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Aaron's Issues Response to 'Misleading, Inaccurate Letter' from Vintage Capital


Aaron's, Inc. (NYSE: AAN), the leading lease-to-own specialty retailer that offers flexible payment options for credit-challenged individuals, today announced that the Chairman of its Board of Directors, Ray Robinson, has sent a letter to Brian R. Kahn, Managing Member of Vintage Capital Management LLC ("Vintage"), in response to the misleading and inaccurate letter published by Vintage on April 29, 2014. 

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Following is the full text of the letter:

April 30, 2014

Brian R. Kahn, Managing Member Vintage Capital Management LLC 4705 S Apopka Vineland Rd Orlando, FL 32819

Dear Brian:

I have received your letter dated April 29, 2014, and I am both disappointed and frustrated that you would choose to disclose an account of discussions that we mutually agreed would remain confidential.  As you know, we reached out to you in good faith to attempt to negotiate a settlement to avoid a costly, distracting and unnecessary proxy contest that you have initiated and that is not in the best interests of all of Aaron's shareholders.

We would like nothing better than to be able to focus our full attention on integrating our recent purchase of Progressive Finance and implementing the initiatives we have announced to maximize returns on our existing core business.  Unfortunately, given the grossly inaccurate and misleading nature of your letter, I can see no alternative but to make sure that Aaron's shareholders understand the following facts: 

o As you know, in order to avoid a proxy contest, I did propose that the Board would consider adding you as a director, subject to the resolution of the antitrust and fiduciary duty concerns presented by your control of Buddy's Home Furnishings, a direct competitor of Aaron's.  Accordingly, you agreed to resolve our antitrust and fiduciary duty concerns by resigning from all operational control of Buddy's and from its board, in order to be named an Aaron's director. o You confirmed that you were aware of the concerns about the circumstances of Ken Butler's departure from Aaron's, as well as the details of Mr. Butler's separation agreement.  You stated that you understood those concerns and, as a result, early in our discussions, you felt it was appropriate to remove Mr. Butler from your slate of nominees. o We proposed that you agree not to engage in a proxy contest until after the Aaron's 2015 Annual Meeting, to allow us to focus on the integration of Progressive into our business.  The last I heard from you, you indicated you were thinking through the circumstances under which you would consider such an arrangement. 

We entered into discussions with you because we believed it was prudent to explore whether we could find a path forward that made sense for Aaron's and our shareholders.  However, as a result of our discussions, your statements and proposals have raised significant concerns on the part of the Aaron's Board that you are interested in obtaining some sort of personal economic advantages through your dealings with Aaron's.  In particular, we are concerned that your interests with regard to the controlling investment you hold in Buddy's, a direct competitor of Aaron's, motivates the desire on your part to attempt to acquire all or parts of Aaron's business, or to leverage Aaron's supply chain and distribution infrastructure, at a price advantageous to you or without paying anything to gain such advantages.  This is consistent with the comments you made to us and similar to your recent comments reported by the media: "'If we own Aaron's, we can very rapidly open Buddy Stores' by using its distribution network and existing merchandise, he said."^1

We have engaged Spencer Stuart to assist us as we continue to prioritize refreshing the Board to add to the overall skills and experience represented by our directors, and in that regard, have added three new independent directors in the last four years.  I will continue to meet with many of Aaron's other shareholders to listen to their views and feedback on the path forward for Aaron's.  I am confident they will agree that creating a path for you to take control of the Company through a multi-year proxy fight without paying for it, let alone paying a fair premium, is not in the best interests of all of Aaron's shareholders.


/s/ Ray Robinson

Ray Robinson Chairman of the Board of Directors Aaron's, Inc.


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