[FIRST UNION LETTERHEAD]
EXHIBIT 10(B)
SWAP TRANSACTION
DATE: June 19, 1995
TO: Gilbert L. Danielson
Aaron Rents Inc.
1100 Aaron Building
3001 N. Fulton Drive NE
Atlanta, GA
Phone: (404) 231-0011
Fax: (404) 240-6584
FROM: First Union National Bank of North Carolina
SUBJECT: Interest Rate Swap
REF. NO. 10413/11295
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Dear Mr. Danielson:
The purpose of this letter agreement is to confirm the terms and
conditions of the transaction entered into between Aaron Rents Inc.
("Counterparty") and First Union National Bank of North Carolina ("First Union")
on the Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the Master Agreement specified
below.
1. The definitions and provisions contained in the 1991 ISDA Definitions
(as published by the International Swap and Derivatives Association, Inc.) (the
"Definitions"), are incorporated into this Confirmation. In the event of any
inconsistency between those definitions and provisions and this Confirmation,
this Confirmation will govern.
If you and we are parties to a Master Agreement that sets forth the
general terms and conditions applicable to Swap Transactions between us (a "Swap
Agreement"), this Confirmation supplements, forms a part of, and is subject to,
such Swap Agreement. If you and we are not yet parties to a Swap Agreement, this
Confirmation will supplement, form a part of, and be subject to, a Swap
Agreement upon its execution by you and us. All provisions contained or
incorporated by reference in such Swap Agreement shall govern this Confirmation
except as expressly modified below. In addition, if a Swap Agreement has not
been executed, this Confirmation will itself evidence a complete binding
agreement between you and us as to the terms and conditions of the Swap
Transaction to which this Confirmation relates.
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 into the Swap Transaction to which this Confirmation relates on the terms
and conditions set forth below.
If on any Calculation Date (or if, for any Calculation period, as
applicable), (a) the product of the Fixed Rate and the Fixed Rate Day Count
Fraction exceeds the product of the Floating Rate (plus or minus the Spread, if
applicable) and the Floating Rate Day Count Fraction, the Fixed Rate Payer shall
pay the Floating Rate Payer, on the relevant Payment Date, an amount equal to
such excess multiplied by the Notional amount, (b) the product of the Floating
Rate (plus or minus the spread if applicable) and the Floating Rate Day Count
Fraction exceeds the product of the Fixed Rate and the Fixed Rate Day Count
Fraction, the Floating Rate Payer shall pay the Fixed Rate Payer, on the
relevant Payment Date, an amount equal to such excess multiplied by the Notional
Amount, or (c) the product of the Fixed Rate and the Fixed Rate Day Count
Fraction is equal to the product of the Floating Rate (plus or minus the Spread,
if applicable) and the Fixed Rate Day Count Fraction, no amount shall be due by
either side on the relevant Payment Date. Each party's obligation to make
payment of any amount which would otherwise by due hereunder on a Payment Date
shall be automatically satisfied and discharged by payment of the net amount due
on such Payment Date, determined by the foregoing manner.
This Confirmation will be governed by and construed in accordance with
the laws of the State of New York, without reference to choice of law doctrine,
provided that this provision will be superseded by any choice of law provisions
contained in the Swap Agreement.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
Transaction Type: Interest Rate Swap
Trade Date: June 16, 1995
Effective Date: June 23, 1995
Termination Date: June 23, 2005, subject to
adjustment in accordance with
the Modified Following Business
Day Convention
Notional Amount: $10,000,000.00
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer Quarterly on the 23rd day of
Payment Dates: each June, September, December,
and March commencing September
23, 1995, through and including
the Termination Date, subject
to the Modified Following
Business Day Convention.
2
Fixed Rate: 6.35%
Fixed Rate Day ACT/360
Count Fraction:
Floating Amounts:
Floating Rate Payer: First Union
Floating Rate Payer Quarterly on the 23th day of
Payment Dates: each June, September, December,
and March commencing September
23, 1995, through and including
the Termination Date, subject
to the Modified Following
Business Day Convention.
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 3 Month
Spread: None
Floating Rate Day ACT/360
Count Fraction:
Reset Dates: Quarterly on the 23th day of
each September, December, March,
and June commencing June 23,
1995, through and including
March 23, 2005, subject to the
Modified Following Business Day
Convention.
Compounding: Inapplicable
Calculation Agent: First Union
Business Days: New York
Payments to First Union: First Union Charlotte
Capital Markets
Attention: Derivatives Desk
Fed. ABA No. 053000219
Ref. No.: 10413/11295
First Union Settlements: Brian Hall
Derivatives Desk
Ph. No.: 704-383-1185
Fax No.: 704-383-9139
3
Payments to Counterparty: Please forward instructions to FUNB-NC.
