code and such payment
has been determined by the court having jurisdiction over the
matter to be a preferential payment. Notwithstanding anything in
this Guaranty Agreement to the contrary, if a bankruptcy petition
has been filed by or against the Company during any preferential
period (as established by the United States Bankruptcy Court or
other applicable law) and the Company has made payments to the
Banks during said preferential period, this Guaranty Agreement
shall not be terminated unless and until a final, nonappealable
decision by a court of competent jurisdiction or other agreement
has been entered or reached pursuant to which the Banks shall be
entitled to retain all such moneys paid during such preferential
period.
Section 1.4. The obligations
of the Guarantors under this Guaranty Agreement shall be primary,
absolute and unconditional and shall remain in full force and
effect until the Guaranteed Obligations or any other liability
guaranteed hereby shall have been paid or provided for,
irrespective of the validity, regularity or enforceability of any
of the Notes or the Loan Agreement and, until such payment, shall
not be affected, modified or impaired upon the happening from
time to time of any event, including, without limitation, any of
the following, whether or not with notice to or the consent of
the Guarantors:
(a) the compromise,
settlement, release or termination
of any or all of the obligations,
covenants or agreements of the
Banks under the Loan Agreement;
(b) to the extent permitted
by law, the failure to give notice
to the Guarantors of the occurrence
of an Event of Default under the
terms and provisions of this
Guaranty Agreement or the
occurrence of an "Event of Default"
under the Loan Agreement;
(c) the waiver of the
payment, performance or observance
by the Banks, the Company or any
Guarantor of any of the
obligations, covenants or
agreements of any of them contained
in the Loan Agreement or this
Guaranty Agreement (except to the
extent waived);
(d) the extension of the time
for payment of any of the advances
or interest thereon under any of
the Notes or of the time for
performance of any other
obligations, covenants or
agreements arising out of the Loan
Agreement or this Guaranty
Agreement or the extension or the
renewal of any thereof;
(e) the modification or
amendment (whether material or
otherwise) of any obligation,
covenant or agreement set forth in
the Loan Agreement;
(f) the taking or the
omission of any of the actions
referred to in the Loan Agreement
or this Guaranty Agreement;
(g) any failure, omission,
delay or lack on the part of the
Banks to enforce, assert or
exercise any right, power or remedy
conferred on the Banks in this
Guaranty Agreement or the Loan
Agreement;
(h) the voluntary or
involuntary liquidation,
dissolution, marshalling of assets
and liabilities, receivership,
insolvency, bankruptcy, assignment
for the benefit of creditors,
reorganization, arrangement,
composition with creditors or
readjustment of, or other similar
proceedings affecting the
Guarantors or the Banks or any of
their assets, or any allegation or
contest of the validity of this
Guaranty Agreement in any such
proceeding or the sale or other
disposition of all or substantially
all the assets of the Banks or the
Guarantors; provided, however, that
this Guaranty Agreement shall
continue to be effective or be
reinstated, as the case may be, if,
at any time, payment, or any part
thereof, pursuant to Section 1.1
hereof, is rescinded or must
otherwise be restored or returned
by the Banks upon any of the events
listed in this Subsection (h) or
otherwise, as though such payment
has not been made;
(i) to the extent permitted
by applicable law, the release or
discharge of the Guarantors from
the performance or observance of
any obligation, covenant or
agreement contained in this
Guaranty Agreement by operation of
law;
(j) the default or failure of
the Guarantors to fully perform any
of the obligations thereof set
forth in this Guaranty Agreement;
(k) the invalidity or
unenforceability of the Loan
Agreement or any of the Notes;
(l) the release, surrender or
substitution, either with or
without consideration, of any
property, collateral or other
security of any kind or nature
whatsoever held by the Banks, or
held by any other Person on behalf
of or for the account of the Banks,
securing any obligation covered by
or under this Guaranty Agreement;
(m) the lack of capacity or
authority on the part of the Banks,
the Company or the Guarantors to
perform their obligations under
this Guaranty Agreement, the Loan
Agreement or any of the Notes;
(n) the creation or incurring
of any new or additional obligation
of the Banks, the Company or the
Guarantors under this Guaranty
Agreement or the Loan Agreement;
(o) the breach of any duty on
the part of the Banks, the Company,
or any other Person to disclose to
the Guarantors any facts which such
Person may now or hereafter know
regardless of whether any such
Person has reason to believe that
any such facts materially increase
the risk beyond which the
Guarantors intends to assume, and
regardless of whether any such
Person has reason to believe that
such facts are unknown to the
Guarantors; or
(p) the existence of any
defense based upon an election of
remedies by the Banks.
Section 1.5. In the event of
a default in payment of the advances under any of the Notes when
and as the same shall become due, whether at the stated maturity
thereof, by acceleration or otherwise, or in the event of a
default in the payment of any interest on any of the Notes when
and as the same shall become due, or in the event of a default in
the payment of any other amount due under the Loan Agreement, and
in each instance the expiration of any applicable cure period
provided for in the Loan Agreement, the Agent, subject to the
unanimous consent of the Banks, may proceed hereunder, and the
Agent, in its sole discretion, shall have the right to proceed
first and directly against any Guarantors, its successors and
assigns, under this Guaranty Agreement without proceeding against
the Company or any other Guarantor, or exhausting any other
remedies which it may have and without resorting to any other
security held by the Agent.
Section 1.6. The Guarantors
hereby expressly waive notice in writing, or otherwise, from the
Banks of their acceptance and reliance on this Guaranty
Agreement. The Guarantors agree to pay all reasonable costs,
expenses and fees, including all actual and reasonable attorneys'
fees of both in-house counsel and outside counsel, which may be
incurred by the Agent in enforcing or attempting to enforce this
Guaranty Agreement following any default on the part of any
Guarantor hereunder, whether the same shall be enforced by suit
or otherwise.
Section 1.7. The Guarantors
hereby acknowledge that there may be future advances by the Banks
to or for the benefit of the Company (although the Banks may be
under no obligation to make such advances) and that the number
and amount of the liabilities guaranteed hereby may fluctuate
from time to time hereafter. Each Guarantor expressly agrees that
its obligations hereunder shall remain absolute, primary and
unconditional notwithstanding such future advances and
fluctuations, if any, and agree that, in any event, this
agreement is a continuing guaranty and shall remain in force at
all times hereafter, whether there are any liabilities
outstanding or not.
Section 1.8. (a) It is the
intent of the Guarantors, the Agent and the Banks that each
Guarantor's maximum obligations hereunder shall be, but not in
excess of:
(i) in a case or proceeding commenced by or
against such Guarantor under the Bankruptcy Code on or
within one year from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would not
otherwise cause the Guaranteed Obligations (or any other
obligations of such Guarantor to the Banks) to be avoidable
or unenforceable against such Guarantor under (A) Section
548 of the Bankruptcy Code or (B) any state fraudulent
transfer or fraudulent conveyance act or statute applied in
such case or proceeding by virtue of Section 544 of the
Bankruptcy Code; or
(ii) in a case or proceeding commenced by or
against such Guarantor under the Bankruptcy Code subsequent
to one year from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would not
otherwise cause the Guaranteed Obligations (or any other
obligations of such Guarantor to the Banks) to be avoidable
or unenforceable against such Guarantor under any state
fraudulent transfer or fraudulent conveyance act or statute
applied in any such case or proceeding by virtue of Section
544 of the Bankruptcy Code; or
(iii) in a case or proceeding commenced by or
against such Guarantor under any law, statute or regulation
other than the Bankruptcy Code (including, without
limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt, dissolution,
liquidation or similar debtor relief laws), the maximum
amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of such Guarantor to
the Banks) to be avoidable or unenforceable against the
Guarantor under such law, statute or regulation including,
without limitation, any state fraudulent transfer or
fraudulent conveyance act or statute applied in any such
case or proceeding.
(The substantive laws under which the possible avoidance or
unenforceability of the Guaranteed Obligations (or any other
obligations of such Guarantor to the Banks) shall be determined
in any such case or proceeding shall hereinafter be referred to
as the "Avoidance Provisions").
(b) To the end set forth in Section 1.8(a), but only
to the extent that the Guaranteed Obligations would
otherwise be subject to avoidance under the Avoidance
Provisions if any Guarantor is not deemed to have received
valuable consideration, fair value or reasonably equivalent
value for the Guaranteed Obligations, or if the Guaranteed
Obligations would render such Guarantor insolvent, or leave
such Guarantor with an unreasonably small capital to conduct
its business, or cause such Guarantor to have incurred debts
(or to have intended to have incurred debts) beyond its
ability to pay such debts as they mature, in each case as of
the time any of the Guaranteed Obligations are deemed to
have been incurred under the Avoidance Provisions and after
giving effect to the contribution by such Guarantor, the
maximum Guaranteed Obligations for which any Guarantor shall
be liable hereunder shall be reduced to that amount which,
after giving effect thereto, would not cause the Guaranteed
Obligations (or any other obligations of such Guarantor to
the Banks), as so reduced, to be subject to avoidance under
the Avoidance Provisions. This Section 1.8(b) is intended
solely to preserve the rights of the Guaranteed Parties
hereunder to the maximum extent that would not cause the
Guaranteed Obligations of any Guarantor to be subject to
avoidance under the Avoidance Provisions, and neither the
Guarantors nor any other Person shall have any right or
claim under this Section 1.8 as against the Guaranteed
Parties that would not otherwise be available to such Person
under the Avoidance Provisions.
ARTICLE II
Special Covenants
Section 2.1. Any notices served upon any Guarantor
shall be sent by registered or certified mail to such Guarantor
at the address set forth below, or to such other address as may
be furnished by such Guarantor to the Agent in writing.
Section 2.2. Any rights that any Guarantor may have
against the Company arising out of the Guaranty Agreement or out
of the Loan Agreement or otherwise shall be subordinate to the
rights of the Banks arising out of the Guaranty Agreement or the
Loan Agreement, and no Guarantor shall exercise or assert any
subrogation rights against the Company prior to payment in full
of the Guaranteed Obligations so long as an Event of Default
hereunder shall have occurred and is continuing.
ARTICLE III
Events of Default; Remedies
Section 3.1. The following shall be "Events of
Default" under this Guaranty Agreement:
(1) the failure in any material respect of any
Guarantor to abide by or perform its obligations under
Section 4.7 hereof within any applicable grace period given
the Company to perform a particular duty or obligation under
the Loan Agreement;
(2) the failure in any material respect of any
Guarantor to abide by or perform any of the other covenants
on the part of such Guarantor contained herein;
(3) the discovery by the Agent that any statement,
representation or warranty of any Guarantor contained herein
is false, misleading or erroneous in any material respect;
or
(4) the occurrence and continuance of an "Event of
Default" under the Loan Agreement.
Section 3.2. If an Event of Default hereunder shall
occur, the Agent, subject to the unanimous consent of the Banks,
shall be entitled to exercise all remedies available against any
Guarantor at law or in equity, including, but not limited to, the
recovery of damages for the breach hereof or specific enforcement
of this Guaranty Agreement, or both, and to recover from any
Guarantor all costs and expenses of exercising such remedies
hereunder, including actual and reasonable attorneys' fees and
actual costs, whether or not the exercise of such remedies
involved litigation. EACH GUARANTOR EXPRESSLY AGREES THAT THE
PROPER VENUE FOR ANY ACTION WHICH MAY BE BROUGHT UNDER THIS
GUARANTY AGREEMENT, IN ADDITION TO ANY OTHER VENUE PERMITTED BY
LAW, SHALL BE IN THE STATE OF GEORGIA. EACH GUARANTOR FURTHER
AGREES THAT ANY SUIT HEREUNDER MAY BE BROUGHT IN EITHER THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA
OR THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA. SHOULD IT
BECOME NECESSARY FOR THE AGENT TO INSTITUTE ANY ACTION UNDER THIS
GUARANTY AGREEMENT, EACH GUARANTOR (i) DOES HEREBY SUBMIT ITSELF
TO THE JURISDICTION OF ANY COURT SITTING IN THE STATE OF GEORGIA
(AND ANY COURT OF APPEALS FROM ANY SUCH COURT) IN REGARD TO ANY
DISPUTE ARISING UNDER THIS GUARANTY AGREEMENT; AND (ii) AGREES
THAT ENTRY OF ANY FINAL AND NONAPPEALABLE JUDGMENT BY ANY SUCH
COURT AND ARISING UNDER THIS GUARANTY AGREEMENT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, SHALL BE BINDING UPON AND SHALL BE
ENTITLED TO THE FULL FAITH AND CREDIT OF THE COURT OF ANY STATE,
TERRITORY OR POSSESSION OF THE UNITED STATES SHOULD THE AGENT
FIND IT NECESSARY TO ENFORCE SAID JUDGMENT IN ANY SUCH STATE,
TERRITORY OR POSSESSION AGAINST SUCH GUARANTOR.
ARTICLE IV
Miscellaneous
Section 4.1. The obligations of each Guarantor
hereunder shall arise absolutely and unconditionally when this
Guaranty Agreement is executed and delivered to the Banks.
Section 4.2. No remedy herein conferred upon or
reserved to the Agent is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy
shall be cumulative and shall be in addition to every other
remedy given under this Guaranty Agreement, or now, or hereafter,
existing at law, or in equity, or by statute. THIS GUARANTY
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF GEORGIA. No delay or omission to
exercise any right or power accruing upon any default, omission
or failure or performance hereunder shall impair any such right
or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time as often
as may be deemed expedient. In order to entitle the Agent to
exercise any remedy reserved to it in this Guaranty Agreement, it
shall not be necessary to give any notice, other than such notice
as may be herein expressly required. In the event any provision
contained in this Guaranty Agreement should be breached by any
party and thereafter duly waived by the other party so empowered
to act, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach
hereunder. No waiver, amendment, release or modification of this
Guaranty Agreement shall be established by conduct, custom or
course of dealing, but solely by an instrument in writing duly
executed by the parties thereunto, duly authorized by this
Guaranty Agreement.
Section 4.3. This Guaranty Agreement constitutes the
entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof and may be executed
simultaneously in several counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
Section 4.4. The invalidity or unenforceability of any
one or more phrases, sentences, clauses or sections in this
Guaranty Agreement contained shall not affect the validity or
enforceability of the remaining portions of this Guaranty
Agreement or any part thereof.
Section 4.5. Where this Guaranty Agreement provides
for notice in any manner, such notice may be waived in writing by
the person entitled to receive such notice, either before or
after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice shall be given in the manner provided
for in Section 2.1 hereof.
Section 4.6. Each Guarantor hereby agrees to indemnify
and defend the Banks and the Agent and hold them harmless from
and against any and all claims, losses, liabilities or damages
(other than such as result from gross negligence or willful
misconduct) in any way growing out of or resulting from this
Guaranty Agreement, including, without limitation, the
enforcement of this Guaranty Agreement.
Section 4.7. Each Guarantor accepts the terms and
provisions of the Loan Agreement and agrees to perform all duties
and obligations, express or implied, of the Company thereunder in
the event the Company shall fail to perform any thereof.
Section 4.8. Upon execution and delivery by any
Subsidiary of the Company of an instrument in the form of
Exhibit 1, such Subsidiary of the Company shall become a
Guarantor hereunder with the same force and effect as if
originally named a Guarantor herein (each an "Additional
Guarantor") and its obligations hereunder shall be joint and
several with the Guarantors that originally executed this
Guaranty. The execution and delivery of any such instrument
shall not require the consent of any other Guarantor hereunder.
The rights and obligations of the Guarantors hereunder shall
remain in full force and effect notwithstanding the addition of
any Additional Guarantor as a party to this Guaranty.
IN WITNESS WHEREOF, the Guarantors and the Agent have
caused this Guaranty to be duly executed and delivered by their
respective duly authorized officers as of the date first above
written.
GUARANTORS:
Address for Notices: AARON INVESTMENT COMPANY
c/o Mellon Bank Delaware
10th and Market Street
Second Floor By:
Wilmington Delaware 19801 Title:
[CORPORATE SEAL]
Address for Notices: AARON ENTERPRISES, INC.
c/o Mellon Bank Delaware
10th and Market Street
Second Floor By:
Wilmington Delaware 19801 Title:
[CORPORATE SEAL]
AGENT:
TRUST COMPANY BANK
By:
Title:
By:
Title:
SECTION 12 OF THE
FOREGOING GUARANTY
ACKNOWLEDGED AND
AGREED TO:
AARON RENTS, INC.
By:
Title:
<PAGE>
SUPPLEMENT
TO
GUARANTY AGREEMENT
THIS SUPPLEMENT TO GUARANTY AGREEMENT (this "Supplement
to Guaranty Agreement"), dated as of ___________, 199_, made by
______________________, a ________ corporation (the "Additional
Guarantor"), for the benefit of TRUST COMPANY BANK, a Georgia
banking corporation (the "TCB"), FIRST UNION NATIONAL BANK OF
GEORGIA, a national banking association and BANK OF AMERICA
ILLINOIS, an Illinois banking corporation (collectively, the
"Banks" and individually, a "Bank"), and TCB as agent for the
Banks (in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, Aaron Rents, Inc., a Georgia corporation (the
"Company"), the Banks and the Agent have entered into that
certain Second Amended and Restated Revolving Credit and Term
Loan Agreement dated as of January 6, 1995 (as amended, restated,
supplemented or otherwise modified from time to time, and
including all schedules and exhibits thereto, the "Loan
Agreement");
WHEREAS, certain Subsidiaries (the "Subsidiary
Guarantors") of the Company have executed and delivered a
Guaranty Agreement dated as of January 6, 1995 (as amended,
restated, supplemented or otherwise modified from time to time,
the "Guaranty") pursuant to which the Subsidiary Guarantors have
agreed to guarantee all of the obligations of the Company under
the Loan Agreement and the other Loan Documents (as defined in
the Loan Agreement);
WHEREAS, the Company owns, directly or indirectly, all
or a majority of the issued and outstanding capital stock of the
Additional Guarantor, and although the Additional Guarantor is
separate legal entity, the making of the advances by the Banks to
the Company under the Notes (as defined in the Guaranty) and the
other extensions of credit under the Loan Agreement provide a
direct, beneficial, economic advantage to the Additional
Guarantor as a result of its relationship to the Company; and
WHEREAS, it is a condition subsequent to the Banks'
obligation to make loans to the Company under the Loan Agreement
that the Additional Guarantor execute and deliver to the Agent
this Supplement to Guaranty Agreement, and the Additional
Guarantor desires to execute and deliver this Supplement to
Guaranty Agreement to satisfy such condition subsequent;
NOW, THEREFORE, in consideration of the premises and in
order to induce the Banks to make the loans to the Company under
the Loan Agreement, the Additional Guarantor hereby agrees as
follows:
1. Defined Terms. Capitalized terms not otherwise
defined herein which are used in the Guaranty are used herein
with the meanings specified for such terms in the Guaranty.
2. Additional Guarantor. The Additional Guarantor
agrees that it shall be and become a Guarantor for all purposes
of the Guaranty and shall be fully liable, jointly and severally
with the Subsidiary Guarantors thereunder to the Agent and the
Banks to the same extent and with the same effect as though the
Additional Guarantor had been a Guarantor executing and
delivering the Guaranty. Without limiting the foregoing, the
Additional Guarantor hereby jointly and severally (with respect
to the guaranties made by the Subsidiary Guarantors under the
Guaranty), irrevocably and unconditionally, guarantees the full
and prompt payment of all advances and interest thereon under
each of the Notes, and all other amounts due and payable by the
Company under the terms of the Loan Agreement, when and as the
same shall become due, whether at the stated maturity thereof, by
acceleration or otherwise; and agrees to pay all reasonable
expenses and charges (including court costs and actual and
reasonable attorneys' fees) paid or incurred by the Agent and or
any the Bank in realizing upon any of the payments hereby
guaranteed or in enforcing the Guaranty (as supplemented hereby),
subject, however, to the limitations expressly provided in
Section 1.8 of the Guaranty. All references in the Guaranty to
the "Guarantors" shall be deemed to include and to refer to the
Additional Guarantor.
3. Governing Law; Submission to Jurisdiction.
(a) THIS SUPPLEMENT TO GUARANTY AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS SUPPLEMENT TO GUARANTY AGREEMENT RELATED HERETO MAY BE
BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY OF THE STATE OF
GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS
SUPPLEMENT TO GUARANTY AGREEMENT, THE ADDITIONAL GUARANTOR HEREBY
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF
ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE AGENT OR OTHER
GUARANTEED PARTIES WITH RESPECT TO THIS SUPPLEMENT TO GUARANTY
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE ADDITIONAL
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS SUPPLEMENT TO
GUARANTY AGREEMENT OR ANY DOCUMENT RELATED THERETO. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ADDITIONAL GUARANTOR
IN ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the Additional Guarantor has caused
this Supplement to Guaranty to be duly executed and delivered
under seal by its duly authorized officers as of the date first
above written.
Address for Notices: ADDITIONAL GUARANTOR:
__________________________
By:
Title:
Attest:
Title:
[CORPORATE SEAL]
<PAGE>
FORM OF REVOLVING CREDIT NOTE
$__________ ________ __,
19__
Atlanta,
Georgia
FOR VALUE RECEIVED, the undersigned, AARON RENTS, INC.,
a Georgia corporation (the "Company"), promises to pay to the
order of __________________ (the "Bank") at its office at
,
or at such other place as the holder hereof shall designate to
the Company in writing, in immediately available funds in lawful
money of the United States of America, on the sooner of (i) the
Revolving Credit Termination Date (as defined in the Loan
Agreement referenced below), (ii) the Conversion Date (as defined
in the Loan Agreement referenced below) and (iii) acceleration of
the indebtedness evidenced by this Note as hereinafter provided,
the lesser of the principal sum of ______________ Dollars
($__________) or so much thereof as shall have been advanced
thereunder in accordance with that certain Second Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of
the January 6, 1995, among the Company, Trust Company Bank, a
Georgia banking corporation ("TCB"), First Union National Bank of
Georgia, a national banking association ("First Union"), Bank of
America Illinois, an Illinois banking corporation ("Bank of
America"), and TCB as agent for itself, Bank of America and First
Union (as hereafter amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement"), and not
theretofore repaid, as shown on the grid schedule attached hereto
(the "Grid Schedule").
In addition to principal, the Company agrees to pay
interest on the principal amounts disbursed hereunder from time
to time from the date of disbursement until paid in full at such
rates of interest per annum and upon such dates as set forth in
Section 5.03 of the Loan Agreement, computed on the basis of the
actual number of days elapsed in a 360-day year. Such interest
is to be paid to the Bank at the address set forth above in the
first paragraph of this Note or at such other place as the holder
hereof may designate by notice in writing to the Company.
This Revolving Credit Note ("Note") evidences Revolving
Credit Loans made by the Bank to the Company pursuant to the
terms and conditions of the Loan Agreement to which reference is
hereby made for a full and complete description of such terms and
conditions. All capitalized terms used in this Note shall have
the same meanings as set forth in the Loan Agreement.
The Bank shall at all times have a right of set-off
against any deposit balances of Company in the possession of the
Bank and the Bank may apply the same against payment of this Note
in accordance with the Loan Agreement. The payment of any
indebtedness evidenced by this Note prior to the Revolving Credit
Termination Date or the Conversion Date shall not affect the
enforceability of this Note as to any future, different or other
indebtedness incurred hereunder by the Company. In the event the
indebtedness evidenced by this Note is collected by legal action
or through an attorney-at-law, the Bank shall be entitled to
recover from Company all costs of collection, including, without
limitation, actual and reasonable attorneys' fees if collected by
or through an attorney-at-law.
Company acknowledges that the actual crediting of the
amount of any disbursement under the Loan Agreement to an account
of Company or recording such amount in the Grid Schedule shall,
in the absence of manifest error, constitute presumptive evidence
of such disbursement and that such advance was made and borrowed
under the Loan Agreement. Such account records or Grid Schedule
shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding and the payments made
under the Agreement at any time and from time to time, provided
that the failure of Bank to record on the Grid Schedule or in
such account the type or amount of any advance shall not affect
the obligation of the undersigned to repay such amount together
with interest thereon in accordance with this Note and the Loan
Agreement.
Upon the existence and during the continuation of an
Event of Default as defined in the Loan Agreement, the principal
and all accrued interest hereof shall automatically become, or
may be declared, due and payable in the manner and with the
effect provided in the Loan Agreement.
Prepayment of this Note in part or in whole is
permitted subject to the conditions set forth in Section 5.06 of
the Loan Agreement.
Failure or forbearance of the Bank to exercise any
right hereunder, or otherwise granted by the Loan Agreement or by
law, shall not affect or release the liability of the Company
hereunder, and shall not constitute a waiver of such right
unless so stated by the Bank in writing. THIS NOTE IS EXECUTED
AND DELIVERED PURSUANT TO, AND ITS PERFORMANCE, INTERPRETATION
AND ENFORCEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, THE LAWS OF
THE STATE OF GEORGIA.
TIME IS OF THE ESSENCE HEREUNDER. PRESENTMENT, PROTEST
AND NOTICE OF DISHONOR ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Company has caused this Note to
be executed in its name and attested to by its authorized
officers, and its corporate seal to be hereunto affixed, all on
the date first above written.
AARON RENTS, INC.
By:____________________________
Name:_______________________
Title:______________________
Attest:_______________________
Name:_______________________
Title:______________________
[CORPORATE SEAL]
Revolving Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
FORM OF CASH MANAGEMENT LINE OF CREDIT NOTE
$__________ January 6, 1995
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, AARON RENTS, INC., a Georgia
corporation (the "Company"), promises to pay to the order of
__________________ (the "Bank") at its office at
, or at such other place as the holder
hereof shall designate to the Company in writing, in immediately available
funds in lawful money of the United States of America, on the earlier of (i)
the Cash Management Loan Termination Date and (ii) acceleration of the
indebtedness evidenced by this Note as hereinafter provided, the lesser of
the principal sum of Three Million and No/100 Dollars ($3,000,000) or so much
thereof as shall have been advanced thereunder in accordance with that
certain Second Amended and Restated Revolving Credit and Term Loan Agreement,
dated as of January 6, 1995, among the Company, the Bank, First Union
National Bank of Georgia, a national banking association ("First Union"),
Bank of America Illinois, an Illinois banking corporation ("Bank of
America"), and the Bank as agent for itself, Bank of America and First Union
(as hereafter amended, restated, supplemented or otherwise modified from time
to time, the "Loan Agreement"), and not theretofore repaid, as shown on the
grid schedule attached hereto (the "Grid Schedule").
In addition to principal, the Company agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of
disbursement until paid in full at such rates of interest per annum and upon
such dates as set forth in Section 5.03 of the Loan Agreement, computed on
the basis of the actual number of days elapsed in a 360-day year. Such
interest is to be paid to the Bank at the address set forth above in the
first paragraph of this Note or at such other place as the holder hereof may
designate by notice in writing to the Company.
This Cash Management Line of Credit Note ("Note") evidences the
Cash Management Loans made by the Bank to the Company pursuant to the terms
and conditions of the Loan Agreement to which reference is hereby made for a
full and complete description of such terms and conditions. All capitalized
terms used in this Note shall have the same meanings as set forth in the Loan
Agreement.
The Bank shall at all times have a right of set-off against any
deposit balances of Company in the possession of the Bank and the Bank may
apply the same against payment of this Note in accordance with the Loan
Agreement. The payment of any indebtedness evidenced by this Note prior to
the Cash Management Loan Termination Date shall not affect the enforceability
of this Note as to any future, different or other indebtedness incurred
hereunder by the Company. In the event the indebtedness evidenced by this
Note is collected by legal action or through an attorney-at-law, the Bank
shall be entitled to recover from Company all costs of collection, including,
without limitation, actual and reasonable attorneys' fees if collected by or
through an attorney-at-law.
Company acknowledges that the actual crediting of the amount of any
disbursement under the Loan Agreement to an account of Company or recording
such amount in the Grid Schedule shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement and that such advance
was made and borrowed under the Loan Agreement. Such account records or Grid
Schedule shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding and the payments made under the
Agreement at any time and from time to time, provided that the failure of
Bank to record on the Grid Schedule or in such account the type or amount of
any advance shall not affect the obligation of the undersigned to repay such
amount together with interest thereon in accordance with this Note and the
Loan Agreement.
Upon the existence and during the continuation of an Event of
Default as defined in the Loan Agreement, the principal and all accrued
interest hereof shall automatically become, or may be declared, due and
payable in the manner and with the effect provided in the Loan Agreement.
Prepayment of this Note in part or in whole is permitted subject to
the conditions set forth in Section 5.06 of the Loan Agreement.
Failure or forbearance of the Bank to exercise any right hereunder,
or otherwise granted by the Loan Agreement or by law, shall not affect or
release the liability of the Company hereunder, and shall not constitute a
waiver of such right unless so stated by the Bank in writing. THIS NOTE IS
EXECUTED AND DELIVERED PURSUANT TO, AND ITS PERFORMANCE, INTERPRETATION AND
ENFORCEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, THE LAWS OF THE STATE OF
GEORGIA.
TIME IS OF THE ESSENCE HEREUNDER. PRESENTMENT, PROTEST AND NOTICE
OF DISHONOR ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
in its name and attested to by its authorized officers, and its corporate
seal to be hereunto affixed, all on the date first above written.
AARON RENTS, INC.
By:____________________________
Name:_______________________
Title:______________________
Attest:________________________
Name:_______________________
Title:______________________
[CORPORATE SEAL]
Cash Management Line of Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
<PAGE>
CASH MANAGEMENT LINE OF CREDIT NOTE
$3,000,000.00 January 6, 1995
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, AARON RENTS, INC., a Georgia
corporation (the "Company"), promises to pay to the order of TRUST COMPANY
BANK (the "Bank") at its office at 25 Park Place, Atlanta, Georgia 30303, or
at such other place as the holder hereof shall designate to the Company in
writing, in immediately available funds in lawful money of the United States
of America, on the earlier of (i) the Cash Management Loan Termination Date
and (ii) acceleration of the indebtedness evidenced by this Note as
hereinafter provided, the lesser of the principal sum of Three Million and
No/100 Dollars ($3,000,000) or so much thereof as shall have been advanced
thereunder in accordance with that certain Second Amended and Restated
Revolving Credit and Term Loan Agreement, dated as of January 6, 1995, among
the Company, the Bank, First Union National Bank of Georgia, a national
banking association ("First Union"), Bank of America Illinois, an Illinois
banking corporation ("Bank of America"), and the Bank as agent for itself,
Bank of America and First Union (as hereafter amended, restated, supplemented
or otherwise modified from time to time, the "Loan Agreement"), and not
theretofore repaid, as shown on the grid schedule attached hereto (the "Grid
Schedule").
In addition to principal, the Company agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of
disbursement until paid in full at such rates of interest per annum and upon
such dates as set forth in Section 5.03 of the Loan Agreement, computed on
the basis of the actual number of days elapsed in a 360-day year. Such
interest is to be paid to the Bank at the address set forth above in the
first paragraph of this Note or at such other place as the holder hereof may
designate by notice in writing to the Company.
This Cash Management Line of Credit Note ("Note") evidences the
Cash Management Loans made by the Bank to the Company pursuant to the terms
and conditions of the Loan Agreement to which reference is hereby made for a
full and complete description of such terms and conditions. All capitalized
terms used in this Note shall have the same meanings as set forth in the Loan
Agreement.
The Bank shall at all times have a right of set-off against any
deposit balances of Company in the possession of the Bank and the Bank may
apply the same against payment of this Note in accordance with the Loan
Agreement. The payment of any indebtedness evidenced by this Note prior to
the Cash Management Loan Termination Date shall not affect the enforceability
of this Note as to any future, different or other indebtedness incurred
hereunder by the Company. In the event the indebtedness evidenced by this
Note is collected by legal action or through an attorney-at-law, the Bank
shall be entitled to recover from Company all costs of collection, including,
without limitation, actual and reasonable attorneys' fees if collected by or
through an attorney-at-law.
Company acknowledges that the actual crediting of the amount of any
disbursement under the Loan Agreement to an account of Company or recording
such amount in the Grid Schedule shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement and that such advance
was made and borrowed under the Loan Agreement. Such account records or Grid
Schedule shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding and the payments made under the
Agreement at any time and from time to time, provided that the failure of
Bank to record on the Grid Schedule or in such account the type or amount of
any advance shall not affect the obligation of the undersigned to repay such
amount together with interest thereon in accordance with this Note and the
Loan Agreement.
Upon the existence and during the continuation of an Event of
Default as defined in the Loan Agreement, the principal and all accrued
interest hereof shall automatically become, or may be declared, due and
payable in the manner and with the effect provided in the Loan Agreement.
Prepayment of this Note in part or in whole is permitted subject to
the conditions set forth in Section 5.06 of the Loan Agreement.
Failure or forbearance of the Bank to exercise any right hereunder,
or otherwise granted by the Loan Agreement or by law, shall not affect or
release the liability of the Company hereunder, and shall not constitute a
waiver of such right unless so stated by the Bank in writing. THIS NOTE IS
EXECUTED AND DELIVERED PURSUANT TO, AND ITS PERFORMANCE, INTERPRETATION AND
ENFORCEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, THE LAWS OF THE STATE OF
GEORGIA.
TIME IS OF THE ESSENCE HEREUNDER. PRESENTMENT, PROTEST AND NOTICE
OF DISHONOR ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
in its name and attested to by its authorized officers, and its corporate
seal to be hereunto affixed, all on the date first above written.
AARON RENTS, INC.
By:____________________________
Name:_______________________
Title:______________________
Attest:________________________
Name:_______________________
Title:______________________
[CORPORATE SEAL]
Cash Management Line of Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
<PAGE>
REVOLVING CREDIT NOTE
$15,000,000.00 January 6, 1995
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, AARON RENTS, INC., a Georgia
corporation (the "Company"), promises to pay to the order of BANK OF AMERICA
ILLINOIS (the "Bank") at its office at 231 South LaSalle Street - 944,
Chicago, Illinois 60697, or at such other place as the holder hereof shall
designate to the Company in writing, in immediately available funds in lawful
money of the United States of America, on the sooner of (i) the Revolving
Credit Termination Date (as defined in the Loan Agreement referenced below),
(ii) the Conversion Date (as defined in the Loan Agreement referenced below)
and (iii) acceleration of the indebtedness evidenced by this Note as
hereinafter provided, the lesser of the principal sum of Fifteen Million and
No/100 Dollars ($15,000,000.00) or so much thereof as shall have been
advanced thereunder in accordance with that certain Second Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of January 6,
1995, among the Company, Trust Company Bank, a Georgia banking corporation
("TCB"), First Union National Bank of Georgia, a national banking association
("First Union"), Bank of America Illinois, an Illinois banking corporation
("Bank of America"), and TCB as agent for itself, Bank of America and First
Union (as hereafter amended, restated, supplemented or otherwise modified
from time to time, the "Loan Agreement"), and not theretofore repaid, as
shown on the grid schedule attached hereto (the "Grid Schedule").
In addition to principal, the Company agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of
disbursement until paid in full at such rates of interest per annum and upon
such dates as set forth in Section 5.03 of the Loan Agreement, computed on
the basis of the actual number of days elapsed in a 360-day year. Such
interest is to be paid to the Bank at the address set forth above in the
first paragraph of this Note or at such other place as the holder hereof may
designate by notice in writing to the Company.
This Revolving Credit Note ("Note") evidences Revolving Credit
Loans made by the Bank to the Company pursuant to the terms and conditions of
the Loan Agreement to which reference is hereby made for a full and complete
description of such terms and conditions. All capitalized terms used in this
Note shall have the same meanings as set forth in the Loan Agreement.
The Bank shall at all times have a right of set-off against any
deposit balances of Company in the possession of the Bank and the Bank may
apply the same against payment of this Note in accordance with the Loan
Agreement. The payment of any indebtedness evidenced by this Note prior to
the Revolving Credit Termination Date or the Conversion Date shall not affect
the enforceability of this Note as to any future, different or other
indebtedness incurred hereunder by the Company. In the event the
indebtedness evidenced by this Note is collected by legal action or through
an attorney-at-law, the Bank shall be entitled to recover from Company all
costs of collection, including, without limitation, actual and reasonable
attorneys' fees if collected by or through an attorney-at-law.
Company acknowledges that the actual crediting of the amount of any
disbursement under the Loan Agreement to an account of Company or recording
such amount in the Grid Schedule shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement and that such advance
was made and borrowed under the Loan Agreement. Such account records or Grid
Schedule shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding and the payments made under the
Agreement at any time and from time to time, provided that the failure of
Bank to record on the Grid Schedule or in such account the type or amount of
any advance shall not affect the obligation of the undersigned to repay such
amount together with interest thereon in accordance with this Note and the
Loan Agreement.
Upon the existence and during the continuation of an Event of
Default as defined in the Loan Agreement, the principal and all accrued
interest hereof shall automatically become, or may be declared, due and
payable in the manner and with the effect provided in the Loan Agreement.
Prepayment of this Note in part or in whole is permitted subject to
the conditions set forth in Section 5.06 of the Loan Agreement.
Failure or forbearance of the Bank to exercise any right hereunder,
or otherwise granted by the Loan Agreement or by law, shall not affect or
release the liability of the Company hereunder, and shall not constitute a
waiver of such right unless so stated by the Bank in writing. THIS NOTE IS
EXECUTED AND DELIVERED PURSUANT TO, AND ITS PERFORMANCE, INTERPRETATION AND
ENFORCEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, THE LAWS OF THE STATE OF
GEORGIA.
TIME IS OF THE ESSENCE HEREUNDER. PRESENTMENT, PROTEST AND NOTICE
OF DISHONOR ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
in its name and attested to by its authorized officers, and its corporate
seal to be hereunto affixed, all on the date first above written.
AARON RENTS, INC.
By:____________________________
Name:_______________________
Title:______________________
Attest:________________________
Name:_______________________
Title:______________________
[CORPORATE SEAL]
<PAGE>
Revolving Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
<PAGE>
REVOLVING CREDIT NOTE
$30,000,000.00 January 6, 1995
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, AARON RENTS, INC., a Georgia
corporation (the "Company"), promises to pay to the order of TRUST COMPANY
BANK (the "Bank") at its office at 25 Park Place, Atlanta, Georgia 30303, or
at such other place as the holder hereof shall designate to the Company in
writing, in immediately available funds in lawful money of the United States
of America, on the sooner of (i) the Revolving Credit Termination Date (as
defined in the Loan Agreement referenced below), (ii) the Conversion Date (as
defined in the Loan Agreement referenced below) and (iii) acceleration of the
indebtedness evidenced by this Note as hereinafter provided, the lesser of
the principal sum of Thirty Million and No/100 Dollars ($30,000,000.00) or so
much thereof as shall have been advanced thereunder in accordance with that
certain Second Amended and Restated Revolving Credit and Term Loan Agreement,
dated as of January 6, 1995, among the Company, Trust Company Bank, a Georgia
banking corporation ("TCB"), First Union National Bank of Georgia, a national
banking association ("First Union"), Bank of America Illinois, an Illinois
banking corporation ("Bank of America"), and TCB as agent for itself, Bank of
America and First Union (as hereafter amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement"), and not
theretofore repaid, as shown on the grid schedule attached hereto (the "Grid
Schedule").
In addition to principal, the Company agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of
disbursement until paid in full at such rates of interest per annum and upon
such dates as set forth in Section 5.03 of the Loan Agreement, computed on
the basis of the actual number of days elapsed in a 360-day year. Such
interest is to be paid to the Bank at the address set forth above in the
first paragraph of this Note or at such other place as the holder hereof may
designate by notice in writing to the Company.
This Revolving Credit Note ("Note") evidences Revolving Credit
Loans made by the Bank to the Company pursuant to the terms and conditions of
the Loan Agreement to which reference is hereby made for a full and complete
description of such terms and conditions. All capitalized terms used in this
Note shall have the same meanings as set forth in the Loan Agreement.
The Bank shall at all times have a right of set-off against any
deposit balances of Company in the possession of the Bank and the Bank may
apply the same against payment of this Note in accordance with the Loan
Agreement. The payment of any indebtedness evidenced by this Note prior to
the Revolving Credit Termination Date or the Conversion Date shall not affect
the enforceability of this Note as to any future, different or other
indebtedness incurred hereunder by the Company. In the event the
indebtedness evidenced by this Note is collected by legal action or through
an attorney-at-law, the Bank shall be entitled to recover from Company all
costs of collection, including, without limitation, actual and reasonable
attorneys' fees if collected by or through an attorney-at-law.
Company acknowledges that the actual crediting of the amount of any
disbursement under the Loan Agreement to an account of Company or recording
such amount in the Grid Schedule shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement and that such advance
was made and borrowed under the Loan Agreement. Such account records or Grid
Schedule shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding and the payments made under the
Agreement at any time and from time to time, provided that the failure of
Bank to record on the Grid Schedule or in such account the type or amount of
any advance shall not affect the obligation of the undersigned to repay such
amount together with interest thereon in accordance with this Note and the
Loan Agreement.
Upon the existence and during the continuation of an Event of
Default as defined in the Loan Agreement, the principal and all accrued
interest hereof shall automatically become, or may be declared, due and
payable in the manner and with the effect provided in the Loan Agreement.
Prepayment of this Note in part or in whole is permitted subject to
the conditions set forth in Section 5.06 of the Loan Agreement.
Failure or forbearance of the Bank to exercise any right hereunder,
or otherwise granted by the Loan Agreement or by law, shall not affect or
release the liability of the Company hereunder, and shall not constitute a
waiver of such right unless so stated by the Bank in writing. THIS NOTE IS
EXECUTED AND DELIVERED PURSUANT TO, AND ITS PERFORMANCE, INTERPRETATION AND
ENFORCEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, THE LAWS OF THE STATE OF
GEORGIA.
TIME IS OF THE ESSENCE HEREUNDER. PRESENTMENT, PROTEST AND NOTICE
OF DISHONOR ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
in its name and attested to by its authorized officers, and its corporate
seal to be hereunto affixed, all on the date first above written.
AARON RENTS, INC.
By:____________________________
Name:_______________________
Title:______________________
Attest:________________________
Name:_______________________
Title:______________________
[CORPORATE SEAL]
<PAGE>
Revolving Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
<PAGE>
REVOLVING CREDIT NOTE
$30,000,000.00 January 6, 1995
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, AARON RENTS, INC., a Georgia
corporation (the "Company"), promises to pay to the order of FIRST UNION
NATIONAL BANK OF GEORGIA (the "Bank") at its office at 999 Peachtree Street,
Atlanta, Georgia 30309, or at such other place as the holder hereof shall
designate to the Company in writing, in immediately available funds in lawful
money of the United States of America, on the sooner of (i) the Revolving
Credit Termination Date (as defined in the Loan Agreement referenced below),
(ii) the Conversion Date (as defined in the Loan Agreement referenced below)
and (iii) acceleration of the indebtedness evidenced by this Note as
hereinafter provided, the lesser of the principal sum of Thirty Million and
No/100 Dollars ($30,000,000.00) or so much thereof as shall have been
advanced thereunder in accordance with that certain Second Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of January 6,
1995, among the Company, Trust Company Bank, a Georgia banking corporation
("TCB"), First Union National Bank of Georgia, a national banking association
("First Union"), Bank of America Illinois, an Illinois banking corporation
("Bank of America"), and TCB as agent for itself, Bank of America and First
Union (as hereafter amended, restated, supplemented or otherwise modified
from time to time, the "Loan Agreement"), and not theretofore repaid, as
shown on the grid schedule attached hereto (the "Grid Schedule").
In addition to principal, the Company agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of
disbursement until paid in full at such rates of interest per annum and upon
such dates as set forth in Section 5.03 of the Loan Agreement, computed on
the basis of the actual number of days elapsed in a 360-day year. Such
interest is to be paid to the Bank at the address set forth above in the
first paragraph of this Note or at such other place as the holder hereof may
designate by notice in writing to the Company.
This Revolving Credit Note ("Note") evidences Revolving Credit
Loans made by the Bank to the Company pursuant to the terms and conditions of
the Loan Agreement to which reference is hereby made for a full and complete
description of such terms and conditions. All capitalized terms used in this
Note shall have the same meanings as set forth in the Loan Agreement.
The Bank shall at all times have a right of set-off against any
deposit balances of Company in the possession of the Bank and the Bank may
apply the same against payment of this Note in accordance with the Loan
Agreement. The payment of any indebtedness evidenced by this Note prior to
the Revolving Credit Termination Date or the Conversion Date shall not affect
the enforceability of this Note as to any future, different or other
indebtedness incurred hereunder by the Company. In the event the
indebtedness evidenced by this Note is collected by legal action or through
an attorney-at-law, the Bank shall be entitled to recover from Company all
costs of collection, including, without limitation, actual and reasonable
attorneys' fees if collected by or through an attorney-at-law.
Company acknowledges that the actual crediting of the amount of any
disbursement under the Loan Agreement to an account of Company or recording
such amount in the Grid Schedule shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement and that such advance
was made and borrowed under the Loan Agreement. Such account records or Grid
Schedule shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding and the payments made under the
Agreement at any time and from time to time, provided that the failure of
Bank to record on the Grid Schedule or in such account the type or amount of
any advance shall not affect the obligation of the undersigned to repay such
amount together with interest thereon in accordance with this Note and the
Loan Agreement.
Upon the existence and during the continuation of an Event of
Default as defined in the Loan Agreement, the principal and all accrued
interest hereof shall automatically become, or may be declared, due and
payable in the manner and with the effect provided in the Loan Agreement.
Prepayment of this Note in part or in whole is permitted subject to
the conditions set forth in Section 5.06 of the Loan Agreement.
Failure or forbearance of the Bank to exercise any right hereunder,
or otherwise granted by the Loan Agreement or by law, shall not affect or
release the liability of the Company hereunder, and shall not constitute a
waiver of such right unless so stated by the Bank in writing. THIS NOTE IS
EXECUTED AND DELIVERED PURSUANT TO, AND ITS PERFORMANCE, INTERPRETATION AND
ENFORCEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, THE LAWS OF THE STATE OF
GEORGIA.
TIME IS OF THE ESSENCE HEREUNDER. PRESENTMENT, PROTEST AND NOTICE
OF DISHONOR ARE HEREBY WAIVED.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
in its name and attested to by its authorized officers, and its corporate
seal to be hereunto affixed, all on the date first above written.
AARON RENTS, INC.
By:____________________________
Name:_______________________
Title:______________________
Attest:________________________
Name:_______________________
Title:______________________
[CORPORATE SEAL]
<PAGE>
Revolving Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
TRUST COMPANY BANK
Confirmation of Interest Rate Swap Transaction
November 14, 1994
Gilbert L. Danielson
Chief Financial Officer
Aaron Rents, Inc.
309 East Paces Ferry Road, N.E.
Atlanta, GA 30305
Dear Mr. Danielson:
The purpose of this letter agreement is to set forth the
terms and conditions of the Rate Swap Transaction entered into
between you and Trust Company Bank on the Trade Date specified
below (the "Rate Swap Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the Interest Rate
and Currency Exchange Agreement specified below.
The definitions and provisions contained in the 1991 ISDA
Definitions published by the International Swap Dealers
Association, Inc. are incorporated by reference into this
Confirmation. In the event of any inconsistency between the
Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms a part of, and is
subject to the Interest Rate and Currency Exchange Agreement (a
"Swap Agreement"), as amended and supplemented from time to time
between you and Trust Company Bank. All provisions contained or
incorporated by reference in the Swap Agreement shall govern this
Confirmation except as expressly modified below.
Each party is hereby advised, and each such party
acknowledges, that the other party has engaged in (or refrained
from engaging in) substantial financial transactions and has
taken other material actions in reliance upon the parties' entry
in the Rate Swap Transaction to which this Confirmation relates
on the terms and conditions set forth below.
This Confirmation will be governed by and construed in
accordance with the laws of the State of Georgia applicable to
contracts made and wholly performed within the State of Georgia.
2. The terms of the particular Rate Swap Transaction to which
this Confirmation relates are as follows:
Type of Transaction: Rate Swap
Notional Amount: US$ 10,000.000.00
Trade Date: November 14, 1994
Effective Date: November 16, 1994
Termination Date: November 16, 1997,
subject to adjustment in
accordance with the
Following Business Day
Convention
Fixed Amounts:
Fixed Rate Payer: Aaron Rents, Inc.
Fixed Rate Payer Payment Dates: Payment dates are on the
16th day of every
February, May, August,
and November, beginning
February 16, 1995 and
terminating on the
Termination Date, subject
to adjustment in
accordance with the
Following Business Day
Convention.
Fixed Rate Payer Initial
Calculation Period: From and including the
Effective Date to but
excluding February 16,
1995.
Fixed Rate: 7.5300% per annum
Fixed Rate Day Count Fraction: Actual/360
Floating Amounts:
Floating Rate Payer: Trust Company Bank
Floating Rate Payer Payment Dates: Payment dates are on the
16th day of every
February, May, August,
and November, beginning
February 16, 1995 and
terminating on the
Termination Date, subject
to adjustment in
accordance with the
Following Business Day
Convention.
Floating Rate Payer Initial
Calculation Period From and including the
Effective Date to but
excluding February 16,
1995.
Floating Rate for initial
Calculation Period: 5.81250%
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 3 months
Spread: Inapplicable
Floating Rate Day Count Fraction: Actual/360
Reset Dates: The first Business Day of
each Floating Rate Payer
Calculation Period.
Compounding: Inapplicable
Calculation Agent: Trust Company Bank
Business Days New York
3. Other Provisions
(i) "USD-LIBOR" means that the rate for a Reset Date will be
the rate for deposits in Dollars for a period of the
Designated Maturity which appears on the Telerate Page 3750
as of 11:00 a.m., London time, on two business days prior to
the Reset Date. If such rate does not appear on the
Telerate Page 3750, the rate for that Reset Date will be
determined as if the parties had specified "LIBOR (Reference
Banks)" as the applicable Floating Rate Option.
(ii) "Telerate Page 3750" means the display designated as
"Page 3750" on the Telerate Service (or such other page as
may replace Page 3750 on that service or such other service
as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British
Banker's Association Interest Settlement Rate for Dollar
deposits.)
4. Account Details:
Payments to Floating Rate Payer:
[please advise]
Payments to Fixed Rate Paver:
Trust Company Bank
ABA# 061000104
Bond Wire Clearing, Center 095
Attn: Judy Keane-Dawes
5. Offices
(a) The Office of Fixed Rate Payer for the Rate Swap
Transactions is its Georgia office; and
(b) The Office of Floating Rate Payer for the Rate Swap
Transaction is its Georgia office.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms
of our agreement by executing this copy of
this Confirmation and sending the same to us by return facsimile
transmission at (404)230-1434 to the attention of Mark Brown or
Mark Lutostansky.
Very truly yours,
TRUST COMPANY BANK
By: /s/ Wadley H. Duckworth
Name: Wadley H. Duckworth
Title: Senior Vice President
By: /s/ John P. Goese
Name: John P. Goese
Title: Assistant Vice President
Accepted and Confirmed as
of the Date First Written:
AARON RENTS, INC.
By: /s/ Gilbert L. Danielson
Name: Gilbert L. Danielson
Title: VP - Finance
By:
Name:
Title:
BANK OF AMERICA
TO: Aaron Rents, Inc. ("Counterparty")
Attn: Mr. Gil Danielson
Rapidfax: (404) 240-6584
FROM: Bank of America National Trust and Savings Association
("BofA")
555 California Street
San Francisco, CA 94104
William L. Denton
Phone No. (415) 953-1449
Rapidfax No.: (415) 622-3548
DATE: November 21, 1994
RE: USD 10,000,000.00 Swap Transaction
Dear Sir/Madam:
The purpose of this letter agreement is to confirm the
terms and conditions of the Transaction entered into between us
on the Trade Date specified below (the "Swap Transaction"). This
letter agreement constitutes a "Confirmation" under the ISDA
Agreement defined below.
The definitions and provisions contained in the 1991 ISDA
Definitions (as published by the International Swaps and
Derivatives Association, Inc. ("ISDA")) are incorporated into
this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this
Confirmation will govern.
1. The parties agree that the Swap Transaction described
in this Confirmation constitutes their binding obligations.
Except as set forth in this Confirmation, the Swap Transaction
shall be subject to all the terms and conditions of the form of
the master agreement entitled "Master Agreement" ("Multicurrency-
Cross Border" version) as published in 1992 by the International
Swaps and Derivatives Association, Inc., (and herein call the
"ISDA Agreement"), excluding the "Schedule" thereto.
Counterparty and BofA shall negotiate a Schedule and upon
agreement shall sign the ISDA Agreement including the Schedule so
negotiated and agreed upon (hereinafter call the "Agreement"),
whereupon this Confirmation shall be deemed automatically,
without further action of any party, to be a Confirmation under
the Agreement; provided, however, that, unless and until
Counterparty and BofA agreed upon and sign the Agreement, the
preceding sentence shall have full force and effect.
THIS FACSIMILE TRANSMISSION WILL BE THE ONLY WRITTEN
COMMUNICATION REGARDING THIS SWAP TRANSACTION. Pursuant to ISDA
guidelines, this facsimile transmission will be sufficient for
all purposes to evidence a binding supplement to the Agreement.
However, should you have an internal requirement for
confirmations with an original signature, we request that you
sign and return this Confirmation by facsimile, whereupon, we
will add an original signature to the fully executed
Confirmation, and forward it to you by mail.
<PAGE>
2. The terms of the particular Swap Transaction to which
this Confirmation relates are as follows:
Notional Amount: USD 10,000,000.00
Trade Date: November 14, 1994
Effective Date: November 16, 1994
Termination Date: November 17, 1997, subject to
adjustment in accordance with the
Modified Following Business Day
Convention
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Dates: The 16th of every February, May,
August and November beginning with
February 16, 1995 and ending on and
including the Termination Date
Fixed Amount: Calculation XFixed XFixed Rate Day
Amount Rate Count Fraction
Fixed Rate: 7.51000 percent per annum
Fixed Rate Day
Count Fraction: Actual/360
Floating Amounts:
Floating Rate Payer: BofA
Floating Rate Payer
Payment Dates: Same as Fixed Rate Payor Payment
Dates
Floating Rate for Initial
Calculation Period: 5.81250 percent per annum
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: Three (3) Months
Spread: None
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: First day of each Calculation
Period
Compounding: Inapplicable
Business Day: New York and London
Business Day Convention: Modified Following
Governing Law:
Calculation Agent: BofA
3. Account Details
Payments to BofA: Fed Funds to Bank of America NT and
SA San Francisco ABA NO. 1210-0035-
8 BISD Acct. No. 33006-83980 Attn:
IRS Operations
Payments to
Counterparty: Fed Funds to Trust Company Bank ABA
No. 0610-0010-4 Account No.
8800527494 Account Aaron Rents,
Inc.
4. Offices:
Office of BofA: The San Francisco Head Office
Office of Counterparty:Atlanta, GA.
Other Provisions Applicable to BofA
Specified Entities of BofA: None
Credit Support Document(s)
Relating to BofA: None
Credit Support Provider Relating
to BofA: None
Agreements of BofA: As per Section 4 of the ISDA
Agreement.
Representations of BofA: As per Section 3 of the ISDA
Agreement.
Other Provisions Applicable to Counterparty
Specified Entities of
Counterparty: As may be indicated in the
Agreement, if at all.
Credit Support Document(s)
Relating to Counterparty: As may be indicated in the
Agreement, if at all.
Credit Support Provider Relating
to Counterparty: As may be indicated in the
Agreement, if at all.
Agreements of Counterparty: As per Section 4 of the ISDA
Agreement.
Representations of
Counterparty: As per Section 3 of the ISDA
Agreement.
Other Provisions (General)
(A) Other Agreements: Corporate Resolution, Specimen
Signature Certificate and other
documentation as indicated in the
Agreement, if at all.
(B) Events of Default: As per Section 5 of the ISDA
Agreement and Cross Default as
indicated in the Agreement, if at
all.
(C) Termination Events: All the Termination Events
specified in Section 5(b) of the
ISDA Agreement will apply
(including Credit Event Upon
Merger).
(D) Early Termination: As per Section 6 of the ISDA
Agreement, it being the parties'
intent that Section 6 apply to all
outstanding Swap Transactions
before (as well as after) execution
of the Agreement.
(E) Tax Representations: Counterparty and BofA make the
Payer Representations contained in
Part 2 of the Schedule to the ISDA
Agreement. Payee Representations
may be indicated in Part 2 of the
Schedule to the Agreement, if
applicable.
(F) Tax Agreements of BofA
and Counterparty: As may be indicated in the
Agreement if at all.
(G) Incorporation of
Covenants: Counterparty hereby covenants and
agrees that, from and after the
trade date hereof and thereafter
until all obligations of
Counterparty hereunder, are paid in
full, Counterparty will observe,
perform and fulfill each and every
covenant, term and provision
("Covenants") contained in the USD
42,000,000 Credit Facility among
Aaron Rents, Inc., as Borrower,
Aaron Investment Company, as
Guarantor, Trust Company Bank and
First Union National Bank of
Georgia, as Lenders dated as of May
27, 1992 and the third Amendment
dated as of February 2, 1994 (the
"Credit Agreement") as the same are
in effect on the date hereof. All
of such covenants, together with
related definitions are hereby
incorporated into this Confirmation
by reference as if such terms were
set forth in this Confirmation in
full. In the event that the Credit
Agreement expires or terminates and
a successor credit agreement is
entered into between Counterparty
and BofA (acting either as the sole
financial institution thereunder or
a one of two or more financial
institutions thereunder), then all
references herein to the Credit
Agreement shall be deemed to refer
to the successor credit agreement.
(H) Variations to the ISDA
Agreement: BofA has made certain amendments to
the ISDA Agreement which it
believes are of a noncontentious
nature. These amendments will be
specified in the draft Agreement to
be sent by BofA to Counterparty.
(I) Documentation: This Confirmation will constitute a
binding agreement with respect to
the Swap Transaction described
herein. Without prejudice to the
preceding sentence, Counterparty
and BofA will negotiate in good
faith to enter into the Agreement
as soon as practicable after the
date of this Confirmation.
Please confirm your agreement to be bound by the terms
stated herein by executing the copy of this Confirmation enclosed
for that purpose and returning it to us or by sending to us a
telex or letter, within 24 hours of receipt of this Confirmation
to Bank of America National Trust and Savings Association San
Francisco Telex No. 249839 Answer Bank OPRST UR or Rapidfax No.
415-622-3548 Attention: William L. Denton RMPG Operations,
substantially in the form below:
Quote
We acknowledged receipt of your rapidfax dated November 21,
1994 with respect to the Swap Transaction entered into on
November 14, 1994 between Aaron Rents, Inc. and Bank of America
National Trust and Savings Association with a Notational Amount
of USD 10,000,000.00 and a Termination Date of November 17, 1997,
and confirm our agreement to be bound by the terms specified in
such rapidfax. [We also confirm that the Basic Representations
provided in Section 3(a) of the ISDA Agreement are true with
respect to the Swap Transaction.]
Unquote
<PAGE>
This Confirmation shall be conclusively deemed accurate and
complete by Counterparty if not objected to within two (2)
Business Days from the date of receipt.
Yours sincerely,
For and on behalf of:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ William R. Huth
Name: William R. Huth
Title: Vice President
Confirmed as of the
date first above written:
AARON RENTS, INC.
By: /s/ Gilbert L. Danielson By:
Name: Gilbert L. Danielson Name:
Title: VP - Finance Title:
LC (41114S6Z)
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Six Mon Ended
December 31, December 31,
1994 1993 1994 1993
Primary:
Net Income $ $ 2,190 $ $6,077
Weighted average number of
common shares outstanding 8,397 8,411
Add:
Dilutive effect of outstanding
options, as determined by the
application of the treasury
stock method using the average
market price of the Company's
common stock 302 302
Weighted average number of common
and common equivalent shares 8,699 8,713
Primary earnings per share $ $ .25 $ $ .70
Fully diluted:
Weighted average number of common
and common equivalent shares 8,699 8,713
Add:
Additional dilutive effect of
outstanding options, as
determined by the application
of the treasury stock method
using the quarter end market
price of the Company's common
stock 31 30
Weighted average number of common
shares fully diluted 8,730 8,743
Fully diluted earnings per share $ $ $ $ .70
*Not presented in Financial Statatements since dilutive
effect is less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMTION EXTRACTED FROM THE THIRD
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1994
<CASH> 92
<SECURITIES> 0
<RECEIVABLES> 10,052
<ALLOWANCES> 0<F1>
<INVENTORY> 119,781<F2>
<CURRENT-ASSETS> 0<F3>
<PP&E> 23,532
<DEPRECIATION> 0<F1><F4>
<TOTAL-ASSETS> 155,934
<CURRENT-LIABILITIES> 0<F3>
<BONDS> 0
<COMMON> 5,999
0
0
<OTHER-SE> 75,419
<TOTAL-LIABILITY-AND-EQUITY> 155,934
<SALES> 12,283
<TOTAL-REVENUES> 56,511
<CGS> 8,830
<TOTAL-COSTS> 51,099
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 774
<INCOME-PRETAX> 4,638
<INCOME-TAX> 1,765
<INCOME-CONTINUING> 2,873
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,873
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
<FN>
<F1>The allowance for doubtful accounts is netted against total accounts
receivable in the Accounts Receivable balance.
<F2>Rental merchandise has been classified as inventory for purposes of this
schedule. Rental merchandise has been shown net of 49,488 accumulated
depreciation.
<F3>The financial statements are presented with an unclassified balance sheet.
<F4>PP&E has been shown net of accumulated depreciation.
</FN>