No payments will be made prior to
receipt of Counterparty's payment
instructions.
First Union Address: One First Union Center
301 South College Street TW-9
Charlotte, NC 28288-0601
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing a copy of this Confirmation enclosed for that purpose and
returning it to us.
Very truly yours,
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Joseph M. Nenichka
------------------------
Name: Joseph M. Nenichka
Title: Vice President
Date:
-----------------
By: /s/ David Kitchen
------------------------
Name: David Kitchen
Title: Vice President
Date:
-----------------
Accepted and confirmed as of
the date first above written:
AARON RENTS INC.
By: /s/ Gilbert L. Danielson
---------------------------
Name: Gilbert L. Danielson
-------------------------
Title: Vice President, Finance
-------------------------
Date: July 17, 1995
-------------------------
4
[TRUST COMPANY BANK LETTERHEAD]
June 20, 1995
CONFIRMATION OF INTEREST RATE SWAP TRANSACTION
Mr. Gilbert L. Danielson
Vice President - Finance
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 "Transaction" or "Rate Swap
Transaction"). This letter agreement constitutes a "Confirmation" as referred to
in either the ISDA Master Agreement or the Interest Rate and Currency Exchange
Agreement entered into by the parties hereto, prior to, or on the date hereof.
The definitions and provisions contained in the 1991 ISDA Definitions
(the "Definitions") published by the International Swap Dealers Association,
Inc. ("ISDA") 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
either the ISDA Master Agreement or 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. In the event that you and Trust Company Bank have not
entered into s Swap Agreement, this Transaction is subject to the 1992 Master
Agreement. Prior to the execution and delivery of such Swap Agreement, this
Confirmation alone shall constitute a complete and binding agreement with
respect to the Transaction.
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: June 16, 1995
Effective Date: June 23, 1995
Termination Date: June 23, 2005 subject to
adjustment in accordance with
the Modified Following Business
Day Convention
PAGE 2
Fixed Amounts:
-------------
Fixed Rate Payer: Aaron Rents, Inc.
Fixed Rate Payer Payment Dates: The 23rd day of each March,
June, September and December,
beginning September 23, 1995
and terminating on the
Termination Date, subject to
adjustment in accordance with
the Modified Following Business
Day Convention.
Fixed Rate: 6.3500% per annum
Fixed Rate Day Count Fraction: A/360
Floating Amounts:
----------------
Floating Rate Payer: Trust Company Bank
Floating Rate Payer Payment Dates: The 23rd day of each March,
June, September and December,
beginning September 23, 1995
and terminating on the
Termination Date, subject to
adjustment in accordance with
the Modified Following Business
Day Convention.
Floating Rate Option: USD-LIBOR-BBA
Floating Rate for initial
Calculation Period: 6.06250%
Designated Maturity: Three months
Spread: Inapplicable
Compounding: Inapplicable
Floating Rate Day Count Fraction: Actual/360
Reset Dates: The first day of each
Calculation Period
Calculation Agent: Trust Company Bank
Business Days: New York and London
PAGE 3
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 displays 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 Fixed Rate Payer:
[PLEASE ADVISE]
Account No.:
Depository:
Address:
Favor of:
Payments to Floating Rate Payer:
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 4
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 overnight mail to SunTrust Capital Markets, 25 Park Place, 4th Floor,
Atlanta, GA 30303 to the attention of Mark Brown or Mark Lutostansky.
By signing below, you also acknowledge and agree that we have explained to you
the risks involved in this Rate Swap Transaction, which risks include but are
not limited to the following:
. Marked Risk: the risk that the Rate Swap Transaction will decline in
value with a change in, among other things, interest rates or the yield
curve; and
. Liquidity Risk: the risk that the Rate Swap Transaction cannot be closed
out or disposed of quickly at or near its value.
You further acknowledge and agree that you understand these risks and the Rate
Swap Transaction as a whole, that you are capable of managing the risks
associated with this Rate Swap Transaction, that the risks involved in this Rate
Swap Transaction are consistent with your financial goals, policies and
procedures, and risk tolerance, and that you have determined that this Rate Swap
Transaction is appropriate for you.
Very truly yours,
TRUST COMPANY BANK
By: /s/ Wadley Duckworth
---------------------------
Name: Wadley Duckworth
Title:
By: /s/ Martha A. Suggs
----------------------------
Name: Martha A. Suggs
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: Vice President, Finance
By:
----------------------------
Name:
Title: