UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-Q
(Mark One)
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended May 3, 1997
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from to
----------- ----------
Commission File No. 1-3381
------
The Pep Boys - Manny, Moe & Jack
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0962915
------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer ID number)
incorporation or organization)
3111 W. Allegheny Ave. Philadelphia, PA 19132
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
215-229-9000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 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 ( )
As of May 3, 1997 there were 63,203,031 shares of the registrant's Common
Stock outstanding.
1
<PAGE>
- -------------------------------------------------------------------
Index Page
- -------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Condensed Consolidated
Financial Statements (Unaudited)
Consolidated Balance Sheets -
May 3, 1997 and February 1, 1997 3
Consolidated Statements of Earnings -
Thirteen weeks ended May 3, 1997
and May 4, 1996 4
Condensed Consolidated Statements of
Cash Flows - Thirteen weeks ended
May 3, 1997 and May 4, 1996 5
Notes to Condensed Consolidated
Financial Statements 6
Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7-9
PART II - OTHER INFORMATION 10
- ---------------------------
SIGNATURE 11
2
<PAGE>
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands, except per share amounts)
<CAPTION>
May 3, 1997 Feb. 1, 1997*
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash....................................................... $ 6,362 $ 2,589
Accounts receivable, net................................... 7,148 7,653
Merchandise inventories.................................... 517,851 520,082
Prepaid expenses........................................... 23,844 33,042
Deferred income taxes...................................... 16,982 16,982
Other...................................................... 24,697 24,570
------------- -------------
Total Current Assets.................................... 596,884 604,918
Property and Equipment - at cost:
Land....................................................... 280,871 278,345
Building and improvements.................................. 824,656 794,244
Furniture, fixtures and equipment.......................... 468,245 448,425
Construction in progress................................... 27,933 22,528
------------ -------------
1,601,705 1,543,542
Less accumulated depreciation and amortization............. 371,721 353,808
------------- -------------
Total Property and Equipment............................ 1,229,984 1,189,734
Other........................................................ 24,111 23,713
------------- -------------
Total Assets.................................................. $1,850,979 $1,818,365
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable........................................... $ 181,191 $ 337,536
Accrued expenses........................................... 149,001 133,557
Short-term borrowings...................................... 105,900 63,000
Current maturities of long-term debt....................... 149 134
------------- -------------
Total Current Liabilities............................... 436,241 534,227
Long-Term Debt, less current maturities...................... 315,850 217,178
Deferred Income Taxes........................................ 60,248 50,382
Convertible Subordinated Notes............................... 86,250 86,250
Zero Coupon Convertible Subordinated Notes................... 153,748 152,237
Commitments and Contingencies
Stockholders' Equity:
Common Stock, par value $1 per share:
Authorized 500,000,000 shares - Issued and
outstanding 63,203,031 and 63,119,491..................... 63,203 63,119
Additional paid-in capital................................. 163,639 162,660
Retained earnings.......................................... 632,069 612,581
------------- ------------
858,911 838,360
Less:
Cost of shares in benefits trust-2,232,500 shares, at cost. 60,269 60,269
------------- ------------
Total Stockholders' Equity.............................. 798,642 778,091
------------- ------------
Total Liabilities and Stockholders' Equity.................... $1,850,979 $1,818,365
============= ============
See notes to condensed consolidated financial statements.
*Taken from the audited financial statements at Feb. 1, 1997.
</TABLE>
3
<PAGE>
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(dollar amounts in thousands, except per share amounts)
UNAUDITED
<CAPTION>
Thirteen weeks ended
-------------------------------
May 3, 1997 May 4, 1996
-------------- ---------------
<S> <C> <C>
Merchandise Sales.................................... $410,321 $364,250
Service Revenue...................................... 78,957 64,364
------------- -------------
Total Revenues....................................... 489,278 428,614
Costs of Merchandise Sales........................... 284,723 255,730
Costs of Service Revenue............................. 62,613 51,583
------------- -------------
Total Costs of Revenues.............................. 347,336 307,313
Gross Profit from Merchandise Sales.................. 125,598 108,520
Gross Profit from Service Revenue.................... 16,344 12,781
------------- -------------
Total Gross Profit................................... 141,942 121,301
Selling, General and Administrative Expenses......... 97,837 81,707
------------- -------------
Operating Profit..................................... 44,105 39,594
Nonoperating Income.................................. 1,253 464
Interest Expense..................................... 8,908 8,128
------------- -------------
Earnings Before Income Taxes......................... 36,450 31,930
Income Taxes......................................... 13,304 11,814
------------- -------------
Net Earnings......................................... 23,146 20,116
Retained Earnings, beginning of period............... 612,581 524,443
Cash Dividends....................................... 3,658 3,148
------------ -------------
Retained Earnings, end of period..................... $632,069 $541,411
============ =============
Net Earnings per Share............................... $ .37 $ .33
============ =============
Cash Dividends per Share............................. $ .0600 $ .0525
============ =============
See notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
UNAUDITED
<CAPTION>
Thirteen weeks ended
----------------------------------
May 3, 1997 May 4, 1996
-------------- --------------
<S> <C> <C>
Net Cash (Used in) Provided by Operating Activities............. $(76,919) $ 5,108
Cash Flows from Investing Activities:
Capital expenditures............................................ (59,302) (32,413)
Other, net...................................................... 713 52
------------ ------------
Net Cash Used in Investing Activities........................... (58,589) (32,361)
Cash Flows from Financing Activities:
Net borrowings under line of credit agreements.................. 141,900 147,400
Reduction of long-term debt..................................... (24) (107,073)
Dividends paid.................................................. (3,658) (3,148)
Proceeds from exercise of stock options
and dividend reinvestment plan................................ 1,063 2,338
------------ -----------
Net Cash Provided by Financing Activities....................... 139,281 39,517
------------ -----------
Net Increase in Cash................................................. 3,773 12,264
Cash at Beginning of Period.......................................... 2,589 11,487
------------ -----------
Cash at End of Period................................................ $ 6,362 $ 23,751
============ ===========
See notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Condensed Consolidated Financial Statements
The consolidated balance sheet as of May 3, 1997, the consolidated statements
of earnings for the thirteen week periods ended May 3, 1997 and May 4, 1996
and the condensed consolidated statements of cash flows for the thirteen
week periods ended May 3, 1997 and May 4, 1996 have been prepared by the
Company without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of operations and
cash flows at May 3, 1997 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
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's February 1,
1997 annual report to shareholders. The results of operations for the
thirteen week period ended May 3, 1997 are not necessarily indicative of the
operating results for the full year.
NOTE 2. Merchandise Inventories
Merchandise inventories are valued at the lower of cost (last-in, first-out)
or market. If the first-in, first-out method of valuing inventories had been
used by the Company, inventories would have been approximately $3,300,000
higher at both May 3, 1997 and February 1, 1997.
NOTE 3. Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." This new
standard requires dual presentation of basic and diluted earnings per share
(EPS) on the face of the statement of earnings and requires reconciliation of
the numerators and denominators of the basic and diluted EPS calculations.
This statement will be effective for the fourth quarter of the Company's 1997
fiscal year. Assuming the Company had adopted the provisions of SFAS No. 128,
the pro forma effect on the Company's EPS calculations for the quarters ended
May 3, 1997 and May 4, 1996 are as follows: May 3, 1997 - as reported: $.37,
basic: $.38; May 4, 1996 - as reported: $.33, basic: $.34. The Company's
reported EPS calculations are the same as pro forma diluted EPS.
6
<PAGE>
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED MAY 3, 1997
Results of Operation -
The following table presents for the periods indicated certain items in the
consolidated statements of earnings as a percentage of total revenues (except
as otherwise provided) and the percentage change in dollar amounts of such items
compared to the indicated prior period.
<CAPTION>
Percentage of Total Revenues Percentage Change
- ------------------------------------------------------ ---------------------------------- -----------------
Thirteen weeks ended May 3, 1997 May 4, 1996 Fiscal 1997 vs.
(Fiscal 1997) (Fiscal 1996) Fiscal 1996
- ------------------------------------------------------ -------------- ------------- -----------------
<S> <C> <C> <C>
Merchandise Sales..................................... 83.9% 85.0% 12.6%
Service Revenue (1)................................... 16.1 15.0 22.7
------ ------ ------
Total Revenues........................................ 100.0 100.0 14.2
Costs of Merchandise Sales (2)........................ 69.4 (3) 70.2 (3) 11.3
Costs of Service Revenue (2).......................... 79.3 (3) 80.1 (3) 21.4
------ ------ ------
Total Costs of Revenues............................... 71.0 71.7 13.0
Gross Profit from Merchandise Sales................... 30.6 (3) 29.8 (3) 15.7
Gross Profit from Service Revenue..................... 20.7 (3) 19.9 (3) 27.9
------ ------ ------
Total Gross Profit.................................... 29.0 28.3 17.0
Selling, General and Administrative Expenses.......... 20.0 19.1 19.7
------ ------ ------
Operating Profit...................................... 9.0 9.2 11.4
Nonoperating Income................................... .3 .1 170.0
Interest Expense...................................... 1.8 1.9 9.6
------ ------ ------
Earnings Before Income Taxes.......................... 7.5 7.4 14.2
Income Taxes.......................................... 36.5 (4) 37.0 (4) 12.6
------ ------ ------
Net Earnings.......................................... 4.7 4.7 15.1
====== ====== ======
<FN>
(1) Service revenue consists of the labor charge for installing merchandise or
maintaining or repairing vehicles, excluding the sale of any installed parts or
materials.
(2) Costs of merchandise sales include the cost of products sold, buying,
warehousing and store occupancy costs. Costs of service revenue include service
center payroll and related employee benefits and service center occupancy costs.
Occupancy costs include utilities, rents, real estate and property taxes, repairs
and maintenance and depreciation and amortization expenses.
(3) As a percentage of related sales or revenue, as applicable.
(4) As a percentage of earnings before income taxes.
</TABLE>
7
<PAGE>
Thirteen Weeks Ended May 3, 1997 vs. Thirteen Weeks Ended May 4, 1996
- ------------------------------------------------------------------------
Total revenues for the first quarter increased 14% due to a higher store
count (620 at May 3, 1997 compared with 518 at May 4, 1996) coupled with
a 2% increase in comparable store revenues (revenues generated by stores in
operation during the same months of each period). Comparable store
merchandise sales increased 1% while comparable service revenue increased 11%.
Gross profit from merchandise sales increased, as a percentage of merchandise
sales, due primarily to substantially higher merchandise margins offset,
in part, by an increase in store occupancy costs.
Gross profit from service revenue increased, as a percentage of service
revenue, due primarily to a decrease in service center employee benefits
expense.
Selling, general and administrative expenses increased, as a percentage of
total revenues, due primarily to increases in store expenses and general office
costs offset, in part, by a decrease in media costs.
<TABLE>
Nonoperating income consisted of the following:
(in thousands)
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Rental revenue $ 415 $ 401
Investment income 806 53
Other income 32 10
------ ------
Total $1,253 $ 464
====== ======
</TABLE>
The 15% increase in net earnings was due primarily to increases in total and
comparable store revenues, a substantial increase in gross profit from
merchandise sales, as a percentage of merchandise sales, offset, in part, by
an increase in selling, general and administrative expenses, as a
percentage of total revenues.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES - May 3, 1997
- ----------------------------------------------
The Company's cash requirements arise principally from the need to finance
the acquisition, construction and equipping of new stores and to purchase
inventory. During the first quarter of 1997, the Company invested $59,302,000
in property and equipment while net inventory (net inventory includes the
increase in inventory less the change in accounts payable) increased
$154,114,000. Working capital increased from $70,691,000 at February 1, 1997
to $160,643,000 at May 3, 1997. At May 3, 1997, the Company had
stockholders' equity of $798,642,000 and long-term debt of $555,848,000. The
Company's long-term debt was 41% of its total capitalization at May 3, 1997
and 37% at February 1, 1997.
The Company plans to open between 84 and 94 new stores during the balance of
the current fiscal year. Given the strong demand for automotive repair and
service the Company intends to open fewer PARTS USAs in 1997 than previously
planned, conserving capital and resources for an increased rate of new store
openings of its full service SUPERCENTERS in future years. Management estimates
that if all 94 new stores are opened the cost of this expansion, coupled with
expenditures in existing stores, warehouses and offices will be approximately
$175,000,000. Funds required to finance the store expansion including related
inventory requirements are expected to come primarily from operating activities
with the remainder provided by unused lines of credit which totalled
$124,100,000 at May 3, 1997, or from accessing traditional lending sources such
as the public capital markets.
In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share." This new standard requires dual presentation of basic and
diluted earnings per share (EPS) on the face of the statement of earnings and
requires reconciliation of the numerators and denominators of the basic and
diluted EPS calculations. This statement will be effective for the fourth
quarter of the Company's 1997 fiscal year. Assuming the Company had adopted
the provisions of SFAS No. 128, the pro forma effect on the Company's EPS
calculations for the quarters ended May 3, 1997 and May 4, 1996 are as follows:
May 3, 1997 - as reported: $.37, basic: $.38; May 4, 1996 - as reported: $.33,
basic: $.34. The Company's reported EPS calculations are the same as pro forma
diluted EPS.
9
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement Re: Computation of Earnings Per
Share
(27) Financial Data Schedules
(b) Reports on Form 8-K. No reports on Form 8-K have been filed
during the quarter for which this report is filed.
10
<PAGE>
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.
THE PEP BOYS - MANNY, MOE & JACK
--------------------------------
(Registrant)
Date: June 17, 1997 By: /s/ Michael J. Holden
----------------------- -------------------------
Michael J. Holden
Executive Vice President &
Chief Financial Officer
11
<PAGE>
INDEX TO EXHIBITS
- -----------------
(10.30) Master Lease
(10.31) Transaction Agreement
(11) Computations of Earnings Per Share
(27) Financial Data Schedule
[CAPTION]
MASTER LEASE
Dated as of February 28, 1997
Between
STATE STREET BANK AND TRUST COMPANY
(NOT INDIVIDUALLY BUT SOLELY AS TRUSTEE)
Lessor
and
THE PEP BOYS - MANNY, MOE & JACK
and Certain Subsidiaries Thereof
Lessee
THIS LEASE HAS BEEN MANUALLY EXECUTED IN
COUNTERPARTS NUMBERED CONSECUTIVELY FROM 1 TO 6.
TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES
CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY
BE CREATED THROUGH THE TRANSFER OR POSSESSION OF
ANY COUNTERPART OF THIS LEASE OTHER THAN
COUNTERPART NO. 1.
This is Counterpart No. ______
[1997 Pep Boys II Leased Property]
TABLE OF CONTENTS
(Not a part of the Lease)
Section Page
1. Lease of Property; Title and Condition. . . . . . . . . . . . . . . .2
2. Use; Quiet Enjoyment; Environmental Matters . . . . . . . . . . . . .5
3. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
4. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5. Net Lease; Non-Terminability. . . . . . . . . . . . . . . . . . . . 10
6. Taxes and Assessments; Compliance with Law; Certain
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7. Matters of Title; Assignability . . . . . . . . . . . . . . . . . . 15
8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. Maintenance and Repair. . . . . . . . . . . . . . . . . . . . . . . 19
10. Alterations; Additions. . . . . . . . . . . . . . . . . . . . . . . 19
11. Lessee's Right to Contest Real Property Taxes . . . . . . . . . . . 20
12. Condemnation and Casualty . . . . . . . . . . . . . . . . . . . . . 21
13. Early Termination Rights. . . . . . . . . . . . . . . . . . . . . . 24
14. Offer to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . 26
15. Procedure Upon Purchase . . . . . . . . . . . . . . . . . . . . . . 28
16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17. Assignment; Subletting. . . . . . . . . . . . . . . . . . . . . . . 31
18. Permitted Contests. . . . . . . . . . . . . . . . . . . . . . . . . 32
19. Default Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 33
20. Additional Rights . . . . . . . . . . . . . . . . . . . . . . . . . 39
21. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
22. No Default Certificate. . . . . . . . . . . . . . . . . . . . . . . 42
23. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
24. Separability; Binding Effect; Governing Law; Non-Recourse . . . . . 43
25. Headings and Table of Contents. . . . . . . . . . . . . . . . . . . 44
26. Waiver of Landlord's Lien . . . . . . . . . . . . . . . . . . . . . 44
28. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
29. Short Form Lease. . . . . . . . . . . . . . . . . . . . . . . . . . 46
30. Protection of Instrument Holders. . . . . . . . . . . . . . . . . . 47
31. Additional Lessees. . . . . . . . . . . . . . . . . . . . . . . . . 47
32. Certain Representations and Covenants of Lessee . . . . . . . . . . 48
33. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . 55
34. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
35. Special Local Provisions. . . . . . . . . . . . . . . . . . . . . . 55
EXHIBIT A - Net Rent; Additional Rent
EXHIBIT B - Form of Supplement for Addition of Parcels
EXHIBIT C - Construction Addendum
EXHIBIT D - Form of Construction Supplement
EXHIBIT E - Form of Interim Supplement
EXHIBIT F
-
Form of SNDA
EXHIBIT G
-
Form of Supplement for Additional Lessee(s)
Table of Defined Terms
(Not a part of the Lease)
Term
Section Where Defined
Acquisition
Price
Exhibit A
Additional
Improvements
Section 10.(a)
Additional
Lessee
Section 31.(a)
Additional
Rent
Section 4.(b)
Adjustment
Date
Exhibit A
Advances
Preliminary Statement
Agent
Preliminary Statement
Applicable
Rate
Exhibit A
Applicable
Spread
Exhibit A
Appraised
Value
Section 27.(b)
Break
Costs
Exhibit A
Business
Day
Exhibit A
Casualty
Section 12.(a)
Change of
Control
Section 32.(c)
CLI
Preliminary Statement
Closing
Costs
Section 15.(b)
Closing
Date
Section 15.(a)
Code
Section 32.(a)
Commencement
Date
Section 3.(a)
Condemnation
Section 12.(a)
Construction
Advance
Section 1.(d)
Construction Failure
Payment
Exhibit C
Construction
Failure
Exhibit C
Construction
Supplement
Section 1.(d)
Contingent Rent
Payment
Exhibit A
Declaration of
Trust
Preamble
Default
Rate
Section 4.(c)
Early Termination
Fee
Section 13.(a)
Early Termination
Notice
Section 13.(b)
Environmental
Event
Section 2.(c)
Environmental Indemnity
Agreement
Section 8.(e)
Environmental
Laws
Section 2.(c)
ERISA
Section 32.(a)
Event of
Default
Section 19.(a)
Excess
Funds
Section 12.(c)
Expiration
Date
Section 3.(a)
Facility
Agreements
Section 6.(b)
GAAP
Section 32.(c)
Hazardous
Materials
Section 2.(c)
Impositions
Section 6.(a)
Improvements
Preliminary Statement
Incipient
Default
Section 8.(b)
Increased
Costs
Exhibit A
Indemnified
Party
Section 8.(a)
Instrument
Holders
Preliminary Statement
Instruments
Preliminary Statement
Insurance
Requirements
Section 16
Interim
Advance
Section 1.(e)
Interim
Supplement
Section 1.(e)
Law
Section 5.(a)
Lease
Preamble
Lease
Guarantee
Preliminary Statement
Lease
Guarantor
Preliminary Statement
Legal
Requirements
Section 6.(b)
Lessee
Preamble
Lessee
Parent
Preamble
Lessee's
Equipment
Preliminary Statement
Lessor
Preamble
LIBO Business
Day
Exhibit A
LIBO Rate Reserve
Percentage
Exhibit A
LIBO
Rate
Exhibit A
Lien
Section 7.(a)
Losses
Section 8.(a)
Material
Improvements
Section 10.(a)
Minimum
Price
Section 27.(b)
Net
Proceeds
Section 12.(a)
Net
Rent
Section 4.(a)
New
Improvements
Section 1.(d)
Nominal Appraised
Value
Section 27.(b)
Non-Disturbance
Agreement
Section 30
Notice
Date
Section 19.(a)(viii)
Offer Purchase
Price
Section 15.(b)
Offer to
Purchase
Section 14.(a)
Parcel(s)
Preliminary Statement
Partial Termination
Notice
Section 13.(a)
Payment
Dates
Section 4.(a)
PBGC
Section 32.(a)
Pep Boys -
Delaware
Preamble
Pep Boys -
California
Preamble
Permitted
Encumbrances
Section 7.(a)
Person
Section 32.(c)
Plans
Exhibit C
Proceeds
Section 12.(a)
Proceeds
Trustee
Section 12.(a)
Property
Preliminary Statement
Required Completion
Date
Exhibit C
Reserve
Costs
Exhibit A
SNDA
Section 30.(b)
Special Incipient
Default
Section 8.(b)
Special LIBO
Rate
Exhibit A
Special Minimum
Price
Exhibit C
Subsidiary
Section 32.(c)
Supplement
Section 1.(b)
Tenant
Mortgage
Section 20.(d)
Term
Section 3.(a)
Termination
Notice
Section 12.(b)
Transaction
Agreement
Preliminary Statement
Transaction
Documents
Preliminary Statement
Transaction
Mortgage
Section 30.(b)
MASTER LEASE
MASTER LEASE dated as of February 28, 1997 ("Lease"),
between STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not individually but solely in its capacity as
Trustee under that certain "Declaration of Trust" (herein so called) dated
of even date herewith (in such capacity, and not individually, "Lessor"),
having an address at Two International Place, Fourth Floor, Boston,
Massachusetts 02110, Attn: Corporate Trust Department, THE PEP
BOYS - MANNY, MOE & JACK, a Pennsylvania corporation ("Lessee
Parent"), THE PEP BOYS MANNY MOE & JACK OF CALIFORNIA,
a California corporation ("Pep Boys - California"), and PEP BOYS -
MANNY, MOE & JACK OF DELAWARE, INC., a Delaware
corporation ("Pep Boys - Delaware"). Lessee Parent, Pep Boys -
California, Pep Boys - Delaware, and such other Subsidiaries of the
Lessee Parent as may become "Additional Lessees" pursuant to Section 31
hereof are herein referred to, either singly or collectively, as the context
may require, as "Lessee". The primary business address of Lessee for
purposes of this Lease is at 3111 W. Allegheny Avenue, Philadelphia,
Pennsylvania 19132.
Preliminary Statement
A. Simultaneously herewith Lessor, Lessee Parent, Citicorp
Leasing, Inc., a Delaware corporation ("CLI"), and Bank of Montreal
have entered into a certain Transaction Agreement (herein so-called)
pursuant to which Lessor will from time to time purchase various parcels
of real property (each a "Parcel") to be leased to one of parties
constituting the Lessee hereunder. In each case the term "Parcel" will be
deemed to include all agreements, easements, licenses, rights of way or
use, appurtenances, tenements, hereditaments, and other rights and
benefits belonging or pertaining to such parcels of property or any
improvements thereon.
B. Any improvements from time to time located on the Parcels
that are subject to this Lease (including without limitation, New
Improvements, as hereinafter defined) are collectively referred to as the
"Improvements", while all Parcels and Improvements subject to this Lease
at any relevant time are collectively referred to as the "Property". It is
acknowledged that for all purposes of this Lease the term "Property" does
not include any trade fixtures, inventory, equipment, or other movable
personal property owned or leased by Lessee and used in the conduct of
its business ("Lessee's Equipment"), but the Property does include (and
"Lessee's Equipment" does not include) all equipment and fixtures that
constitute a part of the plumbing, HVAC, or other operating systems of
the buildings and improvements themselves.
C. Lessor will acquire the Parcels from time to time using the
proceeds of Advances (as defined in the Transaction Agreement) under
certain A-Notes, B-Notes and Certificates (herein referred to as the
"Advances") issued by Lessor pursuant to the Transaction Agreement to
CLI (as the initial "Purchaser") or to such other financial institutions as
may from time to time become "Purchasers" under the Transaction
Agreement.
D. Pursuant to the Transaction Agreement CLI has been
appointed as the initial administrative agent on behalf of itself and the
other Instrument Holders (as defined in the Transaction Agreement) and
Purchasers for the exercise of certain rights and privileges set out in the
Transaction Agreement, the Declaration of Trust, this Lease, and the other
"Transaction Documents". CLI, acting in such capacity, or any successor
administrative agent hereafter appointed by the Instrument Holders and the
Purchasers pursuant to the Transaction Agreement, is herein referred to
as the "Agent".
E. The obligations of the Lessee under this Lease have been
guaranteed by Lessee Parent pursuant to that certain "Lease Guarantee"
(herein so-called) of even date herewith executed by Lessee Parent for the
benefit of Lessor, Agent, and the Instrument Holders. Lessee Parent, in
its capacity as the guarantor of the Lease under the Lease Guarantee, is
sometimes herein referred to as the "Lease Guarantor."
NOW, THEREFORE, in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties do hereby agree as follows:
1. Lease of Property; Title and Condition.
(a) In consideration of the rents and covenants herein
stipulated to be paid and performed by the Lessee and upon the terms and
conditions herein specified, the Lessor hereby leases the Property to
Lessee, and the Lessee hereby leases the Property from the Lessor.
(b) If at any time Lessee Parent desires Lessor to
acquire a Parcel, together with any Improvements located thereon, for
lease to a Lessee hereunder, Lessee Parent may request that such Parcels
and/or Improvements be acquired by Lessor and subjected to this Lease,
thereby becoming a part of the "Property" covered hereby. The process
for the addition of a Parcel to the Property is as set out in the Transaction
Agreement, and no Parcel shall be added to the Property until the
requirements for the addition of such Parcel to the Property pursuant to
the Transaction Agreement have been satisfied and Lessor has received
Advances under the Instruments pursuant to the Transaction Agreement
to provide Lessor with the necessary funds for such purpose. The
addition of a Parcel to the Property shall be effected by a "Parcel Addition
Supplement" (herein so called) to this Lease executed by Lessor, Lessee
Parent (solely in its capacity as Lease Guarantor, if the Lessee Parent is
not also the Lessee of the Parcel in question) and the Lessee that will lease
such Parcel hereunder (including any new Additional Lessee, if applicable)
in substantially the form attached hereto as Exhibit "B". The Parcel
Addition Supplement shall, among other items included therein, specify
the adjustments to the Net Rent and Contingent Rent Payment payable
hereunder as a result of the addition of such Parcel and Improvements to
the Property. Without limitation of the other applicable provisions of the
Transaction Agreement, Lessee acknowledges that Agent is not required
to approve a Parcel Addition Supplement, nor any Advance under the
Transaction Agreement to provide Lessor sums necessary to acquire such
Parcel, if the Debt Rating (as defined in the Transaction Agreement) of
Lessee Parent does not satisfy the requirements of Section 1.04(g)(i) of the
Transaction Agreement.
(c) The Property is leased to the Lessee by Lessor
subject to (a) all applicable Legal Requirements (as defined below); and
(b) all Permitted Encumbrances (as defined below). The execution of a
Parcel Addition Supplement shall constitute conclusive evidence that the
Lessee has examined the Parcel in question (and any Improvements
thereon), and the title thereto, and has found the same satisfactory for all
purposes of this Lease.
(d) If at any time Lessee desires to construct new
improvements ("New Improvements") on any Parcel after such Parcel has
been added to the Property, and Lessee desires to receive a Construction
Advance from Lessor to reimburse Lessee for the costs of such
construction, Lessee may do so upon compliance with the provisions set
out below. Any such New Improvements shall be constructed by Lessee
in accordance with the terms and conditions contained in that certain
Construction Addendum (herein so called) attached hereto as Exhibit "C".
Upon completion of any such New Improvements in accordance with the
terms and conditions of the Construction Addendum and satisfaction of all
requirements for the Lessor to receive an Advance (herein referred to as
a "Construction Advance") under the Transaction Agreement in the
amount needed to fund such Construction Advance, Lessor and Lessee
shall execute a "Construction Supplement" (herein so called) to this Lease
in substantially the form attached hereto as Exhibit "D". The
Construction Supplement shall, among other items included therein,
specify the adjustments to the Net Rent and the Contingent Rent Payment
which result from the applicable Construction Advance. Lessor shall have
no obligation to (i) make a Construction Advance to Lessee in respect of
any New Improvements or (ii) execute the necessary Construction
Supplement with respect to such New Improvements, unless an Advance
therefor has been made to Lessor in accordance with Article I of the
Transaction Agreement. Any New Improvements which are constructed
by Lessee, and for which Lessee receives reimbursement from Lessor
pursuant to the Construction Addendum, shall not be treated as
"Additional Improvements" (as defined in Section 10 of this Lease) for
purposes hereof; but rather the construction of such New Improvements
shall be governed by the Construction Addendum. In no event will Lessee
be entitled to receive any Construction Advance after August 31, 1998,
and further, in no event will Lessee be entitled to any such Construction
Advance if, at the time such Construction Advance would otherwise be
made, the Debt Rating (as defined in the Transaction Agreement) of
Lessee Parent does not satisfy the requirements of Section 1.04(c) and/or
Section 1.04(g)(i), as applicable, of the Transaction Agreement.
(e) In addition to Lessee's right to obtain Construction
Advances upon completion of New Improvements on a Parcel as provided
for in Section 1(d) above, Lessee may obtain "Interim Advances" (herein
so-called) to reimburse Lessee for costs theretofore incurred in connection
with the construction of New Improvements that are not yet completed and
are therefore not yet eligible for Construction Advances pursuant to
Section 1(d). Interim Advances shall be treated as "Construction
Advances" and "Advances" for all purposes of the Transaction Agreement
and the other Transaction Documents, except as otherwise specifically
provided in Section 1.04(c) of the Transaction Agreement. At such time
as Lessee desires to obtain an Interim Advance, Lessor and Lessee shall
execute and submit to Agent an "Interim Supplement" (herein so-called)
in substantially the form attached hereto as Exhibit "E". The Interim
Supplement shall, among other items included therein, specify the
adjustments to the Net Rent and the Contingent Rent Payment which result
from the applicable Interim Advance. Lessor shall have no obligation to
(i) make an Interim Advance to Lessee in respect of any New
Improvements or (ii) execute the necessary Interim Supplement with
respect to such New Improvements, unless Lessee has satisfied all
conditions to an Interim Advance under, and an Interim Advance has been
made to Lessor in accordance with, the provisions of Article I of the
Transaction Agreement. It is expressly agreed that any amounts advanced
to Lessee by Lessor hereunder as an Interim Advance shall be treated as
a "Construction Advance" for all purposes of this Lease, including, but
without limitation, for purposes of computing the amount of the
Construction Failure Payment under the Construction Addendum, when
applicable.
(f) In connection with the construction of New
Improvements on a Parcel Lessee may demolish Improvements that were
located on the Parcel in question at the time such Parcel was acquired by
Lessor so long as the value of the Improvements to be demolished was not
included in any appraised value of the Parcel in question at the time such
Parcel was acquired by Lessor and the amount of the Advance made by
the Purchaser(s) under the Transaction Agreement in connection with such
acquisition did not include any amount in respect of the Improvements to
be demolished. In the event Lessee is in doubt as to whether the existing
Improvements on any given Parcel are eligible for demolition as aforesaid,
Lessee may request confirmation thereof from Agent.
(g) THE LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PROPERTY OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, OR THE LOCATION, USE,
DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE
FOR ANY PARTICULAR PURPOSE, CONDITION, OR DURABILITY
THEREOF OR AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, OR AS TO THE LESSOR'S TITLE
THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT BEING
AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE
BORNE SOLELY BY THE LESSEE. IN THE EVENT OF ANY
DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROPERTY
OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION
THEREOF, WHETHER PATENT OR LATENT, THE LESSOR SHALL
HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT
THERETO EXCEPT TO THE EXTENT SET FORTH IN SECTION 8(a)
BELOW. THE PROVISIONS OF THIS SUBSECTION 1(f) HAVE
BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE
EXCLUSION AND NEGATION OF ANY AND ALL WARRANTIES,
EXPRESS OR IMPLIED, BY THE LESSOR WITH RESPECT TO THE
PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING
A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANY OTHER LAW, NOW OR
HEREAFTER IN EFFECT. NOTHING IN THIS SECTION 1(f) SHALL
BE DEEMED TO LIMIT LESSEE'S CONTRACTUAL RIGHTS
AGAINST LESSOR IN THE EVENT LESSOR VIOLATES ITS
SPECIFIC COVENANTS AND OBLIGATIONS TO LESSEE
PURSUANT TO THE TRANSACTION AGREEMENT OR THIS
LEASE, BUT NO SUCH VIOLATION OF THE TRANSACTION
AGREEMENT BY LESSOR SHALL AFFECT LESSEE'S
OBLIGATIONS UNDER THIS LEASE.
2. Use; Quiet Enjoyment; Environmental Matters.
(a) Subject to the other specific terms and provisions
hereof, the Lessee may use the Property for any lawful purpose provided
that the value of the Property is not diminished by any such use. It is
expressly agreed that use of the Property for the operation of automobile
parts and/or service centers is a permitted use, subject to compliance with
the other terms and conditions hereunder, and such use will not be deemed
to diminish the value of the Property. Lessee shall not commit or suffer
to be committed upon the Property any acts or conditions that constitute
a nuisance under applicable Law. Lessee hereby agrees not to engage in
any activity, or store upon the Property any goods and equipment, which
would render the property coverage insurance described in Section 16
hereof void. During the Term the Lessor covenants that, unless an Event
of Default (as defined below) has occurred and is continuing, Lessor will
not, and will not permit any party claiming by, through or under the
Lessor to, interfere with the peaceful and quiet possession and enjoyment
of the Property by the Lessee; provided, however, that the Lessor, the
Agent, or their respective successors, assigns and agents may, upon at
least ten (10) days prior written notice to the Lessee (unless an emergency
exists, in which case only such written notice as shall be reasonably
practicable under the circumstances shall be necessary), enter upon and
examine the Property or any part thereof. Lessee will always be
permitted to have a representative of Lessee accompany the representative
or agent of Lessor or Agent in question in any inspection if Lessee desires
to do so. It is expressly acknowledged that, as provided in Section 5
hereof, violation of the foregoing covenant shall not permit Lessee to
withhold rent or terminate this Lease.
(b) The Lessee shall, and it shall require and ensure that
any and all sublessees, employees, contractors, subcontractors, agents,
representatives, affiliates, consultants and any and all other Persons, use,
employ, emit, store, handle, transport, dispose of and/or arrange for the
disposal of, any and all Hazardous Materials (as defined below) in, on or,
directly or indirectly, related to or in connection with the Property in
compliance with all Environmental Laws (as defined below) applicable
thereto. Without limitation of the inspection rights as elsewhere set out
herein, if Lessor or Agent at any time believes that an Environmental
Event may have occurred, Lessor or Agent may, at Lessee's expense,
conduct tests of the Property or portions thereof; provided, however, that
in connection therewith: (i) so long as no Event of Default pursuant to
Sections 19(a)(i), (vii), (x), (xi), (xii) or (xiv) hereof exists, no Event of
Default under Section 19(a)(iv) relating to the failure to have required
insurance coverage in place (as opposed to a failure to satisfy any other
Insurance Requirement) exists, and Lessor or Agent have not taken
remedial actions relating to the possession or ownership of such Parcel as
a result of any other Event of Default that may then exist, Lessor or
Agent will first notify Lessee of its desire for tests to be conducted and
request that Lessee perform such tests and provide the results thereof to
Lessor, and so long as Lessee promptly carries out such tests Lessor or
Agent will not perform such tests directly, and (ii) in the conduct of any
tests that Lessor or Agent may conduct directly Lessor or Agent will take
reasonable steps to interfere as little as reasonably practicable with the
conduct of Lessee's business within the Property. Any failure by the
Lessor or Agent or such other Person to comply with the foregoing
provisions of this Section 2 shall not give the Lessee any right to cancel
or terminate this Lease, or to abate, reduce or make deduction from or
offset against any Net Rent, Additional Rent or other sum payable under
this Lease, or to fail to perform or observe any other covenant, agreement
or obligation hereunder, but shall permit Lessee to prohibit Lessor or
Agent from conducting such tests until such requirements are satisfied.
Lessee's obligations hereunder with respect to Hazardous Materials and
Environmental Laws are intended to extend to and cover all matters and
conditions in, on, under, beneath, with respect to, affecting, related to, in
connection with or involving the Property or any part thereof, without
regard to whether Lessee has actually caused or participated in the event
or circumstance giving rise to the matter in question, and without regard
to whether the matter in question arose prior to or during the Term (as
hereinafter defined) of this Lease.
(c) For purposes of the foregoing provisions (or where
such terms are used elsewhere in this Lease), the following terms shall
have the meanings specified below:
(A) "Environmental Laws" means any and all
federal, state and local Laws, including without limitation any and
all requirements to register underground storage tanks, relating to:
(i) emissions, discharges, spills, releases or threatened releases of
pollutants, contaminants, Hazardous Materials (as hereinafter
defined), or hazardous or toxic materials or wastes into ambient
air, surface water, groundwater, watercourses, publicly or
privately owned treatment works, drains, sewer systems, wetlands,
septic systems or onto land; (ii) the use, treatment, storage,
disposal, handling, manufacturing, transportation, or shipment of
Hazardous Materials (as defined below), materials containing
Hazardous Materials or hazardous and/or toxic wastes, material,
products or by-products (or of equipment or apparatus containing
Hazardous Materials), or (iii) pollution or the protection of the
environment.
(B) "Hazardous Materials" means (i) hazardous
materials, hazardous wastes, and hazardous substances as those
terms are defined under any Environmental Laws, including, but
not limited to, the following: the Hazardous Materials
Transportation Act, 49 U.S.C. 1801 et seq., as amended from
time to time ("HMTA"), the Resource Conservation and Recovery
Act, 42 U.S.C. 6901 et seq., as amended from time to time
("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act, 42 U.S.C. 9601 et seq.,
and as further amended from time to time ("CERCLA"), the Clean
Water Act, 33 U.S.C. 1251 et seq., as amended from time to
time ("CWA"), the Clean Air Act, 42 U.S.C. 7401 et seq., as
amended from time to time ("CAA") and/or the Toxic Substances
Control Act, 15 U.S.C. 2601 et seq., as amended from time to
time ("TSCA"); (ii) petroleum and petroleum products including
crude oil and any fractions thereof; (iii) natural gas, synthetic gas,
and any mixtures thereof; (iv) asbestos and/or any material which
contains any hydrated mineral silicate, including, but not limited
to, chrysotile, amosite, crocidolite, tremolite, anthophylite and/or
actinolite, whether friable or non-friable; (v) PCBs, or PCB-
containing materials, or fluids; (vi) radon; (vii) any other
hazardous or radioactive substance, material, contaminant,
pollutant, or waste; and (viii) any substance with respect to which
any federal, state or local Environmental Law or governmental
agency requires environmental investigation, monitoring or
remediation.
(C) "Environmental Event" shall mean any
environmental event or the discovery of any environmental
condition in, on, beneath or involving the Property or any portion
thereof (including, but not limited to, the presence, emission or
release of Hazardous Materials and the violation of any applicable
Environmental Law) that in the sole but reasonable judgment of
Agent, if not properly mitigated or remediated, might have a
material adverse effect on the use, occupancy, possession, value
or condition of the Property or any portion thereof.
3. Term.
(a) Base Term. The term of this Lease ("Term") shall
commence on the date hereof ("Commencement Date") and continue until
August 31, 2003 (the "Expiration Date").
(b) Extension Provisions.
(i) If Lessee desires to extend the Term of this
Lease for an additional three (3) years beyond the original Expiration
Date, Lessee shall have the right, during the period beginning fifteen (15)
months prior to the Expiration Date and ending fourteen (14) months prior
to the Expiration Date, to advise Lessor and Agent of its desire to so
extend the Term. If Lessee expresses such a desire then during the period
ending twelve (12) months prior to Expiration Date Lessor and Lessee
shall negotiate in good faith toward a mutually acceptable extension of the
Term. All terms and conditions of any such extension (other than the
length of the extension), including, without limitation, the Net Rent and
other amounts to be paid by Lessee during such extended term, shall be
subject to negotiation and the mutual agreement of Lessor and Lessee and
approved by Agent on behalf of the Instrument Holders (unless the
Instruments are discharged in full prior to the contemplated Expiration
Date), it being acknowledged and agreed that neither Lessor nor any
Instrument Holder shall be obligated to approve any extension, and their
approval of any requested extension and/or the terms thereof shall be at
the sole discretion of Lessor and such Instrument Holders. If any
extension of the Term is agreed upon then the parties hereto shall execute
an amendment to this Lease setting out the new Expiration Date and all
appropriate revisions to this Lease applicable during such extended period.
(ii) Notwithstanding the foregoing, if Lessee and
Agent desire to extend the Term of the Lease but one or more Instrument
Holders is unwilling to approve such extension, Lessee and Agent shall
make reasonable efforts to find a replacement party willing to purchase the
Instruments held by the Instrument Holders that do not desire to extend
the Term, and otherwise to cooperate reasonably at Lessee's expense to
effect the mutually desirable extension.
(c) Keys and Locks. On the Expiration Date, Lessee
shall surrender to Lessor all keys to all doors of the Property, and give
the Lessor or Agent an explanation of the combination of all safes or
safecabinets, if any, which are to remain in the Property.
(d) Holdover Rent. Upon the termination of this Lease
(whether by the expiration of the Term of the Lease or otherwise) Lessee
must immediately vacate the Property. If Lessee fails to do so then at the
option of Lessor, but without the execution of a new lease by Lessor and
Lessee, Lessee shall immediately become a tenant from month-to-month
of the Property, or any part thereof, at a Net Rent (as hereinafter defined)
equal to the greater of two hundred percent (200%) of the Net Rent
effective in the month immediately preceding termination of this Lease or
one hundred fifty percent (150%) of the then applicable fair market rental
value of the Property, and under all other terms, conditions, provisions,
and obligations of this Lease insofar as the same are applicable to a
tenancy from month-to-month.
4. Rent.
(a) Throughout the Term, Lessee shall pay to the Lessor
as net rental (the "Net Rent") the amounts determined in accordance with,
and on the "Payment Dates" (herein so called) described on Exhibit "A"
attached hereto. During the Term, Lessee shall also pay to Lessor the
items of Additional Rent (as hereinafter defined) set out on Exhibit "A".
At such time as Improvements or Parcels are added to the Property, or
construction advances are made to Lessee by Lessor in respect of New
Improvements constructed by Lessee on any Parcel, the Net Rent and
Additional Rent payments shall be adjusted as contemplated on
Exhibit "A" and/or on the Supplement by which such Improvements or
Parcels are added to the Property, and/or the Construction Supplement
evidencing the construction advance in question, as applicable.
(b) All amounts that the Lessee is required to pay to the
Lessor pursuant to this Lease (other than Net Rent), including, but not
limited to, any and all amounts payable upon expiration of the Lease Term
and/or upon transfer or purchase of the Property, together with amounts
specifically denominated as such on Exhibit "A" as well as every fine,
penalty, interest and cost that may be added for non-payment or late
payment thereof, shall constitute "Additional Rent". Lessor shall give
Lessee notice of any Additional Rent due hereunder promptly after it has
knowledge of such Additional Rent, and shall use its best efforts to notify
Lessee in advance of the due date and amount of such Additional Rent;
provided that failure to give such prompt notice shall not relieve the
Lessee of its obligation to pay such Additional Rent, subject to, as
applicable, the Lessee's rights, if any, under Section 18 hereof.
(c) The Lessee shall pay on demand to the Lessor
interest at a rate (the "Default Rate") equal to the lesser of (i) a rate that
is 200 basis points (2%) in excess of the rate quoted from time to time by
Citibank, N.A., New York, as its "prime" or "base reference" rate for
short-term floating rate commercial loans (whether or not such rate is
actually charged in any particular instance), adjusted daily, or (ii) the
highest lawful rate, on all amounts payable by it to the Lessor hereunder
from the due date thereof until paid in full, subject to Section 4(h) below.
Any such interest at the Default Rate shall be paid at the same place and
in the same manner as Net Rent (as hereinafter provided).
(d) All amounts payable by the Lessee hereunder shall
be paid in lawful money of the United States of America. All Net Rent
payments shall be made to Lessor by 11:00 A.M. (New York City Time)
on the applicable Payment Date. All Additional Rent or other sums due
hereunder shall also be paid by 1:00 p.m. (New York City Time) on the
applicable due date. All payments shall be made by wire transfer or other
immediately available funds. Unless and until Lessee is otherwise notified
in writing by Agent and Lessor, all payments of Net Rent or Additional
Rent hereunder shall be paid to Lessor as follows:
State Street Bank and Trust Company
c/o Citibank, N.A.
New York, New York
Account # 40685147
ABA #021000089
Re: 1997 Pep Boys II
Any payments of rental or other amounts hereunder by Lessee made other
than in accordance with the foregoing requirements shall be at Lessee's
peril and shall not be credited for the benefit of Lessee hereunder unless
and until such funds are actually received by Lessor. If any payment of
Net Rent, Additional Rent, or other sum due hereunder is timely made by
Lessee but Lessor, as Trustee under the Declaration, fails to make timely
distribution of the amounts in question to the Instrument Holder(s) entitled
to receive such amounts, Lessee shall have no responsibility for any late
fees or other compensatory payments due to the Instrument Holders in
respect of such late payment by the Trustee, nor subject to any other
consequences arising therefrom.
(e) Agent shall endeavor to send to Lessee on a monthly
basis an invoice stating the amount of Net Rent due for the month in
question. While the delivery of such an invoice is not a condition
precedent to Lessee's obligation to pay the Net Rent due hereunder, if
Agent fails to sent an invoice Lessee shall not be deemed to be in default
of its obligations to pay Net Rent hereunder if, on the date the Net Rent
is due hereunder Lessee (i) pays to Lessor an amount equal to the amount
of Net Rent that was due and payable for the preceding month hereunder,
(ii) delivers to Agent a written notice that Lessee did not receive an
invoice for the month in question and is therefore unable to compute the
exact amount due for the month in question, and (iii) Lessee makes any
reconciliation payments necessary such that Lessee pays the correct
amount of Net Rent hereunder for the month in question within five (5)
Business Days after Lessee receives a reconciliation invoice. If the
amount actually paid by Lessee is more than the Net Rent due for the
month, Lessor shall refund the overage to Lessee within five (5) Business
Days after the reconciliation invoice is produced by Agent. Any positive
difference between the amount of Net Rent due to Lessor and the actual
amount paid by Lessee pursuant to the foregoing provision shall bear
interest at the Applicable Rate for the period between the date the Net
Rent payment is due hereunder and the date such reconciliation payment
is actually made by Lessee, and in the event the actual payment of Net
Rent made by Lessee as aforesaid is more than the amount of Net Rent
due for the month in question, any credit or refund to Lessee shall
likewise bear interest at the Applicable Rate from the date the Net Rent
was paid by Lessee until such refund payment is made.
(f) The Lessee shall perform all of its obligations under
this Lease at its sole cost and expense and shall pay, when due and
without notice or demand (except as otherwise provided in this Lease), all
amounts due hereunder. The Lessee agrees to pay on demand (i) all
Impositions (as defined in Section 6) (subject to Lessee's rights pursuant
to paragraph 6) and (ii) all reasonable fees and expenses of the counsel to
each of Lessor and Agent, in connection with the preparation, execution,
delivery, modification and amendment of this Lease and any other
documents to be delivered in connection herewith or therewith or in
connection with or arising out of any refinancing or refunding thereof
requested or consented to by Lessee.
(g) In the event that Lessee shall fail to pay any portion
of any installment of Net Rent on the day on which such installment is
due, to the extent permitted by applicable law there shall be added to such
unpaid amount a late charge of two percent (2%) of the amount owed in
order to compensate Lessor and Agent for the extra administrative
expenses incurred. Any such late charges shall be paid by Lessee in the
same manner as hereinabove provided for the payment of Net Rent. The
foregoing provision shall not be deemed to limit Lessor's right to receive
interest at the Default Rate with respect to such payment as provided in
subsection 4(c) above.
(h) Notwithstanding the foregoing Lessor shall waive
any late charges and/or any extra amounts due by Lessee as a result of the
application of the Default Rate to late payments made by Lessee hereunder
on up to three (3) occasions during the Term so long as the payment in
question is made during the applicable grace or cure period such that the
late payment in question does not become an Event of Default hereunder.
5. Net Lease; Non-Terminability.
(a) This Lease is a net lease and, except as otherwise
expressly provided in this Lease, any present or future Law (as defined
below) to the contrary notwithstanding, shall not terminate, nor shall the
Lessee be entitled to any abatement, reduction, set-off, counterclaim,
defense or deduction with respect to any Net Rent, Additional Rent or
other sum payable hereunder. Without limitation of the generality of the
foregoing, except as otherwise expressly provided in this Lease, the
obligations of the Lessee shall not be affected by reason of: (i) any
damage to or destruction of the Property or any part thereof by any cause
whatsoever (including, without limitation, fire, Casualty (as defined in
Section 12) or act of God or enemy or any other force majeure event);
(ii) any Condemnation (as defined in Section 12), including, without
limitation, a temporary Condemnation of the Property or any part thereof;
(iii) any prohibition, limitation, restriction or prevention of the Lessee's
use, occupancy or enjoyment of the Property by any person; (iv) any
matter affecting title to the Property or any part thereof; (v) any eviction
of the Lessee from, or loss of possession by the Lessee of, the Property
or any part thereof, by reason of paramount title or otherwise; (vi) any
default by the Lessor hereunder or under any other agreement; (vii) the
invalidity or unenforceability of any provision hereof or the impossibility
or illegality of performance by the Lessor or the Lessee or both; (viii) any
action of any federal, state or local governmental authority; or (ix) any
other cause or occurrence whatsoever, whether similar or dissimilar to the
foregoing. The parties intend that the obligations of the Lessee hereunder
shall continue unaffected unless such obligations shall have been modified
or terminated pursuant to an express provision of this Lease. For
purposes hereof "Law" means all statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions, or decrees of any municipal, state,
federal, foreign, or territorial government, or any court, governmental
body, subdivision, agency, department, commission, board, bureau, or
instrumentality thereof.
(b) The Lessee shall remain obligated under this Lease
in accordance with its terms and shall not take any action to terminate,
rescind or avoid this Lease notwithstanding any bankruptcy, insolvency,
reorganization, liquidation, dissolution or other proceeding affecting the
Lessor or any action with respect to this Lease which may be taken by any
trustee, receiver or liquidator or by any court. Except as expressly
permitted in this Lease, the Lessee waives all rights to terminate or
surrender this Lease, or to any abatement or deferment of Net Rent,
Additional Rent or other sums payable hereunder. The Lessee shall
remain obliged under this Lease in accordance with its terms and the
Lessee hereby waives any and all rights now or hereafter conferred by
Law or otherwise to modify or to avoid strict compliance with its
obligations under this Lease. All payments made to the Lessor hereunder
as required hereby shall be final and the Lessee shall not seek recovery of,
nor shall Lessee be entitled to recover, any such payment or any part
thereof for any reason whatsoever, absent manifest error.
(c) Lessee shall be entitled to bring a separate action
against Lessor, Agent, or the Purchasers, as applicable, to enforce their
respective obligations to Lessee hereunder or under the other Transaction
Documents, but no such action (including any judgment received by
Lessee in connection therewith) shall ever permit or grant Lessee the right
to terminate this Lease or create any right of abatement, set-off, or other
reduction or suspension of the payments due by Lessee
hereunder.
6. Taxes and Assessments; Compliance with Law; Certain
Agreements.
(a) The Lessee shall pay or cause to be paid, subject to
Section 18, all Impositions before any fine, penalty, interest or cost may
be added or any default may be claimed or any termination or foreclosure
or forfeiture procedures for nonpayment may be commenced. If any
Imposition may legally be paid in installments, such Imposition may be so
paid in installments provided that the Lessee shall pay all such installments
due and payable on or prior to the Expiration Date or earlier termination
of this Lease. "Impositions" means (i) all taxes, assessments, levies, fees,
water and sewer rents and charges, inspection fees and other authorization
fees and all other governmental charges, general and special, ordinary and
extraordinary, foreseen and unforeseen, of every character (including all
penalties or interest thereon) which, at any time prior to or during the
Term, may be imposed or levied upon or assessed against or be a Lien (as
defined in Section 7) upon (A) the Property or any part thereof, or
(B) this Lease or the leasehold estate hereby created, or which arise in
respect of the ownership, operation, occupancy, possession, use, non-use
or condition of the Property or any part thereof; (ii) all gross receipts or
similar taxes imposed or levied upon, assessed against or measured by any
Net Rent, Additional Rent or other sum payable hereunder; (iii) all sales,
value added, use and similar taxes at any time levied, assessed or payable
on account of the ownership, operation, occupancy, use, leasing, or
subleasing of the Property or any part thereof; (iv) all charges, levies,
fees, rents or assessments for or in respect of utilities, communications
and other services rendered or used on or about the Property or any part
thereof; and (v) payments in lieu of each of the foregoing. "Impositions"
shall not be deemed to include any taxes or charges imposed upon any
sale or transfer of ownership interests in the Lessor, nor any "Excluded
Charges" (as defined in the Transaction Agreement).
(b) Subject to Section 18, the Lessee shall comply with,
and cause the Property to comply with, all Legal Requirements. "Legal
Requirements" means (i) all Laws, foreseen or unforeseen, ordinary or
extraordinary, or arising from any restriction of record or otherwise,
which now or at any time hereafter may be applicable to the Lessor, as
owner of the Property, the Lessee, as lessee hereunder, or the Property
or any part thereof, or any of the adjoining sidewalks or vaults, if any, or
the ownership, operation, occupancy, use, non-use or condition of the
Property or any part thereof and any other governmental rules, orders and
determinations now or hereafter enacted, made or issued, and applicable
to the Lessor, as owner of the Property, the Lessee, as lessee hereunder,
or the Property or any part thereof or the ownership, construction,
operation, mortgaging, occupancy, possession, use, non-use or condition
thereof whether or not presently contemplated; and (ii) all agreements,
permits, covenants, conditions, and restrictions applicable to the Property
or any part thereof or the ownership, operation, mortgaging, occupancy,
use, non-use, or condition thereof, including but not limited to, all Facility
Agreements (as defined below) and all such Laws (including, without
limitation, carrying out all necessary or appropriate remediation or other
response to any Environmental Event in accordance with all applicable
Environmental Laws), contracts, agreements, covenants, conditions and
restrictions which require structural, unforeseen or extraordinary changes
in the Property or any part thereof and all matters of public record.
Without limitation, to the extent that any portion of the Property currently
is included in the same subdivision lot or tax parcel with other property
that is not included in the Property, Lessee shall proceed to promptly
cause such portions of the Property to be replatted and/or to effect such
other legal or administrative actions as may be required to cause each
portion of the Property to be in a legal subdivision lot and tax parcel that
does not include any property that is not a part of the Property; provided,
however, that in isolated cases Lessee may, in lieu of any such replat or
other proceedings, provide title insurance endorsements, bonds,
indemnification or other assurances satisfactory, in Agent's reasonable
discretion, to assure that neither Lessor nor any successor-in-title thereto
shall bear any risk of cost or loss as a result of any such subdivision lot
or tax lot discrepancy. For purposes hereof "Facility Agreements" mean
all contracts or agreements relating to or affecting the Property or the
operation thereof or any portion thereof, including, without limitation, any
easements, declarations, covenants, or restrictions affecting the Property,
and any other agreement or arrangement that constitutes a Permitted
Encumbrance.
(c) The Lessee shall fully and promptly keep, observe,
perform and satisfy, on behalf of Lessor, any and all obligations,
conditions, covenants and restrictions of or on the Lessor under any and
all Facility Agreements, or contest any obligations or alleged obligations
thereunder, so that there will be no default thereunder (other than a
default as to which remedial actions are stayed or suspended pending a
contest of the obligations in question pursuant to Section 18 hereof) and
so that the other parties thereunder shall be and remain at all times obliged
to perform their obligations thereunder. To the extent within its control
Lessee shall not permit to exist any condition, event or fact that could
allow or serve as a basis or justification for any such person to avoid such
performance or to impose or enforce a Lien on the Property or any
portion thereof as a result of the non-performance by Lessee under any
Facility Agreement. Lessor agrees that without Lessee's consent, which
consent shall not be unreasonably withheld, Lessor shall not terminate or
modify any Facility Agreement. Further, at the request and expense of
Lessee, Lessor agrees to reasonably cooperate with Lessee in connection
with the creation of additional Facility Agreements and/or with any
amendment or modification of any existing Facility Agreement that Lessee
may deem desirable; provided, that no Facility Agreement shall be created
or amended without the prior written consent of Agent, which consent
shall not be unreasonably withheld. Lessor hereby further authorizes
Lessee to act on Lessor's behalf pursuant to the Facilities Agreements in
the ordinary course of business related to the routine daily operation of the
Property; provided, that (i) prompt written notice of any material action
taken or notice received by Lessee with respect to any Facility Agreement
shall be given by Lessee to Agent, (ii) no consent, approval, modification,
amendment, or waiver under any Facility Agreement nor any status
report, estoppel certificate, or similar statement or certification with
respect to any Facility Agreement may be given by Lessee on Lessor's
behalf without the prior written approval of Agent (which approval shall
not be unreasonably withheld) unless the Facility Agreement in question
has been approved (or deemed approved) by Agent and either the Facility
Agreement in question or another instrument approved by the Agent
contains an express delegation to Lessee (in its capacity as such) of the
right to issue the item in question or of the right to provide such consent
or approval on behalf of Lessor.
(d) Lessee's execution of a Supplement adding any
Parcel or Improvements to the Property shall constitute Lessee's
representation and warranty to Lessor, Agent, and to each of the
Instrument Holders that as of the date of such Supplement, to Lessee's
knowledge: (i) there is no default, or event or circumstance which, with
notice and/or the passage of time could result in a default, by Lessee or,
to Lessee's knowledge, any other party under any Facility Agreement
applicable to such Parcel or Improvements, (ii) Lessee has paid all
amounts currently due and payable with respect to the Property or any
portion thereof under the terms of any Facility Agreement, and (iii)
Lessee has received no notice of, nor does Lessee have any other
knowledge of, any events, circumstances, or facts that have resulted in,
or could result in, the loss or material reduction or interruption of any of
the services, easements, rights-of-way, or other benefits inuring to the
applicable Parcel under any of the Facility Agreements, and/or the
imposition of any Lien or charge of any kind upon the applicable Parcel
or any portion thereof pursuant to any Facility Agreement. Without
limitation of any other indemnifications or other rights granted for the
benefit of Lessor, Agent, and/or the Instrument Holders herein, Lessee
expressly agrees to indemnify, save, and hold harmless Lessor, Agent,
each Instrument Holder, and their respective successors and assigns from
and against any breach of any of the representations, warranties, or
covenants regarding the Facility Agreements contained in this Section 6.
(e) If any Improvements situated on any Parcels at any
time during the Term shall encroach upon any property, street or right-of-
way adjoining or adjacent to such Parcel, or shall violate the agreements
or conditions contained in any Facility Agreements affecting such Parcel
or any part thereof, or shall impair the rights of others under or hinder or
obstruct any easement or right-of-way to which such Parcel is subject,
then, promptly after the written request of Lessor or Agent, or any person
affected by any such encroachment, violation, impairment, hindrance or
obstruction, Lessee shall, at its expense, either (i) contest such matter in
accordance with Section 18, (ii) obtain effective waivers or settlements of
all claims, liabilities and damages resulting from each such encroachment,
violation, impairment, hindrance or obstruction whether the same shall
affect Lessor, Lessee or both, (iii) make such changes in the
Improvements and take such other action as shall be necessary to remove
such encroachments, hindrances or obstructions and to end such violations
or impairments, including, if necessary, the alteration or removal of any
Improvement (subject to Lessor's and Agent's consent if required by
Section 10(a) hereof), or (iv) provide to Lessor affirmative title insurance
endorsements, bonds, or other assurances satisfactory to Agent, in its
discretion, to assure that neither Lessor nor any successor-in-title thereto
shall bear any risk of cost or loss as a result of the existence of such
encroachment. Lessor and Agent will not make request for correction of
any minor encroachments or similar minor matters unless either (A) a
governmental entity or a person or entity having an interest (which need
not be an ownership interest) in the property affected by such matter
requests correction thereof, or (B) in Lessor's or Agent's good faith
judgment the existence of such encroachment has a materially adverse
effect upon the ownership, marketability, and/or financeability of the
Parcel or portion of the Property to which such encroachment or other
matter relates.
(f) In those circumstances set out in this Section in
which Lessee is authorized or permitted to take an action only after the
consent or approval of the Agent or Lessor is authorized or permitted to
execute Facility Agreements or other agreements requested by Lessee only
after the consent or approval of Agent, Agent shall be deemed to have
approved the action, or execution by Lessor of the document, in question
if no disapproval is given to Lessee by Agent within ten (10) Business
Days after Lessee's written request for approval where such request for
approval (A) contains a reasonably detailed description of the actions
which Lessee proposes to take if the request is approved (including copies
of documents proposed to be executed or delivered) and (B) contains a
specific notice to Agent that the request will be deemed approved if not
disapproved within such period. If Agent disapproves any request, Agent
shall state its reasons for disapproval (which may include lack of sufficient
information regarding the request or, in any appropriate case, insufficient
time to fully evaluate the request). If Agent fails to notify Lessee within
such ten (10) Business Day period that the information provided by Lessee
regarding the requested approval is inadequate for Agent's needs Agent
shall be deemed to have waived any right to refuse a requested approval
on the basis of inadequate information (but the foregoing shall not be
deemed to limit any rights or claims that the Lessor or Agent may have
if the description or other information provided by Lessee in connection
with a requested approval is inaccurate, misleading, or fraudulent). Agent
shall deliver to Lessor written authorizations or directions to evidence
Agent's approval of actions or documents that have been approved (or
deemed approved) by Agent as aforesaid. Following any such approval
or deemed approval by Agent, and receipt by Lessor of the aforesaid
authorizations or directions, Lessor shall execute any approved Facility
Agreement or other approved agreements as requested by Lessee.
(g) Within five (5) Business Days after receipt thereof
by Lessor, unless it is apparent that such materials have independently
been received by Lessee or Agent, as applicable, Lessor shall deliver to
Lessee, with a copy to Agent, any tax bills, condemnation notices,
mechanics' lien claims, legal pleadings, notices relating to Facility
Agreements or Permitted Encumbrances, or other material
communications relating to the Property.
7. Matters of Title; Assignability.
(a) Subject to Section 18, and except for the Permitted
Encumbrances, the Lessee shall not create or permit to exist, and shall
promptly remove and discharge, any mortgage, charge, lien, security
interest, encumbrance, right or claim (each, a "Lien") upon this Lease or
the Property or any part thereof or interest therein, or upon any Net Rent,
Additional Rent or other sum payable hereunder, which Lien arises for
any reason, including, without limitation, any and all Liens which arise
out of the use, condition, occupancy, construction, possession, repair or
rebuilding of the Property or any part thereof (including, without
limitation, by reason of a default under any Facility Agreement) or by
reason of labor or materials furnished or claimed to have been furnished
to the Lessee or for the Property or any part thereof. "Permitted
Encumbrances" means, with respect to the Property but only to the extent
applicable thereto (i) rights reserved to or vested in any municipality or
public authority by the terms of any right, power, franchise, grant,
license, permit or provision of Law affecting the Property to (A) terminate
such right, power, franchise, grant, license or permit, provided that the
exercise of such right would not materially impair the use of the Property
or materially and adversely affect the value thereof, or (B) purchase,
condemn, appropriate or recapture, or designate a purchaser of, the
Property; (ii) any liens thereon for Impositions and any liens of
mechanics, materialmen and laborers for work or services performed or
materials furnished in connection with the Property, which are not due and
payable or which are not delinquent to the extent that penalties for
nonpayment may be assessed (or with respect to which title insurance
endorsements, bonds, or other security and assurances reasonably
satisfactory to Agent have been provided); (iii) easements, rights-of-way,
servitudes, restrictions and other minor defects, encumbrances, and
irregularities in the title to the Property approved by Agent as of the date
the Parcel in question is added to the Property and described in the
owner's policies of title insurance issued to Lessor, as owner of the
Parcels, in connection with Lessor's acquisition of the Parcels; (iv) rights
reserved to or vested in any municipality or public authority to control or
regulate use of the Property or to use the Property in any manner; (v) this
Lease; and (vi) any Transaction Documents.
(b) The Lessor shall not create any Lien upon this
Lease, the Property, or any part thereof except this Lease, the Liens
securing the obligations of Lessor and/or Lessee under the Transaction
Documents, and any Liens that may arise in respect of any action taken
by the Lessor, Agent or the Instrument Holders from time to time in
connection with the enforcement of any rights under this Lease or the
Transaction Documents.
8. Indemnification.
(a) The Lessee shall pay, protect, indemnify and hold
harmless each Indemnified Party (as defined below) from and against, and
shall defend all actions against any Indemnified Party with respect to, any
and all liabilities (including, but not limited to, liability in tort (whether
strict liability or otherwise)), losses, damages, costs, expenses (including,
but not limited to, reasonable attorneys' fees and expenses), causes of
action, suits, claims, demands or judgments of any nature whatsoever
(collectively, "Losses") arising from (i) any injury to or death of any
person, or damage to or loss of property, or any other event or
circumstance occurring on or resulting from activities on the Property, or
resulting from or in connection with the ownership, leasing, subleasing,
operation, occupancy, possession, use, non-use or condition of the
Property, (ii) any Environmental Event, Incipient Default or Event of
Default hereunder, (iii) any act or omission of the Lessee or its agents,
contractors, licensees, sublessees, invitees, representatives or any Person
for whose conduct the Lessee is legally responsible on or relating to or in
connection with the ownership, leasing, subleasing, operation,
management, maintenance, occupancy, possession, use, non-use or
condition of the Property; (iv) performance of any labor or services or
furnishing of any materials or other property in respect of the Property or
any part thereof; (v) any permitted contest referred to in Section 18,
provided, that no Indemnified Party shall be entitled to payment or
indemnification with respect to any amounts voluntarily paid by such
Indemnified Party in respect of matters being properly contested by Lessee
under such Section 18; or (vi) any violation by the Lessee of any contract
or agreement to which the Lessee is a party or of any Legal Requirement
or Insurance Requirement, in each case affecting any Indemnified Party
or the Property, or any part thereof or the ownership, operation,
occupancy, possession, use, non-use or condition thereof and in each case
regardless of the acts, omissions or negligence of any Indemnified Party
(except as otherwise set forth in the following proviso); provided,
however, that the Lessee shall not be required to indemnify any
Indemnified Party hereunder against any such claims to the extent arising
solely as a result of the fraud, gross negligence or willful misconduct of
the Indemnified Party in question. IT IS THE EXPRESS INTENT AND
UNDERSTANDING OF THE PARTIES THAT THE FOREGOING
PROVISION DOES CONSTITUTE AN INDEMNIFICATION BY
THE LESSEE OF THE INDEMNIFIED PARTIES OF AND FROM
LOSSES ARISING OUT OF THE NEGLIGENCE OF THE
RESPECTIVE INDEMNIFIED PARTIES OR ANY OF THEM;
PROVIDED, HOWEVER, THAT THE PARTIES AGREE AND
ACKNOWLEDGE THAT NO INDEMNIFIED PARTY SHALL BE
ENTITLED TO INDEMNIFICATION HEREUNDER FOR
DAMAGES OR LOSSES TO THE EXTENT CAUSED BY THE
FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE INDEMNIFIED PARTY IN QUESTION. In connection with any
such defense by Lessee, Lessee may file answers and pleadings in the
name of and on behalf of the applicable Indemnified Party(ies) where
necessary. For purposes of this Section 8, "Indemnified Party" means the
Lessor (in both its capacity as Trustee under the Declaration of Trust and
in its individual capacity), each Instrument Holder, Agent (and any
successor agent), and any officer, director, employee or agent of any of
the above. "Incipient Default" means the occurrence of any event or the
existence of any circumstance that would entitle Agent or Lessor to send
a notice requiring remedial action by Lessee which, if not carried out by
Lessee within the applicable grace or cure period as provided in the
applicable subsection of Section 19(a) hereof, would result in the existence
of an Event of Default hereunder.
(b) The obligations of the Lessee under this Section 8
shall survive the expiration or any termination of this Lease (whether by
operation of Law or otherwise) for all matters described in this Section 8
which occur or arise prior to such expiration or termination or arise out
of or result from facts, events, claims, liabilities, actions or conditions
occurring, arising or existing on or before such expiration or termination;
provided, that the foregoing shall not be construed to extend or toll any
applicable statute of limitations with respect to the obligations of Lessee
hereunder. In case any action shall be brought against any Indemnified
Party in respect of which indemnity may be sought against the Lessee,
such Indemnified Party shall promptly notify the Lessee in writing, but
failure to give such prompt notice shall not relieve the Lessee from any
liability hereunder except to the extent Lessee is actually prejudiced by
such failure to give prompt notice. So long as no Event of Default exists,
and no Incipient Default exists with respect to the matters covered in
Sections 19(a)(i), (iv), (vii), (x), (xi), or (xiv) (any such Incipient Default
being referred to as a "Special Incipient Default") has occurred and is
continuing hereunder, the Lessee, at its own expense, may defend any
action brought against an Indemnified Party, including the employment of
counsel reasonably satisfactory to such Indemnified Party and the payment
of all reasonable expenses thereof. Any Indemnified Party shall have the
right to employ separate counsel in any such action and to consult with the
Lessee regarding the defense thereof, provided that, except in the
circumstances described below any such separate counsel shall be
employed at the sole cost and expense of the Indemnified Party, and
provided, further, that, except as provided below, the Lessee shall at all
times control such defense. If the Lessee shall have failed to employ
counsel reasonably satisfactory to such Indemnified Party (or, upon notice
from the Indemnified Party that the counsel employed by Lessee is not
satisfactory, if Lessee has failed to discharge counsel previously employed
and to retain new counsel that both Lessee and the Indemnified Party
agree upon), the fees and expenses of counsel to each Indemnified Party
shall be paid by the Lessee. Further Lessee shall pay all of the Losses of
such Indemnified Party incurred in respect of such defense if either (i) the
Lessee shall elect in writing not to assume the defense or, having assumed
such defense, shall thereafter fail to prosecute diligently such defense
thereof, or (ii) if any Special Incipient Default or Event of Default has
occurred and is continuing hereunder. Further, if any Indemnified Party
shall have been advised by counsel chosen by it that there may be one or
more legal defenses available to such Indemnified Party that are different
from or additional to those available to Lessee and the relief sought
against the Indemnified Party is other than payment of monetary damages,
the Indemnified Party may assume the defense of such loss or action once
tendered and Lessee will reimburse such Indemnified Party for the
reasonable fees and expenses of any counsel retained by the Indemnified
Party. So long as Lessee is diligently defending the claim in question as
aforesaid or, if the Indemnified Party has assumed defense thereof, so
long as Lessee is paying the costs of such separate defense in accordance
herewith, the Lessee shall not be liable for any settlement of any action
without its consent. No settlement of any such action may be made by the
Lessee without the Indemnified Party's consent; provided, however, such
consent shall not be necessary if the settlement results in an unconditional
and final release of the Indemnified Party without the admission by the
Indemnified Party of guilt, complicity or culpability.
(c) Upon demand for payment by any Indemnified Party
of any Losses incurred by it for which indemnification is sought, along
with a brief description of the nature and extent of the Losses as well as
the circumstances under which indemnification is sought, Lessee shall pay
when due and payable the full amount of such Losses to the appropriate
party, unless the Lessee shall have assumed the defense of such Loss or
action once tendered and is diligently prosecuting the same and Lessee has
taken all action as may be reasonably necessary to prevent (i) the
collection of such Losses from the Indemnified Party; (ii) the sale,
forfeiture or loss of the Property or any part thereof during such defense
of such action; and (iii) the imposition of any civil or criminal liability for
failure to pay such Losses when due and payable.
(d) Notwithstanding the foregoing, if a claim that is
subject to the indemnification provisions set out above is made seeking
monetary damages only and the maximum exposure of the Indemnified
Party is less than $1,000,000.00, then so long as the Lease Guarantor is
in compliance with the financial covenants set out in the Lease Guarantee,
Lessee may defend or settle such matter at its discretion and in the name
of the Indemnified Party without involvement of the Indemnified Party in
the defense or settlement thereof.
(e) Lessee acknowledges the execution, of even date
herewith, of the "Environmental Indemnity Agreement" (herein so-called)
wherein Lessee has indemnified Lessor, Agent and the Instrument Holders
for various matters relating to Hazardous Substances and Environmental
Laws relating to the Property. The indemnification rights provided for
herein are in addition to, and not in lieu of, indemnification rights granted
in the Environmental Indemnity Agreement.
9. Maintenance and Repair. The Lessee, at its own expense,
will manage and maintain the Property in good repair and condition,
subject to normal wear and tear. Further, Lessee will take all action, and
will make all changes and repairs, structural and nonstructural, foreseen
and unforeseen, ordinary and extraordinary, to the Property from time to
time as may be required to keep the Property in compliance with any
Legal Requirement or Insurance Requirement at any time in effect. The
Lessor shall not be required to, and Lessee hereby waives any right to
require the Lessor to, manage, maintain, repair or rebuild the Property or
any part thereof and the Lessee waives any and all rights it may now or
hereafter have to make any repairs at the expense of the Lessor pursuant
to any Legal Requirement, Insurance Requirement, or otherwise, at any
time in effect. All repairs, replacements and rebuilding by the Lessee
hereunder shall immediately become and shall remain part of the Property,
subject to this Lease.
10. Alterations; Additions.
(a) At any time, so long as no Event of Default has
occurred, and no Special Incipient Default then exists, the Lessee may, at
its own expense, make Additional Improvements to the Property;
provided, however, that (i) the fair market value of the Property shall not
be lessened thereby, and (ii) such work shall be completed in a good and
workmanlike manner free and clear of any Liens for labor, services or
materials (subject to Section 18 hereof) and in compliance with all
applicable Legal Requirements and Insurance Requirements, (iii) the
structural integrity of the Improvements shall not be impaired thereby, and
(iv) any "Material Improvements" (as defined below) shall have been
approved in writing by Agent prior to commencement thereof (which
approval shall not be unreasonably withheld or delayed). "Additional
Improvements" means additions or alterations of the Improvements made
by or for the Lessee and "Material Improvements" means Additional
Improvements which have a cost in excess of $350,000.00 (for this
purpose related segments of Additional Improvements on any given Parcel
(but not similar activities occurring on separate Parcels) shall be
aggregated). The installation or modification of Lessee's Equipment
inside any Improvements will not be treated as Additional Improvements
for purposes hereof. The Lessee shall be permitted, with the consent of
the Agent (which consent shall not be unreasonably withheld), at any time
during, or upon the expiration or termination of, the Term, and at its sole
cost and expense, to remove any such Additional Improvements to the
Property; provided, however, that, in the reasonable discretion of Agent,
such removal shall not impair the use or reduce the fair market value of
the Property below its fair market value on commencement of the Term
and that such removal shall not cause a violation of any Legal
Requirement or Insurance Requirement. Any damage to the Property or
any part thereof caused by such removal shall promptly be repaired by the
Lessee and the Property or part thereof shall be restored to its condition
(or the reasonable equivalent thereof) as it existed immediately prior to the
construction of such Additional Improvements, at the Lessee's sole cost
and expense. The Lessee may place upon the Property or any part thereof
any inventory, fixtures, machinery, equipment or other property belonging
to the Lessee or third parties and remove the same at any time during the
Term and at the request of the Lessor or Agent shall remove the same at
the expiration or termination hereof unless the Lessee shall have purchased
the Property pursuant to the terms hereof; provided that any damage to the
Property or any part thereof caused by such removal shall promptly be
repaired by the Lessee and the Property or such part thereof shall be
restored to its condition (or the reasonable equivalent thereof) as it existed
immediately prior to the placement of any such property upon the
Property, all at the Lessee's sole cost and expense.
(b) If any request is made by Lessee for approval by
Agent of the construction of proposed Additional Improvement and/or the
removal thereof by Lessee where such approval is required, the request
in question shall be deemed approved if Agent has not given Lessee notice
of disapproval within ten (10) Business Days after Lessee's written request
for approval where such request for approval (A) contains a reasonably
detailed description of the action which Lessee proposes to take (including
the Additional Improvements to be constructed or demolished, and the
effect thereof upon the value and utility of the affected Parcel and the
Improvements thereon), and (B) contains a specific notice to Agent that
the request will be deemed approved if not disapproved within such
period. If Agent disapproves any request, Agent shall state its reasons for
disapproval (which may include lack of sufficient information regarding
the request or, in an appropriate case, insufficient time to fully evaluate
the request). If Agent fails to notify Lessee within such ten (10) Business
Day period that the information provided by Lessee regarding the
requested approval is inadequate for Agent's needs Agent shall be deemed
to have waived any right to refuse a requested approval on the basis of
inadequate information (but the foregoing shall not be deemed to limit any
rights or claims that the Lessor or Agent may have if the description or
other information provided by Lessee in connection with a requested
approval is inaccurate, misleading, or fraudulent).
(c) All Additional Improvements shall become and
remain part of the Property and shall be subject to this Lease, unless and
until removed by the Lessee in accordance with subsection 10(a).
11. Lessee's Right to Contest Real Property Taxes. The
Lessee, at its own cost and expense, shall have the sole right, at any time,
to seek a reduction in the assessed valuation of the Property or to contest
any real property taxes for the Property as provided for in Section 18
hereof. If required by any applicable Legal Requirement the proceeding
or contest may be brought by Agent in the name of Lessor as the owner
of the Property but Lessee shall pay any and all costs and expenses
incurred by, or that become the obligation of, the owner of the Property
in connection therewith. Lessee, on final determination of the proceeding
or contest, shall, subject to Section 18 hereof, immediately pay, discharge
and satisfy any decision or judgment rendered, together with all costs,
interest, and penalties incidental to the decision or judgment. Any tax
refund or similar amount received by Lessor as a result of any such
contest by Lessee and attributable to periods when the tax in question was
paid by Lessee shall be received for the benefit of Lessee and promptly
paid over to Lessee by Lessor.
12. Condemnation and Casualty.
(a) General.
(i) Subject to the provisions of this Section 12
Lessee hereby irrevocably assigns to the Lessor any award or
compensation or insurance payment to which the Lessee may become
entitled (i) if the Property or any part thereof is damaged or destroyed by
fire or other casualty (such an occurrence being herein called a
"Casualty") or (ii) if the use, occupancy or title of the Property or any
part thereof is taken or requisitioned or sold in, or on account of any
actual or threatened condemnation or eminent domain proceedings, or
other action by any Person having the power of eminent domain (such an
occurrence being herein called a "Condemnation").
(ii) The Lessee shall promptly notify the Lessor
in writing of any Casualty or Condemnation and shall appear in any
proceeding or action to defend, negotiate, prosecute or adjust any claim
for any award or compensation or insurance payment on account thereof.
The Lessee shall take all appropriate action in connection therewith,
including the employment of counsel reasonably satisfactory to the Lessor
and Agent. The Lessor and Agent shall have the right to appear and
participate and to employ separate counsel in any such proceeding or
action, and the fees and expenses of such counsel shall be paid by the
Lessee if the Lessee shall have failed to employ counsel reasonably
satisfactory to the Lessor and Agent (or, upon notice from Lessor or
Lessee of their dissatisfaction with the counsel employed by Lessee,
Lessee shall have failed to discharge counsel previously employed and to
retain new counsel that Lessee and the Agent and Lessor may agree
upon). If the Lessee shall elect not to enter an appearance in any such
proceeding or action or shall fail to prosecute any such proceeding or
action diligently, or if any Special Incipient Default or Event of Default
has occurred and is continuing hereunder, the Lessor and/or Agent may
assume the prosecution thereof and the Lessee shall pay all of the
reasonable fees and expenses of Lessor's and/or Agent's counsel. No
settlement of any such proceeding or action shall be made by the Lessee
without the written consent of the Lessor and the Agent, which consent
shall not unreasonably be withheld.
(iii) All awards and proceeds attributable to
Lessee's Equipment, Lessee's moving and other expenses, and other
losses incurred by Lessee and all proceeds of Lessee's business
interruption insurance shall be paid to Lessee, and Lessor shall not have
any rights therein, so long as the award or insurance proceeds payable in
respect of the Parcel and/or the Improvements themselves are not reduced
as a result of any such payments to Lessee. In no event shall Lessee
make any claim in any Condemnation proceeding in respect of the loss or
value of the leasehold estate in the Property created hereby, and Lessee
hereby assigns to Lessor any rights it may have to any award based on the
value of the leasehold estate; provided, however, that (i) the foregoing
shall not preclude Lessee from bringing a separate action for damage to
its leasehold estate if, and only if, the award to the Lessor is not reduced
as a result thereof, and further provided that (ii) if Lessee purchases the
Property (or applicable portion thereof) in connection with any such
Condemnation under any applicable provision of this Lease, Lessee shall
be entitled to any Net Proceeds arising therefrom and may prosecute or
dispose of any Condemnation action as it deems appropriate.
(iv) Except as otherwise set out below, any and
all amounts representing proceeds paid in connection with any such
Condemnation or Casualty (other than proceeds of rental loss insurance
and proceeds attributable to Lessee's personal property, Lessee's moving
or other expenses, and business interruption insurance), as the case may
be (collectively, the "Proceeds"), shall be paid over to the Proceeds
Trustee (as defined below) to be held in trust by such Proceeds Trustee
and distributed pursuant to paragraph 12 or 15 of this Lease, as
appropriate, (all such Proceeds, less the reasonable expenses incurred by
the Lessor and the Lessee in collecting such amounts, but including any
reimbursement by the Lessee for reasonable costs and expenses in
connection therewith to which the Lessor and the Agent are entitled
pursuant to this Lease, are the "Net Proceeds"). Except as otherwise
provided below, any and all Proceeds received by the Lessee in
connection with any such proceeding or action shall be received and held
in trust for the benefit of the Lessor, shall be segregated from other funds
of the Lessee and shall be forthwith paid over to the Proceeds Trustee.
The Lessee and Lessor agree that this Lease shall control the rights of the
Lessor and the Lessee in any such Proceeds, and any present or future
Law to the contrary is hereby waived. Any and all reasonable charges,
fees and expenses of the Proceeds Trustee shall be paid from the Net
Proceeds. "Proceeds Trustee" shall mean Agent, if Agent elects to
perform such functions or, if Agent elects not to perform such functions,
such title company or other independent bank or trust company as may be
designated by the Lessor with the approval of Agent.
(v) Notwithstanding the foregoing, however, if
the total amount of Proceeds attributable to a Casualty or Condemnation
is less than or equal to $350,000.00 with respect to any one Parcel, and
no Special Incipient Default and no Event of Default of any kind then
exists, then Lessee may settle the claim in question on behalf of Lessee
and any and all Proceeds received by Lessee in connection with any such
proceeding or action may be retained by Lessee (rather than being paid
over to the Proceeds Trustee), and this Lease shall continue in full force
and effect, and the Lessee shall, at its expense, promptly commence and
diligently pursue to completion the rebuilding, replacement or repair of
any damage to such portion of the Property caused by such event in
conformity with the requirements of Sections 9 or 10, as applicable, in
order to restore such portion of the Property (in the case of a
Condemnation, as nearly as practicable) to the condition and fair market
value thereof immediately prior to such event.
(b) Condemnation with Termination. (i) If a
Condemnation shall in the good faith opinion of an authorized officer of
Lessee affect the Improvements on a given Parcel in such manner as to
render it unsuitable for restoration or for continued use and occupancy by
the Lessee, then the Lessee may deliver, not later than sixty (60) days
after such occurrence, or (ii) if a Condemnation shall affect the entirety
of a Parcel and the Improvements thereon, then the Lessee shall be
deemed to have delivered as of such occurrence, to the Lessor a written
notice (herein called a "Termination Notice") containing (A) notice of the
Lessee's intention to terminate this Lease with respect to the affected
Parcel and the Improvements thereon, and (B) a certificate of an officer
of the Lessee describing the Condemnation giving rise to such termination
and certifying as to clause (i) or (ii) above, as appropriate. In such event
this Lease shall remain in full force and effect as to the Parcels (and the
Improvements thereon) not affected by the Condemnation in question, and
as to the affected Parcel and Improvements the Lessee shall have the same
options available to it that would be available to Lessee at the Expiration
Date with respect to the entire Property. Accordingly, Lessee may either
purchase the remainder of the Parcel and Improvements in question, if
any, plus the Net Proceeds attributable thereto for the Offer Purchase
Price as provided for in Section 15 below, or terminate this Lease as to
the Parcel and Improvements in question upon payment of a Contingent
Rent Payment in respect of the Parcel and Improvements in question in an
amount equal to 84% of the amount that would be the applicable Offer
Purchase Price for the Parcel and Improvements in question pursuant to
Section 15. (If Lessee pays the Contingent Rent Payment in respect of a
portion of the Property pursuant to this provision, such amount shall be
credited, without interest, against the Contingent Rent Payment payable
hereunder at the Expiration Date.) If Lessee fails to elect which of the
foregoing options it requests at the time of delivery of the Termination
Notice, it shall be deemed to have elected to purchase the affected portion
of the Property for the applicable Offer Purchase Price.
(c) Condemnation Without Termination; Casualty.
(i) If, after a Condemnation, the Lessee has not
given a Termination Notice in accordance with subsection 12(b) with
respect to the affected Parcel and the Improvements thereon, or in any
event after a Casualty (unless, in the case of Casualty, Lessee elects to
proceed pursuant to Section 13 below, if applicable), then this Lease shall
continue in full force and effect with respect to the affected Parcel and the
remainder of the Property, and the Lessee shall, at its expense, promptly
commence and diligently pursue to completion the rebuilding,
replacement or repair of any damage to such portion of the Property
caused by such event in conformity with the requirements of Section 9 or
10, as applicable, in order to restore such portion of the Property (in the
case of a Condemnation, as nearly as practicable) to the condition and fair
market value thereof immediately prior to such event.
(ii) In circumstances where the Net Proceeds are
to be administered by the Proceeds Trustee, the Lessee shall be entitled
to receive payment from the Net Proceeds from time to time as such work
of rebuilding, replacement or repair progresses, but only after presentation
of certificates of a licensed architect chosen by the Lessee and subject to
the approval of the Agent (which approval shall not be unreasonably
withheld or delayed), delivered by the Lessee to the Proceeds Trustee
(with a copy to the Agent) from time to time as such work of rebuilding,
replacement or repair progresses. Each such architect's certificate shall
describe the work for which the Lessee is requesting permission to pay or
requesting payment and the cost incurred by the Lessee in connection
therewith and shall state that such work has been properly completed and
that the Lessee has not theretofore received payment for such work, and
shall be accompanied by an officer's certificate of the Lessee certifying
that no Special Incipient Default or Event of Default has occurred and is
continuing and that the amounts held by the Proceeds Trustee are adequate
to complete such rebuilding, replacement or repair. The Proceeds Trustee
shall deliver, or cause to be delivered, payment within ten (10) Business
Days after its receipt of the certificates required above. Upon receipt by
the Proceeds Trustee (with a copy to the Agent) of an officer's certificate
from the Lessee to the effect that final payment has been made for any
such work and stating that the rebuilding, replacement or repair has been
completed, the remaining amount of such Net Proceeds shall be paid to
the Lessee. The Lessee shall be responsible for the cost of any such
repair, rebuilding or restoration in excess of such Net Proceeds, for which
cost the Lessee shall make adequate provision acceptable to the Lessor and
Agent.
(d) Temporary Condemnation or Lease Termination.
Notwithstanding any other provision to the contrary contained in this
Section 12, in the event of any temporary Condemnation, this Lease shall
remain in full force and effect, and provided no Special Incipient Default
or Event of Default has occurred and is continuing, the Lessee shall be
entitled to receive the Net Proceeds allocable to such temporary
Condemnation, except that if this Lease shall expire or terminate during
such temporary Condemnation, then Lessee shall only be entitled to the
Net Proceeds allocable to the period after the termination or expiration of
this Lease if it has purchased the Property pursuant to Section 14 hereof.
(e) Notwithstanding the foregoing provisions, in the
event a material Condemnation or Casualty with respect to a Parcel occurs
during the last twelve (12) months of the Term, Lessee may issue a Partial
Termination Notice with respect to the Parcel in question in the manner
contemplated in Section 13(a) hereof, but without satisfying the
requirements set out in Section 13(a)(i)(3) regarding the Parcel in
question. No Early Termination Fee shall be payable in the event Lessee
exercises such option.
13. Early Termination Rights.
(a) Partial Termination.
(i) Subject to the provisions of subsections (a)(ii)
and (a)(iii) below, the Lessee may at any time deliver to the Lessor a
written notice signed by an authorized officer of the Lessee (herein called
a "Partial Termination Notice") containing (1) notice of the Lessee's
intention to terminate this Lease with respect to a specific Parcel and the
Improvements located thereon as of a Payment Date no earlier than thirty
(30) days after the delivery of such notice, (2) an Offer to Purchase with
respect to such Parcel and the Improvements located thereon pursuant to
Section 14, and (3) a certification of an authorized officer of Lessee to the
effect that either (A) the Parcel in question has become obsolete and is no
longer needed by Lessee for its operation; or (B) if an Event of Default,
or any Incipient Default, exists which in either case arises out of an
Environmental Event relating solely to the Parcel in question and Lessee
elects to cure the Event of Default in question, or to cure the Incipient
Default before it becomes an Event of Default, by purchasing the affected
Parcel in lieu of taking the curative action required by Lessor or Agent.
(ii) Specific Limitation. In no event shall Lessee
have the right to give a Partial Termination Notice with respect to any
Parcel(s) pursuant to subsection (a)(i)(A) above prior to the first
anniversary of the date the Parcel in question was added to the Property
or while any Event of Default shall have occurred and be continuing. The
foregoing one (1) year limitation will not apply to the exercise of Lessee's
purchase option pursuant to subsection (a)(i)(B) above. It is acknowledged
that the option of the Lessee to give a Partial Termination Notice pursuant
to subsection (a)(i)(B) above is a right granted to Lessee that is separate
from the obligation of Lessee to purchase a Parcel at the option of Lessor
if the Environmental Event in question ripens into an Event of Default, as
provided in Section 14(a)(v).
(iii) In addition to any other amounts included
within the Offer Purchase Price, Lessee shall pay to Lessor an "Early
Termination Fee" (herein so-called) in an amount equal to one percent
(1%) of the Acquisition Price of the Parcel(s) in question, at the time the
Lease is terminated as to any Parcel(s) pursuant to this Section 13(a).
(b) Material Changes in Treatment of Transaction.
(i) The Lessee at any time may deliver to the
Lessor a written notice signed by an authorized officer of the Lessee
(herein called an "Early Termination Notice") upon the occurrence of any
of the following:
(A) A ruling by the Internal Revenue
Service which results in the loss of MACRS (as defined in the
Internal Revenue Code of 1986) deductions relating to the Property
by Lessee for federal income tax purposes; or
(B) A change in GAAP or the interpretive
rulings applicable thereto which requires recharacterization of this
Lease as a "capital lease" rather than an "operating lease";
(C) Issuance of any rulings or
requirements by the Securities and Exchange Commission ("SEC")
that would require that this Lease be accounted for as a "capital
lease" rather than as an "operating lease" in any financial
statements of Lessee used in any public SEC filings.
The Early Termination Notice shall contain notice of the Lessee's
intention to terminate this Lease as of a Payment Date no earlier than
thirty (30) days after the delivery of such notice, and (ii) an Offer to
Purchase all of the Property pursuant to paragraph 14.
(ii) No Early Termination Fee shall be due in the
event of a purchase of the Property pursuant to this Section 13(b).
14. Offer to Purchase.
(a) Lessee shall have the right, or obligation, as
applicable, to deliver an "Offer to Purchase" (herein so-called) for the
Property or an applicable portion thereof from Lessor under the following
circumstances:
(i) On the date that is six (6) months prior to the
Expiration Date (as extended, if applicable), Lessee shall be
deemed to have delivered to Lessor an Offer to Purchase the entire
Property unless, on or before such date, Lessee has given notice
to Lessor of Lessee's election to pay the Contingent Rent Payment
pursuant to Section 27 hereof. Any such purchase of the entire
Property may be closed at any time during the last six (6) months
of the Term and no Early Termination Fee shall be applicable
thereto. The exercise by Lessee of its rights on one or more
occasions under Sections 12(b) or 13(a)(i) or 13(b) shall not limit
or otherwise affect Lessee's right to elect either to deliver an Offer
to Purchase or to pay the Contingent Rent Payment hereunder with
respect to the portions of the Property that remain subject to this
Lease at the time the provisions of Section 27 become applicable.
(ii) Simultaneously with the delivery of Partial
Termination Notice pursuant to Section 13(a)(i) above with respect
to any applicable portion of the Property, Lessee shall be obligated
to deliver an Offer to Purchase such portion of the Property and
the delivery of such Offer to Purchase shall be a condition
precedent to the effectiveness of such Partial Termination Notice.
(iii) Simultaneously with the delivery of any
Early Termination Notice pursuant to Section 13(b) above, Lessee
shall be obligated to deliver an Offer to Purchase the entire
Property and the delivery of such Offer to Purchase shall be a
condition precedent to the effectiveness of such Early Termination
Notice.
(iv) Simultaneously with the delivery of any
Termination Notice with respect to an applicable portion of the
Property pursuant to Section 12(b) hereof in connection with any
Condemnation, Lessee shall be obligated to deliver an Offer to
Purchase such portion of the Property and the delivery of such
Offer to Purchase shall be a condition precedent to the
effectiveness of such Termination Notice.
(v) Upon the occurrence of an Event of Default,
Lessee shall, at the option of Lessor or Agent, be deemed to have
delivered an Offer to Purchase covering the entire Property (unless
the Event of Default in question is one that arises solely out of
facts or conditions applicable to one or more particular Parcel(c)
[as opposed to the Property as a whole, or the condition of Lessee
or Lessee Parent] such that if the Parcel(s) in question were not
part of the Property the Event of Default in question would not
exist, in which case the Offer to Purchase shall be applicable only
to the Parcel(s) as to which such Event of Default relates) effective
as of the date on which such Event of Default is declared by
Lessor or Agent; provided, however, that in the case of any Event
of Default as defined in subsection 19(a)(xi) or 19(a)(xii), the
Offer to Purchase shall be deemed to have been given immediately
upon the occurrence of the Event of Default in question and
without the necessity or requirement of any notice or request from
Lessor or Agent. An Early Termination Fee in an amount equal
to one percent (1%) of the applicable Acquisition Price shall be
due and payable with respect to any purchase of one or more
Parcel(s) pursuant to this subsection (v).
(vi) If a Construction Failure (as defined in
Section 3 of the Construction Addendum) shall occur with respect
to the construction of New Improvements on any one or more
Parcel(s), then unless Lessee elects in writing within fifteen (15)
days thereafter to terminate the Lease with respect to the Parcel as
to which the Construction Failure has occurred pursuant to Section
3.1 of the Construction Addendum, Lessee shall be deemed to
have delivered an Offer to Purchase the Parcel with respect to
which such Construction Failure has occurred upon the earlier of
the Required Completion Date (as defined in the Construction
Addendum) or the date on which such Construction Failure occurs
for the New Improvements in question. No Early Termination Fee
shall be payable with respect to any such purchase.
(b) Any Offer to Purchase delivered by the Lessee shall
be irrevocable, except as otherwise provided herein.
(c) The Lessor shall promptly accept any Offer to
Purchase delivered by Lessee in accordance with the foregoing provisions
and the procedure for the purchase of the Property or applicable portion
thereof and the purchase price therefor shall be governed by Section 15
hereof.
15. Procedure Upon Purchase.
(a) If the Lessee shall deliver (or is deemed to have
delivered) an Offer to Purchase under Section 14(a)(i), the closing of the
Lessee's purchase of the Property (the "Closing Date") shall be on the
Expiration Date (or such earlier date during the last six (6) months of the
Term as may be designated by Lessee). Otherwise, the Closing Date shall
be: (1) in the case of an Offer to Purchase covering all or a portion of the
Property given pursuant to subsection 14(a)(ii), (iii), or (iv), on the
Payment Date specified in the Partial Termination Notice, Early
Termination Notice, or Termination Notice, as applicable; (2) in the case
of an Offer to Purchase (covering either all of the Property or an
applicable portion thereof) delivered pursuant to subsection 14(a)(v) or (vi)
on the first Payment Date that is at least thirty (30) days after delivery (or
deemed delivery) of the Offer to Purchase to Lessor by Lessee. In any
case the Closing Date may be on such other date as may be mutually
agreed upon by the Lessor and the Lessee. On the Closing Date, upon
receipt of the Offer Purchase Price, the Lessor shall convey, or cause to
be conveyed, the Property or applicable portion thereof (or, in the case of
Condemnation, the remaining portion thereof) to the Lessee or its designee
by an appropriate recordable limited or special warranty deed and other
appropriate conveyance documents containing no representation or
warranty (expressed or implied) except that the Property or applicable
portion thereof is free and clear of any conveyance, mortgage, lease, or
Lien or other adverse interest of any kind created or caused by the Lessor
or any person claiming by, through or under the Lessor but not otherwise
(except as consented to by the Lessee).
(b) On the Closing Date, the Lessee shall pay, or cause
to be paid, to the Lessor the "Acquisition Price" for the Property or the
portion(s) thereof covered by the Offer to Purchase in question as defined
in Exhibit "A", together with all Net Rent, Additional Rent and other
sums then due and payable hereunder relating to the Property (including,
in the case of a transfer of less than all of the Property, all such sums
attributable both to the portions of the Property being transferred and the
remaining portions of the Property) up to and including such Closing
Date, plus the Early Termination Fee (if applicable) (such amounts, plus
all amounts payable by Lessee pursuant to the following sentence, are
herein referred to as the "Offer Purchase Price"), and the Lessor shall
simultaneously (i) deliver to the Lessee or its designee the instruments
referred to in this Section 15 with respect to the Property or the applicable
portions thereof and any other instruments reasonably necessary to convey
to Lessee or its designee the Property or the applicable portions thereof
and assign any other property then required to be assigned pursuant
hereto, and (ii) convey, or cause to be conveyed, to the Lessee or its
designee any Net Proceeds and/or the right to receive the same
attributable to the portions of the Property being transferred that have not
theretofore been disbursed. The Transaction Mortgage granted by Lessor
on the Property pursuant to the Transaction Agreement shall be released
from the Property (or applicable portion thereof) purchased by Lessee, by
the Agent, by appropriate recordable instrument. The Lessee shall also
pay, or cause to be paid, all charges incident to such conveyance,
including reasonable attorneys' fees of Lessor's counsel and/or Agent's
counsel, and escrow fees, recording fees, any fees, costs or expenses
incurred by the Lessor or Agent in connection with the same, and all
applicable transfer taxes which may be imposed by reason of such
conveyance and the delivery of said instruments (collectively, the "Closing
Costs"). Upon the completion of any purchase of the Property pursuant
to this Section 15, but not prior thereto, this Lease shall terminate with
respect to the Property or the applicable portions thereof affected by such
transaction except with respect to obligations and liabilities of the Lessee
(actual or contingent) (i) under Section 8 hereof, and (ii) which have
arisen with respect to the Property on or prior to such date of purchase,
and except as elsewhere provided herein.
(c) If less than all of the Property is purchased, this
Lease shall remain in full force and effect as to the remaining portions of
the Property, and the Net Rent shall be adjusted as provided for on
Exhibit "A".
16. Insurance. Throughout the Term of the Lease (including
any extension thereof), Lessee shall comply with the following "Insurance
Requirements" (herein so-called):
(a) The Lessee will purchase and maintain, or cause to
be purchased and maintained, insurance with respect to the Property of the
following types and in the following amounts, or if greater, in sufficient
amounts to prevent the Lessor, the Lessee, the Agent and/or the
Instrument Holders from becoming co-insurers of any loss:
(i) Property Insurance: Insurance against
physical damage to the Property caused by "all risks" perils
(subject to certain commercially customary exclusions such as
earthquake damage), as well as broad form boiler and machinery
coverage.
(ii) Commercial General Liability Insurance:
Insurance (issued on an "occurrence" rather than "claims made"
basis) against claims for bodily injury (including death) and
property damage occurring on, in or about the Property or
resulting from activities on the Property, in the minimum
combined single limit amount of $50,000,000 in the aggregate and
$25,000,000 for each occurrence for bodily injury (or death)
and/or property damage. Such coverage may be provided either
by a primary policy having such limits or by a primary policy with
lower limits and one or more secondary or "umbrella" policies, so
long as in the aggregate the required coverage is provided.
(iii) Other Insurance: Such other insurance, in
such amounts and against such risks, as is available from time to
time and customarily carried by companies owning, operating or
leasing property or conducting businesses similar and/or similarly
situated to the Property and/or the Lessee.
Such insurance shall be written by companies that are nationally
recognized (including Lloyd's of London or other recognized international
insurers) and primary insurance shall be written by companies with a
Best's rating of at least B+/VI for property insurance and B+/X or better
for other insurance, and in each case legally qualified to issue such
insurance, selected by the Lessee and shall name Lessor (in both its
individual capacity and in its capacity as Trustee under the Declaration of
Trust, to the extent of its respective interests under the Transaction
Documents) and Agent (for the benefit of itself and the Instrument
Holders) as an additional insured and/or loss payee, as their interests may
appear. If the Property or any part thereof shall be damaged or destroyed
by fire or other insured peril, the Lessee shall promptly notify the Lessor
thereof and of the estimated cost of rebuilding, and of replacing or
repairing the same.
(b) The property insurance referred to in subsection
16(a)(i) for the Property shall (i) at all times be in an amount at least
equal to one hundred percent (100%) of the replacement cost value
(without depreciation), but excluding the cost of footers, foundations, and
site improvements not normally insured, and (ii) include a lenders' loss
payable endorsement in favor of the Agent, as mortgagee under the
Transaction Mortgage, and any loss or damage under such property
insurance policy other than proceeds representing compensation for
business interruption or damage to Lessee's personal property shall be
paid to the Proceeds Trustee (or, if received by any other party, shall be
immediately endorsed or paid over to the Proceeds Trustee) where
required pursuant to Section 12 of this Lease to be held and applied
pursuant to the terms of this Lease. Every policy required under Section
16(a) shall (i) expressly provide that it will not be canceled or terminated
due to a lapse for non-payment of premium or materially changed except
upon fifteen (15) days' written notice to the Lessor, Agent and the Lessee;
(ii) provide that the interests of the Lessor and the Agent shall be insured
regardless of any breach or violation by the Lessee of any warranties,
declarations or conditions contained in such insurance; (iii) provide that
such insurance shall not be invalidated as to the Lessor, the Agent, or any
Instrument Holder by any act, omission or negligence of the Lessee or any
other of the Lessor, the Agent or any Instrument Holder, nor by any
foreclosure or other proceedings or notices thereof relating to the Property
or any part thereof, nor by legal title to, or ownership of the Property or
any part thereof becoming vested in the Agent or its agents, nor by
occupancy or use of the Property or any part thereof for purposes more
hazardous than permitted by such policy; (iv) provide that all insurance
claims pertaining to the Property or any part thereof shall be adjusted by
the insurers thereunder with the Lessee but that the Lessor and Agent must
consent to any such adjusted claim (which consent shall not be
unreasonably withheld) except in those circumstances where Lessee is
authorized to adjust the insurance claim in question pursuant to Section 12
hereof; and (v) include a waiver of all rights of subrogation against the
Lessor, the Agent and/or the Instrument Holders and any recourse against
the Lessor, the Agent and/or the Instrument Holders for payment of any
premiums or assessments under any policy. The Lessee shall advise the
Lessor promptly of any policy cancellation or any change adversely
affecting the coverage provided thereby.
(c) The Lessee shall deliver to the Lessor and Agent the
certificates of insurance in form and substance reasonably acceptable to
Lessor and Agent evidencing the existence of all insurance which is
required to be maintained by the Lessee hereunder including descriptions
of the previously mentioned Insurance Requirements not normally found
in a standard insurance policy as well as descriptions of the exclusions
from coverage under such policies, such delivery to be made (i) on or
before the Commencement Date, (ii) within thirty (30) days of the
issuance of any additional policies or amendments or supplements to any
of such insurance, and (iii) on or before the expiration date of any such
insurance; provided, however, that Lessee may deliver the necessary
certificate for a renewal or replacement policy within five (5) days after
the expiration date of the policy being renewed or replaced so long as
Lessee provides Lessor and Agent with some reasonable evidence that the
required coverage is in fact in place on or before the expiration date of the
expiring policy. The Lessee shall not obtain or carry separate insurance
concurrent in form, or contributing in the event of loss, with that required
by this Section 16 unless the Lessor, the Agent and/or the Instrument
Holders, as applicable, are named as additional insureds therein as their
interests may appear, with loss payable as provided in this Lease. The
Lessee shall immediately notify the Lessor and the Agent whenever any
such separate insurance is obtained and shall deliver to the Lessor and
Agent the certificates of insurance evidencing the same as is required
hereunder. Any insurance required hereunder may be provided under
Lessee's blanket policies; provided that the coverage allocable to the
Property is not less than the coverage required by this Section 16 as
separately stated.
(d) The requirements of subsections (a) through (c) of
this Section 16 shall not be construed to negate or modify the Lessee's
obligations under Section 8 hereof.
(e) From time to time Lessee may elect to satisfy all or
certain of the insurance requirements of this Section 16 through use of a
self-insurance program, subject to Lessor's and Agent's prior written
reasonable approval of the self-insurance program in question and after
delivery to Lessor and Agent of such assurances and undertakings as
Lessor and Agent may reasonably require to evidence that any loss or
damage that would have been covered by third party insurance policies
hereunder in the absence of such a self-insurance program will be paid or
covered by Lessee pursuant to such self-insurance program. In this regard
Lessee's current self-insurance program as described on Annex I attached
hereto and made a part hereof for all purposes is approved. Further, so
long as no Event of Default exists hereunder Lessee may from time to
time increase the self-insurance retention limits/deductibles for general
liability, automobile liability, and/or property damage losses, respectively,
in its self-insurance program from the amounts set out on such Annex I
to amounts not in excess of $1,000,000.00 without the consent of Lessor
or Agent. Without limitation on any indemnification or other obligations
of Lessee hereunder Lessee hereby expressly acknowledges and agrees
that Lessee shall be fully responsible and liable to Lessor, Agent, and/or
the Instrument Holders, as applicable, from time to time for any loss or
damage that would have been covered by third party insurance policies
hereunder in the absence of such self-insurance program and any such loss
or damage will be paid or covered by Lessee on demand.
17. Assignment; Subletting.
(a) Sublease Requirements. The Lessee may sublet the
Property or any part thereof if, but only if, (i) at the time of execution of
any such sublease, no Event of Default shall have occurred and be
continuing; (ii) any such sublease shall by its terms be expressly made
subject and subordinate to the terms of this Lease and the Transaction
Documents; and (iii) the Lessee shall provide the Lessor, within ten (10)
days prior to the effective date of such sublease, with a conformed copy
of the instrument creating such sublease. Any sublease executed by
Lessee and not in strict compliance with the foregoing shall be null and
void and of no force or effect.
(b) Assignment or Hypothecation. The Lessee shall not
assign, convey, or otherwise transfer, or mortgage, pledge or otherwise
hypothecate or encumber its interest in and to this Lease or in and to any
sublease or the rentals payable thereunder without the prior written
consent of the Agent, which consent may be conditioned or denied in
Agent's sole discretion; Any such assignment, conveyance, transfer,
mortgage, pledge, hypothecation, or encumbrance made without Agent's
consent shall be null and void and of no force or effect. The foregoing
shall not prohibit Lessee from mortgaging or granting a security interest
in Lessee's Equipment. In addition, any Lessee may assign its lease
position with respect to a particular Parcel to any other Lessee without the
consent of the Agent, but in such instance the Lessees involved shall
notify Agent and Lessor of the assignment, which shall be effective upon
execution of a supplement to this Lease in form reasonably satisfactory to
Agent confirming the change of the Lessee applicable to the Parcel in
question.
(c) Use By Affiliates. Notwithstanding anything herein
to the contrary, Lessee may from time to time during the Term permit
Affiliates of the Lessee to occupy portions of the Property and Lessor
acknowledges and agrees to the same.
(d) Lessee Remains Liable. No sublease pursuant to
this Section 17 or any occupancy of the Property by any Affiliate of the
Lessee, nor any assignment or hypothecation that may be approved by
Agent (but without implying any obligation whatsoever on Agent to
approve any proposed assignment or hypothecation), shall modify or limit
any right or power of the Lessor hereunder or affect or reduce any
obligation of the Lessee hereunder, and all such obligations shall continue
in full force and effect as obligations of a principal and not of a guarantor
or surety, as though no subletting, assignment, or hypothecation had been
made or occupancy permitted.
18. Permitted Contests.
(a) The Lessee shall not be required, nor shall the
Lessor have the right, to pay, discharge or remove any Imposition, to
comply or cause the Property or any part thereof to comply with any
applicable Legal Requirement, to pay any materialman's, laborer's or
undischarged or unremoved Lien, to perform any disputed obligations
under any Facility Agreements, or to take action to cure any alleged
encroachment affecting a Parcel as long as no Special Incipient Default,
and no Event of Default of any kind, exists hereunder and so long as the
Lessee shall at its sole expense contest, or cause to be contested, in good
faith the existence, amount or validity thereof by appropriate proceedings
which shall (i) in the case of an unpaid Imposition or undischarged or
unremoved Lien, prevent the collection thereof from the Lessor, the
Agent, the Instrument Holders and/or against the Property, (ii) in all cases
prevent the sale, forfeiture, loss of the Property or any part thereof, and
(iii) in all cases not subject the Lessor, the Agent, and/or the Instrument
Holders to the risk of any civil or criminal liability for failure to comply
therewith. The Lessee shall give such security as may be reasonably
demanded by the Lessor or Agent to insure ultimate payment of such
Imposition or the discharge or removal of materialman's, laborer's or
mechanic's Lien or to insure compliance with such Legal Requirement or
Facility Agreement and to prevent any sale or forfeiture of the Property
or any part thereof, or any interference with or deductions from any Net
Rent, Additional Rent or any other sum required to be paid by the Lessee
hereunder by reason of such non-payment, non-discharge, non-removal or
non-compliance; provided that no such security shall be required so long
as Lease Guarantor is in compliance with the financial covenants set out
in the Lease Guarantee.
(b) The Lessor shall cooperate with the Lessee in any
contest and shall allow the Lessee to conduct such contest (in the name of
the Lessor, if necessary) at the Lessee's sole cost and expense. The
Lessee shall notify the Lessor of each such proceeding within ten (10)
days after the commencement thereof, which notice shall describe such
proceeding in reasonable detail.
(c) The Lessee shall, promptly after the final
determination (including appeals) of any contest brought by it pursuant to
this Section 18, pay and discharge all amounts which shall be determined
to be payable therein and shall be entitled to receive and retain for its own
account all amounts refunded and/or rebated as a result of any such
contest and if the Lessor receives any amount as a result of such contest
to which it is not otherwise entitled pursuant to this Lease, it shall
promptly return such amount to the Lessee.
19. Default Provisions.
(a) Any of the following occurrences or acts shall
constitute an event of default (each, an "Event of Default") under this
Lease:
(i) if the Lessee shall fail to pay any Net Rent,
Offer Purchase Price or Contingent Rent Payment on the date on
which payment is due; provided, however, that with respect to Net
Rent, Lessee shall be entitled to notice of such non-payment and
a five (5) Business Day cure period with respect to the defaulted
amount before such non-payment of Net Rent becomes an Event
of Default on up to two (2) occasions during any period of
eighteen (18) consecutive months during the Term (after such two
(2) notices of non-payment of Net Rent during any period of
eighteen (18) consecutive months Lessee will not be entitled to
further notice of non-payment or grace or cure periods with
respect to Net Rent payments during the remainder of the eighteen
(18) month period in question (i.e. the period beginning with the
first of such two occasions) and an Event of Default shall exist if
future Net Rent payments during such period of eighteen (18)
consecutive months are not made when due).
(ii) subject to the terms of Section 18 relating to
permitted contests, if the Lessee shall fail to pay any Imposition
(including, without limitation, any interest or penalties that may
then be applicable thereto) within five (5) Business Days after
written demand by Lessor or Agent.
(iii) if the Lessee shall fail to pay any Additional
Rent or other monetary payment due hereunder (other than the
payment referred to in subsections [i] or [ii] above) or due under
the Transaction Agreement or any Transaction Document on the
date such payment is due and such failure is not cured within five
(5) Business Days after written notice of such failure is given by
either Lessor or Agent to Lessee;
(iv) if the Lessee shall fail to comply with any
Insurance Requirement (either by actual insurance or through the
use of a self-insurance program satisfying the requirements of
Section 16(e) hereof) and such failure is not cured within thirty
(30) days after written notice of such failure is given to Lessee
(which cure period shall be ten (10) days instead of thirty (30)
days if the non-compliance in question is an actual failure to have
any required insurance in force); provided, that the foregoing cure
period shall not be deemed to limit Lessor's or Agent's right to
take action as deemed necessary to avoid lapse or termination of
coverage even during such cure period nor Lessee's obligations to
reimburse Lessor for any funds it may expend in connection
therewith;
(v) if the Lessee shall voluntarily grant or create
any Lien (other than Permitted Encumbrances) upon the Property
or any part thereof or interest therein or upon any Net Rent,
Additional Rent or other sum payable hereunder;
(vi) if Lessee shall fail to comply with any of the
affirmative or negative covenants set out in Section 32 hereof;
(vii) if any representation or warranty made by
Lessee under this Lease, any supplement hereto, the Transaction
Agreement, or any other Transaction Document proves to have
been false or materially misleading at the time made and the
misrepresentation, in the reasonable judgment of Lessor or Agent,
as applicable, has a material adverse effect upon Lessor or the
Instrument Holders;
(viii) if the Lessee shall fail to observe or perform
any other provision hereof (except as provided in Section 18
hereof), or fail to observe or perform Lessee's obligations under
the Transaction Agreement or any Transaction Document and, in
either case, Lessee does not cure such failure within thirty (30)
days after receipt of written notice to the Lessee of such failure;
(ix) if an Event of Default has occurred under the
Environmental Indemnity Agreement, or an Event of Default by
Lessee has occurred under the Transaction Agreement or any of
the other Transaction Documents;
(x) Upon the occurrence of a payment default by
Lessee with respect to any other indebtedness in an amount in
excess of $5 million owed by Lessee to any person or entity as and
when such payment is due, which default continues beyond any
grace or cure periods applicable thereto under the terms of the
instruments evidencing such indebtedness; or
(xi) if a custodian, receiver, liquidator, or trustee
of Lessee, or of any of the property of Lessee, is appointed or
takes possession, and such appointment or possession remains in
effect for more than sixty (60) days; or Lessee generally fails to
pay its debts as they become due or admits in writing its inability
to pay its debts as they mature; or Lessee is adjudicated bankrupt
or insolvent; or an order for relief is entered under the Federal
Bankruptcy Code against Lessee; or any of the property of Lessee
is sequestered by court order and the order remains in effect for
more than sixty (60) days; or a petition is filed against Lessee
under the bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or subsequently in effect, and is not
stayed or dismissed within sixty (60) days after filing;
(xii) if Lessee files a petition in voluntary
bankruptcy or seeking relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction, whether
now or subsequently in effect; or consents to the filing of any
petition against it under any such law; or consents to the
appointment of or taking possession by a custodian, receiver,
trustee or liquidator of Lessee or of all or any part of the property
of Lessee;
(xiii) if the Property or any material portion
thereof shall be left vacant or unattended and without proper
maintenance for a period of thirty (30) days after notice from
Lessor requesting maintenance or other appropriate action.
Nothing in the foregoing provision shall be deemed to prohibit
Lessee from ceasing retail operations at any Parcel so long as the
Improvements as to which retail operations have ceased continue
to be properly secured, maintained, and insured as required by the
terms of this Lease; or
(xiv) if an Event of Default by the Lease
Guarantor has occurred under the Lease Guarantee.
To the extent any provision of this Lease requires payment and/or
performance of any matter after written request or demand by Lessor, and
Lessor gives such written request or demand for the action in question to
Lessee, such written request or demand to Lessee specifically requesting
or demanding payment or performance of the matter in question, and
specifying that if payment or performance is not made an Event of Default
may be declared by Lessor or Agent, shall constitute the notice required
to be given by Lessor under this Section 19(a) for purposes of beginning
any applicable grace or cure period, and if the action requested or
demanded is not taken by Lessee within the applicable grace or cure
period in question, an Event of Default shall arise hereunder without the
necessity of any further notice or demand by Lessor or Agent.
It is expressly agreed that in all circumstances where Lessee is
entitled to receive notice of non-performance from Lessor pursuant to this
Section 19(a) the notice in question may be given on behalf of Lessor by
Agent, and Lessor hereby appoints Agent as its agent for purposes of
giving such notices to Lessee.
If at any time there is more than one entity that is a Lessee under
the terms of this Lease, then (A) any Event of Default by any Lessee
(including, but without limitation, an Event of Default pursuant to
subsections 19(a)(xi) and/or (xii) as to such Lessee, shall constitute an
Event of Default for purposes of all parties constituting "Lessee," and (B)
where Lessor or Agent is required to give notice of any default, non-
payment, or non-performance hereunder, notice shall be given to the
Lessee Parent which shall be effective as to all Lessees regardless of
which Lessee actually uses or occupies the portions of the Property in
question.
If an Event of Default occurs (including the expiration of
applicable grace or cure periods), then the subsequent performance of the
defaulted obligation shall not be deemed to "cure" the Event of Default
unless Lessor (with the consent of Agent) agrees to accept such cure in
writing, and absent such agreement the Event of Default in question shall
be deemed to "continue" for all purposes of this Lease. However, the
purchase by Lessee of an affected portion of the Property pursuant to
subsection 13(a)(i), 14(a)(v) or 14(a)(vi) where no Event of Default exists
with respect to the remaining portions of the Property shall be deemed to
"cure" the Event of Default in question, the Lease shall remain in effect
as to the remainder of the Property, and the Lessor and Lessee shall be
automatically restored to their former rights and positions hereunder.
(b) The Lessor may take all steps to protect and enforce
the rights of the Lessor or obligations of the Lessee hereunder, whether
by action, suit or proceeding at law or in equity (for the specific
performance of any covenant, condition or agreement contained in this
Lease, or in aid of the execution of any power herein granted, or for the
enforcement of any other appropriate legal or equitable remedy) or
otherwise as the Lessor shall deem necessary or advisable.
(c) If an Event of Default shall have occurred and be
continuing, then:
(i) By written notice by the Lessor to the Lessee,
the Lessor may terminate this Lease; provided, that no such termination
shall be effective unless approval of such termination is given in writing
by Agent to both Lessor and Lessee. This Lease and the estate hereby
granted shall expire and terminate on the date specified in such notice (or,
if later, the date on which approval of such notice is given by Agent) as
fully and completely and with the same effect as if such date were the
Expiration Date herein fixed for the expiration of the Term and all rights
of the Lessee hereunder shall expire and terminate, but the Lessee shall
remain liable as hereinafter provided.
(ii) Should the Lessor elect not to terminate this
Lease after the occurrence of an Event of Default, this Lease shall
continue in effect and Lessor may enforce all Lessor's rights and remedies
under this Lease including the right to recover the rent as it becomes due
under this Lease. For the purposes hereof, the following do not constitute
a termination of this Lease:
(A) Acts of maintenance or preservation
of the Property or any part thereof or efforts to relet the Property
or any part thereof, including, without limitation, termination of
any sublease of the Property and removal of such subtenant from
the Property; and/or
(B) The appointment of a receiver upon
initiative of the Lessor to protect the Lessor's interest under this
Lease.
(d) If an Event of Default shall have occurred and be
continuing, the Lessor shall have (i) the right, whether or not this Lease
shall have been terminated pursuant to subsection 19(c) hereof, to re-enter
and repossess the Property or any part thereof, as the Lessor may elect,
by summary proceedings, ejectment, any other legal action or in any other
lawful manner the Lessor determines to be necessary or desirable and
(ii) the right to remove all persons and property therefrom. The Lessor
shall be under no liability by reason of any such re-entry, repossession or
removal. No such re-entry or repossession of the Property or any part
thereof shall be construed as an election by the Lessor to terminate this
Lease unless a notice of such termination is given to the Lessee pursuant
to subsection 19(c) hereof, or unless such termination is decreed by a
court or other governmental tribunal of competent jurisdiction. Should the
Lessor elect to re-enter the Property as herein provided or should the
Lessor take possession pursuant to legal proceedings or pursuant to any
notice provided for by Law or upon termination of this Lease pursuant to
subsection 19(c) hereof or otherwise as permitted by Law, the Lessee shall
peaceably quit and surrender the Property or any part thereof to the
Lessor. In any such event, neither the Lessee nor any person claiming
through or under the Lessee, by virtue of any Law, shall be entitled to
possession or to remain in possession of the Property, but shall forthwith
quit and surrender the Property to the Lessor.
(e) At any time or from time to time after the re-entry
or repossession of the Property or any part thereof pursuant to subsection
19(d) hereof, whether or not this Lease shall have been terminated
pursuant to subsection 19(c) hereof, the Lessor may (but, except as
otherwise required by applicable Law, shall be under no obligation to)
relet the Property or any part thereof, for the account of the Lessee,
without notice to the Lessee, for such term or terms and on such
conditions and for such uses as the Lessor, in its discretion, may
determine. The Lessor may collect and receive any rents payable by
reason of such reletting. The Lessor shall not be liable for any failure to
relet the Property or any part thereof or for any failure to collect any rent
due upon any such reletting.
(f) No termination of this Lease pursuant to subsection
19(c) hereof, or by operation of Law, and no re-entry or repossession of
the Property or any part thereof, pursuant to subsection 19(d) hereof, and
no reletting of the Property or any part thereof pursuant to subsection
19(e) hereof, shall relieve the Lessee of its liabilities and obligations
hereunder, all of which shall survive such termination, re-entry,
repossession or reletting.
(g) Upon the occurrence of an Event of Default, the
Lessor, without waiving any Event of Default or releasing Lessee from
any obligation, may (but shall be under no obligation to) make any
required payment or perform any required act for the account and at the
expense of the Lessee, and may enter upon the Property for such purpose
and take all such action thereon as, in the Lessor's sole discretion, may
be necessary or appropriate therefor. No such entry shall be deemed an
eviction of the Lessee or a termination of this Lease. All sums so paid by
the Lessor and all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses so incurred, together with interest
thereon to the extent permitted by Law) shall be paid by the Lessee to the
Lessor on demand as Additional Rent.
(h) In the event of any termination of this Lease or
re-entry or repossession of the Property or any part thereof by reason of
the occurrence of any Event of Default, the Lessee shall pay to the Lessor
all Net Rent and Additional Rent and other sums required to be paid to
and including the date of such termination, re-entry or repossession; and
thereafter, until the end of the Term, whether or not the Property or any
part thereof shall have been relet, the Lessee shall be liable to the Lessor
for, and shall pay to the Lessor, on the days on which such amounts
would be payable under this Lease in the absence of such termination,
re-entry or repossession, as agreed current damages and not as a penalty:
all Net Rent, all Additional Rent and other sums which would be payable
under this Lease by the Lessee, in the absence of such termination,
re-entry or repossession, and all costs (including reasonable attorneys' fees
and expenses) incurred by the Lessor hereunder (payable on demand). At
such time after the termination or expiration of this Lease as the Lessee
shall have paid all amounts required to be paid by it under this Lease and
the Lessor shall have discharged any and all obligations to the Agent, then
the Lessor shall pay to the Lessee, within five (5) Business Days after its
receipt thereof, the net proceeds, if any, of any reletting effected for the
account of the Lessee pursuant to subsection 19(e), after deducting from
such proceeds all the Lessor's reasonable expenses in connection with
such reletting (including, but not limited to, all repossession costs,
brokerage commissions, attorneys' fees and expenses, employees'
expenses, alteration costs and expenses of preparation for such reletting),
and the amounts to which Lessee may be entitled hereunder shall be held
by Lessor in trust for Lessee pending any such payment to Lessee.
(i) Lessor may exercise its rights under this Section 19
either directly or indirectly or through any agent (including, without
limitation, the Agent under the Transaction Agreement) as Lessor may
from time to time appoint to act on Lessor's behalf.
(j) It is acknowledged that if Lessee closes the purchase
of the Property pursuant to an Offer to Purchase properly given (or
deemed given) by Lessee hereunder and pays the Offer Purchase Price to
Lessor therefor, this Lease shall terminate as of the closing of such
purchase and Lessor will have no further remedial rights with respect to
any then existing Event of Default, but such purchase shall not extinguish
any rights of indemnification or other such rights of Lessor, Agent, or the
Instrument Holders that, by the terms or implications hereof, are intended
to survive termination of this Lease.
20. Additional Rights.
(a) No right or remedy hereunder shall be exclusive of
any other right or remedy, but shall be cumulative and in addition to any
other right or remedy hereunder or now or hereafter existing by law or in
equity and the exercise by the Lessor of any one or more of such rights,
powers or remedies shall not preclude the simultaneous exercise of any or
all of such other rights, powers or remedies. Failure to insist upon the
strict performance of any provision hereof or to exercise any option, right,
power or remedy contained herein shall not constitute a waiver or
relinquishment thereof for the future. Receipt by the Lessor of any Net
Rent, Additional Rent or other sum payable hereunder with knowledge of
the breach by Lessee of any provision hereof shall not constitute waiver
of such breach, and no waiver by the Lessor of any provision hereof shall
be deemed to have been made unless made in writing. The Lessor shall
be entitled to injunctive relief in case of the violation or attempted or
threatened violation of any of the provisions hereof, a decree compelling
performance of any of the provisions hereof or any other remedy allowed
to the Lessor by law or in equity.
(b) The Lessee hereby waives and surrenders for itself
and all those claiming under it, including creditors of all kinds, any right
and privilege which they may have to redeem the Property or to have a
continuance of this Lease after termination of the Lessee's right of
occupancy by Law or by any legal process or writ, or under the terms of
this Lease, or after the termination of the term of this Lease as herein
provided. Lessee also waives, to the maximum extent permitted by law,
any requirement that the Lessor re-let the Property or otherwise mitigate
or attempt to mitigate damages arising out of any default by Lessee.
(c) If an Event of Default exists hereunder, the Lessee
shall pay to the Lessor on demand, all reasonable fees and expenses
incurred by the Lessor in enforcing its rights under this Lease, including
reasonable attorneys' fees and expenses, and expressly including any
obligations or liabilities that Lessor may incur to Agent or the Instrument
Holders in respect of costs incurred by Agent or the Instrument Holders
as a result of such Event of Default.
(d) (i) Lessor and Lessee intend that this Lease be
treated as an operating lease. If, notwithstanding the intention of the
parties, a court of competent jurisdiction determines in a final judgment
or order that the transaction represented by this Lease will be treated as
a financing transaction under state law, then in such event it is the
intention of the parties hereto (1) that this Lease be treated as a mortgage
and security agreement or other similar instrument (the "Tenant
Mortgage") from Lessee, as mortgagor, to Lessor, as mortgagee,
encumbering the Property, (2) that upon an Event of Default Lessor shall
have, as a result of such determination, all of the rights, powers and
remedies of a mortgagee available under applicable Law to take possession
of and sell (whether by foreclosure or otherwise) the Property, (3) that the
effective date of the Tenant Mortgage shall be the effective date of this
Lease, (4) that the recording of an instrument referencing this provision
shall be deemed to be the recording of the Tenant Mortgage, and (5) to
conform strictly to any applicable usury Laws (in such regard, if the
Tenant Mortgage would otherwise be usurious under applicable Law,
then, notwithstanding anything herein to the contrary, it is agreed as
follows: (A) the aggregate of all consideration that constitutes interest
under applicable Law that is contracted for, taken, reserved, charged or
received shall under no circumstances exceed the maximum amount
allowed by such applicable Law, (B) in the event of acceleration or any
required or permitted prepayment, then such consideration that constitutes
interest under applicable Law may never include more than the maximum
amount allowed by such applicable Law, and (C) excess interest, if any,
provided for herein shall be canceled automatically and if theretofore paid,
shall be credited to or refunded to Lessee. It is further agreed that sums
paid or agreed to be paid for the use, forbearance or detention of money
hereunder shall, to the extent permitted by applicable Law, be amortized,
prorated, allocated and spread throughout the full Term until payment in
full so that the rate or amount of interest does not exceed the applicable
usury ceiling, if any). Lessee hereby grants, bargains, sells, conveys,
mortgages, and hypothecates all of Lessee's right, title, and interest in the
Property to Lessor to the extent necessary to effect
the foregoing provisions, and appropriate words of conveyance shall be
included in the recorded memorandum of this Lease as necessary to give
effect to such provisions under state law.
(ii) If this Lease is treated as a Mortgage then for
purposes of clause (i) above, the term "applicable Law" shall mean the
Law of the State of Pennsylvania (or the Law of any other jurisdiction
whose Laws may be mandatorily applicable notwithstanding other
provisions of this Lease, or Law of the United States of America
applicable hereto which would permit the parties to contract for, charge,
take, reserve or receive a greater amount of interest than under
Pennsylvania (or such other jurisdiction's) Law.
(e) At all times during the Term of this Lease, and
without regard to the characterization of this Lease for state law or for
financial accounting purposes, the Lessor shall claim no depreciation
deductions with respect to the Property for federal income tax purposes.
Further, to the extent Lessor is required to file a tax return as a legal
entity Lessor will treat all Net Rent received as interest income for federal
income tax purposes.
21. Notices. Any notice required to be delivered hereunder
shall be deemed delivered, whether actually received or not, one (1)
Business Day after deposit with a nationally recognized courier service for
overnight delivery addressed to the parties hereto or Agent, as applicable,
at the respective addresses specified below, or at such other address as
they or the Agent may have subsequently specified by written notice. The
addresses for notices to Lessor, Lessee, and Agent are as follows:
If to Lessor: State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Fourth Floor
Boston, MA 02110
Attention: Donald E. Smith
Vice-President
Fax No. 617/664-5371
with a copy to: Bingham, Dana & Gould LLP
100 Pearl Street
Hartford, CT 06103
Attention: James G. Scantling, Esq.
Fax No. 860/527-5188
If to Lessee: The Pep Boys - Manny, Moe & Jack
(all Lessees shall 3111 W. Allegheny Avenue
be deemed notified Philadelphia, PA 19132
by notice to this Attention: Michael Holden
address) Senior Vice President-Finance
Fax No. 215/227-9533
with a copy to: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention: Ronald M. Neifield, Esq.
Real Estate Counsel
Fax No. 215/229-5076
If to Agent: Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, NY 10528
Attention: EFL/CBL Credit Head
Fax No. 914/899-7308
with a copy to: Brown McCarroll & Oaks Hartline
300 Crescent Court, Suite 1400
Dallas, Texas 75201
Attention: Charles W. Morris, Esq.
Fax No. 214/999-6170
Notices sent by any other method (including regular or certified mail,
hand delivery, or facsimile transmission) shall be deemed delivered when
actually received by the addressee. Any notice of change of address shall
be effective only upon actual receipt, regardless of delivery method, and
such new address shall be effective as to notices given by the other parties
commencing ten (10) days after such change of address notice is received
by such parties. No party may establish an official address for notice
outside the continental United States.
22. No Default Certificate. Each party hereby shall, at the
reasonable request of the other party hereto, deliver to such other party
a certificate stating whether such other party has knowledge of, or has
received notice from any person of, any Environmental Event, Casualty,
Condemnation, Incipient Default or Event of Default.
23. Surrender. If upon the expiration or termination of the
Term of this Lease, or upon any partial termination of the Lease as to a
Parcel pursuant to Section 12(b), Lessee or its designee has not purchased
the Property or applicable Parcel as provided hereunder, the Lessee shall
surrender the Property or applicable Parcel to the Lessor in the condition
in which the Property or applicable Parcel was upon the addition of the
Parcel to the Property or, in the case of a Parcel on which New
Improvements have been added, the condition in which such Parcel existed
at the time the Construction Advance in respect of such New
Improvements was made, except as repaired, rebuilt, altered or added to
as permitted or required hereby and except for ordinary wear and tear.
In addition, simultaneously with the surrender of the Property or
applicable Parcel to Lessor, Lessee shall deliver to Lessor and Agent a
current "Phase I" Environmental Assessment Report covering all portions
of the Property or applicable Parcel evidencing that the Property or
applicable Parcel does not appear, based on the visual review of same, to
be in violation of Environmental Laws or contaminated with any
Hazardous Substances and that the consultant issuing such report (which
consultant must be acceptable to Agent) based on such consultant's review
of the Hazardous Substances handling practices of Lessee and review of
all documents and records with respect thereto does not recommend any
further testing or environmental remediation work on the Property or any
portion thereof. To the extent that the Property or applicable Parcel is not
in such condition upon such expiration or termination, the Lessee shall
pay to the Lessor such additional amounts as are reasonably required to
place it in such condition. The Lessee shall also surrender the Property
or applicable Parcel to the Lessor free and clear of all Liens, easements,
consents and restrictive covenants and agreements affecting the Property
or applicable Parcel which the Lessee is obliged hereunder to remove but
Lessee shall not be required to remove any Permitted Encumbrance or any
other matter specifically approved for such purpose in writing by Agent.
Nothing contained in this Section 23 shall relieve or discharge or in any
way affect the obligation of the Lessee to cure promptly pursuant to this
Lease any violations of Legal Requirements referred to in this Lease, or
to pay and discharge any Liens and Impositions against the Property or
applicable Parcel, subject, however, to the right of the Lessee to contest
the same pursuant to the provisions of Section 18. The Lessee, at its sole
cost and expense, shall remove from the Property or applicable Parcel on
or prior to expiration or termination all property situated thereon which
is not owned by the Lessor and shall repair any damage caused by such
removal and shall restore the Property or applicable Parcel to the
condition (or reasonable equivalent thereof) in which they existed
immediately prior to the installation of such property, except for ordinary
wear and tear. Lessee shall indemnify and hold harmless the Lessor
against any loss, liability or claim arising out of the Lessee's removal of
such property from the Property or applicable Parcel. Property not so
removed shall be deemed abandoned by Lessee, shall become the property
of the Lessor, and the Lessor may cause such property to be removed
from the Property or applicable Parcel and disposed of, but the reasonable
cost of any such removal and disposition and of repairing any damage
caused by such removal and of the restoration of the Property or
applicable Parcel to the condition (or reasonable equivalent thereof) in
which it existed immediately prior to the installation of such property,
ordinary wear and tear excepted, shall be borne by the Lessee. The
obligations of the Lessee under this Section 23 shall survive the expiration
or any termination of this Lease (whether by operation of Law or
otherwise) for all matters described in this Section 23 which occur or arise
prior to such expiration or termination or arise out of or result from facts,
events, claims, liabilities, actions or conditions occurring, arising or
existing on or before such expiration or termination.
24. Separability; Binding Effect; Governing Law; Non-
Recourse.
(a) Except as expressly provided otherwise in this
Lease, each provision hereof shall be separate and independent and the
breach of any such provision by the Lessor shall not discharge or relieve
the Lessee from its obligations to perform each and every covenant to be
performed by the Lessee hereunder. If any provision hereof or the
application thereof to any Person or circumstance shall be invalid or
unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be valid and shall be enforceable to the extent permitted by
Law. All provisions contained in this Lease shall be binding upon, inure
to the benefit of, and be enforceable by, the respective permitted
successors and assigns of the Lessor and the Lessee to the same extent as
if each successor and assignee were named as a party hereto. Further, all
rights of the Agent and/or Instrument Holders hereunder shall inure to the
benefit of each successor and assignee of Agent, in its capacity as such,
or any successor holder of any Instrument. This Lease may not be
changed, modified or discharged except by a writing signed by the Lessor
and the Lessee and approved in writing by Agent. Any change,
modification or discharge made otherwise than as expressly permitted by
this Section 24 shall be null and void. THIS LEASE SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF PENNSYLVANIA, WITHOUT REGARD
TO ITS CONFLICT OF LAWS PRINCIPLES; PROVIDED THAT TO
THE EXTENT THAT AT ANY TIME A PORTION OF THE
PROPERTY IS LOCATED IN A STATE OTHER THAN THE STATE
OF PENNSYLVANIA THE LAWS OF SUCH STATE SHALL
GOVERN SUCH PROVISIONS, IF ANY, OF THIS LEASE AS BY
THEIR NATURE MUST BE INTERPRETED AND ENFORCED
UNDER THE LAWS OF SUCH OTHER STATE WITH RESPECT TO
MATTERS OCCURRING IN OR AFFECTING SUCH STATE. IT IS
EXPRESSLY AGREED, HOWEVER, THAT IT IS THE DESIRE AND
INTENT OF THE PARTIES THAT THE LAW OF THE STATE OF
PENNSYLVANIA GOVERN ALL PORTIONS OF THIS LEASE TO
THE EXTENT THAT SUCH INTENT MAY BE HONORED WITHOUT
VIOLATION OF THE LAW OR PUBLIC POLICY OF THE STATE IN
WHICH ANY PORTION OF THE PROPERTY IS LOCATED. All
references in this Lease to "applicable Law" or terms of similar import
shall be interpreted consistent with the foregoing. This Lease, when
delivered, shall constitute an original, fully enforceable counterpart for all
purposes except that only the counterpart stamped or marked
"COUNTERPART NUMBER 1" shall constitute, to the extent applicable,
"chattel paper" or other "collateral" within the meaning of the Uniform
Commercial Code in effect in any jurisdiction.
(b) No recourse shall be had against the Lessor, Agent,
and/or any Instrument Holder or their employees, agents or shareholders,
for any claim based on any failure by the Lessor in the performance or
observance of any of the agreements, covenants or provisions contained
in this Lease and in the event of any such failure, recourse shall be had
solely against the Property.
(c) It is acknowledged that from time to time various
Affiliates of the Original Lessee may become a party to this Lease as an
Additional Lessee as provided in Section 31 hereof. Each entity that
becomes a "Lessee" hereunder shall be jointly and severally liable for the
obligations of the "Lessee" hereunder. It is acknowledged, however, that
no employee, agent, director, officer or shareholder of any Lessee or any
Additional Lessee (except an agent or shareholder that is itself a Lessee
hereunder) shall be liable for the obligations of Lessee.
25. Headings and Table of Contents. The table of contents and
the headings of the various Sections and Exhibits of this Lease are for
convenience only and shall not affect the meaning of the terms and
conditions of this Lease.
26. Waiver of Landlord's Lien. Lessor hereby waives any right
to distrain Lessee's Equipment and any landlord's lien or similar lien
upon, or security interest in Lessee's Equipment, regardless of whether
such lien is created by statute or otherwise. Lessor agrees, at the request
of Lessee, to execute a waiver of any landlord's or similar lien for the
benefit of any present or future holder of a security interest in, or lessor
of, any of Lessee's Equipment, subject to the approval of the form and
substance of such waiver by Agent, which approval shall not be
unreasonably withheld or delayed. Lessor acknowledges, and agrees to
acknowledge in the future (in a written form reasonably satisfactory to
Lessee and Agent), to such persons, at such times and for such purposes
as Lessee may reasonably request, that Lessee's Equipment is Lessee's
property and that Lessor has no right, title or interest in any of Lessee's
Equipment.
27. Lessee's Obligation at Expiration.
(a) In addition to its other rights and obligations under
Section 14 hereof, Lessee shall, by notice given not less than six (6)
months prior to the Expiration Date, elect either to (i) purchase the
Property as of the Expiration Date (or such earlier date during the last six
(6) months of the Term as may be designated by Lessee) as provided for
in Section 14(a)(i) for the applicable Offer Purchase Price, in which case
the transfer of the Property shall be governed by the terms of Section 15;
or (ii) terminate this Lease, abandon all of the Property as of the
Expiration Date and pay to the Lessor on the Expiration Date, in addition
to any Net Rent, Additional Rent or other sums that may be then due and
payable to the Lessor hereunder, a "Contingent Rent Payment" in the
amount determined at the applicable time as provided for on Exhibit "A"
(as amended from time to time). If Lessee fails to give the notice
required in this Section 27(a) on or before the date that is six (6) months
prior to the Expiration Date, then Lessee shall be irrevocably deemed to
have elected the option provided for in clause 27(a)(i) and on the
Expiration Date (or such earlier date during the six month period
preceding the Expiration Date as Lessee may designate by reasonable
notice to Lessor and Agent) Lessee shall purchase the Property for the
Offer Purchase Price.
(b) If Lessee elects to terminate the Lease pursuant to
Section 27(a)(ii) above, then Lessee, as agent for Lessor but at Lessee's
sole cost and expense, shall use its best efforts to sell the Property to a
third party at the maximum available market price not later than the date
that is thirty (30) days after the Expiration Date. Lessor shall join in any
sale at or above the Minimum Price and Agent's approval of such sale
will not be required; however, Lessee may not sell the Property without
the consent of Agent, which consent may not be given without the
approval of the Majority Holders, and in any event may be withheld at
Agent's sole and absolute discretion, if the purchase price is less than the
Minimum Price. To the extent that the net sale proceeds of the Property
received by Lessor upon any such sale are more than the amounts
necessary to permit Lessor to discharge all amounts due to the Instrument
Holders and/or the Lessor under the Transaction Agreement and/or the
Transaction Documents (a sale price that will produce net sale proceeds,
after all transaction costs, in such amount being referred to as the
"Minimum Price"), then Lessor shall credit against the Contingent Rent
Payment (or refund to Lessee if the Contingent Rent Payment has
theretofore been paid) all such excess payments up to, but not in excess
of, the full amount of the Contingent Rent Payment. If Lessee has failed
to cause the Property to be sold within such period, Lessee's rights under
this subsection (b) shall cease and Lessor shall thereafter have the sole and
exclusive right to sell or dispose of the Property solely for the account of
the Instrument Holders. If the net sale proceeds of any such proposed
sale arranged by Lessee are to be less than the Minimum Price (or if
Lessee does not propose a sale and Lessor or Agent is unable to sell the
Property prior to the Expiration Date for an amount to produce net sale
proceeds equal to or in excess of the Minimum Price), then Lessor or
Agent may order an MAI appraisal of the Property, at Lessee's sole cost
and expense, prior to the closing of any proposed sale by Lessee (or if
Lessee does not propose such a sale, after Lessor's or Agent's reasonable
efforts to sell the Property for an amount equal to or in excess of the
Minimum Price) to determine the fair market value of the Property at such
time (the "Appraised Value") as well as what the Appraised Value of the
Property would have been if the Property has been maintained in good
repair and condition and otherwise in accordance with Section 9 of this
Lease, subject to normal wear and tear (the "Nominal Appraised Value").
If such appraisal indicates a Nominal Appraised Value for the Property
that is greater than the price to be received in the sale proposed by Lessee
(or, if Lessee does not propose a sale, such appraisal indicates an actual
Appraised Value for the Property that is less than the Nominal Appraised
Value, or a Nominal Appraised Value that is greater than the price that
would have been received by Lessor or Agent had they accepted the best
written bona fide offer from a purchaser ready, willing and able to close),
then Lessee shall pay to Lessor a sum equal to the lesser of (A) the
amount by which the actual Appraised Value, or the proposed, actual or
possible sale price, as applicable, is less than the Minimum Price, or (B)
the difference between the Nominal Appraised Value and the proposed,
actual or possible net sales proceeds or the actual Appraised Value
(whichever is applicable) as an additional "Contingent Rent Payment" in
order to compensate Lessor for extraordinary wear and tear on the
Property.
(c) If the mechanical provisions of Section 27(b) above
are applicable to a situation where the Lease has been terminated as to less
than the entire Property, then the "Minimum Price" for application of the
foregoing provisions shall be that amount which will produce net sale
proceeds (after applicable closing and transaction costs) sufficient to
permit the Lessor (or Agent on behalf of the Lessor) to pay to the
applicable Instrument Holders the amount that such Instrument Holders
would have received if, in lieu of terminating the Lease and making the
Contingent Rent Payment, the Lessee had purchased the Parcel(s) in
question and paid the Offer Purchase Price therefor, taking into account
the additional interest or certificate yield, as applicable, accrued on the
Instruments in question with respect to the amount that would have been
paid on sale of the Property to Lessee at the Offer Purchase Price but
which remained unpaid on the date of such partial termination of the
Lease as a result of the Contingent Rent Payment being less than the
Acquisition Price of the Parcel(s) in question.
(d) Lessor shall reasonably cooperate in any sale of the
Property by Lessee (after approval of the sale by Agent, where required),
but at Lessee's sole cost and expense, such cooperation to include
execution of contracts of sale, closing documents, and related materials;
provided that Lessor shall not be required to incur any liability beyond its
interest in the Property in connection therewith.
28. No Merger. Unless and until execution of a written
agreement to the contrary by a single Person that at the time thereof holds
all of the interests of both Lessor and Lessee in the Property, and the full
payment and discharge of the Instruments and release of Transaction
Mortgage held by Agent on the Property, there shall be no merger of this
Lease or of the leasehold estate created by this Lease with the fee or any
other estate or interest in or the Property or any portion thereof by reason
of the fact that the same person owns or holds, directly or indirectly, all
such estates and interests or any combination thereof.
29. Short Form Lease. Lessee agrees not to record this Lease,
but Lessor and Lessee shall execute a memorandum or short-form of lease
in form reasonably satisfactory to Lessor and Lessee in each jurisdiction
where any portion of the Property is located. The memorandum of lease
may be recorded by Lessee at any time. Lessor agrees that it will not
record a memorandum of this Lease if requested not to do so by Lessee
unless Lessor or Agent determines, based upon written advice of counsel,
that recordation of such memorandum of this Lease is advisable for the
protection of the interests of the Lessor or the Instrument Holders.
30. Protection of Instrument Holders.
(a) Rights of Instrument Holders. Notwithstanding
anything in this Lease, so long as amounts owing under any of the
Instruments, or any of the Transaction Documents, remain unpaid,
(i) Agent and each Purchaser and Instrument Holder shall be third party
beneficiaries of the provisions of this Lease, including, without limitation,
all provisions of this Section 30, and Section 8 hereof, (ii) Lessor and
Lessee acknowledge that each has been sufficiently notified and apprised
of the Purchasers and Instrument Holders, and the mailing address of
Agent, as the administrative agent acting on behalf of the Instrument
Holders, as contemplated by the provisions of this Section 30 and any
other provision of this Lease, and (iii) this Lease shall not be amended,
modified or assigned (collaterally or directly), in any respect without the
prior written consent of Agent.
(b) Subordination and Non-Disturbance. Simultaneously
with the addition of a Parcel to the Property, Lessor will execute and
record a mortgage or deed of trust (as applicable, the "Transaction
Mortgage") on the Property to Agent for the benefit of the Noteholders as
provided for in the Transaction Agreement, and Lessor, Lessee, and
Agent (on behalf of the Noteholders) shall enter into a Subordination,
Non-Disturbance, and Attornment Agreement (the "SNDA") covering this
Lease with respect to the Parcel in question and relating to the Transaction
Mortgage in substantially the form attached hereto as Exhibit "F". In the
event of any default by Lessor hereunder, Lessee shall notify Agent of
such default in accordance with Section 21 hereof. Agent, on behalf of
the Noteholders, shall thereafter have a reasonable opportunity (but no
obligation) to cure Lessor's default, including time to obtain possession of
the Property by power of sale or judicial foreclosure of the Transaction
Mortgage, if same should prove necessary to effect a cure, before Lessee
may take any action against Lessor. Lessee shall accept a cure of
Lessor's default from Agent in the event that Agent tenders such cure on
behalf of the Noteholders.
31. Additional Lessees.
(a) From time to time Lessee Parent may request that
one or more wholly-owned Subsidiaries of the Lessee Parent be approved
by Agent to become a Lessee under this Lease, which approval shall not
be unreasonably withheld. Any such Person approved by Agent shall be
referred to as an "Additional Lessee", and from and after the date of
execution of a Supplement to this Lease in substantially the form attached
hereto as Exhibit "G" such Additional Lessee shall be a party to this
Lease in the same manner as if such Additional Lessee had been an
original Lessee hereunder.
(b) From and after the date on which an Additional
Lessee becomes a party hereto, such Additional Lessee shall be jointly and
severally liable for any and all obligations of the "Lessee" hereunder,
whether accruing or arising before or after the date such Additional Lessee
becomes a party hereto. The assumption of liability hereunder by any
Additional Lessee shall not reduce or limit the obligations of any other
Person that is or becomes a party hereto as a Lessee.
(c) Agent may, as a condition to its approval of the
Supplement making one of the Additional Lessees a party hereto, require
legal opinions, review of corporate authorizations and other corporate
documents, and similar matters comparable to those required by Lessor
and Agent with respect to the Lessee Parent and the other original Lessees
in connection with the original execution hereof.
32. Certain Representations and Covenants of Lessee. The
terms of this Section 32 shall, as of the date hereof, be binding upon each
Lessee. At such time as any Additional Lessee becomes a party to this
Lease pursuant to Section 31 above, each such Additional Lessee will be
required to make similar representations and warranties and assume
comparable obligations pursuant to the instrument by which they become
a party to this Lease.
(a) Representations and Warranties. The Lessees jointly
and severally represent and warrant to Lessor, Agent, and each Instrument
Holder that, as to each Lessee:
(i) Lessee (A) is duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of its incorporation, (B) has full corporate power and
authority to own and operate its properties and to conduct its
business as presently conducted, and full corporate power,
authority and legal right to execute, deliver and perform its
obligations under this Lease, (C) is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction in
which its ownership or leasing of properties or the conduct of its
business requires such qualification.
(ii) This Lease has been duly authorized,
executed and delivered by Lessee and is a legal, valid and binding
obligation of Lessee, enforceable according to its terms (subject as
to enforcement of remedies to any applicable bankruptcy,
reorganization, moratorium, or other Laws or principles of equity
affecting the enforcement of creditors' rights generally).
(iii) The execution, delivery and performance by
Lessee of this Lease will not result in any violation of any term of
the certificate of incorporation or the by-laws of Lessee, does not
require stockholder approval or the approval or consent of any
trustee or holders of debt of Lessee except such as have been
obtained prior to the date hereof, and will not conflict with or
result in a breach of any terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien
upon, any property or assets of Lessee under, any indenture,
mortgage or other agreement or instrument to which Lessee is a
party or by which it or any of its property is bound, or any
existing applicable law, rule, regulation, license, judgment, order
or decree of any government, governmental body or court having
jurisdiction over Lessee or any of its activities or properties,
including, without limitation, any rule or order of any public utility
commission or other governmental body.
(iv) There are no consents, licenses, orders,
authorizations or approvals of, or notices to or registrations with
any governmental or public body or authority which are required
in connection with the valid execution, delivery and performance
of this Lease by Lessee that have not been obtained or made, and
any such consents, licenses, orders, authorizations, approvals,
notices and registrations that have been obtained or made are in
full force and effect.
(v) Except as disclosed in writing to Agent by
Lessee concurrently herewith or publicly disclosed in Lessee
Parent's 10-Q and/or 10-K filings with the Securities and Exchange
Commission, if any, (A) there is no action, suit, proceeding or
investigation at law or in equity by or before any court,
governmental body, agency, commission or other tribunal now
pending or, to the best knowledge of Lessee after due inquiry,
threatened against or affecting Lessee or any property or rights of
Lessee as to which there is a significant possibility of an adverse
determination, and which if adversely determined, may have a
material adverse effect on the financial condition or business of
Lessee or which, if adversely determined could materially impair
the ability of Lessee to perform its obligations under this Lease,
and (B) there is no action, suit, proceeding or investigation at law
or in equity by or before any court, governmental body, agency,
commission or other tribunal now pending or, to the best
knowledge of Lessee after due inquiry, threatened which questions
or would question the validity of this Lease.
(vi) Lessee is not in default under or with respect
to any agreement or other instrument to which it is party or by
which it or its assets may be bound which would have a material
adverse effect on the financial condition of Lessee or the ability of
Lessee to perform its obligations under this Lease. Lessee is not
subject to or in default under any order, award or decree of any
court, arbitrator, or other governmental authority binding upon or
affecting it or by which any of its assets may be bound or affected
which would have a material adverse effect on the ability of Lessee
to carry on its business as presently conducted or to perform its
obligations under this Lease.
(vii) Lessee has filed or caused to be filed all tax
returns which to the knowledge of Lessee are required to be filed,
and has paid all taxes shown to be due and payable on said returns
or on any assessments made against it, except for (i) returns which
have been appropriately extended and (ii) taxes, fees, assessments
or other charges, the amount or validity of which is currently
being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been
provided on the books of Lessee.
(viii) Lessee and each of its Subsidiaries are in
compliance in all material respects with the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations thereunder insofar as ERISA, the Code and
such rules and regulations relate to any employee benefit plan as
defined in Section 3(3) of ERISA. No employee pension benefit
plan (as defined in Section 3[2] of ERISA) maintained by Lessee
or any of its Subsidiaries for its employees and covered by ERISA
(a "Plan") had an "accumulated funding deficiency", within the
meaning of said term under Section 302 of ERISA, as of the last
day of the most recent fiscal year of such Plan, and neither Lessee
nor any of its Subsidiaries has incurred with respect to any Plan
any liability to the Pension Benefit Guaranty Corporation
("PBGC") which is material to the consolidated financial condition
of Lessee or any of its Subsidiaries. For the purpose of this
subsection (viii), the term "Subsidiary" shall include a Controlled
Group of Corporations as that term is defined in Section 1563 of
the Code or Section 4.001 of ERISA.
(ix) The consolidated financial statements of
Lessee Parent furnished to Lessor and Agent on or before the date
hereof have been prepared in accordance with GAAP and fairly
present the financial condition of Lessee Parent as of the date
thereof. Since the date of such financial statements there has been
no material adverse change in the financial condition or business
of Lessee Parent which would impair the ability of Lessee Parent
to perform its obligations hereunder.
(b) Affirmative Covenants. Lessee covenants and agrees
with Lessor, Agent and the Instrument Holders that, so long as this Lease
shall remain in effect each Lessee will, unless Lessor and Agent shall
otherwise consent in writing:
(i) Compliance with Laws. Comply, and cause
each of its Subsidiaries to comply, in all material respects with all
applicable Laws, for which the failure to so comply could have a
material adverse effect on the operations of Lessee as a whole so
as to adversely affect its capacity to perform its obligations under
this Lease, and such compliance shall include, without limitation,
paying before the same become delinquent all taxes imposed upon
it or its property, except to the extent contested diligently and in
good faith, and for which adequate reserves are established.
(ii) Maintenance of Existence; Licenses and
Franchises. Maintain, and cause each of its Subsidiaries that is a
Lessee or an approved Additional Lessee to maintain, its existence,
and preserve and maintain, and shall cause each of its Subsidiaries
that is a Lessee or an approved Additional Lessee to preserve and
maintain, all material licenses, privileges, franchises, certificates,
authorizations and other permits and agreements necessary for the
operation of its business in the respective jurisdictions in which
any Property leased by Lessee or such Additional Lessee, as
applicable, is located, and in its jurisdiction of origin.
(iii) Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance policies with respect to its
property and business in such amounts and against such casualties
and contingencies as is customary in its industry; provided that
nothing herein shall prejudice the right of Lessee or any Subsidiary
thereof to self-insure for certain risks in accordance with
customary procedures.
(iv) Additional Information. Lessee shall furnish
to Agent: (1) within sixty (60) days of the end of each quarterly
fiscal period during the Term, unaudited quarterly financial
statements for Lessee Parent (and its consolidated Subsidiaries)
(including a balance sheet, income statement, and such other
reports as Agent may reasonably request); (2) within one hundred
twenty (120) days of the end of each fiscal year during the Term,
annual financial statements for Lessee Parent (and its consolidated
Subsidiaries) audited by a nationally recognized public accounting
firm (including a balance sheet, income statement and such other
material reports as Agent may reasonably request); (3) when issued
or filed, copies of the most recent 10-K for Lessee Parent, proxy
statements, financial statements and other reports filed by Lessee
Parent with the Securities and Exchange Commission or any
national securities exchange or market on which any of Lessee
Parent's securities are traded or quoted; (4) from time to time
upon Agent's request, an Officer's Certificate stating that there
exists no Event of Default (or event or circumstance which with
notice and or the passage of time could mature into an Event of
Default) under this Lease or, if any such event or circumstances
does exist, specifying the nature and period of existence thereof
and what action Lessee proposes to take with respect thereto; and
(5) from time to time at the request of Agent, and in any event
simultaneously with delivery of the annual consolidated financial
statements of the Lessee Parent, a statement certified by a senior
financial officer of the Lessee Parent (A) certifying that the Lessee
Parent is in compliance with all of the financial covenants (both
affirmative and negative) contained in the Lease Guarantee and (ii)
certifying the Leverage Ratio, Tangible Net Worth, Current Ratio,
and
NOP
/Interest Charges Ratio (as such terms are defined in the
Lease Guarantee) of the Lessee Parent as of the end of the
preceding quarter or fiscal year, or for the preceding quarter or
fiscal year, as applicable. The fiscal year of the Lessee Parent is
the approximately fifty-two (52) week period ending on the
Saturday falling nearest to January 31.
(v) Review of Records. Further, Lessee will
permit the duly authorized representatives of Agent at all
reasonable times upon at least ten (10) days prior written notice to
examine the books and records of Lessee and its Subsidiaries, and
take memoranda and extracts therefrom; provided, that
information, including financial information, which is non-public
and confidential or proprietary in nature disclosed to Agent (as a
result of any examination of the books and records of Lessee and
its Subsidiaries or pursuant to Section 32(b)(iv) or otherwise) will
be kept confidential and will not, without the prior written consent
of Lessee, be disclosed in any manner whatsoever, in whole or in
part, except that Agent shall be permitted to disclose such
information (A) to the Instrument Holders (who shall be bound by
the same confidentiality requirements upon receipt of such
information), (B) to any regulatory agencies having jurisdiction
over Agent or any Instrument Holder in connection with their
regulatory functions, and (C) as required by Law or court order,
or in connection with any investigation or proceeding arising out
of the transactions contemplated by this Lease.
(vi) Taxes, Charges, Etc. Duly pay and
discharge, or cause to be paid and discharged, when due, all taxes,
assessments and other governmental charges imposed upon it or
any Subsidiary that is an approved Additional Lessee and its and
their properties, or any part thereof or upon the income or profits
therefrom, as well as all claims for labor, materials or supplies
which if unpaid could have a materially adverse effect on the
operations of Lessee as a whole so as to adversely affect Lessee's
capacity to perform its obligations under this Lease, except such
items as are being in good faith appropriately contested by Lessee
or any applicable Subsidiary and for which adequate reserves are
being maintained in accordance with GAAP.
(c) Negative Covenants. Lessee covenants and agrees
with Lessor and Agent that, so long as this Lease shall remain in effect
Lessee will not, unless Agent shall otherwise consent in writing:
(i) The Lessee will not, nor will it permit any
of its Subsidiaries to, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution). The Lessee will
not make, and will not permit any of its Subsidiaries to make, any
acquisition (in one transaction or a series of related transactions)
in excess of $50,000,000. The Lessee will not, and will not
permit any of its Subsidiaries to, convey, sell, lease, transfer or
otherwise dispose of in one transaction or a series of transactions,
all or a substantial part of its business or assets, whether now
owned or hereafter acquired (including, without limitation,
receivables and leasehold interests, but excluding (i) any inventory
or other assets (including real property) sold or disposed of in the
ordinary course of business and (ii) obsolete or worn-out property,
tools or equipment no longer used or useful in its business).
Notwithstanding the foregoing provisions:
(1) any Subsidiary of the Lessee may be
merged or consolidated with or into: (i) the Lessee or
another Lessee if the Lessee or another Lessee shall be the
continuing or surviving corporation or (ii) any other such
Subsidiary; provided that if any such transaction shall be
between a Subsidiary and a wholly-owned Subsidiary, the
wholly-owned Subsidiary shall be the continuing or
surviving corporation;
(2) any such Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Lessee or
another Lessee or a wholly-owned Subsidiary of the Lessee
or another Lessee; and
(3) any Lessee may sell, lease, transfer
or otherwise dispose of all or any of its assets (upon
voluntary liquidation or otherwise) to any other Lessee.
(ii) Lines of Business. Engage or, in the case of
Lessee Parent, permit any of its Subsidiaries that are approved
Additional Lessees to engage, to any substantial extent in any line
or lines of business activity other than the business of owning and
operating retail stores and auto service centers (including functions
that are directly related thereto and supportive thereof).
(iii) Change of Control. Permit the occurrence
of any Change of Control with respect to Lessee Parent or any
approved Additional Lessee; provided, however, that a Change of
Control as to the Lessee Parent shall not constitute a violation of
this Lease if, as of the date that such Change of Control occurs,
the senior unsecured debt of the Lessee Parent is rated BBB or
better by Standard & Poors and/or Baa2 or better by Moody's
Investors Services, and the Lessee Parent or its securities are not
in a "credit watch" status with either such rating service.
(iv) Judgments. Permit or acquiesce in the entry
of any final unappealable judgment or order for the payment of
money in excess of $1,000,000.00 against Lessee or any of its
Subsidiaries; provided, however, that any such judgment or order
shall not be an Event of Default if and for so long as (x) the entire
amount of such judgment or order is covered (subject to customary
deductibles) by a valid and binding policy of insurance between the
defendant and the insurer covering payment thereof and (y) such
insurer, which shall be rated at least "B+/X" by A. M. Best
Company, has been notified of, and has not disputed the claim
made for payment of the amount of such judgment or order.
(v) Limitation on Liens. The Lessee will not,
nor will it permit any of its Subsidiaries to, create, incur, assume
or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except:
(1) Liens imposed by any governmental
authority for taxes, assessments or charges not yet due or
which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are
maintained on the books of the Lessee or any of its
Subsidiaries, as the case may be, in accordance with
GAAP;
(2) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue for
a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings;
(3) pledges or deposits under worker's
compensation, unemployment insurance and other social
security legislation;
(4) deposits to secure the performance of
bids, trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(5) Liens on assets of corporations which
become Subsidiaries of the Lessee after the date of this
Lease, provided that such Liens are in existence at the time
the respective corporations become Subsidiaries of the
Lessee and were not created in anticipation thereof;
(6) Liens upon real property, fixtures and
equipment (excluding equipment that constitutes inventory)
acquired after the date hereof (by purchase, construction or
otherwise) by the Lessee or any of its Subsidiaries;
(7) Liens upon the assets of the Lessee
and its Subsidiaries in existence on the date hereof; and
(8) any extension, renewal or
replacement of the foregoing, provided, however, that the
Liens permitted hereunder shall not be spread to cover any
additional Indebtedness or property (other than a
substitution of like property).
As used in this Section 32(c), the following terms have the meanings
indicated below:
"Change of Control" means, after the date hereof, (A) as to Lessee
Parent, any event or circumstance that results in a majority of the
individuals comprising the board of directors of the Lessee Parent
as of any date to consist of individuals that were not members of
the board of directors of the Lessee Parent twelve (12) months
previous to such date (other than by reason of death), or (B) as to
any other Lessee, any event or circumstance that results in such
Lessee not being a wholly owned Subsidiary of the Lessee Parent.
"GAAP" shall mean generally accepted accounting principles that
are (a) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as
in effect from time to time, and (b) consistently applied with past
financial statements of any Person adopting the same principles.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For purposes of this Lease, Lessee or any
of its Subsidiaries shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Subsidiary" shall mean, as to any Person, any corporation of
which at least a majority (or in the case of a wholly-owned
Subsidiary, 100%) of the outstanding shares of stock having by the
terms thereof ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether or
not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more of
its Subsidiaries or by such Person and one or more of its
Subsidiaries.
33. WAIVER OF JURY TRIAL. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND FOR THE PURPOSE
OF REDUCING THE TIME AND EXPENSE OF LITIGATION,
LESSOR AND LESSEE WAIVE TRIAL BY JURY IN ANY ACTION
BROUGHT ON, UNDER, OR BY VIRTUE OF THIS AGREEMENT.
34. Exhibits. The following Exhibits are attached hereto and
made a part hereof for all purposes.
Annex I - Approved Self-Insurance Program
Exhibit A - Net Rent; Additional Rent
Exhibit B - Form of Supplement for Addition of
Parcels
Exhibit C - Construction Addendum
Exhibit D - Form of Construction Supplement
Exhibit E - Form of Interim Supplement
Exhibit F - Form of SNDA
Exhibit G - Form of Supplement for Additional
Lessee(s)
35. Special Local Provisions. It is expressly agreed that this
Lease may be amended or supplemented, as necessary, with any special
local provisions or requirements deemed necessary by Lessor or Agent,
which provisions shall be included in the Supplement adding the portions
of the Property to which such special provisions shall be applicable to the
coverage of this Lease.
IN WITNESS WHEREOF, intending to be legally bound hereby,
the parties hereto have caused this Lease to be duly executed on the
attached signature pages by their respective officers thereunto duly
authorized, to be effective as of the day and year first above written.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE OF LESSOR
ATTACHED TO
MASTER LEASE
(1997 PEP BOYS II LEASED PROPERTY)
LESSOR:
STATE STREET BANK AND
TRUST COMPANY,
a Massachusetts trust company
not in its individual capacity but
solely as Trustee under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE OF LESSEE
ATTACHED TO
MASTER LEASE
(1997 PEP BOYS II LEASED PROPERTY)
LESSEE:
THE PEP BOYS - MANNY,
MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
THE PEP BOYS MANNY
MOE & JACK OF
CALIFORNIA, a California
corporation
By:
Name:
Title:
PEP BOYS - MANNY, MOE
& JACK OF
DELAWARE, INC., a
Delaware corporation
By:
Name:
Title:
ANNEX I
Approved Self-Insurance Program
EXHIBIT "A"
Net Rent; Additional Rent and Related Definitions
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Lease to which this Exhibit "A" is
attached (including terms defined by reference in the Lease to other
instruments or documents).
A. Net Rent. Net Rent during the Term shall be due and
payable monthly in arrears on each Payment Date in an amount
determined by multiplying (1) the then applicable Acquisition Price for the
Property times (2) the lesser of the Applicable Rate for the LIBO Rate
Period in which such month falls or the highest lawful rate times (3) a
fraction, the numerator of which is the actual number of days in the month
in question, and the denominator of which is 360 (or if the highest lawful
rate is used in lieu of the Applicable Rate, 365 or 366, as applicable).
"Payment Date" means the first (1st) day of each calendar
month to and including the last day of the Term, as well as the last day
of the Term itself; provided, however, that if such Payment Date is not
a Business Day, such Payment Date shall be the next succeeding Business
Day. It is acknowledged that for the period between the date a Parcel is
added to the Property or a Construction Advance is made in respect of
New Improvements and the next Adjustment Date the Net Rent will be
computed using multiple Applicable Rates applied to the respective
Acquisition Prices, as set forth in the next sentence, and the payments
shall be adjusted accordingly. In the event this Lease is terminated as to
a Parcel and the Improvements thereon pursuant to the terms hereof, or
a Parcel or Improvements thereon are added to the Property, or a
Construction Advance is made, the Net Rent shall be adjusted, as of the
date of such termination or addition, by eliminating from the aggregate
Acquisition Price (in the case of a partial termination) or adding to the
aggregate Acquisition Price (in the case of the addition of a Parcel and
Improvements or a Construction Advance in respect of New
Improvements) the portion of the aggregate Acquisition Price thereof
attributable to the portion of the Property so released or added.
If, at any time, the Applicable Rate then in effect shall
exceed the highest lawful rate, then any subsequent reductions in the
Applicable Rate shall not reduce the Net Rent below the amount of Net
Rent that would be payable hereunder if the Applicable Rate were equal
to the highest lawful rate until the total amount of Net Rent accrued
hereunder equals the amount of Net Rent that would have accrued
hereunder if the Applicable Rate had at all times been the Applicable Rate
without the limitation of the highest lawful rate. In the event that at the
Expiration Date (howsoever the Expiration Date occurs) the total amount
of Net Rent paid or accrued hereunder is less than the total amount of Net
Rent that would have accrued if the Applicable Rate had at all times been
in effect without the limitation of the highest lawful rate, then Lessee
agrees, to the fullest extent permitted by Law, to pay to Lessor on the
Expiration Date an amount equal to the difference between (a) the lesser
of (i) the amount of Net Rent that would have accrued hereunder if the
highest lawful rate had at all times been utilized to compute the Net Rent
accruing hereunder, or (ii) the amount of Net Rent that would have
accrued hereunder if the Applicable Rate had at all times been utilized to
compute the Net Rent without the limitation of the highest lawful rate, and
(b) the amount of Net Rent otherwise accrued hereunder.
The parties agree to modify the Applicable Rate payable
hereunder as contemplated in the Transaction Agreement to provide to
Lessee the financial benefit of any interest or yield reductions on the
Instruments.
B. Additional Rent. In addition to such Additional Rent as
may otherwise be payable under the Lease, Lessee shall pay, within thirty
(30) days of a demand therefor, as Additional Rent, all Break Costs,
Reserve Costs, Increased Costs and/or all reasonable expenses as set forth
elsewhere herein or in the Transaction Documents of Lessor or Agent
required to be paid by Lessee pursuant to this Lease, the Transaction
Agreement, or any Transaction Document.
C. Definitions. As used herein, the following terms have the
following meanings:
"Acquisition Price" means the amount attributable to the
Property (in the aggregate) or a particular Parcel, as applicable, as set out
at the time in question on the most recent Schedule "A-1" to the Lease.
The Parcel Addition Supplement by which any Parcel is added to the
Property and the Interim Supplement or the Construction Supplement
with respect to the Construction Advance related to any Improvements
shall designate the increase in the Acquisition Price attributable thereto
and any other agreed adjustment to the Acquisition Price Schedule by the
attachment of an updated Schedule "A-1". At such time as this Lease is
terminated as to any Parcel and either the Offer Purchase Price, the
Contingent Rent Payment, or the Construction Failure Payment amount
applicable thereto is paid under any applicable provision of this Lease, the
Parcel in question shall no longer be part of the Property, the portion of
the Acquisition Price previously applicable to such Parcel shall no longer
be a part of the Acquisition Price of the Property for any purpose, and
Schedule A-1 shall be adjusted to reflect the exclusion of such Parcel from
the Property.
"Adjustment Date" means the first day of each month
throughout the Term.
"Applicable Rate" means, for any month, as applicable (A)
the sum of (i) the LIBO Rate for the LIBO Rate Period in which such
month falls, plus (ii) the Applicable Spread or (B) as to the portion of the
Acquisition Price attributable to a Parcel or a Construction Advance prior
to the first Adjustment Date after such Parcel is added to the Property or
such Construction Advance is made, the sum of the Special LIBO Rate
applicable thereto plus the Applicable Spread.
"Applicable Spread" means, as applicable, the amount based
on the debt rating most recently issued by Standard & Poor's for Lessee's
senior unsecured debt as of any Adjustment Date determined by reference
to the following:
Lessee's Most
Recent Debt Rating Applicable Spread
BBB+ (or higher) 45.0 basis points
(0.45%)
BBB 49.8 basis points
(0.498%)
BBB- 59.4 basis points
(0.594%)
less than BBB- 81.0 basis points
(0.81%)
"Break Costs" shall mean an amount equal to the amount
(if any) required to compensate any Instrument Holder for any additional
losses (including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or funds acquired
by such Instrument Holder to fund or maintain a Trust Instrument) it may
reasonably incur as a result of Lessee's payment of the Offer Purchase
Price, or the Contingent Rent Payment other than on an Adjustment Date
or the Expiration Date.
"Business Day" means every day on which banks in the
cities of New York, New York, Chicago, Illinois, Boston, Massachusetts,
and Philadelphia, Pennsylvania, are open for business and not required to
be closed.
"Contingent Rent Payment" means, as of any relevant time,
an amount equal to the lesser of (A) eighty-four percent (84%) of the
aggregate of all Advances theretofore made under the Transaction
Agreement (less any amounts theretofore paid by Lessee as Contingent
Rent Payments or Construction Failure Payments), or (B) 100% of the
Acquisition Price of the Parcels remaining subject to this Lease as of the
date the Contingent Rent Payment is made. In the event that any Parcel(s)
are purchased by Lessee during the period ending on the Outside Funding
Date (as defined in the Transaction Agreement), pursuant to any option or
obligation of Lessee to make such purchase hereunder, the Contingent
Rent Payment computed under clause (A) above shall be recomputed so
as to equal eighty-four percent (84%) of the aggregate of all Advances
theretofore made under the Transaction Agreement excluding Advances
theretofore made in respect of the Parcel(s) purchased by Lessee during
such period. The parties acknowledge that the obligation for the payment
of Contingent Rent Payments is a rental obligation in consideration of the
lease of the Property to Lessee hereunder, and that Lessee has agreed to
make the Contingent Rent Payment when due hereunder in consideration
of the Lessor's agreement to accept Net Rent payments during the Term
in a lower amount than Lessor would otherwise be willing to accept.
"Increased Costs" means any additional amounts required
to be paid to any Instrument Holder by Lessor under the Transaction
Agreement to compensate such Instrument Holder for any increased costs
of maintaining the Instruments or the advances evidenced thereby (the
effect of which was not included in the applicable Instrument Holder's
determination of such costs at the more recent to occur of the original
issuance of such Instrument or the date of adjustment of the Note Rate or
Certificate Rate applicable to such Instrument or applicable interest therein
in connection with the Secondary Transaction) as a result of the
implementation after the date hereof of any applicable Law regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Instrument Holder (or any
office thereof) with any request or directive regarding capital adequacy
(whether or not having the force of Law) of any such authority, central
bank or comparable agency which has the effect of increasing the amount
of capital required or expected to be maintained as a result of its
maintaining the Instruments held by it.
"LIBO Business Day" means a day of the year on which
dealings are carried on in the London interbank market and banks are
open for business in London and not required or authorized to close in
New York City.
"LIBO Rate" for the period commencing on the date hereof
to the first Adjustment Date and for each period commencing on any
Adjustment Date to and until the next succeeding Adjustment Date (each,
a "LIBO Period") means an interest rate per annum equal to the average
(rounded, if necessary, to the next highest 1/16 of 1%) of the rates of
interest per annum at which deposits in United States dollars are offered
to prime banks in the London interbank market at 11:00 a.m. (London
time) two LIBO Business Days before the first day of such LIBO Period
(the "Interest Setting Date") for a period equal to such LIBO Period.
"LIBO Rate Reserve Percentage" for any LIBO Period
means the reserve percentage applicable to the Instrument Holders during
such LIBO Period under the regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or if more than one
such percentage is so applicable, the daily average for such percentages
for those days in such LIBO Period during which any such percentage
shall be so applicable) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for the Instrument Holders in respect of
liabilities or assets consisting of or including Eurocurrency Liabilities (as
defined in Regulation D of the Board of Governors of Federal Reserve
System as in effect from time to time) having a term equal to such LIBO
Period.
"Reserve Costs" means, so long as any Instrument Holder
hereafter shall be required under regulations of the Board of Governors
of the Federal Reserve System to maintain reserves in excess of those
maintained at the more recent to occur of the original issuance of the
applicable Instrument or the date of adjustment of the Note Rate or
Certificate Rate applicable to such Instrument or applicable interest therein
in connection with the Secondary Transaction with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional
amounts equal to the product of (1) the outstanding balance of the
Instruments held by such Instrument Holder, multiplied by (2) an interest
rate per annum equal at all times during the period in which such reserves
were assessed to the remainder obtained by subtracting (a) the LIBO Rate
for the applicable period from (b) the rate obtained by dividing such LIBO
Rate applicable during such period by a percentage equal to 100% minus
the then applicable LIBO Rate Reserve Percentage, payable on each
Payment Date.
Promptly after Lessor receives notice from Agent or any
Instrument Holder of any Reserve Costs or Increased Costs to be payable
as Additional Rent Lessor shall notify the Lessee of the same; provided,
however, that the failure to provide such notice as to Increased Costs shall
not affect the Lessor's right to recover Additional Rent for the same. A
certificate in reasonable detail (i) setting forth the basis for and the amount
of such costs submitted by the Lessor to the Lessee and (ii) in the case of
Increased Costs, setting forth in reasonable detail the calculation of the
same and that the Instrument Holder has certified to the Lessor that such
Increased Costs are generally being charged by the Instrument Holder to
other similarly situated persons under similar arrangements, which notice
shall be conclusive and binding for all purposes, absent manifest error,
unless such notice fails to set forth the information required above as to
the Increased Costs.
"Special LIBO Rate" means, for any period commencing
on the date any Parcel is added to the Property or a Construction Advance
is made, as applicable, through the next Adjustment Date, an interest rate
per annum equal to the rate of interest per annum at which deposits in
United States dollars are offered to prime banks in the London interbank
market at 11:00 a.m. (London time) two LIBO Business Days before the
date such Parcel is added to the Property, or the Construction Advance is
made, for a period equal to the period between such date and the next
Adjustment Date. The Special LIBO Rate shall be used to determine the
Applicable Rate only for that portion of the Acquisition Price attributable
to the Parcel in question and/or the construction advance in question, but
only through the next Adjustment Date.
<PAGE>
FORM OF
SCHEDULE "A-1"
Schedule of Acquisition Prices
Date of Schedule: __________, 199__
Applicable Portion of
Parcel
Acquisition Price
$
Total Acquisition Price
$__________
Contingent Rent Payment
$__________<PAGE>
EXHIBIT "B"
Form of Parcel Addition Supplement
SUPPLEMENT TO MASTER LEASE
(_____________, ________) [Location of Parcel]
This Parcel Addition Supplement ("Supplement") is hereby added,
as of the _____ day of _________, _____, to that certain Master Lease (as
heretofore amended and supplemented, the "Lease"), dated as of
_____________, 1997, by and between STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, as Trustee under
that certain Declaration of Trust of even date with the Lease (in such
capacity, and not individually, "Lessor"), and, among other Lessees
therein named, ________________________, a _________ corporation
("Lessee"). Upon execution hereof by Lessor and Lessee, and approval
hereof by CITICORP LEASING, INC., a Delaware corporation (as
administrative agent for the "Purchasers" [as defined in the Lease])
("Agent"), this Supplement shall be included in and shall be a part of the
Lease for all purposes. Terms used but not otherwise defined herein shall
have the meanings given to such terms in the Lease.
The parties hereto, intending to be legally bound hereby,
acknowledge and agree to the following:
Lessee is one of the parties to the Lease as a "Lessee" thereunder.
[IF LESSEE IS AN "ADDITIONAL LESSEE" REFERENCE
SUPPLEMENT PURSUANT TO WHICH SUCH ADDITIONAL
LESSEE BECAME A PARTY TO THE LEASE.]
The parcel of land (the "Parcel") more fully described on
Exhibit "A" attached hereto and the improvements, if any, located thereon
(the "Improvements") are hereby added by this Supplement to this Lease
and shall hereafter constitute a part of the "Property" for all purposes of
the Lease. Lessor hereby leases the Parcel and Improvements to Lessee,
and Lessee hereby leases the Parcel and Improvements from Lessor
pursuant to the Lease.
The "Permitted Encumbrances" with respect to the Parcel shall
consist of those items listed on Exhibit "B" attached hereto, which shall
hereafter constitute the "Permitted Encumbrances" applicable to the Parcel
for all purposes of the Lease.
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised
Schedule A-1 attached hereto, and all references to the "Acquisition Price"
of all or any Parcel(s) for any purpose shall be deemed to refer to the
Acquisition Price(s) referred to on such Revised Schedule A-1.
[ATTACH REVISED SCHEDULE A-1] From and after the date hereof
the aggregate Acquisition Price under the Lease is increased to
$______________ [Should Match New Schedule A-1 Total], which
amount shall be used for the computation of Net Rent under the Lease
until further adjusted.
The Contingent Rent Payment shall be increased by
$____________ [INSERT AMOUNT EQUAL TO 84% OF THE
ADVANCE FOR THE PARCEL] as a result of the addition to the Lease
of the Parcel and Improvements, resulting in a new Contingent Rent
Payment in the amount of $_____________ .
Lessee hereby confirms, as of the date hereof, that all
representations and warranties made in the Lease with respect to the
Property heretofore covered by the Lease remain true and correct in all
material respects; that all representations and warranties included in the
Lease with respect to the "Property" are, as of the date hereof, true and
correct as to the Parcel and the Improvements as if such Parcel and
Improvements had been originally included within the term "Property";
and that no Event of Default and, to the best of Lessee's knowledge, no
event which with notice and/or the passage of time might ripen into an
Event of Default exists under the Lease. Without limitation, Lessee
confirms that all representations and warranties set out in Section 6(d) of
the Lease are, as of the date hereof, true and correct as to the Parcel and
Improvements hereby added to the Property.
Lessee hereby acknowledges and confirms that as of the date
hereof, Lessee has no defense to the payment or performance of the
Lessee's obligations under the Lease and that, to the best of Lessee's
knowledge, no claims, counterclaims, affirmative defenses, or other such
rights exist against Lessor, Agent, or any Purchaser or Instrument Holders
under the Lease.
Lessee acknowledges and confirms hereby that it has examined the
Parcel and the Improvements and title thereto, and that it accepts and
approves the Parcel and the Improvements and all matters relating thereto
as suitable and satisfactory for inclusion in the Lease [except that the
improvements located on the Parcel on the date hereof may be
demolished, in whole or in part, as provided below -- DELETE THIS
PROVISION IF NOT APPLICABLE.
Lease Guarantor, as "Indemnitor" under that certain Environmental
Indemnity Agreement (the "Environmental Indemnity") of even date with
the Lease, executed by Lease Guarantor for the benefit of Lessor, Agent
and the Instrument Holders, hereby acknowledges that said Environmental
Indemnity and each and every representation, warranty, covenant,
obligation, indemnity, or other term thereof applies to, and applies with
respect to, the Parcel and the Improvements added to the Lease hereby
and that from and after the date hereof such Parcel and Improvements
shall constitute part of the "Property" for all purposes of the
Environmental Indemnity.
Further, Lease Guarantor, as "Guarantor" under that certain Lease
Guarantee (the "Lease Guarantee") of even date with the Lease, executed
by Lease Guarantor and Lessor, hereby acknowledges that said Lease
Guarantee and each and every representation, warranty, covenant,
obligation, indemnity, or other term thereof applies to, and with respect
to, the Parcel(s) and the Improvements added to the Lease hereby and that
from and after the date hereof such Parcel(s) and Improvements (including
any Improvements hereafter constructed by Lessee on the Parcel) shall be
covered by the Lease Guarantee, and that the Lease Guarantee remains in
full force and effect and continues to apply to the Lease, as supplemented
hereby.
It is expressly acknowledged and agreed that Agent and the
Purchasers and Instrument Holders are intended to be beneficiaries of this
Supplement to the same extent as Agent and the Purchasers and Instrument
Holders are beneficiaries of the Lease and the Environmental Indemnity.
[INSERT HERE ANY ADDITIONAL
PROVISIONS APPLICABLE TO THE
NEW PROPERTY]
[The Improvements existing on the Parcel as of the date hereof
are approved for demolition pursuant to Section 1(f) of the Lease --
DELETE OR MODIFY BASED ON FACTS AND UNDERWRITING.]
[INSERT ONLY IF APPLICABLE AND MODIFY TO
REFLECT APPLICABLE UNDERWRITING CRITERIA]
[The Parcel contains [describe excess land by legal description,
size and location, or other available information] (the "Excess Land")
which is not needed for Lessee's purposes. Lessee shall have the right to
subdivide the Excess Land from the remainder of the Parcel and dispose
of the Excess Land, subject to satisfaction of the following requirements:
(i) the Excess Land and the remainder of the Parcel
must be separately platted legal lots, have adequate legal and
physical access to publicly dedicated streets or rights of way, be
separate tax parcels, and (except pursuant to approved Facility
Agreements) otherwise not be dependent upon each other for any
legal or functional purpose whatsoever, and the disposition of the
Excess Land must not cause the remainder of the Parcel (including
any Improvements thereon or New Improvements contemplated to
be developed thereon) to violate any parking requirements, set-
back lines, zoning requirements, floor-area ratio requirements, or
other legal or applicable private restrictions, requirements or
development standards.
(ii) the surveys, Title Policies, appraisals, and other
underwriting reports and materials provided to Agent in connection
with the addition of the Parcel to the Property must show (or be
supplemented, endorsed, and updated, as applicable, to show) the
remainder of the Parcel (exclusive of the Excess Land), and must
satisfy all underwriting requirements set out in the Transaction
Agreement such that the Parcel, without regard to the Excess
Land, would be eligible for inclusion as a part of the Property
(with the applicable Acquisition Price) if it did not already
constitute a part of the Property.
(iii) any utility, access, or other rights across the Excess
Land necessary for the use and operation of the remainder of the
Parcel shall be documented into formal easements that are not
subject or subordinate to any mortgage or other lien affecting the
Excess Land.
(iv) the remainder of the Parcel shall have a separate
approved site plan, final development plan, development plat,
infrastructure plan, or other applicable legal filings and approvals
as may be necessary in the applicable jurisdiction such that the
Parcel and Improvements thereon are entirely legally separate from
any other property (including, without limitation, being covered by
separate certificates of occupancy or local equivalent).
(v) all costs or expenses of Agent or Lessor in
connection with the release of the Excess Land shall be paid by
Lessee.
If the Excess Land and the remainder of the Parcel satisfy the foregoing
requirements the Excess Land may be transferred to Lessee or its designee
and excluded from the coverage of this Lease without requirement for
payment of any Acquisition Price (but otherwise at the sole cost and
expense of Lessee). In such event the Agent shall also release the
Transaction Mortgage from the Excess Land. The release of the Excess
Land shall not reduce the Acquisition Price for the Parcel.]
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO SUPPLEM
MASTER LEASE
LESSOR:
STATE STREET BANK AND
TRUST COMPANY, a
Massachusetts trust company, not in its individual
capacity but solely as Trustee
under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO
MASTER LEASE
"LESSEE":
[ONLY SPECIFIC LESSEE LEASING PARCEL NEED SIGN]
__________________________________,
a
_____________________corporation
By:
Name:
Title:
The undersigned, in its capacity as Lessee Parent, Lease
Guarantor, and party to the Environmental Indemnity Agreement joins in
this Supplement for the purposes therein stated.
LESSEE PARENT AND
LEASE GUARANTOR:
THE PEP BOYS - MANNY,
MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO
MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation
(as administrative agent on
behalf of the Purchasers)
By:
Name:
Title:
EXHIBIT "C"
Construction Addendum
If Lessee elects to construct New Improvements on any Parcel and
receive a Construction Advance in respect thereof the New Improvements
in question must be constructed on such Parcel in accordance with the
requirements of this Construction Addendum. Any such New
Improvements constructed upon the Property shall be the property of
Lessor from the date such New Improvements (or any portions thereof)
are placed on the Property.
Section 1. Construction of New Improvements.
1.1 If Lessee desires to construct New Improvements on
any Parcel in respect of which Lessee intends to seek a Construction
Advance upon completion thereof, then prior to commencing construction
of such New Improvements Lessee shall notify Agent of its intention to
construct such New Improvements and its desire to receive a Construction
Advance for the costs thereof upon completion. Such notice shall include
(i) a description of the Parcel on which such construction is to occur, (ii)
a general description of the work to be performed (which, in the case of
New Improvements that are substantially consistent with a "prototype"
store or service center previously approved by Agent, may consist merely
of an indication that the New Improvements in question are to be of such
prototype, and (iii) a good faith (but non-binding) estimate of the amount
of the Construction Advance Lessee expects to seek upon completion of
construction of the New Improvements.
1.2 Lessee shall enter into such contracts and agreements
as it shall deem necessary or appropriate in order to cause completion of
the New Improvements on the Parcel in question. Such contracts and
agreements shall be in Lessee's name only and the obligations to be
performed by Lessee thereunder shall be the sole responsibility of Lessee.
1.3 If requested by Agent, Lessee shall deliver to Agent
(i) copies of all contracts and agreements relating to construction of the
New Improvements, (ii) the plans and any related specifications, working
drawings and construction schedules for the New Improvements (the
"Plans"), (iii) all governmental permits and licenses relating to or
necessary for completion of the New Improvements, and (iv) any other
Documents which Lessor or Agent may reasonably require with respect
thereto. Delivery of such materials shall not be a condition precedent to
the addition of the Parcel to the Property or the commencement of
construction of the New Improvements, but Agent shall have the right to
review such materials in connection with its approval of the Construction
Advance. Agent's review and approval of such materials shall be from
the perspective of permitting it to assure itself that any Construction
Advance is made with respect to New Improvements that are constructed
in accordance with applicable legal requirements and sound construction
and development practices. Agent's approval shall not be based upon
cost, value, or market analyses or similar matters (except to the extent that
such matters influence the amount of the appraisal of the Parcel and New
Improvements). If Agent has previously been provided with Plans for a
prototype of New Improvements Agent shall not request Plans for specific
New Improvements that Lessee represents to Agent have been or are to
be constructed substantially in accordance with the prototype Plans. If
Lessee makes any material change or modification in any documents or
materials delivered to Agent pursuant to this Section 1.3 Lessee shall
provide Agent with a copy of the modified version of such documents or
other materials.
1.4 Lessee shall effect or cause to be effected the
completion of the New Improvements in a good and workmanlike manner,
free of any patent or latent defects, in substantial accordance with the
Plans, and in accordance with all laws, rules, regulations and ordinances
applicable thereto (including, without limitation, all Environmental Laws).
Any New Improvements shall be completed on or before earlier of (i)
August 31, 1998, or (ii) the first anniversary of the date on which the
Parcel in question was added to the Property (as applicable, the "Required
Completion Date").
1.5 Lessee shall be solely responsible for, and shall pay
or cause to be paid in a timely manner, all costs of completion of the New
Improvements, including, without limitation, (a) amounts paid or to be
paid to contractors and other persons for work and services actually
performed (including employees of Lessee) and fees of architects,
engineers and other consultants and professionals, (b) all premiums for
builder's risk, public liability, worker's compensation and other insurance
premiums pursuant to insurance policies required hereby or by the Lease,
and (c) survey costs. Lessee agrees to hold Lessor, Agent and each
Instrument Holder harmless from the payment of all costs of completion
of the New Improvements. Lessee also agrees to pay directly to the party
to whom such amounts are owed within thirty (30) days after demand all
reasonable out-of-pocket costs, charges, reasonable fees and expenses of
the Lessor and its counsel and the Agent and its counsel, related to the
preparation, evaluation (including related diligence activities), and
execution of any supplements to the Lease in connection therewith.
1.6 During the period when any construction activities
are being carried out by Lessee with respect to any of the New
Improvements, Lessee shall cause to be carried and to be in full force and
effect (either directly or pursuant to the self-insurance program permitted
under the Lease) (a) non-reporting builder's risk or all-risk property
insurance insuring the Parcel and New Improvements in the amount of the
full replacement value thereof (on an "as-built" basis), (b) insurance
covering all materials stored at the construction site (or off the
construction site) that are intended to be incorporated into the New
Improvements in an amount not less than the full insurable value of such
materials from time to time, and (c) such other insurance coverage as
Lessee may be required to carry under the Lease. All of such insurance
coverage shall be carried in accordance with all applicable provisions of
the Lease.
1.7 Upon completion of the New Improvements for any
Parcel, and as a condition precedent to Lessee's right to receive a
Construction Advance in respect thereof, Lessee shall cause to be
delivered to Agent (a) complete as-built plans and specifications for the
New Improvements (or, if the New Improvements are constructed
pursuant to prototype Plans previously provided to Agent, a certification
that the New Improvements have been so constructed), (b) an "as-built"
survey of the Parcel (in form reasonably satisfactory to Lessor and Agent)
updated to show the location of the New Improvements and all easements
or other Permitted Encumbrances affecting the Parcel, (c) copies of books
and records reflecting the cost of the New Improvements in such detail as
may be sufficient to enable Agent to substantiate the cost of the New
Improvements in question, (d) such lien waivers and contractor's affidavits
as may reasonably be required by Agent, (e) an endorsement to the
mortgagee title policy showing no exceptions for mechanic's and
materialman's liens and otherwise in form and substance reasonably
satisfactory to Agent, and (f) such other instruments, documents and/or
materials which may be reasonably requested by the Agent to evidence the
completion of such New Improvements, the payment of the costs thereof,
and the satisfaction of the conditions to a Construction Advance pursuant
to the Transaction Agreement. The delivery of any such materials or
documents to Agent shall constitute a representation by Lessee to Lessor
and Agent that such materials are correct and complete in all material
respects.
1.8 Provided that all conditions have been timely
satisfied by Lessee, Agent will proceed to obtain the funding of the
Construction Advance by the Purchasers as provided in the Transaction
Agreement.
Section 2. Funding of Construction Advance. Immediately
upon receipt of any funding of an Advance in respect of the New
Improvements under the Transaction Agreement, Lessor shall pay to
Lessee, as a Construction Advance for the New Improvements, the
amount of such funding in consideration of the performance by Lessee of
its obligations hereunder. In connection with such funding Lessee and
Lessor shall execute such instruments or documents (including, without
limitation, a Construction Supplement) and do such things as may be
required to fulfill the provisions of the Lease relating to the construction
of the New Improvements and the provisions of the Transaction
Agreement relating to the funding of a Construction Advance thereunder.
Section 3. Construction Failure.
3.1 If the New Improvements on any Parcel are not
completed and/or the requirements hereof necessary to permit Lessee to
obtain a final Construction Advance under the Transaction Agreement in
respect of such New Improvements are not satisfied prior to the Required
Completion Date for that Parcel (a "Construction Failure"), then Lessee
shall, at its option, either (i) make an Offer to Purchase the Parcel with
respect to which such Construction Failure has occurred pursuant to
Section 14 of the Lease, or (ii) elect to terminate this Lease as to the
Parcel with respect to which the Construction Failure has occurred. If
Lessee fails to elect option (ii) within fifteen (15) days after the
Construction Failure occurs then Lessee shall irrevocably be deemed to
have elected option (i). In either event neither Agent, the Instrument
Holders, nor Lessor shall have any further obligation (other than as
provided in Section 3.1.2 below) to Lessee for the cost of constructing the
New Improvements.
3.1.1 If Lessee elects (or is deemed to have elected) to
purchase the Parcel with respect to which the Construction Failure
has occurred pursuant to option (i) above then the Offer Purchase
Price for such Parcel as provided in Section 15 of the Lease
(which Offer Purchase Price will include the Acquisition Price for
the Parcel in question, as such Acquisition Price shall theretofore
have been increased as a result of any construction allowance
attributable to such Parcel that may theretofore have been
advanced) and the closing of Lessee's purchase of such Parcel
from Lessor shall otherwise be in accordance with Section 15 of
the Lease.
3.1.2 If Lessee elects to terminate this Lease as to an
affected Parcel pursuant to option (ii) above as a result of a
Construction Failure then Lessee shall, on the date that is fifteen
(15) days after such Construction Failure occurs, pay to Lessor a
special termination payment (the "Construction Failure Payment")
in an amount (not to exceed the Acquisition Price for the Parcel in
question) determined as follows:
3.1.2.1 First, the aggregate amount of costs
and expenses incurred and paid for by Lessee in connection
with the construction of the New Improvements on the
Parcel in question, as substantiated to Agent's reasonable
satisfaction, that have not previously been reimbursed to
Lessee through an Interim Advance or Construction
Advance ("Unadvanced Costs") shall be determined;
3.1.2.2 Second, Lessee shall apply for, and
Lessor shall make, an Interim Advance in respect of the
Parcel in question in an amount equal to the amount of the
Unadvanced Costs in respect of the Parcel in question, and
the Acquisition Price for the Parcel in question shall be
increased by the amount of such Interim Advance;
3.1.2.3 Third, multiply the Acquisition Price
of the Parcel in question, after giving effect to the Interim
Advance provided for in Section 3.1.2.2 above, by eighty-
nine percent (89%), and the product so determined shall be
the required "Construction Failure Payment."
The Construction Failure Payment shall be treated and disposed of
by Lessor in the same manner as a Contingent Rent Payment
(notwithstanding that the Construction Failure Payment is
computed as a different percentage of the Acquisition Price than
is used to compute the regular Contingent Rent Payment
hereunder) for all purposes of this Lease and the other Transaction
Documents. For the convenience of the Purchasers and the Agent,
if desired, the amount of the final Interim Advance to be made
pursuant to Section 3.1.2.2 above may be "netted" against the
amount of the Construction Failure Payment and not actually
advanced to Lessee.
3.2 If Lessee elects to terminate the Lease as to a Parcel
with respect to which a Construction Failure has occurred and has paid the
Construction Failure Payment in respect thereof, then Lessee, as agent for
Lessor but at Lessee's sole cost and expense, shall use its best efforts to
sell the Parcel in question to a third party at the maximum available
market price not later than the date that is thirty (30) days after the
effective date of such termination. Lessor shall join in any sale at or
above the Special Minimum Price (defined below) and Agent's approval
of such sale will not be required; however, Lessee may not sell the Parcel
in question without the consent of Agent, which consent may not be given
without consent of the Majority Holders and in any event may be
withheld at Agent's sole and absolute discretion, if the purchase price is
less than that price that will produce net sale proceeds of the Parcel
received by Lessor upon any such sale (after applicable closing and
transaction costs) sufficient, together with the Construction Failure
Payment itself, to permit the Lessor (or Agent on behalf of Lessor) to pay
to the applicable Instrument Holders the amount that such Instrument
Holders would have received if, in lieu of terminating the Lease and
making the Construction Failure Payment, the Lessee had purchased the
Parcel(s) in question and paid the Offer Purchase Price therefor (computed
after giving full effect to the Interim Advance, if any, made pursuant to
Section 3.1.2.2 above), taking into account the additional interest or
certificate yield, as applicable, accrued on the Instruments in question with
respect to the amount that would have been paid on sale of the Property
to Lessee at the Offer Purchase Price but which remained unpaid on the
date of such partial termination of the Lease as a result of the
Construction Failure Payment being less than the Acquisition Price of the
Parcel(s) in question (a sale price that will produce net sale proceeds, after
all transaction costs, in such amount being referred to as the "Special
Minimum Price"). To the extent the net sale proceeds exceed the Special
Minimum Price Lessor shall refund all such excess to Lessee. If Lessee
has failed to cause the Parcel to be sold within such period, Lessee's
rights under this subsection 3.2 shall cease and Lessor shall thereafter
have the sole and exclusive right to sell or dispose of the Parcel in
question solely for the account of the Instrument Holders. Lessor shall
reasonably cooperate in any sale of the Parcel in question by Lessee (after
approval of the sale by Agent, where required), but at Lessee's sole cost
and expense, such cooperation to include execution of contracts of sale,
closing documents, and related materials; provided that Lessor shall not
be required to incur any liability beyond its interest in the Parcel in
question in connection therewith.
Section 4. Representations and Warranties of Lessee. Lessee
represents and warrants to Lessor with respect to each Parcel and the New
Improvements thereon, as of the date of funding of the Construction
Advance as follows:
4.1 No violation of any Laws exists with respect to the
Parcel and New Improvements. The intended use and operation of the
Parcel and New Improvements complies with all Legal Requirements,
including, without limitation, building codes, zoning, and private
covenants.
4.2 All streets, easements, utilities and related services
necessary for the construction of the New Improvements and the operation
and use thereof for its intended purposes are available, dedicated, and
fully operational to the boundaries of the Parcel, including, without
limitation, reciprocal use easements, potable water, electric, gas and
telephone facilities, garbage removal, and sewer services.
4.3 The Plans are adequate for construction of the New
Improvements, comply with all applicable Laws, building codes,
covenants, conditions, or restrictions applicable to the Parcel and New
Improvements, and were prepared in accordance with good commercial
construction practices, and the New Improvements have been constructed
in substantial accordance with the Plans.
4.4 Lessee has obtained or caused to be obtained all
requisite building permits, licenses and approvals required by any
governmental authority with respect to construction of the New
Improvements.
To the extent any of the foregoing representations is
inaccurate in any respect with regard to a specific Parcel at the time a
Construction Advance is requested for such Parcel, Lessee shall set forth
the accurate representation in writing, together with the status of such
matters and the protections to be afforded to Lessor, Agent and the
Instrument Holders and, so long as the effect of the facts as they exist,
giving effect to such protections as are provided to address such matters,
do not reduce the value of the Parcel and New Improvements relative to
the value set out in the appraisal received by Agent, and Agent is
otherwise satisfied that neither Lessor, Agent, nor any Instrument Holder
is materially adversely affected by the existing facts and conditions, such
variance shall not delay, condition or serve as the basis for a refusal of the
Construction Advance requested by Lessee.
Section 5. Nature of Relationship. Nothing contained herein shall
create the relationship of partnership or of joint venture or of any
association between Lessor and Lessee.
EXHIBIT "D"
Form of Construction Supplement for Completed Improvements
CONSTRUCTION SUPPLEMENT TO MASTER LEASE
(_____________________, ___________) [Project Location]
This Construction Supplement ("Supplement") is hereby added, as
of the _____ day of _________, _____, to that certain Master Lease (as
heretofore amended or supplemented, the "Lease"), dated as of
__________, 1997, by and between STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, in its capacity as
Trustee under that certain Declaration of Trust dated of even date with the
Lease (in such capacity, and not individually, "Lessor"), and among other
Lessees therein named, ____________________________, a
________________ corporation ("Lessee"). Upon execution hereof by
Lessor and Lessee, and approval hereof by CITICORP LEASING, INC.,
a Delaware corporation (as administrative agent for the Purchasers [as
defined in the Lease]) ("Agent"), this Supplement shall be included in and
shall be a part of the Lease for all purposes. Terms used but not
otherwise defined herein shall have the meanings given to such terms in
the Lease.
The parties hereto, intending to be legally bound hereby,
acknowledge and agree to the following:
Lessee is one of the parties to the Lease as a "Lessee" thereunder.
[IF LESSEE IS AN "ADDITIONAL LESSEE" REFERENCE
SUPPLEMENT PURSUANT TO WHICH SUCH ADDITIONAL
LESSEE BECAME A PARTY TO THE LEASE.]
The parcel of land (the "Parcel") more fully described on
Exhibit "A" attached hereto was added to the Lease by Parcel Addition
Supplement dated ______________, and constitutes a part of the
"Property" for all purposes of the Lease. Lessee has elected to construct
"New Improvements" (as defined in the Lease) on the Parcel pursuant to
Section 1(d) of the Lease and the Construction Addendum attached
thereto.
Lessee hereby represents and warrants to Lessor, Agent, and each
Purchaser and Instrument Holder that the construction of the New
Improvements on the Parcel has been completed in accordance with the
terms and conditions of the Construction Addendum. Based on such
representation and warranty, Lessor and Lessee desire to increase the
Acquisition Price for the Parcel by the amount of $__________, which
amount is being simultaneously herewith advanced to Lessee by Lessor as
a Construction Advance in respect of the New Improvements.
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised
Schedule A-1 attached hereto, and all references to the "Acquisition Price"
of all or any Parcel(s) for any purpose shall be deemed to refer to the
Acquisition Price(s) referred to on such Revised Schedule A-1.
[ATTACH REVISED SCHEDULE A-1]
The Contingent Rent Payment is hereby increased by
$____________ [insert amount equal to 84% of the Construction
Advance], resulting in a Contingent Rent Payment in the amount of
$_____________.
Lessee hereby confirms, as of the date hereof, that all
representations and warranties made in the Lease with respect to the
Property heretofore covered by the Lease remain true and correct in all
material respects; that all representations and warranties included in the
Lease with respect to the "Property" are, as of the date hereof, true and
correct as to the Parcel and the New Improvements; and that no Event of
Default and, to the best of Lessee's knowledge, no event which with
notice and/or the passage of time might ripen into an Event of Default,
exists under the Lease.
Lessee hereby acknowledges and confirms that as of the date
hereof, Lessee has no defenses to the payment or performance of the
Lessee's obligations under the Lease and that, to the best of Lessee's
knowledge, no claims, counterclaims, affirmative defenses, or other such
rights exist against Lessor, Agent or any Purchaser or Instrument Holder
under the Lease.
It is expressly acknowledged and agreed that Agent and the
Purchasers and Instrument Holders are intended to be beneficiaries of this
Supplement to the same extent as Agent and the Purchasers and Instrument
Holders are beneficiaries of the Lease and the Environmental Indemnity.
Lease Guarantor joins in the execution hereof for the purpose of
acknowledging the Construction Advance being made and the adjustments
to the Net Rent and Contingent Rent Payment to be affected thereby.
Lease Guarantor confirms that the Lease Guarantee dated as of even date
with the Lease, executed by Lease Guarantor remains in full force and
effect and continues to apply to the Lease, as supplemented hereby.
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO CONSTR
SUPPLEMENT
LESSOR:
STATE STREET BANK AND
TRUST COMPANY, a
Massachusetts trust company, not in its individual
capacity but solely as Trustee
under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO CONSTRUCTION
SUPPLEMENT
"LESSEE":
[ONLY SPECIFIC LESSEE LEASING PARCEL NEED SIGN]
__________________________________,
a
_____________________corporation
By:
Name:
Title:
The undersigned, in its capacity as Lessee Parent, Lease
Guarantor, and party to the Environmental Indemnity Agreement joins in
this Supplement for the purposes therein stated.
LESSEE PARENT AND
LEASE GUARANTOR:
THE PEP BOYS - MANNY,
MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO CONSTRUCTION
SUPPLEMENT
Approved and Accepted as of the date first above written.
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation (as
administrative agent for
itself and the Purchasers)
By:
Name:
Title:
EXHIBIT "E"
Form of Supplement for Interim Advance
INTERIM SUPPLEMENT TO MASTER LEASE
This Interim Supplement ("Supplement") is hereby added, as of the
____ day of _____________, 199__, to that certain Master Lease (as
amended, supplemented or otherwise modified from time to time, the
"Lease"), dated as of __________, 1997, by and between STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, as Trustee under that certain Declaration of Trust of even date
with the Lease (in such capacity, and not individually, "Lessor"), and
among other lessees named therein, [NAME OF APPLICABLE
LESSEE] , a _____________ corporation ("Lessee"). Upon execution
hereof by Lessor and Lessee and approval hereof by CITICORP
LEASING, INC., a Delaware corporation (as administrative agent for the
"Purchasers" [as defined in the Lease]) ("Agent"), this Supplement shall
be included in and shall be a part of the Lease for all purposes. Terms
used but not otherwise defined herein shall have the meanings given to
such terms in the Lease.
The parties hereto, intending to be legally bound hereby,
acknowledge and agree to the following:
Lessee hereby represents and warrants to Lessor and Lender that
New Improvements (as defined in the Lease), have been partially
constructed (but are not yet completed), in accordance with the terms and
conditions of the Construction Addendum, upon the Parcel located in
______________, more particularly described on Exhibit "A" attached
hereto (the "_______ Parcel"), and the New Improvements, or the portion
thereof so completed, constitute a part of the "Property" for all purposes
of the Lease. Based on such representation and warranty and in
consideration of the advance by Lessor of even date herewith of a
reimbursement for construction costs incurred to date, Lessor and Lessee
desire to increase the Acquisition Price for the _________ Parcel by the
amount of $___________ [IF MORE THAN ONE PARCEL
INVOLVED-ALLOCATE AMONG APPLICABLE PARCELS]. The
aggregate amount to date that has been paid to Lessee in reimbursement
for the costs of constructing the New Improvements on the __________
Parcel is $_______________. [MODIFY AS APPROPRIATE IF MORE
THAN ONE PARCEL INVOLVED-FULL AMOUNT MUST BE
ALLOCATED AMONG PARCELS]
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised
Schedule A-1 attached hereto, and all references to the "Acquisition Price"
of all or any Parcel(s) for any purpose shall be deemed to refer to the
Acquisition Price(s) referred to on such Revised Schedule A-1.
[ATTACH REVISED SCHEDULE A-1----ACQUISITION PRICE OF
EACH AFFECTED PARCEL TO BE INCREASED BY THE
PORTION OF THE INTERIM ADVANCE ALLOCABLE TO SUCH
PARCEL--AGGREGATE ACQUISITION PRICE MUST BE
INCREASED BY TOTAL AMOUNT OF INTERIM ADVANCE AND
SHOULD EQUAL AMOUNT OF AGGREGATE ADVANCES TO
DATE (LESS PURCHASE PRICE OF PARCELS REPURCHASED,
IF APPLICABLE)]
Lessor and Lessee hereby confirm, as of the date hereof, that all
representations and warranties made in the Lease with respect to the
Property remain true and correct in all material respects; and that to the
best of Lessee's knowledge no Event of Default or event which with
notice and/or the passage of time might ripen into a Event of Default
exists under the Lease.
Lessee hereby acknowledges and confirms that as of the date
hereof, Lessee has no defense to the payment or performance of the
Lessee's obligations under the Lease and that, to the best of Lessee's
knowledge, no claims, counterclaims, affirmative defenses, or other such
rights exist against Lessor, Agent, or any Purchaser or Instrument Holders
under the Lease.
It is expressly acknowledged and agreed that Agent and the
Purchasers and Instrument Holders are intended to be beneficiaries of this
Supplement to the same extent as Agent and the Purchasers and Instrument
Holders are beneficiaries of the Lease and the Environmental Indemnity.
EXECUTED as of the date first above written.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
LESSOR:
STATE STREET BANK AND
TRUST COMPANY,
a Massachusetts trust
company, not in its
individual capacity but solely
as Trustee under
the Declaration of Trust
By:
Donald E. Smith, Vice
President
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
LESSEE:
____[MAY BE MULTIPLE
LESSEES]_____
By:
Name:
Title:
The undersigned, in its capacity as Lessee Parent, Lease
Guarantor, and party to the Environmental Indemnity Agreement joins in
this Supplement for the purposes therein stated.
LESSEE PARENT AND
LEASE GUARANTOR:
THE PEP BOYS - MANNY,
MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation
(as administrative agent on
behalf of the Purchasers)
By:
Name:
Title:
EXHIBIT "F"
Form of SNDA
EXHIBIT "G"
Form of Supplement for Additional Lessee
SUPPLEMENT NO. _____ TO MASTER LEASE
This Supplement ("Supplement") is hereby added, as of the _____
day of _________, _____, to that certain Master Lease (as heretofore
amended and supplemented, the "Lease"), dated as of _____________,
1995, by and between STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, as Trustee under that certain
Declaration of Trust of even date with the Lease (in such capacity, and
not individually, "Lessor"), and THE PEP BOYS - MANNY, MOE &
JACK, a Pennsylvania corporation, THE PEP BOYS MANNY, MOE &
JACK OF CALIFORNIA, a California corporation, and PEP BOYS -
MANNY, MOE & JACK OF DELAWARE, INC., a Delaware
corporation ("Lessee"). Upon execution hereof by Lessor, Lessee Parent,
and Additional Lessee, and approval hereof by CITICORP LEASING,
INC., a Delaware corporation (as administrative agent for the
"Purchasers" [as defined in the Lease]) ("Agent"), this Supplement shall
be included in and shall be a part of the Lease for all purposes. Terms
used but not otherwise defined herein shall have the meanings given to
such terms in the Lease.
The parties hereto, intending to be legally bound hereby,
acknowledge and agree to the following:
___________________________, a _________ corporation
("Additional Lessee") and Lessee Parent desire for the Additional Lessee
to become a party to the Lease as a Lessee as provided for in Section 31
of the Lease.
To induce approval of the acceptance of Additional Lessee as a
party to the Lease Lessee Parent and Additional Lessee hereby represent
and warrant to Agent and Lessor that, as of the date hereof:
(a) Additional Lessee is a wholly-owned Subsidiary of
Lessee Parent.
(b) All representations and warranties made in the Lease
with respect to the "Lessee" are true and correct in all material
respects as to the Additional Lessee as of the date hereof.
(c) Giving effect to the approval of Additional Lessee
as a party to the Lease, all representations and warranties made in
the Lease and in the Lease Guarantee as to Lessee Parent remain
true and correct in all material respects.
Lease Guarantor, as "Indemnitor" under that certain Environmental
Indemnity Agreement (the "Environmental Indemnity") of even date with
the Lease, executed by Lease Guarantor for the benefit of Lessor, Agent
and the Instrument Holders, hereby acknowledges that said Environmental
Indemnity and each and every representation, warranty, covenant,
obligation, indemnity, or other term thereof applies to, and applies with
respect to, the Additional Lessee and any Parcel and the Improvements
that may ever be leased by the Additional Lessee pursuant to the Lease.
Further, Lease Guarantor, as "Guarantor" under that certain Lease
Guarantee (the "Lease Guarantee") of even date with the Lease, executed
by Lease Guarantor and Lessor, hereby acknowledges that said Lease
Guarantee and each and every representation, warranty, covenant,
obligation, indemnity, or other term thereof applies to, and with respect
to, the Additional Lessee and any Parcel(s) and the Improvements that
may ever be leased by the Additional Lessee pursuant to the Lease and
that from and after the date hereof the Additional Lessee shall be covered
by the Lease Guarantee as if the Additional Lessee had been an original
Lessee, and that the Lease Guarantee remains in full force and effect.
Additional Lessee hereby assumes, jointly and severally, all
obligations of the Lessee under the Lease, whether arising prior to, or
subsequent to, the date of this Supplement.
It is expressly acknowledged and agreed that Agent and the
Purchasers and Instrument Holders are intended to be beneficiaries of this
Supplement to the same extent as Agent and the Purchasers and Instrument
Holders are beneficiaries of the Lease and the Environmental Indemnity.
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO SUPPLEM
MASTER LEASE
LESSOR:
STATE STREET BANK AND
TRUST COMPANY, a
Massachusetts trust company, not in its individual
capacity but solely as Trustee
under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO
MASTER LEASE
"ADDITIONAL LESSEE":
__________________________________,
a
_____________________corporation
By:
Name:
Title:
The undersigned, in its capacity as Lessee Parent, Lease
Guarantor, and party to the Environmental Indemnity Agreement joins in
this Supplement for the purposes therein stated.
LESSEE PARENT AND
LEASE GUARANTOR:
THE PEP BOYS - MANNY,
MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO
MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation
(as administrative agent on
behalf of the Purchasers)
By:
Name:
Title:
LEASE GUARANTEE
THIS LEASE GUARANTEE ("Guarantee") made and entered into
as of the 28th day of February, 1997, by and among THE PEP BOYS -
MANNY, MOE & JACK, a Pennsylvania corporation ("Guarantor"),
STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company, in its individual capacity as its interest may appear in the
Transaction Documents, but otherwise not in its individual capacity but
solely in its capacity as Trustee under that certain Declaration of Trust
dated of even date herewith ("Lessor"), and CITICORP LEASING, INC.,
as administrative agent for itself and other Purchasers and Instrument
Holders, as defined in the Lease ("Agent");
W I T N E S S E T H:
A. Lessor has contemporaneously herewith entered into a
certain Master Lease (the "Lease") with Guarantor, The Pep Boys Manny
Moe & Jack of California, a California corporation, and Pep Boys -
Manny, Moe & Jack of Delaware, Inc., a Delaware corporation
(collectively, the "Lessee"), which Lease is intended to cover certain real
property to be added thereto from time to time as provided for therein.
As used in this Guarantee "Lessee" means, collectively, the above-named
parties that constitute the "Lessee" on the date hereof as well as any
Additional Lessees (as defined in the Lease) that may hereafter become a
party to the Lease.
B. The property to be covered by the Lease will be acquired
by Lessor with the proceeds of advances under certain A-Notes, B-Notes
and Certificates (herein referred to as the "Instruments") issued by Lessor
to Purchasers pursuant to the terms of a certain Transaction Agreement
(herein so called) of even date herewith by and among Lessor, Guarantor,
Bank of Montreal, and Agent (Agent acting on behalf of itself and such
other financial institutions as may, from time to time, become Purchasers
or Instrument Holders thereunder).
C. In consideration of the execution and delivery of the Lease
by Lessor to Lessee, and in recognition that the favorable terms accruing
to Lessee through the rental terms of the Lease, all of which are
contingent upon the delivery of this Guarantee by Guarantor; and in
recognition that Guarantor will receive direct and material benefits from
the delivery of the Lease and the Transaction Agreement and the
consummation of the transactions contemplated thereby, Guarantor desires
to deliver this Guarantee to Lessor.
NOW, THEREFORE, for and in consideration of the mutual
covenants and agreements herein contained, Lessor and Guarantor hereby
agree as follows:
1. Guarantee. For value received, and in consideration of
Lessor entering into the Lease with Lessee and in further consideration of
the agreement of the Purchasers to make Advances from time to time
under the Transaction Agreement, Guarantor hereby unconditionally
guarantees the full payment and performance when due, whether at the
stated due date, by acceleration or otherwise, of any and all rent,
monetary or non-monetary obligations and other amounts of every kind,
howsoever created, arising, or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing or owing to Lessor by
Lessee pursuant to the Lease, including, but without limitation, the
payment of Net Rent, Contingent Rent Payments (including Construction
Failure Payments), Offer Purchase Price, other Additional Rent and
including any attorneys fees, court costs or other enforcement costs of any
kind or nature, including those incurred during pre-trial, trial or appellate
levels (all such monetary and non-monetary obligations being hereinafter
collectively called the "Obligations"). Guarantor hereby agrees that upon
any default by Lessee in the payment or performance of any of the
Obligations when and as due, Guarantor will forthwith pay and/or perform
the same immediately upon demand and without further notice.
Guarantor acknowledges that at such time(s) as Parcels
and/or Improvements are added to the Lease each and every payment and
performance obligation (including increased rent) of Lessee under the
Lease is automatically guaranteed hereunder without the need of any
confirmation and without any notice to Guarantor. Upon request by
Lessor or Agent, Guarantor agrees to confirm by supplement this
Guarantee with respect to addition of Parcels and/or advances in respect
of New Improvements. Such a supplement would be executed by the
Guarantor and would contain a reaffirmation of representations and
warranties contained herein. A supplement, however, is not required for
this Guarantee to cover the obligations of Lessee in respect of Parcels and
Improvements when added to the Lease.
2. Guarantee Continuing, Absolute, Unlimited. This
Guarantee is a continuing, absolute and unlimited guarantee of payment
and performance as primary obligor and not as surety. This Guarantee
shall apply to all Obligations pursuant to the Lease without limitation as
to either amount or period of time. The Obligations shall be conclusively
presumed to have been created in reliance on this Guarantee. Lessor shall
not be required to proceed first against Lessee or any other person, firm
or corporation or against any property securing any of the Obligations
before resorting to Guarantor for payment. This Guarantee shall be
construed as a guarantee of payment and performance without regard to
the validity, regularity, or enforceability of any of the Obligations as to
Lessee or the rejection of the Lease in bankruptcy, and notwithstanding
any claim, defense (other than irrevocable payment by Guarantor or
another Lessee) or right of set-off which Lessee or Guarantor may have
against Lessor, including any such claim, defense or right of set-off based
on any present or future law or order of any government (de jure or
de facto), or of any agency thereof or court of law purporting to reduce,
amend or otherwise affect any obligations of Lessee, or any other obligor,
or to vary any terms of payments, and without regard to any other
circumstances which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. Guarantor agrees that this Guarantee
shall continue to be effective or be reinstated, as the case may be, if at
any time payment to Lessor of the Obligations or any part thereof is
rescinded or must otherwise be returned by Lessor upon the insolvency,
bankruptcy or reorganization of Lessee, or otherwise, as though such
payment to Lessor had not been made.
3. Definitions. Unless otherwise indicated, capitalized terms
used herein and not defined below shall have the respective meanings
given to them in the Lease. In addition to the definitions provided in the
Lease, the following words and terms shall have the meanings indicated
below:
(a) "Capital Lease Obligations" shall mean, as to any
Person, the obligations of such Person to pay rent or other
amounts under a lease of (or other agreement conveying the right
to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a
balance sheet of such Person under GAAP (including Statement of
Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board) and, for purposes of the Lease and
this Guarantee, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP
(including such Statement No. 13).
(b) "Change of Control" means, as to Guarantor, any
event or circumstance that results in a majority of the individuals
comprising the board of directors of the Guarantor as of any date
to consist of individuals that were not members of the board of
directors of the Guarantor twelve (12) months previous to such
date (other than by reason of death).
(c) "Consolidated Subsidiary" shall mean, as to any
Person, each Subsidiary of such Person (whether now existing or
hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial
statements of such Person in accordance with GAAP.
(d) "GAAP" shall mean generally accepted accounting
principles that are (a) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time, and (b) consistently
applied with past financial statements of any Person adopting the
same principles.
(e) "Guarantee" shall mean a guarantee, an
endorsement, a contingent agreement to purchase or to furnish
funds for the payment or maintenance of, or otherwise to be or
become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends
or other distributions upon the stock of any corporation, or an
agreement to purchase, sell or lease (as lessee or lessor) property,
products, materials, supplies or services primarily for the purpose
of enabling a debtor to make payment of his, her or its obligations
or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank to open a letter of credit for the
benefit of another Person, but excluding endorsements for
collection or deposit in the ordinary course of business. The terms
"Guarantee" and "Guaranteed" used as a verb shall have a
correlative meaning.
(f) "Indebtedness" shall mean, as to any Person: (i)
indebtedness created, issued or incurred by such Person for
borrowed money (whether by loan or the issuance and sale of debt
securities); (ii) obligations of such Person to pay the deferred
purchase or acquisition price of property or services, other than
trade accounts payable (other than for borrowed money) arising,
and accrued expenses incurred, in the ordinary course of business
so long as such trade accounts payable are payable within 90 days
of the date the respective goods are delivered or respective
services rendered; (iii) Indebtedness of others secured by a Lien on
the property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (iv)
obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other institutions for
the account of such Person; (v) Capital Lease Obligations of such
Person; and (vi) Indebtedness of others Guaranteed by such
Person.
(g) "Interest Expense" shall mean, for any period, the
sum of the following: (i) all interest in respect of Indebtedness
accrued or capitalized during such period (whether or not actually
paid during such period) plus (ii) the net amounts payable (or
minus the net amounts receivable) under interest rate protection
agreements accrued during such period (whether or not actually
paid or received during such period). Payments of Net Rent or
other payments under the Lease will not be treated as Interest
Expense for purposes hereof.
(h) "Leverage Ratio" shall mean, at any time, the ratio
of Total Liabilities to Tangible Net Worth of Guarantor and its
Consolidated Subsidiaries at such time.
(i) "Lien" shall mean, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset. For purposes of this Lease,
Guarantor or any of its Subsidiaries shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating
to such asset.
(j) "Net Earnings" shall mean, for any period, the net
earnings of Guarantor and its Consolidated Subsidiaries determined
in accordance with GAAP for such period; provided that, if for
any fiscal quarterly period such net earnings shall be negative (i.e.,
a loss), "Net Earnings" for such period shall be deemed to be
zero.
(k) "Net Operating Profit" shall mean, for any period,
for Guarantor and its Consolidated Subsidiaries (i) net sales minus
(ii) total costs and expenses (excluding costs of income taxes and
Interest Expense), in each case determined in accordance with
GAAP for such period.
(l) "NOP/Interest Charges Ratio" shall mean, as at any
date of determination thereof, the ratio of (i) Net Operating Profit
for the period of four consecutive fiscal quarters of Guarantor
ending on or most recently ended prior to such date of
determination to (ii) Interest Expense for such period.
(m) "Person" shall mean any individual, corporation,
company, voluntary association, partnership, joint venture, trust,
unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
(n) "Subsidiary" shall mean, as to any Person, any
corporation of which at least a majority of the outstanding shares
of stock having by the terms thereof ordinary voting power to elect
a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or
one or more of its Subsidiaries or by such Person and one or more
of its Subsidiaries.
(o) "Tangible Net Worth" shall mean, as at any date of
determination thereof, the sum of the following for any Person and
its Consolidated Subsidiaries determined (without duplication) in
accordance with GAAP:
(i) the amount of capital stock, plus
(ii) the amount of surplus and retained earnings
(or, in the case of a surplus or retained earnings deficit,
minus the amount of such deficit), minus
(iii) the sum of the following: cost of treasury
shares and the book value of all assets of such Person and
its Consolidated Subsidiaries which should be classified as
intangibles (without duplication of deductions in respect of
items already deducted in arriving at surplus and retained
earnings) but in any event including goodwill, research and
development costs, trademarks, trade names, copyrights,
patents and franchises, all reserves and any write-up in the
book value of assets resulting from a revaluation thereof
subsequent to January 28, 1989.
(p) "Total Liabilities" shall mean, as at any date of
determination thereof, the sum, for Guarantor and its Consolidated
Subsidiaries determined (without duplication) in accordance with
GAAP, of all Indebtedness of Guarantor and its Consolidated
Subsidiaries (including subordinated Indebtedness) and all other
liabilities of Guarantor and its Subsidiaries which should be
classified as liabilities on a balance sheet of Guarantor and its
Consolidated Subsidiaries prepared in accordance with GAAP and
in any event including all reserves (other than general contingency
reserves) and all deferred taxes and other deferred items.
4. Guarantee Not Affected by Change in Security or Other
Actions. Lessor may, from time to time, without the consent of or notice
to Guarantor, take any or all of the following actions without impairing
or affecting Guarantor's obligations under this Guarantee or releasing or
exonerating Guarantor from any of its liabilities hereunder:
(a) retain or obtain a security interest in any property
to secure any of the Obligations or any obligation hereunder;
(b) retain or obtain the primary or secondary liability of
any party or parties, in addition to the Guarantor, with respect to
any of the Obligations;
(c) extend the time or change the manner, place or
terms of payment of, or renew or amend the Lease, or other
instrument executed in connection with or evidencing the
Obligations or any part thereof, or amend in any manner any
agreement relating thereto;
(d) release or compromise, in whole or in part, or
accept full or partial payment for, any of the Obligations hereby
guaranteed, or any liability of any nature of any other party or
parties with respect to the Obligations or any security therefor;
(e) subordinate the payment of all or any part of the
Obligations to the payment of any liability of Lessee to creditors
of Lessee other than Lessor or Guarantor;
(f) enforce Lessor's security interest, if any, in all or
any properties securing any of the Obligations or any obligations
hereunder in order to obtain full or partial payment of the
Obligations then outstanding;
(g) release or fail to perfect, protect, or enforce
Lessor's security interest, if any, in all or any properties securing
any of the Obligations or any obligation hereunder, or permit any
substitution or exchange for any such property; and
(h) take or fail to take any other action of whatever kind
or character with respect to the Obligations, the Lease or any other
document or instrument, it being the intention of Guarantor that it
shall remain liable as primary obligor for the Obligations
notwithstanding any act, omission or thing which might, but for
the provisions hereof, otherwise operate as a legal or equitable
discharge of any guarantor.
5. Waivers. Guarantor hereby expressly waives:
(a) notice of acceptance of this Guarantee;
(b) notice of the existence or incurrence of any or all of
the Obligations;
(c) presentment, demand, notice of dishonor, notice of
intent to accelerate, notice of acceleration, protest, and all other
notices whatsoever except as expressly provided herein;
(d) any requirement that proceedings first be instituted
by Lessor against Lessee;
(e) all diligence in collection or protection of or
realization upon the Obligations or any part thereof, or any
obligation hereunder, or any collateral for any of the foregoing;
(f) any rights or defenses based on Lessor's election of
remedies, including any defense to Lessor's action to recover any
deficiency after a non-judicial sale;
(g) the occurrence of every other condition precedent to
which Guarantor might otherwise be entitled; and
(h) any right to require Lessor to marshall assets.
6. Representations and Warranties of Guarantor. Guarantor
represents and warrants to Lessor that:
(a) Guarantor (i) is duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Pennsylvania, (ii) has full corporate power and authority
to own and operate its properties and to conduct its business as
presently conducted, and full corporate power, authority and legal
right to execute, deliver and perform its obligations under this
Guarantee, (iii) is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which its
ownership or leasing of properties or the conduct of its business
requires such qualification, and (iv) all of the issued and
outstanding voting stock of Subsidiaries that are Lessees or are
approved "Additional Lessees" under the Lease is owned, directly
or indirectly, by Guarantor.
(b) This Guarantee has been duly authorized, executed
and delivered by Guarantor and is a legal, valid and binding
obligation of Guarantor, enforceable according to its terms (subject
as to enforcement of remedies to any applicable bankruptcy,
reorganization, moratorium, or other Laws or principles of equity
affecting the enforcement of creditors' rights generally).
(c) The execution, delivery and performance by
Guarantor of this Guarantee will not result in any violation of any
term of the articles of incorporation or the by-laws of Guarantor,
does not require stockholder approval or the approval or consent
of any trustee or holders of debt of Guarantor except such as have
been obtained prior to the date hereof, and will not conflict with
or result in a breach of any terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien
upon, any property or assets of Guarantor under, any indenture,
mortgage or other agreement or instrument to which Guarantor is
a party or by which it or any of its property is bound, or any
existing applicable law, rule, regulation, license, judgment, order
or decree of any government, governmental body or court having
jurisdiction over Guarantor or any of its activities or properties,
including, without limitation, any rule or order of any public utility
commission or other governmental body.
(d) There are no consents, licenses, orders,
authorizations or approvals of, or notices to or registrations with
any governmental or public body or authority which are required
in connection with the valid execution, delivery and performance
of, this Guarantee by Guarantor that have not been obtained or
made, and any such consents, licenses, orders, authorizations,
approvals, notices and registrations that have been obtained or
made are in full force and effect.
(e) Except as disclosed in writing to Agent by
Guarantor concurrently herewith or publicly disclosed in
Guarantor's 10-Q and/or 10-K filings with the Securities and
Exchange Commission, (i) there is no action, suit, proceeding or
investigation at law or in equity by or before any court,
governmental body, agency, commission or other tribunal now
pending or, to the best knowledge of Guarantor after due inquiry,
threatened against or affecting Guarantor or any property or rights
of Guarantor as to which there is a significant possibility of an
adverse determination, and which if adversely determined, may
have a material adverse effect on the financial condition or
business of Guarantor or which, if adversely determined could
materially impair the ability of Guarantor to perform its obligations
under this Guarantee, and (ii) there is no action, suit, proceeding
or investigation at law or in equity by or before any court,
governmental body, agency, commission or other tribunal now
pending or, to the best knowledge of Guarantor after due inquiry,
threatened which questions or would question the validity of this
Guarantee.
(f) Guarantor is not in default under or with respect to
any agreement or other instrument to which it is party or by which
it or its assets may be bound which would have a material adverse
effect on the financial condition of Guarantor or the ability of
Guarantor to perform its obligations under this Guarantee.
Guarantor is not subject to or in default under any order, award or
decree of any court, arbitrator, or other governmental authority
binding upon or affecting it or by which any of its assets may be
bound or affected which would have a material adverse effect on
the ability of Lessee to carry on its business as presently conducted
or to perform its obligations under this Guarantee.
(g) Guarantor has filed or caused to be filed all tax
returns which to the knowledge of Guarantor are required to be
filed, and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it, except for (i)
returns which have been appropriately extended and (ii) taxes,
fees, assessments or other charges, the amount or validity of which
is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of Guarantor.
(h) Guarantor and each of its Subsidiaries are in
compliance in all material respects with the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations thereunder insofar as ERISA, the Code and
such rules and regulations relate to any employee benefit plan as
defined in Section 3(3) of ERISA. No employee pension benefit
plan (as defined in Section 3[2] of ERISA) maintained by
Guarantor or any of its Subsidiaries for its employees and covered
by ERISA (a "Plan") had an "accumulated funding deficiency",
within the meaning of said term under Section 302 of ERISA, as
of the last day of the most recent fiscal year of such Plan, and
neither Guarantor nor any of its Subsidiaries has incurred with
respect to any Plan any liability to the Pension Benefit Guaranty
Corporation ("PBGC") which is material to the consolidated
financial condition of Guarantor or any of its Subsidiaries. For the
purpose of this subsection (viii), the term "Subsidiary" shall
include a Controlled Group of Corporations as that term is defined
in Section 1563 of the Code or Section 4.001 of ERISA.
(i) The financial statements of Guarantor furnished to
Lessor and Agent on or before the date hereof have been prepared
in accordance with GAAP and fairly present the financial condition
of Guarantor as of the date thereof. Since the date of such
financial statements there has been no material adverse change in
the financial condition or business of Guarantor which would
impair the ability of Guarantor to perform its obligations
hereunder.
7. Affirmative Covenants. Guarantor covenants and agrees
with Lessor, Agent and the Instrument Holders that, so long as this
Guarantee shall remain in effect Lessee will, unless Lessor and Agent
shall otherwise consent in writing:
(a) Compliance with Laws. Comply, and cause each of
its Subsidiaries to comply, in all material respects with all
applicable Laws, for which the failure to so comply could have a
material adverse effect on the operations of Guarantor as a whole
so as to adversely affect its capacity to perform its obligations
under this Guarantee, and such compliance shall include, without
limitation, paying before the same become delinquent all taxes
imposed upon it or its property, except to the extent contested
diligently and in good faith, and for which adequate reserves are
established.
(b) Maintenance of Existence; Licenses and Franchises.
Maintain its existence, and preserve and maintain all material
licenses, privileges, franchises, certificates, authorizations and
other permits and agreements necessary for the operation of its
business.
(c) Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance policies with respect to its
property and business in such amounts and against such casualties
and contingencies as is customary in its industry; provided that
nothing herein shall prejudice the right of Guarantor or any
Subsidiary thereof to self-insure for certain risks in accordance
with customary procedures.
(d) Additional Information. Guarantor shall furnish to
Agent: (i) within sixty (60) days of the end of each quarterly
fiscal period during the Term, unaudited quarterly financial
statements for Guarantor (including a balance sheet, income
statement, and such other reports as Agent may reasonably
request); (ii) within one hundred twenty (120) days of the end of
each fiscal year during the Term, annual financial statements for
Guarantor (and its consolidated Subsidiaries) audited by a
nationally recognized public accounting firm (including a balance
sheet, income statement and such other reports as Agent may
reasonably request); (iii) when issued or filed, copies of the most
recent 10-K for Guarantor, proxy statements, financial statements
and other reports filed by Guarantor with the Securities and
Exchange Commission or any national securities exchange or
market on which any of Guarantor's securities are traded or
quoted; (iv) from time to time upon Agent's request, an Officer's
Certificate stating that there exists no Event of Default (or event
or circumstance which with notice and or the passage of time
could mature into an Event of Default) under the Lease, this
Guarantee, and/or the Environmental Indemnity Agreement of even
date herewith executed by Guarantor or, if any such event or
circumstances does exist, specifying the nature and period of
existence thereof and what action Guarantor proposes to take with
respect thereto; and (v) from time to time at the request of Agent,
and in any event simultaneously with delivery of the annual
financial statements of Guarantor, a statement certified by a senior
financial officer of Guarantor certifying (A) that Guarantor is in
compliance with all of the financial covenants (both affirmative and
negative) contained in this Guarantee, and (B) Leverage Ratio,
Tangible Net Worth, Current Ratio, and NOP/Interest Charges
Ratio as of the end of the preceding quarter or fiscal year, or for
the preceding quarter or fiscal year, as applicable. Guarantor's
fiscal year is a period of approximately fifty-two (52) weeks
ending on the Saturday falling nearest to January 31.
(e) Review of Records. Further, Guarantor will permit
the duly authorized representatives of Agent at all reasonable times
upon at least ten (10) days notice to examine the books and records
of Guarantor and its Subsidiaries, and take memoranda and
extracts therefrom; provided, that information, including financial
information, which is non-public and confidential or proprietary in
nature disclosed to Agent (as a result of any examination of the
books and records of Guarantor and its Subsidiaries or pursuant to
subsection (d) above or otherwise) will be kept confidential and
will not, without the prior written consent of Guarantor, be
disclosed in any manner whatsoever, in whole or in part, except
that Agent shall be permitted to disclose such information (i) to the
Instrument Holders (who shall be bound by the same
confidentiality requirements upon receipt of such information), (ii)
to any regulatory agencies having jurisdiction over Agent or any
Instrument Holder in connection with their regulatory functions,
and (iii) as required by Law or court order, or in connection with
any investigation or proceeding arising out of the transactions
contemplated by this Guarantee.
(f) Taxes, Charges, Etc. Duly pay and discharge, or
cause to be paid and discharged, when due, all taxes, assessments
and other governmental charges imposed upon it or any Subsidiary
that is an approved Additional Lessee and its and their properties,
or any part thereof or upon the income or profits therefrom, as
well as all claims for labor, materials or supplies which if unpaid
could have a material adverse effect of the operations of
Guarantor, as a whole, so as to adversely affect Guarantor's
capacity to perform its obligations under this Guarantee, except
such items as are being in good faith appropriately contested by
Guarantor or any such Subsidiary and for which adequate reserves
are being maintained in accordance with GAAP.
8. Negative Covenants. Guarantor covenants and agrees with
Lessor and Agent that, so long as this Guarantee shall remain in effect
Guarantor will not, unless Lessor and Agent shall otherwise consent in
writing:
(a) The Guarantor will not, nor will it permit any of its
Subsidiaries to, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution). The Guarantor will
not make, and will not permit any of its Subsidiaries to make, any
acquisition (in one transaction or a series of related transactions)
in excess of $50,000,000. The Guarantor will not, and will not
permit any of its Subsidiaries to, convey, sell, lease, transfer or
otherwise dispose of (in one transaction or a series of
transactions), all or a substantial part of its business or assets,
whether now owned or hereafter acquired (including, without
limitation, receivables and leasehold interests, but excluding (i) any
inventory or other assets (including real property) sold or disposed
of in the ordinary course of business and (ii) obsolete or worn-out
property, tools or equipment no longer used or useful in its
business). Notwithstanding the foregoing provisions:
(1) any Subsidiary of the Guarantor may be
merged or consolidated with or into: (i) the Guarantor if
the Guarantor shall be the continuing or surviving
corporation or (ii) any other such Subsidiary; provided that
if any such transaction shall be between a Subsidiary and
a wholly-owned Subsidiary, the wholly-owned Subsidiary
shall be the continuing or surviving corporation;
(2) any such Subsidiary may sell, lease, transfer
or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Guarantor or a
wholly-owned Subsidiary of the Guarantor; and
(3) Guarantor may sell, lease, transfer or
otherwise dispose of all or any of its assets to another
Lessee.
(b) Leverage Ratio. Permit the Leverage Ratio to
exceed 1.5 to 1.0.
(c) Tangible Net Worth. Permit its Tangible Net
Worth, on any date of determination thereof, to be less than the
sum of (x) $520,000,000.00 plus (y) 25% of the aggregate amount
of Net Earnings for each quarterly period occurring during the
period commencing January 29, 1995, and ending on the date that
is the last day of Guarantor's fiscal quarter next preceding such
date of determination.
(d) Current Ratio. Permit the ratio of consolidated
current assets of Guarantor and its Consolidated Subsidiaries over
consolidated current liabilities of Guarantor and its Consolidated
Subsidiaries to be at any time less than 1 to 1. For purposes
hereof, the terms "current assets" and "current liabilities" shall
have the respective meanings assigned to them by GAAP.
(e) NOP/Interest Charges Ratio. At any time permit the
NOP/Interest Charges Ratio to be less than 2.5 to 1.0.
(f) Lines of Business. Engage, or permit any of its
Subsidiaries that is a Lessee or an approved Additional Lessee to
engage, to any substantial extent in any line or lines of business
activity other than the business of owning and operating retail
stores and auto service centers (including functions that are directly
related thereto and supportive thereof).
(g) Change of Control. Permit the occurrence of any
Change of Control with respect to Guarantor; provided that a
Change of Control as to Guarantor shall not be a default hereunder
if, as of the date such Change of Control occurs, the senior
unsecured debt of Guarantor is rated BBB or better by Standard &
Poors Corporation and/or Baa2 or better by Moody's Investors
Services, and the Guarantor or its securities are not in a "credit
watch" status with either such rating service.
(h) Judgments. Permit or acquiesce in the entry of any
final unappealable judgment or order for the payment of money in
excess of $1,000,000.00 against Guarantor or any of its
Subsidiaries; provided, however, that any such judgment or order
shall not be an Event of Default if and for so long as (x) the entire
amount of such judgment or order is covered (subject to customary
deductibles) by a valid and binding policy of insurance between the
defendant and the insurer covering payment thereof and (y) such
insurer, which shall be rated at least "B+/X" by A. M. Best
Company, has been notified of, and has not disputed the claim
made for payment of the amount of such judgment or order.
(i) Limitation on Liens. The Guarantor will not, nor
will it permit any of its Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except:
(1) Liens imposed by any governmental
authority for taxes, assessments or charges not yet due or
which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are
maintained on the books of the Guarantor or any of its
Subsidiaries, as the case may be, in accordance with
GAAP;
(2) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue for
a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings;
(3) pledges or deposits under worker's
compensation, unemployment insurance and other social
security legislation;
(4) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the
ordinary course of business;
(5) Liens on assets of corporations which
become Subsidiaries of the Guarantor after the date of this
Agreement, provided that such Liens are in existence at the
time the respective corporations become Subsidiaries of the
Guarantor and were not created in anticipation thereof;
(6) Liens upon real property, fixtures and
equipment (excluding equipment that constitutes inventory)
acquired after the date hereof (by purchase, construction or
otherwise) by the Guarantor or any of its Subsidiaries;
(7) Liens upon the assets of the Guarantor and
its Subsidiaries in existence on the date hereof; and
(8) any extension, renewal or replacement of the
foregoing, provided, however, that the Liens permitted
hereunder shall not be spread to cover any additional
Indebtedness or property (other than a substitution of like
property).
9. Payments. Each payment by Guarantor to Lessor under this
Guarantee shall be made by transferring the amount thereof in
immediately available U.S. funds, without set-off or counterclaim, to
Lessor in the same manner as rent is payable by Lessee under the Lease.
10. Costs and Expenses. Guarantor hereby agrees to pay all
reasonable legal and other costs and expenses incurred by Lessor and
Agent or any Instrument Holder in seeking to protect or enforce any of
Lessor's, Agent's or such Instrument Holder's rights or remedies with
respect to the Obligations and this Guarantee.
11. Subrogation and Other Rights. Guarantor shall not assert,
enforce, or otherwise exercise (a) any right of subrogation to any of the
rights or liens of Lessor or any other beneficiary against Lessee or any
other obligor on all or any part of the Obligations, or (b) any right of
recourse, reimbursement, contribution, indemnification, or similar right
against Lessee or any other obligor on all or any part of the Obligations
or any guarantor thereof, and Guarantor hereby irrevocably waives any
and all of the foregoing rights it may have against the Lessee by reason
of Guarantor's performance under this Guarantee until all amounts due
hereunder have been paid.
12. No Waiver. No delay on Lessor's or Agent's part in the
exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Lessor or Agent of any right or remedy shall
preclude the other or further exercise thereof or the exercise of any other
right or remedy.
13. Parties; Successors and Assigns. This Guarantee shall inure
to the benefit of Lessor, Agent, the Purchasers and Instrument Holders,
and their respective successors, assigns and transferees, and shall be
binding upon Guarantor and its respective successors and assigns.
Guarantor may not delegate any of its duties under this Guarantee without
the prior written consent of Lessor and Agent or any Person to whom
Lessor has assigned this Guarantee. Lessor may assign Lessor's rights
and benefits under this Guarantee to any Person, including, without
limitation, to any Instrument Holder, but only in connection with an
assignment of Lessor's rights under the Lease. Upon any assignment by
Lessor of this Guarantee, and upon any subsequent assignment or
assignments by Lessor's assignee or future assignees, such assignee or
future assignee shall succeed to all of the rights, benefits, remedies and
privileges of this Guarantee and shall for all purposes hereof be deemed
to be "Lessor" hereunder to the exclusion of the assigning Lessor. Upon
a request therefor, accompanied by copies of documentation evidencing
such assignee's entitlement thereto, Guarantor agrees to make such
disclosures and to take such action and execute such instruments as any
such assignee or future assignee may reasonably require to more fully
protect, preserve and assure to such assignee or future assignee all of the
rights, benefits, remedies and privileges provided hereby.
14. Defaults.
(a) If any one or more of the following events shall
occur:
(i) If an Event of Default (as defined in the
Lease) shall occur under the Lease; or
(ii) If Guarantor shall fail to pay any part of the
Obligations within five (5) Business Days after demand is
made therefor under this Guarantee;
(iii) If any representations or warranties made by
Guarantor herein shall be false or misleading in any
material respect on the date when made;
(iv) If there shall be a default in the performance
or observance of any other term, covenant or condition
contained in this Guarantee (other than a default described
in subparagraph (ii) above), which default shall continue
for more than thirty (30) days after there has been given to
Guarantor by the Lessor or Agent a written notice pursuant
to Section 15 of such default or breach which cure period
shall be extended for such reasonable period as may be
required to afford Guarantor the opportunities to complete
its cure of the default or breach in question so long as
Guarantor commences its curative efforts within such thirty
(30) day period and thereafter diligently pursues such
curative efforts to completion;
(v) If a custodian, receiver, liquidator, or trustee
of Guarantor or any Subsidiary, or of any of the property
of either, is appointed or takes possession, and such
appointment or possession remains in effect for more than
sixty (60) days; or Guarantor or any Subsidiary generally
fails to pay its debts as they become due or admits in
writing its inability to pay its debts as they mature; or
Guarantor or any Subsidiary is adjudicated bankrupt or
insolvent; or an order for relief is entered under the
Federal Bankruptcy Code against Guarantor or any
Subsidiary; or any of the property of either is sequestered
by court order and the order remains in effect for more
than sixty (60) days; or a petition is filed against Guarantor
or any Subsidiary under the bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution
or liquidation law of any jurisdiction, whether now or
subsequently in effect, and is not stayed or dismissed
within sixty (60) days after filing;
(vi) If Guarantor or any Subsidiary files a
petition in voluntary bankruptcy or seeking relief under any
provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation
law of any jurisdiction, whether now or subsequently in
effect; or consents to the filing of any petition against it
under any such law; or consents to the appointment of or
taking possession by a custodian, receiver, trustee or
liquidator of Guarantor, or a Subsidiary, or of all or any
part of the property of either;
(vii) The occurrence of an uncured event of
default under any instrument securing or evidencing any
Indebtedness in excess of $5,000,000 of the Guarantor or
any of its Subsidiaries;
then, a "Default" shall be deemed to exist hereunder and an
"Event of Default" shall be deemed to exist under the Lease. In
any such event, and in addition to all other rights and remedies at
law and in equity available to Lessor as a result of such event,
Guarantor shall immediately pay or cause to be paid to Lessor,
without notice or demand, the amounts due and payable to Lessor
by Lessee under the Lease, either in respect of the Offer Purchase
Price with respect the "Property" covered thereby or as a
Contingent Rent Payment. It is understood that any payments
made by Guarantor to Lessor under this Guarantee shall not
release or discharge Guarantor from its obligations hereunder until
all of the Obligations have been fully and finally paid to Lessor.
All amounts payable by Guarantor hereunder shall be credited
against corresponding amounts otherwise payable by Lessee under
the Lease for the remainder of its term if the Lease remains in
effect.
(b) Any payment made by Guarantor under this
Section 14 shall be deemed to be an agreed guarantee payment
without regard to the status of the Lease or Lessee's rights
thereunder; and in no event and under no circumstance shall any
such payment be repayable or refundable to Guarantor for any
reason or under any circumstance except in the case of duplicate
payments.
(c) ALL AMOUNTS PAYABLE BY GUARANTOR
UNDER THIS GUARANTEE ARE PAYABLE WITHOUT
OFFSET, COUNTERCLAIM OR DEDUCTION OF
WHATEVER KIND AND ARE NOT CONDITIONED UPON,
AND CANNOT BE AFFECTED IN ANY WAY BY, ANY
FUTURE EVENT, OCCURRENCE OR ACTION BY ANY
PARTY, AND GUARANTOR UNDERSTANDS AND AGREES
THAT ALL SUCH AMOUNTS SHALL BE PAYABLE
NOTWITHSTANDING ANY FACT OR CIRCUMSTANCE
(INCLUDING, WITHOUT LIMITATION, THE BANKRUPTCY
OF OR A SIMILAR EVENT AFFECTING LESSEE) AT ANY
TIME AFFECTING LESSEE OR THE LEASE, WHETHER
CAUSED OR CONTRIBUTED TO BY LESSEE, LESSOR OR
ANY OTHER PARTY.
15. Notices. Any notice required to be delivered hereunder
shall be deemed delivered, whether actually received or not, one (1)
Business Day after deposit with a nationally recognized, courier service
for overnight delivery addressed to the parties hereto at the respective
addresses specified below, or at such other address as they may have
subsequently specified by written notice. The addresses for notices to
Guarantor, Lessor, and Agent are as follows:
If to Lessor: State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Fourth Floor
Boston, MA 02110
Attention: Donald E. Smith
Vice-President
Fax No. (617) 664-5371
with a copy to: Bingham, Dana & Gould LLP
100 Pearl Street
Hartford, CT 06103
Attention: James G. Scantling, Esq.
Fax No. (860) 527-5188
If to Guarantor: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention: Michael Holden
Senior Vice-President -
Finance
Fax No. (215) 227-9533
with a copy to: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention: Ronald M. Neifield,
Esq.
Real Estate Counsel
Fax No. (215) 229-5076
If to Agent: Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: EFL/CBL Credit Head
Fax No. (914) 899-7308
with a copy to: Brown McCarroll & Oaks Hartline
300 Crescent Court, Suite 1400
Dallas, Texas 75201
Attention: Charles W. Morris,
Esq.
Fax No. (214) 999-6170
Notices sent by any other method (including personal delivery, certified
mail, and facsimile transmission) shall be deemed delivered when actually
received by the addressee. Any notice of change of address shall be
effective only upon actual receipt, regardless of delivery method, and such
new address shall be effective as to notices given by the other parties
commencing ten (10) days after such change of address notice is received
by such parties. No party may establish an official address for notice
outside the continental United States.
16. Term. This Guarantee is not limited to any particular
period of time but shall continue in full force and effect until all of the
Obligations have been fully and finally paid or have been otherwise
discharged by Lessee, and Guarantor shall not be released from any
obligations or liability hereunder until such full payment or discharge shall
have occurred, whereupon this Guarantee shall terminate and be of no
further force or effect; provided, however, that if, pursuant to any
bankruptcy, insolvency or other debtor relief law or any order or decision
thereunder any payment is rescinded or Lessor is required to restore any
payment or part thereof received in satisfaction of the Obligations or any
part thereof, the term "Obligations" as used herein includes such payment
to the extent rescinded or restored, and, to the extent of the payment
rescinded or restored, any prior release or discharge of this Guarantee or
of Guarantor shall be without effect and this Guarantee shall remain in full
force and effect notwithstanding such release or discharge.
17. GOVERNING LAW. THIS GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF PENNSYLVANIA WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES.
18. WAIVER OF JURY TRIAL. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND FOR THE PURPOSE
OF REDUCING THE TIME AND EXPENSE OF LITIGATION,
GUARANTOR AND LESSOR WAIVE TRIAL BY JURY IN ANY
ACTION BROUGHT ON, UNDER, OR BY VIRTUE OF THIS
GUARANTEE.
IN WITNESS WHEREOF, intending to be legally bound, the
parties hereto have caused this Lease Guarantee to be executed by their
respective officers thereunder duly authorized, as of the date first written
above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO LEASE GUARANTEE
GUARANTOR:
THE PEP BOYS - MANNY,
MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO LEASE GUARANTEE
LESSOR:
STATE STREET BANK
AND TRUST
COMPANY, a Massachusetts
trust company
(acting in its capacity as
Trustee under the
Declaration of Trust and not
in its individual
capacity)
By:
Donald E. Smith, Vice President
SIGNATURE PAGE ATTACHED TO LEASE GUARANTEE
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation, as
administrative
agent for the Purchasers and
Instrument Holders
By:
Name:
Title:
SCHEDULE 1
FORM OF SOLVENCY CERTIFICATE
The undersigned, the of THE PEP BOYS - MANNY, MOE & JACK, a Pennsylvania
corporation (the "Guarantor"), hereby certifies in his capacity as such officer
and not personally, that he has reviewed the Lease Guarantee dated as of
February __, 1997, among Guarantor, STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, as Trustee and not
individually ("Lessor"), and CITICORP LEASING, INC., a Delaware
corporation ("Agent"). The undersigned hereby further certifies to Lessor
and Agent (as defined in the Lease Guarantee) that:
1. There has been no material adverse change in the financial
position of the Guarantor since .
2. The Guarantor is solvent and able to pay its debts as they
mature, has capital sufficient to carry on its business and has assets having
a present fair saleable value greater than the amount of the Guarantor's
total liabilities (including known contingent liabilities).
3. The Guarantor does not contemplate filing a petition in
bankruptcy or for reorganization under the federal bankruptcy code, and
there are (to the knowledge of the undersigned) no bankruptcy or
insolvency proceedings threatened against the Guarantor.
IN WITNESS WHEREOF, the undersigned has executed this
certificate this _____ day of ____________, 19__.
Name:
Title:
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT
("Agreement"), made effective as of the 28th day of February, 1997, by
THE PEP BOYS - MANNY, MOE & JACK, a Pennsylvania corporation,
PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC., a
Delaware corporation, and THE PEP BOYS
MANNY MOE
& JACK OF
CALIFORNIA, a California corporation (collectively, "Indemnitor") for
the benefit of STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not individually but solely in its capacity as
Trustee under that certain Declaration of Trust (herein so called) dated of
even date herewith, ("Trustee"), STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company (in its individual capacity,
"Trust Company"), CITICORP LEASING, INC., a Delaware corporation
("Agent"), and those persons (including, without limitation, Citicorp
Leasing, Inc., and Bank of Montreal) who are the "Instrument Holders"
and/or "Purchasers" from time to time under that certain Transaction
Agreement of even date herewith among Indemnitor, Trustee, Agent and
Citicorp Leasing, Inc., and Bank of Montreal as the initial "Instrument
Holders" and initial "Purchasers". (Trustee, Trust Company, Agent,
Purchasers and the Instrument Holders being referred to herein
collectively as the "Indemnitees"). The term "Indemnitees" shall also
include any successor or assign of Trustee or Agent and any other Person
that may from time to time be included within the meaning of the term
"Instrument Holder" or "Purchaser" as defined in the Transaction
Agreement, together with the partners, shareholders, officers, directors,
agents, representatives, attorneys, successors and assigns of any of the
foregoing, and the term "Indemnitor" shall also include any successor or
assign of Indemnitor.
Contemporaneously herewith, Trustee, as lessor, and Indemnitor,
as lessee, have entered into a certain Master Lease (as amended,
supplemented or otherwise modified from time to time, the "Lease"),
which Lease is intended to cover various properties and facilities to be
added to the coverage of the Lease by supplements executed from time to
time. The properties and facilities affected by the Lease from time to
time are herein referred to collectively as the "Property").
NOW, THEREFORE, in consideration of the premises and the
sum of One Dollar ($1.00) in hand paid by Indemnitees to Indemnitor,
receipt whereof is hereby acknowledged and in order to induce Trustee to
enter into the Lease with Indemnitor, and to induce Trustee, Agent and
Instrument Holders and Purchasers to enter into and incur their obligations
under the Transaction Agreement and the other Transaction Documents,
Indemnitor, intending to be legally bound, hereby agrees as follows:
1. Definitions. For purposes hereof, the following terms shall
have the following meanings:
"Environmental Laws" means any and all federal, state and local
Laws, including, without limitation, any and all requirements to
register underground storage tanks, relating to: (i) emissions,
discharges, spills, releases or threatened releases of pollutants,
contaminants, Hazardous Materials (as hereinafter defined), or
hazardous or toxic materials or wastes into ambient air, surface
water, groundwater, watercourses, publicly or privately owned
treatment works, drains, sewer systems, wetlands, septic systems
or onto land; (ii) the use, treatment, storage, disposal, handling,
manufacturing, transportation, or shipment of Hazardous Materials
(as defined below), materials containing Hazardous Materials or
hazardous and/or toxic wastes, material, products or by-products
(or of equipment or apparatus containing Hazardous Materials), or
(iii) pollution or the protection of the environment;
"Hazardous Materials" means (1) hazardous materials, hazardous
wastes, and hazardous substances as those terms are defined under
any Environmental Laws, including, but not limited to, the
following: the Hazardous Materials Transportation Act, 49 U.S.C.
1801 et seq., as amended from time to time ("HMTA"), the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et
seq., as amended from time to time ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act,
42 U.S.C. 9601 et seq., and as further amended from time to
time ("CERCLA"), the Clean Water Act, 33 U.S.C. 1251 et
seq., as amended from time to time ("CWA"), the Clean Air Act,
42 U.S.C. 7401 et seq., as amended from time to time ("CAA")
and/or the Toxic Substances Control Act, 15 U.S.C. 2601 et
seq., as amended from time to time ("TSCA"); (2) petroleum and
petroleum products including crude oil and any fractions thereof;
(3) natural gas, synthetic gas, and any mixtures thereof;
(4) asbestos and/or any material which contains any hydrated
mineral silicate, including, but not limited to, chrysotile, amosite,
crocidolite, tremolite, anthophylite and/or actinolite, whether
friable or non-friable; (5) PCBs, or PCB-containing materials, or
fluids; (6) radon; (7) any other hazardous or radioactive substance,
material, pollutant, contaminant, or waste; and (8) any substance
with respect to which any federal, state or local Environmental
Law or governmental agency requires environmental investigation,
monitoring or remediation.
"Event of Default" means any default, failure, or refusal by
Indemnitor to pay any amount and/or perform any obligation under
this Agreement, which default, failure, or refusal remains uncured
(i) in the case of matters that can be cured solely by the payment
of money, five (5) Business Days after written notice of such
failure to pay is given to Indemnitor by one or more of the
Indemnitees, and (ii) in the case of any other matter, thirty (30)
days after written notice of such failure to perform is given to
Indemnitor by one or more Indemnitees; provided, that in the case
of matters covered by clause (ii) above such cure period will be
extended, so long as Indemnitor has commenced curative efforts
within such thirty (30) day period and is diligently pursuing such
efforts, Indemnitor delivers periodic progress reports on such
curative efforts to the Indemnitees, and Agent determines that the
interests of the Indemnitees will not be materially adversely
affected by such extension.
"Environmental Event" shall mean any environmental event or the
discovery of any environmental condition in, on, beneath or
involving the Property or any portion thereof (including, but not
limited to, the presence, emission or release of Hazardous
Materials and the violation of any applicable Environmental Law)
that in the sole but reasonable judgment of Agent (after
consultation with the Majority Holders, if deemed necessary or
prudent by the Agent), if not properly mitigated or remediated,
might have a material adverse effect on the use, occupancy,
possession, value or condition of the Property or any portion
thereof.
Any other capitalized terms used but not defined in this Agreement shall
have the meanings assigned thereto in the Transaction Agreement or the
Lease, as the case may be.
2. Basic Covenants.
(a) Indemnitor shall cause the Property and every
portion thereof at all times to be operated, used, and maintained in
compliance with all applicable Environmental Laws. Further, Indemnitor
shall not conduct, permit, or authorize, or permit to be conducted,
permitted, or authorized, the manufacturing, emission, generation,
transportation, treatment, storage, or disposal on the Property or any part
thereof of any Hazardous Materials without the prior written consent of
Agent. Agent shall have the right to withhold consent thereto for any
reason, or without cause, in its discretion. The foregoing provisions shall
not, however, be deemed to prohibit, or to require Agent's consent for,
the storage, holding for sale, or use on the Property of Hazardous
Materials in the ordinary course of business of retail sales of automobile
parts and supplies, as well as the business of operating automotive service
centers, so long as such use is at all times carried out in conformity with
all Environmental Laws, but the indemnification obligations of Indemnitor
hereunder shall apply to all such materials.
(b) Indemnitor acknowledges and agrees that its
obligations hereunder with respect to Hazardous Materials and
Environmental Laws are intended to extend to and cover all matters and
conditions in, on, under, beneath, with respect to, affecting, related to, in
connection with or involving the Property or any part thereof, without
regard to whether Indemnitor has actually caused or participated in the
event or circumstance giving rise to the matter in question, and without
regard to whether the matter in question arose prior to or during the Term
of the Lease; provided, however, that the Indemnitor shall not be required
to indemnify any Indemnitee hereunder against any such claims to the
extent arising solely as a result of the fraud, gross negligence or willful
misconduct of the Indemnitee in question. IT IS THE EXPRESS
INTENT AND UNDERSTANDING OF THE PARTIES THAT THE
FOREGOING PROVISION DOES CONSTITUTE AN
INDEMNIFICATION BY THE INDEMNITOR OF THE
INDEMNITEES OF AND FROM LOSSES ARISING OUT OF THE
NEGLIGENCE OF THE RESPECTIVE INDEMNITEES OR ANY OF
THEM; PROVIDED, HOWEVER, THAT THE PARTIES AGREE
AND ACKNOWLEDGE THAT NO INDEMNITEE SHALL BE
ENTITLED TO INDEMNIFICATION HEREUNDER FOR
DAMAGES OR LOSSES TO THE EXTENT CAUSED BY THE
FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE INDEMNITEE IN QUESTION.
(c) Nothing in this Agreement shall be deemed to
preclude Indemnitor from contesting by appropriate proceedings, (i) the
validity of any order or directive issued by any governmental authority,
(ii) the application of any Environmental Law to a particular factual
situation, or (iii) the accuracy or validity of any allegation relating to the
matters covered hereby; provided that any such proceedings (A) prevent
the sale, forfeiture, or the loss of the Property or any part thereof during
the pendency of such contest, (B) do not subject any Indemnitee to the
risk of civil or criminal liability for failure to comply with the matter
being contested during the pendency or such contest, and (c) Indemnitor
provides Indemnitees with such further information regarding the matter
being contested and/or assurances against loss, liability, or damage as may
be reasonably required by Indemnitees under the circumstances.
3. Indemnity. Indemnitor undertakes to protect, indemnify,
and save harmless each of the Indemnitees from any and all liability, loss,
cost or damage that Indemnitees or any of them may suffer as a result of
claims, demands, liabilities, costs or judgments against any or all of them
(including, without limitation, claims of contribution from any other
person or entity that has or might have joint and several liability therefor)
as a result of a claim, demand, liability, cost or judgment made against
Indemnitees or any of them by any third party, including, without
limitation, a governmental authority, arising from (i) any violation of any
Environmental Law relating to or affecting the Property or any part
thereof, (ii) the depositing, storing, disposing, transporting, emitting,
burying, dumping, injecting, using, testing, spilling, leaking or other
placing or releasing in or on the Property or any part thereof, or in or on
any other property in the vicinity of the Property, to the extent such
actions on or in other property in the vicinity has an adverse impact upon
the Property itself or to the extent that any such actions on or in the
Property has an adverse impact upon other property in the vicinity of the
Property, of Hazardous Materials, and/or (iii) reasonable costs incurred
in connection with settlement or attempted settlement in lieu of litigation
or other proceedings with respect to any such matters (subject to
paragraph 7 below), including, but not limited to:
(a) Liability for costs of removal or remedial action,
incurred by the United States Government or any state or local
government, or response costs incurred by any other person, or
damages from injury to, destruction of, or loss of natural
resources, including the reasonable costs of assessing such injury,
destruction or loss, incurred pursuant to the CERCLA or any
comparable federal, state, or local statute;
(b) Liability for cost and expenses of site assessment,
testing, laboratory fees, monitoring, abatement, correction or
clean-up, fines, damages, response costs or penalties which arise
from the provisions of any other Environmental Law, whether
state, federal, local, or otherwise; and
(c) Liability for personal injury or property damage
arising under any statutory or common-law theory, including
damages assessed for the maintenance of the public or private
nuisance, response costs or for the carrying on of an abnormally
dangerous activity.
Nothing in this Agreement shall be deemed or construed as an admission
by Indemnitor of liability or responsibility hereunder for any violation or
alleged violations of Environmental Laws as between Indemnitor and any
governmental agency or other third party, notwithstanding that, as
between Indemnitor and the Indemnitees, Indemnitor has responsibility
hereunder for such matter and for indemnifying the Indemnitees from the
consequences thereof.
4. Costs. Indemnitor's liability hereunder shall, without
however limiting the indemnity provided in the preceding paragraph,
extend to and include all reasonable costs, expenses and attorneys' fees
incurred or sustained by Indemnitees or their respective successors or
assigns in making any investigation on account of any such claim,
demand, loss, liability, cost, charge, suit, order, judgment or adjudication,
in prosecuting or defending any action brought in connection therewith,
in obtaining or seeking to obtain a release therefrom and in enforcing any
of the agreements herein contained.
5. Delivery of Information. Indemnitor shall promptly provide
Indemnitees with copies that it receives of all communications, permits or
agreements with any governmental authority or agency (federal, state or
local) or any private entity relating in any way to the presence, release,
threat of release, placement on or in the Property or any portion thereof
or the manufacturing, emission, generation, transportation, storage,
treatment, or disposal at the Property, of any Hazardous Materials and/or
the violation, alleged violation, or potential violation of any Environmental
Law, except for the presence and proper use of those Hazardous Materials
specifically permitted on the Property pursuant to Paragraph 2 hereof.
Indemnitees shall also use reasonable efforts to provide Indemnitor with
copies of all communications from any governmental authority or private
entity with respect to the Property and relating to Hazardous Materials or
Environmental Laws (unless it is apparent that Indemnitor or an affiliate
thereof has independently received such communication); provided that the
failure of any Indemnitee to do so shall not adversely effect Indemnitees'
rights and protections hereunder.
6. Test Results. Without limitation of the inspection rights as
elsewhere set out herein, if an Indemnitee at any time reasonably believes
that an Environmental Event may have occurred, the Indemnitee may, at
Lessee's expense, conduct tests of the Property or portions thereof;
provided, however, that in connection therewith: (i) so long as no Event
of Default pursuant to Sections 19(a)(i), (vii), (x), (xi), (xii) or (xiv) of
the Lease exists, no Event of Default under Section 19(a)(iv) of the Lease
relating to the failure to have required insurance coverage in place (as
opposed to a failure to satisfy any other Insurance Requirement) exists,
and Lessor or Agent have not taken remedial actions relating to the
possession or ownership of such Parcel as a result of any other Event of
Default that may then exist under the Lease, the applicable Indemnitee
will first notify Indemnitor of its desire for tests to be conducted and
request that Lessee perform such tests and provide the results thereof to
Indemnitees, and so long as Indemnitor promptly causes such tests to be
conducted, the Indemnitees will not perform such tests directly, and (ii) in
the conduct of any tests that any Indemnitee may conduct directly such
Indemnitee will take reasonable steps to interfere as little as reasonably
practicable with the conduct of Lessee's business within the Property.
7. Procedural Matters. The procedural provisions of Sections
8(b)-(d) of the Lease are incorporated herein by this reference, and shall
govern the obligations of the Indemnitor and Indemnitees with respect to
matters of notice of indemnified claims, defense of actions, appointment
of counsel, and similar matters. Such provisions shall remain applicable
to this Agreement whether or not the Lease is then in effect. For
purposes thereof the term "Indemnified Party" in such Section 8(b)-(d)
shall be deemed to mean "Indemnitee" hereunder and references to
"Lessee" in such Section 8(b)-(d) shall be deemed to mean "Indemnitor"
hereunder.
8. Remediation.
(a) Indemnitees (or any of them) shall have the right,
but not the obligation, subsequent to any Event of Default by Indemnitor
hereunder, without in any manner limiting Indemnitees' other rights and
remedies under this Agreement, to enter onto the Property or to take such
other actions as Indemnitees deem necessary or advisable to clean up,
remove, resolve or minimize the impact of, or otherwise deal with, any
Hazardous Materials or a violation of Environmental Laws at the Property
upon at least ten (10) days prior written notice to the Lessee (unless an
emergency exists, in which case only such written notice as shall be
reasonably practicable under the circumstances shall be necessary).
Lessee will always be permitted to have a representative of Lessee
accompany the representative or agent of the Indemnitees in question in
any inspection if Lessee desires to do so. All reasonable costs and
expenses paid or incurred by Indemnitees in the exercise of any such
rights shall be payable by Indemnitor thirty (30) days after demand.
(b) In the event that Indemnitor is engaged in the
remediation of any violation of Environmental Laws and/or presence of
Hazardous Materials at the Property at the time an Event of Default
occurs under the Transaction Agreement, the Declaration of Trust, and/or
the Lease, and the Event of Default in question does not arise out of such
violation of Environmental Laws and/or presence of Hazardous Materials
or the remediation actions or inactions of Indemnitor with respect thereto,
then Indemnitees agree that Indemnitor shall be permitted to control the
completion of such remediation activities so long as Indemnitor diligently
proceeds therewith in a manner reasonably satisfactory to Indemnitees and
Indemnitor keeps Indemnitees reasonably informed as to the progress of
such remediation efforts. In any such event, however, this Agreement and
the indemnification rights provided for herein shall remain in full force
and effect.
9. Independent Obligation. As to the Purchasers, Instrument
Holders and the Agent, this Agreement is given solely to protect such
parties against environmental matters, and not as additional security for,
or as a means of repayment of, the amounts owed to the Instrument
Holders, and as to Lessor this Agreement is given to protect Lessor
against environmental matters and not as security for Indemnitor's
obligations under the Lease. The obligations of the Indemnitor to
Indemnities under this Agreement are independent of, and shall not be
measured or affected by (i) any amounts at any time owing under the
Transaction Documents, (ii) the sufficiency or insufficiency of any
collateral (including, without limitation, the Property) given to secure
repayment of the amounts due to the Instrument Holders, (iii) the
consideration given any party in order to acquire the Property, or any
portion thereof, in any foreclosure or other sale, (iv) the modification,
expiration, release or termination of the transactions contemplated by the
Transaction Agreement or any document or instrument relating thereto, (v)
the discharge or repayment in full of amounts due under the Transaction
Agreement (including, without limitation, by amounts paid or credit bid
at a foreclosure sale or by discharge in connection with a deed in lieu of
foreclosure under the Transaction Mortgage), or (vi) the expiration or
termination of the Lease or the performance by Indemnitor of its
obligations thereunder. Notwithstanding anything herein to the contrary,
Indemnitor shall not be liable to Indemnitees hereunder in respect of any
Hazardous Materials that are first manufactured, emitted, generated,
treated, stored, or disposed of on the Property, or any violation of
Environmental Laws that first occurred on or with respect to the Property
after the date on which the Lease is terminated and Lessee surrenders
possession of the Property in accordance with the terms of the Lease
(including, without limitation, the obligation to deliver an acceptable
environmental assessment of the Property upon surrender) except to the
extent such manufacture, emission, generation, treatment, storage,
disposal, or violation is actually caused by Indemnitor or those for whose
actions Indemnitor is legally responsible.
10. Payment on Demand. All obligations of the Indemnitor
hereunder shall be payable on demand, and any amount due and payable
hereunder to Indemnitees by Indemnitor which is not paid within thirty
(30) days after written demand therefor from Indemnitee with an
explanation of the amounts demanded shall, to the extent permitted by
applicable law, bear interest from the date of such demand at the Default
Rate (as defined in the Lease).
11. Subrogation. If Indemnitor fails to perform its obligations
under this Agreement (after expiration of all applicable grace, notice,
and/or cure periods), Indemnitees shall be subrogated to, and Indemnitor
hereby assigns to Indemnitees any indemnification or contributions rights
Indemnitor may have from or against any present, future or former
owners, tenants, or other occupants or users of the Property (or any
portion thereof), including, without limitation, any subsidiary or affiliate
of Indemnitor; provided, that such assignment shall not be deemed to
exclude Indemnitor from the direct enforcement of such rights for its own
benefit, either concurrently with or separate from the enforcement thereof
by Indemnitees.
12. Inspections Shall Not Affect Liability. Neither any
environmental audits nor assessments, nor any inspections conducted by
Indemnitees or their representatives, nor the consummation of the Lease
and/or the related transactions in light of the matters disclosed as a result
of these inspections, nor any other term or provision of this Agreement
shall effect, modify, or constitute a waiver of, the rights and obligations
of the parties to this Agreement under applicable Environmental Laws and
the rights and remedies of Indemnitees under this Agreement shall be
cumulative of and not modify the rights and remedies that Indemnitees
would have in the absence of this Agreement. Indemnitor hereby
expressly releases any contribution or other claims or rights it now or may
hereafter have against Indemnitees under applicable Environmental Laws,
excepting only contribution rights or other claims against any particular
Indemnitee with respect to matters for which such Indemnitee is not
entitled to indemnification hereunder as a result of the fraud, gross
negligence or intentional misconduct of the particular Indemnitee in
question.
13. Survival. This Agreement shall survive the transfer of any
or all of the Property, including, but not limited to, any foreclosure sale
or deed in lieu of foreclosure transaction with respect to the Mortgage.
14. WAIVER OF JURY TRIAL. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND FOR THE PURPOSE
OF REDUCING THE TIME AND EXPENSE OF LITIGATION,
INDEMNITOR AND INDEMNITEES WAIVE TRIAL BY JURY IN
ANY ACTION BROUGHT ON, UNDER OR BY VIRTUE OF THIS
AGREEMENT.
15. Specific Enforcement. Indemnitor acknowledges that it may
be impossible to measure accurately the damages to Indemnitees resulting
from a breach of Indemnitor's covenants under this Agreement, that such
a breach will cause irreparable injury to Indemnitees, and that Indemnitees
may not have an adequate remedy at law in respect of such breach.
Therefore, such covenants shall be specifically enforceable against
Indemnitor. This clause shall not prejudice Indemnitees' rights to assert
any and all claims for damages incurred as a result of Indemnitor's breach
hereof or for equitable relief.
16. Joint and Several Liability. The liability of Indemnitor (if
more than one) is joint and several. A separate action or actions may be
brought and prosecuted against any Indemnitor, whether or not action is
brought against any other person or whether or not any other person is
joined in such action or actions.
17. Notice. All notices, demands, requests and other
communications required hereunder shall be in writing and shall be
deemed to have been properly given and received, whether actually
received or not, one (1) Business Day after deposit with a nationally
recognized courier service for overnight delivery addressed to the party
for whom it is intended at its address hereinafter set forth:
If to Indemnitor: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention: Michael Holden
Senior Vice-President - Finance
Fax No. (215) 227-9533
with a copy to: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 191332
Attention: Ronald M. Neifield,Esq.
Real Estate Counsel
Fax No. (215) 229-5076
If
to Agent: Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: EFL/CBL Credit Head
Fax No. (914) 899-7308
with a copy to: Charles W. Morris, Esq.
Brown McCarroll & Oaks Hartline
300 Crescent Court
Suite 1400
Dallas, Texas 75201-6929
Fax No. (214) 999-6170
If to Trustee: State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Fourth Floor
Boston, MA 02110
Attention: Donald E. Smith
Vice-President
Fax No. (617) 664-5371
with a copy to: Bingham, Dana & Gould LLP
100 Pearl Street
Hartford, CT 06103
Attention: James G. Scantling,
Esq.
Fax No. (860) 527-5188
Notices sent by any other method (including regular or certified mail,
hand delivery, or facsimile transmission) shall be deemed delivered when
actually received by the addressee. Any notice of change of address shall
be effective only upon actual receipt, regardless of delivery method, and
such new address shall be effective as to notices given by the other parties
commencing ten (10) days after such change of address notice is received
by such parties. No party may establish an official address for notice
outside the continental United States.
18. Attorney's Fees. In the event any party files a suit in
connection with this Agreement or any provisions contained in this
Agreement, then the party which substantially prevails in such action shall
be entitled to recover, in addition to all other remedies or damages,
reasonable attorney's fees and costs of court incurred in such suit,
including, without limitation, any such fees and costs incurred in
connection with any appellate
proceedings.
19. No Third Party Beneficiaries. This Agreement is executed
for the sole use and benefit of the Indemnitor and Indemnitees, and no
person or entity other than the Indemnitor or Indemnitees is intended to
be a beneficiary hereof or otherwise to have any right to enforce the
provisions hereof.
20. No Waiver. The failure of Indemnitees to insist upon strict
compliance with any of the terms hereof shall not be considered to be a
waiver of any of such terms nor shall it militate against the right of
Indemnitees to insist upon strict compliance herewith at any time
thereafter.
21. Severability. If any provision of this Agreement shall be
contrary to the laws of the jurisdiction in which the same shall be sought
to be enforced, the illegality or unenforceability of any such provision
shall not affect the other terms, covenants or conditions thereof, and the
same shall be binding upon Indemnitor with the same force and effect as
though such illegal or unenforceable provision were not contained herein.
22. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF PENNSYLVANIA, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
[SEE ATTACHED SIGNATURE PAGE]
IN WITNESS WHEREOF, Indemnitor, intending to be legally
bound hereby, has caused this Agreement to be duly executed, to be
effective as of the day and year first above written.
THE PEP BOYS - MANNY, MOE
& JACK,
a Pennsylvania corporation
By:
Name:
Title:
THE PEP BOYS
MANNY MOE
&
JACK
OF CALIFORNIA, a California corporation
By:
Name:
Title:
PEP BOYS - MANNY, MOE &
JACK
OF DELAWARE, INC., a Delaware corporation
By:
Name:
Title:
[CAPTION]
TRANSACTION AGREEMENT
(1997 Pep Boys II Leased Property)
TABLE OF CONTENTS
Page
Preliminary Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE
I. FUNDING
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.01. Advances under Instruments . . . . . . . . . . . . . . .2
Section 1.02. Closing Date . . . . . . . . . . . . . . . . . . . . . .4
Section 1.03. Conditions for Initial Advance . . . . . . . . . . . . .5
Section 1.04. Conditions Precedent to All Advances . . . . . . . . . .5
Section 1.05. Advance Process. . . . . . . . . . . . . . . . . . . . 12
Section 1.06. Form of Documents. . . . . . . . . . . . . . . . . . . 13
Section 1.07. Transaction Fees . . . . . . . . . . . . . . . . . . . 13
Section 1.08. Extension of Lease Term. . . . . . . . . . . . . . . . 15
ARTICLE
II. REPRESENTATIONS
AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.01. Lessee's Representations and Warranties. . . . . . . . 15
Section 2.02. Trust Company Representations. . . . . . . . . . . . . 17
ARTICLE
III. TRUSTEE
AND TRUST COMPANY
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.01. Lien Claims. . . . . . . . . . . . . . . . . . . . . . 20
Section 3.02. Inspection of Property . . . . . . . . . . . . . . . . 20
Section 3.03. Notice of Significant Matters. . . . . . . . . . . . . 20
Section 3.04. Qualification; Business; Use of Advances.. . . . . . . 21
Section
3.05. Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.06. Transaction Documents. . . . . . . . . . . . . . . . . 21
Section 3.07. Transactions with Affiliates . . . . . . . . . . . . . 22
Section 3.08. Transfer or Encumbrance of the Property. . . . . . . . 22
Section 3.09. Compliance with Laws and Documents . . . . . . . . . . 23
Section 3.10. Assignment . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.11. Other Tenant Leases. . . . . . . . . . . . . . . . . . 23
Section 3.12. Agent's Approval of Settlements. . . . . . . . . . . . 23
Section 3.13. Notice of Actions; Prosecution . . . . . . . . . . . . 24
Section 3.14. Covenants of Trust Company . . . . . . . . . . . . . . 24
ARTICLE
IV. THE
NOTES AND THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 25
Section 4.01. Rates Applicable to Instruments. . . . . . . . . . . . 25
Section 4.02. Assignments and Participations . . . . . . . . . . . . 25
Section 4.03. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.04. Avoidance of Taxes, Other Charges and Increased
Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.05. Sharing of Payments, Etc . . . . . . . . . . . . . . . 31
Section 4.06. Instrument Holders' Credit Decisions . . . . . . . . . 31
ARTICLE
V. MISCELLANEOUS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.01. Survival . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.03. Severability . . . . . . . . . . . . . . . . . . . . . 34
Section 5.04. Amendments, Etc. . . . . . . . . . . . . . . . . . . . 34
Section 5.05. Headings . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.06. Definitions. . . . . . . . . . . . . . . . . . . . . . 34
Section 5.07. Benefit. . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.08. Place of Payment . . . . . . . . . . . . . . . . . . . 35
Section 5.09. Counterparts . . . . . . . . . . . . . . . . . . . . . 35
Section 5.10. Governing Law; Venue . . . . . . . . . . . . . . . . . 35
Section 5.11. Business Day . . . . . . . . . . . . . . . . . . . . . 35
Section 5.12. The Trustee. . . . . . . . . . . . . . . . . . . . . . 36
Section 5.13. Estoppel Certificates. . . . . . . . . . . . . . . . . 36
Section 5.14. Transaction Documents; Further Assurances. . . . . . . 36
Section 5.15. Confidentiality. . . . . . . . . . . . . . . . . . . . 37
Section 5.16. Interest . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.17. Money. . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.18. Number and Gender of Words . . . . . . . . . . . . . . 38
Section 5.19. Articles, Sections, Exhibits, and Schedules. . . . . . 38
Section 5.20. Decisions of Parties . . . . . . . . . . . . . . . . . 39
Section 5.21. Restructure of Transaction . . . . . . . . . . . . . . 39
Section 5.22. Construction of Agreement. . . . . . . . . . . . . . . 39
Section 5.23. Brokers. . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.24. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . 40
ARTICLE
VI. THE
AGENT
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.01. Appointment. . . . . . . . . . . . . . . . . . . . . . 40
Section 6.02. Nature of Duties . . . . . . . . . . . . . . . . . . . 41
Section 6.03. Rights, Exculpation, etc.. . . . . . . . . . . . . . . 43
Section 6.04. Reliance . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.05. Indemnification. . . . . . . . . . . . . . . . . . . . 44
Section 6.06. Successor Agent; Resignation of Agent. . . . . . . . . 44
Section 6.07. Authorization to Act as Agent of Trustee . . . . . . . 45
This TRANSACTION AGREEMENT dated as of February 28,
1997 (the "Agreement"), is entered into by and among THE PEP BOYS -
MANNY, MOE & JACK, a Pennsylvania corporation ("Lessee"); STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, not in its individual capacity except as expressly stated herein,
but solely as Trustee under the Declaration of Trust, as hereinafter defined
(State Street Bank and Trust Company, when acting in its respective
capacities as such Trustee, together with any successor trustee under the
Declaration of Trust, is herein referred to as the "Trustee" and State
Street Bank and Trust Company, when acting in its individual capacity,
is herein referred to as "Trust Company"); BANK OF MONTREAL
("Bank of Montreal") as an initial "Purchaser" and "Instrument Holder;
CITICORP LEASING, INC., a Delaware corporation ("CLI"), on behalf
of itself as an initial "Purchaser" and "Instrument Holder" hereunder and
on behalf of the other financial institutions that may, from time to time,
become "Purchasers" or "Instrument Holders" hereunder; and CITICORP
LEASING, INC., a Delaware corporation ("Agent"), in its capacity as the
initial administrative agent for the Instrument Holders hereunder.
Capitalized terms used but not otherwise defined in this Agreement shall
have the meanings set forth in Schedule 1 hereto.
Preliminary Statement
A. From time to time Trustee will acquire certain parcels of
real property (each such parcel, together with all agreements, easements,
licenses, rights of way or use, appurtenances, tenements, hereditaments
and other rights and benefits now or hereafter belonging to or pertaining
to such parcel or the improvements thereon, being referred to as a
"Parcel").
B. Each Parcel and any improvements located or constructed
thereon (the "Improvements") will be leased to Lessee (and, where
applicable, certain Additional Lessees that are wholly-owned subsidiaries
of Lessee) by Trustee under that certain Master Lease (the "Lease") of
even date herewith between Trustee, as lessor, and Lessee, as lessee. All
Parcels that, as of any relevant time, have been included in the coverage
of the Lease by supplements as provided for therein, and all
Improvements located on such Parcels from time to time, are sometimes
herein collectively called the "Property." It is acknowledged that while
various subsidiaries of Lessee may, under the terms of the Lease, become
"Additional Lessees" from time to time, references in this Agreement to
"Lessee" are intended to refer only to THE PEP BOYS - MANNY, MOE
& JACK, a Pennsylvania corporation.
C. To finance its acquisition of the Property, the Trustee shall
issue to CLI and Bank of Montreal, as the initial Purchasers of the
Instruments, (i) Series A Trust Notes (collectively, the "Original A-
Notes") in the aggregate stated principal amount of up to $37,800,000.00
(such amount being referred to as the "A-Note Commitment"), (ii)
Series B Trust Notes (collectively, the "Original B-Notes") in the
aggregate stated principal amount of up to $5,400,000.00 (such amount
being referred to as the "B-Note Commitment"), and (iii) Series C
Certificates (collectively, the "Original Certificates") in the aggregate
stated amount of up to $1,800,000.00 (such amount being referred to as
the "Certificate Commitment"). The Original A-Notes, and any other
Series A promissory notes issued from time to time pursuant to the terms
hereof and of the Declaration of Trust, are collectively referred to as the
"A-Notes"; the Original B-Notes, and any other Series B promissory notes
issued from time to time pursuant to the terms hereof and of the
Declaration of Trust are collectively referred to as the "B-Notes." The
Original Certificates and any other Series C certificates issued from time
to time pursuant to the terms hereof and of the Declaration of Trust are
collectively referred to as the "Certificates." The A-Notes and the
B-Notes are herein collectively referred to as the "Notes." The Notes and
the Certificates are herein referred to collectively as the "Instruments."
D. The Instruments shall be issued, be dated, mature and be
payable as provided in this Agreement and in the Declaration of Trust and
shall be entitled to the benefit of the Trust Estate held by Trustee pursuant
to the Declaration of Trust. A copy of the Declaration of Trust has been
provided to Lessee, Agent and Purchasers.
NOW, THEREFORE, in consideration of the agreements herein
and in the other Transaction Documents and in reliance upon the
representations and warranties set forth herein and therein, the parties
agree as follows:
ARTICLE I.
FUNDING
Section 1.01. Advances under Instruments.
(a) CLI, as an initial Purchaser of the Instruments,
confirms that its Certificate Commitment is $1,800,000.00, its A-Note
Commitment is $18,112,500.00, and its B-Note Commitment is
$2,587,500.00, for a total Commitment of $22,500,000.00.
Notwithstanding the foregoing, it is expressly agreed that in no event will
CLI ever be obligated to make an Advance in respect of its Commitment
if, at the time of the Advance and after giving effect to the Advance in
question, the "Hold Position" of CLI (i) for Advances made during the
period ending March 31, 1997, would exceed $38,500,000.00, (ii) for
Advances made during the period April 1, 1997, through June 30, 1997,
would exceed $30,000,000.00, (iii) for Advances made during the period
July 1, 1997, through September 30, 1997, would exceed $25,000,000.00,
and (iv) for Advances made on or after October 1, 1997, would exceed
$15,000,000.00. For purposes hereof the term "Hold Position" means the
sum of (i) the aggregate outstanding principal balance and/or stated
amounts of Instruments then held by CLI hereunder, plus (ii) the
aggregate outstanding principal and/or stated amount of notes or equity
certificates then held by CLI in respect of the Pep Boys I Facility, plus
(iii) the remaining amount of available advances that Lessee may request
under the Pep Boys I Facility; provided, however, that there shall be
excluded from such calculation any portion of the principal balance and/or
stated amount, as applicable, of any such instruments (whether hereunder
or in respect of the Pep Boys I Facility) that are held by CLI for the
benefit of an unaffiliated participant or assignee that has closed on or
purchased such participation. It is acknowledged that CLI's "Hold
Position" with respect to the Pep Boys I Facility as of the date hereof is
$15,920,000.00, such that the maximum amount of Advances currently
available under the CLI Commitment is $22,500,000.00.
(b) Bank of Montreal, as an initial Purchaser of the
Instruments, confirms that its Certificate Commitment is zero ($0.00), its
A-Note Commitment is $19,687,500.00, and its B-Note Commitment is
$2,812,500.00, for a total commitment of $22,500,000.00..
(c) Advances under the Instruments representing the
Commitment shall be made by the Purchasers at the request of the Lessee,
in one or more installments (each an "Advance" and collectively
"Advances") subject to satisfaction or waiver of all conditions and
requirements with respect thereto set forth herein. The Purchasers shall
fund each Advance by advancing funds under A-Notes in the aggregate
amount of 84% of such Advance, B-Notes in the amount of 12% of such
Advance, and Certificates in the amount of 4% of such Advance. Each
Purchaser shall fund its pro rata share of each Advance by depositing with
the Agent funds in an amount equal to such Purchaser's Percentage of the
portion of such Advances to be made by Purchasers in respect of A-Notes,
B-Notes or Certificates, as the case may be. All such Advances shall be
funded by the Purchasers by transfers of immediately available funds
received prior to 11:00 a.m. (New York, New York time) in an account
of the Trustee to be established and maintained at Citibank, N.A.,
New York, New York (Account No. 40685147 - ABA No. 021000089),
or to such other Person or account as Trustee may direct.
(d) The proceeds of each Advance(s) shall be used by
Trustee to purchase Parcels and Improvements, if any, thereon, to make
Construction Advances (as hereinafter defined) to Lessee under the Lease
in respect of New Improvements, to make Interim Advances (as
hereinafter defined) to Lessee under the Lease in respect of New
Improvements then under construction in certain circumstances as more
fully described in Section 1.04(c) below, and for other Approved
Purposes. Upon the execution by Trustee and Lessee, and the approval
thereof by Agent, on behalf of Purchasers, of a supplement to the Lease
adding a Parcel to the Lease, and the execution and delivery of such other
documents in connection therewith as Agent, on behalf of Purchasers, may
reasonably deem appropriate consistent with Section 1.04 below, such
Parcel and Improvements shall thereafter be a part of the "Property"
covered by this Agreement and the Transaction Documents. In the case
of Advances made to permit Trustee to reimburse Lessee for the costs of
New Improvements located on Parcels already included in the Property
(each, a "Construction Advance" and collectively, "Construction
Advances"), Lessee and Trustee shall execute, and Agent, on behalf of the
Purchasers, shall approve, a Construction Supplement to the Lease in
substantially the form attached to the Lease (each, a "Construction
Supplement" and collectively, "Construction Supplements").
(e) From time to time other banks or financial
institutions satisfactory to Lessee, Trustee, Agent, and CLI may become
additional "Purchasers" for purposes of this Agreement. Approval of any
proposed Purchaser by any party hereto shall not be unreasonably
withheld. In such event such new Purchaser shall execute such
supplements or amendments to this Agreement and/or the other
Transaction Documents as the other parties hereto may deem appropriate
to evidence, among other matters (i) the amount of the Commitment of
such new Purchaser with respect to Instruments, (ii) whether the
Commitment of the new Purchaser represents an increase of the overall
Commitment of the Purchasers hereunder or a reduction of the
Commitment of CLI hereunder, and (iii) the assumption by such new
Purchaser of the obligations of a "Purchaser" hereunder. At the time any
Person becomes a Purchaser Instruments reflecting the Commitment of
such Purchaser will be issued to such Purchaser and, if the unadvanced
Commitment of any existing Purchaser is reduced as a result thereof, the
Instruments then held by the existing Purchasers shall be replaced by a
replacement Instrument of the same series issued by Trustee in the
reduced amount. It is expressly agreed that no Person may become a
Purchaser hereunder without the prior written consent of Lessee and
Agent. It is further acknowledged and agreed that any Person that
becomes an Instrument Holder as a result of an assignment thereto of
Instruments previously issued to a Purchaser hereunder shall not thereby
become a "Purchaser". An Instrument Holder that is not also a Purchaser
shall have no obligation to fund Advances under the Instruments and no
right to approve Advances, which shall be approved by Agent acting
solely on behalf of Purchasers, subject to the terms and conditions hereof.
(f) Agent shall keep current a Master Schedule
reflecting the amount of the Commitment of each Purchaser, the amount
of Advances made in respect of the outstanding Instruments, any payments
made under or with respect to the Instruments that reduce the outstanding
balance thereof, and the amount of the unfunded Commitment of each
Purchaser. Upon request, the Agent will provide a copy of the then
current Master Schedule to any Purchaser, Instrument Holder, the
Trustee, or the Lessee. Such Master Schedule maintained by Agent shall
be conclusive and binding on the Purchasers, Instrument Holders, and the
Trustee in the absence of manifest error. The information reflected on the
Master Schedule shall have no effect upon the amounts payable by the
Lessee under the Lease, all of which payment obligations shall be
governed by the Lease itself.
Section 1.02. Closing Date. The closing of first Advance shall
take place on such date (the "Closing Date") as the Lessee may request,
subject to Lessee's timely satisfaction of all conditions set forth in Section
1.03, as well as the applicable portions of Section 1.04.
Section 1.03. Conditions for Initial Advance. In addition to
satisfaction of the requirements of Section 1.04 below (which are
applicable to all Advances), the initial Advance shall not be made
hereunder until all of the following requirements have been satisfied.
(a) This Agreement, the Declaration of Trust, the
Lease, the Lease Guarantee, and the Environmental Indemnity have each
been fully executed and delivered by each of the parties thereto.
(b) Trustee, Purchasers, and Lessee have each received
such evidence of authority to act, legal opinions, and related matters as
they may deem reasonably necessary to confirm that all parties to the
Transaction Documents are bound thereby and such Transaction
Documents are binding and enforceable upon all parties thereto.
(c) All fees, costs, and expenses to be paid or
reimbursed by Lessee to the Trustee or Purchasers and/or their respective
counsel and/or consultants through the Closing Date as otherwise provided
herein, or in the other Transaction Documents, have been paid in full.
Section 1.04. Conditions Precedent to All Advances. In addition
to the requirements of Section 1.03 above, Purchasers will have no
obligation to make Advances hereunder (including, without limitation, the
initial Advance) unless, at the time such Advance is requested, each of the
following conditions precedent has been satisfied. At such time as the
applicable conditions have been satisfied, Purchasers shall make the
requested Advance:
(a) If the Advance in question is in connection with the
addition of an unimproved Parcel (or a Parcel as to which any existing
Improvements are intended to be demolished in connection with the
construction of New Improvements) to the Property:
(i) Trustee has executed and delivered, and
arrangements reasonably satisfactory to the Agent have been made
for the recordation of, a Transaction Mortgage covering the Parcel
in question.
(ii) Title Company shall have issued (or provided
Agent with evidence satisfactory to Agent that the Title Company
is irrevocably obligated to issue immediately after closing) the
Owner's Title Policy to Trustee and the Mortgagee Title Policy to
the Agent with respect to the Parcel(s) being added to the
Property.
(iii) Agent has received original, fully-executed,
counterparts of a Supplement to the Lease adding the Parcel in
question to the "Property" covered by the Lease.
(iv) A memorandum of the Lease has been
executed and delivered by Trustee and Lessee and, except in those
circumstances where no memorandum of lease is to be recorded as
provided for in the Lease, such memorandum of the Lease has
been recorded (or arrangements reasonably satisfactory to the
Agent have been made for the recordation) in all applicable
jurisdictions to provide public record notice of the existence of the
Lease.
(v) Agent and Trustee have received such legal
opinions as they may reasonably require regarding the
documentation executed to add the Parcel in question to the
Property, including, without limitation, favorable opinions of local
counsel satisfactory to Agent regarding the enforceability of the
Transaction Documents under local law to the extent the law of the
location of the Parcel is applicable thereto. Agent and Trustee
confirm that as a matter of regular practice they intend to require
opinions of local counsel only in respect of the first Parcel located
in a given state that is added to the Property; provided that Trustee
and Agent reserve the right to require opinions of local counsel
upon the addition of subsequent Parcels in such state where they
determine (in their sole but reasonable discretion) that a legitimate
need for a local counsel opinion exists.
(vi) Agent shall have received, reviewed, and
approved an appraisal of the Parcel and of the contemplated New
Improvements to be developed thereon in form and substance, and
issued by an appraiser, satisfactory to Agent. Such appraisal must
indicate a current value of the Parcel (in its unimproved state) of
at least 50% of the amount of the Advance for the Parcel itself,
and a value for the Parcel and contemplated New Improvements
(on an "as if vacant" but completed basis) of at least 50% of the
aggregate amount that Lessee estimates ultimately will be
Advanced in respect of such Parcel and New Improvements. If the
appraisal of the vacant Parcel received by Agent does not
adequately support the amount of the requested Advance for the
Parcel itself and Lessee elects to proceed with such Parcel and
cover any additional costs from Lessee's own funds, the amount
of the acquisition Advance will be reduced such that the
Acquisition Price of the Parcel in question, after giving effect to
such Advance, will be not more than twice the appraised value of
the vacant Parcel.
(vii) Agent shall have received, reviewed, and
approved (A) a survey of the Parcel in form and substance
reasonably satisfactory to the Agent and in any event sufficient for
title insurance purposes, (B) an environmental site assessment of
the Parcel in question reasonably acceptable to Agent, and (C)
such other reports, studies, or information regarding the Parcel in
question as Agent may reasonably require.
(b) If the Advance in question is in connection with a
Construction Advance to be made by Trustee under the Lease in respect
of New Improvements that have been constructed by Lessee on a Parcel:
(i) Agent has received and approved original
executed counterparts of a Construction Supplement to the Lease
in respect of the New Improvements in respect of which
Construction Advance is to be made.
(ii) Agent has received and approved, where
applicable, the materials required to be supplied by Lessee
pursuant to the Construction Addendum to the Lease evidencing
the completion of the New Improvements in question, the payment
of the costs therefor, and the performance of Lessee's other
obligations thereunder to support Lessee's entitlement to the
Construction Advance in question.
(iii) Agent shall have received, reviewed, and
approved an "as-built" survey of the Parcel in question dated
subsequent to completion of the New Improvements thereon in
form and substance reasonably satisfactory to Agent which shall
show the location of all New Improvements thereon and that the
New Improvements are completely within the boundaries of the
Parcel, shall not indicate the violation of any Laws, the
encroachment across or on any easement (except as otherwise
approved by Agent), or the violation of any restrictive covenant or
other restrictions, and shall not reflect any other conditions not
reasonably acceptable to Agent.
(iv) The Title Company shall have issued (or
provided Agent with evidence satisfactory to Agent that the Title
Company is irrevocably obligated to issue immediately after
funding of the Advance in question) an endorsement to the Owner
Title Policy and the Mortgagee Title Policy covering the Parcel in
question increasing the coverage to the aggregate amount advanced
in respect of the Parcel and Improvements thereon, without
exceptions unacceptable to Agent in its reasonable discretion. Any
Permitted Encumbrances approved by Agent in connection with the
addition of the applicable Parcel to the Property may not be
disapproved by Agent in connection with a subsequent Advance in
respect of such Parcel so long as the construction of the New
Improvements has not created any encroachments or other
problems related thereto that did not exist when the Permitted
Encumbrance in question was originally approved.
(v) Agent shall have received, reviewed, and
approved an "as-built" appraisal of the Parcel and the completed
Improvements thereon in form and substance, and issued by an
appraiser, satisfactory to Agent indicating an "as if vacant" value
of the Parcel and completed New Improvements thereon of not less
than 50% of the Acquisition Price (as defined in the Lease) of the
Parcel in question after giving effect to the requested Advance. In
the event the appraisal received by Agent does not adequately
support the amount of the requested Advance the amount of the
Advance shall be reduced such that the Acquisition Price of the
Parcel in question after giving effect to such Advance will be not
more than twice the appraised value of the Parcel.
(vi) The Lessee that leases the Parcel in question
under the Lease has received a certificate of occupancy (or local
equivalent), if any, required for lawful occupancy, and has opened
for business in, the New Improvements.
(c) In addition to Lessee's right to obtain Construction
Advances upon completion of New Improvements on a Parcel as provided
for in subsection 1.04(b) above, Lessee may obtain "Interim Advances"
(herein so-called) to reimburse Lessee for costs theretofore incurred in
connection with the construction of New Improvements that are not yet
completed and are therefore not yet eligible for Construction Advances
pursuant to subsection 1.04(b). Interim Advances shall be treated as
"Construction Advances" and "Advances" for all purposes of the
Transaction Agreement and the other Transaction Documents, except as
otherwise specifically provided in this subsection 1.04(c). Interim
Advances are subject to the following:
(i) Interim Advances may be obtained by Lessee
not more than six (6) times per annum. For administrative
convenience of the parties Lessee will use its best efforts to
coordinate the timing of Interim Advance requests with requests
for other Advances for which Lessee may be eligible.
(ii) The amount of each Interim Advance shall
be not less than $250,000.00. Costs associated with the New
Improvements on more than one Parcel may be aggregated to
reach the required minimum amount for the Interim Advance, but
costs for each Parcel shall be accounted for separately. The
aggregate amount of Interim Advance(s) on a Parcel shall not
exceed 85% of the anticipated construction costs for New
Improvements on that Parcel, with all remaining costs being
funded only through a Construction Advance pursuant to Section
1.04(b) upon Lessee's satisfaction of all requirements applicable
thereto.
(iii) Purchasers shall have no obligation to make
any Interim Advance hereunder if, at the time such Interim
Advance would otherwise be made, the Debt Rating of Lessee is
lower than BBB (as rated by Standard & Poor's Corporation) or
lower than Baa2 (as rated by Moody's Investors Service).
However, if Lessee thereafter reattains the required Debt Rating
and is otherwise then eligible for an Interim Advance, Lessee may
reinstate its requests for Interim Advances that were not available
to it because of failure to satisfy the Debt Rating requirements.
Such Debt Rating requirements are applicable to Interim Advances
only, and do not affect the provisions of Section 1.04(g) below
applicable to Advances generally.
(iv) Costs related to the New Improvements on
any particular Parcel may be included in only two (2) Interim
Advances. However, the foregoing shall not preclude Lessee from
obtaining an Advance for the acquisition of such Parcel pursuant
to subsection 1.04(a) and/or a final Construction Advance in
respect of the New Improvements on such Parcel pursuant to
subsection 1.04(b) upon satisfaction of the requirements of such
provisions.
(v) The amount of any Construction Advance
available to Lessee pursuant to subsection 1.04(b) in respect of a
given Parcel shall be reduced to the extent that costs that would
otherwise have been included in such Construction Advance have
previously been funded through an Interim Advance.
(vi) The amount of the Interim Advance
attributable to any particular Parcel and the New Improvements
thereon shall not exceed the costs of acquiring the Parcel and/or
the cost of construction of the New Improvements theretofore
constructed and in place on the Parcel (reduced by the amount of
any previous Advance in connection with acquisition of the Parcel
in question), as reasonably substantiated to Agent. Applicable
transaction costs and "soft" costs related to the addition of the
Parcels and/or the development of the New Improvements shall
also be eligible for inclusion in an Interim Advance.
(vii) Each request for any Interim Advance must
be accompanied by a written certification by a senior financial
officer of Lessee (i) that the costs for which the Interim Advance
in question has been requested have been incurred by Lessee and
the work for which such Interim Advance is requested has been
completed and is in place, all in substantial accordance with the
Plans for the work in question previously approved by Agent, (ii)
that Lessee expects to complete construction of the New
Improvements to which the Interim Advance relates on or before
the applicable Required Completion Date, (iii) certifying the
amount of costs that are not covered in the Interim Advance that
Lessee reasonably expects to spend to complete the New
Improvements in question ("Remaining Costs"), (iv) that upon
completion of the New Improvements the Lessee expects that the
"as-built" appraisal for such New Improvements will satisfy the
requirements of this Transaction Agreement for purposes of
obtaining a final Construction Advance covering all costs of
construction and development thereof in accordance with
subsection 1.04(b)(v) of this Transaction Agreement,
(v)
identifying any new Liens affecting the Parcel of which such
officer has received actual written notice and certifying that with
respect to any such Liens and any further Liens that may be filed,
Section
7(a) of the Lease will be applicable
thereto,
and (vi) that
Lessee then satisfies all other applicable requirements for obtaining
the requested Interim Advance and will continue to do so after
giving effect to the Interim Advance in question.
(viii) As further conditions to any Interim
Advance:
(A) Agent shall have received and
approved original executed counterparts of an Interim
Construction Supplement to the Lease in respect of the
Interim Advance in question in substantially the form
attached to the Lease. Each Interim Construction
Supplement shall be treated in the same manner as, and
shall be included as, a "Construction Supplement" for all
purposes of this Transaction Agreement and the other
Transaction Documents.
(B) Agent shall have received and
approved, where applicable, the materials required to be
supplied by Lessee pursuant to the Construction Addendum
to the Lease evidencing construction (to the extent that the
costs thereof are included in the Interim Advance request)
of the New Improvements in question, the payment of the
costs therefor, and the performance of Lessee's other
obligations thereunder to support Lessee's entitlement to
the Interim Advance in question. In this regard the parties
acknowledge that the conditions set out in the Construction
Addendum shall be applicable only to the extent that such
conditions would be reasonably expected to have been
completed or satisfied in the course of construction in a
commercially prudent manner to the stage at which the
construction on the New Improvements in question is then
advanced, as reasonably determined by Agent.
(C) Agent shall have received, reviewed,
and approved (either at the time the Parcel was added to
the Property or in connection with the Interim Advance in
question) an "as-if-completed" appraisal of the Parcel(s)
and the completed Improvements to be constructed thereon
in form and substance, and issued by an appraiser,
satisfactory to Agent indicating, on an "as if vacant" basis,
that the Parcel and Improvements to be constructed thereon
will have a value, when completed, of not less than 50% of
the sum of the Acquisition Price (as defined in the Lease)
of the Parcel in question after giving effect to the requested
Interim Advance and the amount of Remaining Costs for
such Parcel. In the event the appraisal received by Agent
does not adequately support the amount of the requested
Advance the amount of the Advance shall be reduced such
that the sum of the Acquisition Price of the Parcel in
question after giving effect to such Advance and the
amount of Remaining Costs for such Parcel will be not
more than twice the appraised value of the Parcel.
(D) Agent shall have the right, in its
discretion, to waive the requirement for delivery by Lessee
of any items or materials required to be supplied by Lessee
hereunder with respect to a Parcel; provided, however, that
any such waiver with respect to a Parcel shall not be
deemed to constitute a waiver with respect to any future
Parcel(s).
(d) Regardless of whether the Advance is in connection
with the addition of a Parcel or in connection with a Construction
Advance under the Lease:
(i) No Casualty or Condemnation (as those
terms are defined in the Lease) shall have occurred with respect to
any portion of the Parcel to which such Advance is being made.
(ii) No Event of Default has occurred and is
continuing, and no Special Incipient Default exists under the
Lease.
(iii) All reasonable costs and expenses incurred
by Agent or Trustee in connection with the Advance in question,
and all reasonable fees or other payments due in respect of such
Advance, have been paid (or arrangements satisfactory to Agent
and Trustee regarding the payment thereof have been made). It is
agreed that so long as no Event of Default exists no overhead or
other internal costs of the Agent shall be payable by Lessee;
provided that the foregoing limitation shall not be deemed to limit
or restrict amounts that are otherwise recoverable by Agent
pursuant to any Transaction Document if an Event of Default
exists.
(iv) No material adverse change has occurred in
the financial condition or business of Lessee and its consolidated
subsidiaries, taken as a whole, as shown on or reflected in a
consolidated balance sheet of Lessee, or its consolidated statement
of income or cash flow, other than changes in the ordinary course
of business that will not have any materially adverse effect, either
individually or in the aggregate, on the business or financial
condition of Lessee and its consolidated subsidiaries.
(v) The amount of the Advance shall not exceed
the costs of acquiring the Parcel and/or the cost of the New
Improvements, as reasonably substantiated to Agent. Applicable
transaction costs and "soft" costs related to the addition of the
Parcels and/or the development of the New Improvements shall be
eligible for Advance, subject to the overall limitation that the value
of the Parcel or Improvements in question must support the
amount of the Advance (based on the appraisal requirements set
out in subsection [b][v] above).
(e) The conditions set out in both subsections (a) and (b)
shall apply, subject to reasonable modifications under the circumstances,
in the event Lessee requests an Advance in respect of an improved Parcel
where the Improvements existing thereon are to be occupied under the
Lease rather than being entirely demolished, with or without renovation
and/or construction of New Improvements, and whether or not a
subsequent "Construction Advance" is anticipated.
(f) To the extent applicable the underwriting guidelines
listed on Schedule 2 attached hereto shall be adhered to by the Agent in
evaluating any requested Advance. Any matters not specifically addressed
in such guidelines shall be subject to the approval of Agent in the exercise
of its reasonable discretion.
(g) Anything to the contrary herein notwithstanding:
(i) Purchasers shall have no obligation to make
any Advance hereunder for the addition of a Parcel to the Property
if, at the time such Advance would otherwise be made, the Debt
Rating of Lessee is lower than BBB- (as rated by Standard &
Poor's Corporation or Baa3 (as rated by Moody's Investors
Service), or the Debt Rating of Lessee is BBB-/Baa3 and Lessee
is then on "credit-watch" status with either rating agency; and
(ii) Purchasers shall have no obligation to make
any Advance hereunder as a Construction Advance in respect of a
Parcel previously added to the Property if, at the time such
Advance would otherwise be made, the Debt Rating of Lessee is
BB+ or lower (as rated by Standard & Poor's Corporation or Ba1
or lower (as rated by Moody's Investors Service).
Section 1.05. Advance Process. The following procedures and
limitations shall be applicable to each Advance unless otherwise waived
by Agent:
(a) Lessee shall notify Agent in writing not less than
fifteen (15) days prior to the date on which the Advance in question is
desired (or, in the case of the first Advance hereunder in respect of a
Parcel located within a given state, not less than thirty (30) days prior to
the date on which the Advance in question is desired). The requested
Advance shall be funded by the Purchaser(s) on or before the requested
date if Lessee has satisfied all of the conditions precedent to the requested
Advance (other than the execution and delivery of the necessary
Supplements and related closing documents) at least five (5) Business
Days prior to the requested Advance date. Neither Agent nor Trustee
shall have any liability or obligation to Lessee if an Advance cannot be
completed at the time requested by Lessee if all required materials are not
supplied by Lessee in a timely manner.
(b) All materials that are to be reviewed and/or
approved as a condition to the requested Advance shall be submitted to
Agent (and, in the case of the environmental site assessment for a Parcel
to be added to the Property, to the Trustee) for review and approval
simultaneously with Lessee's request for Advance. Except for the
environmental site assessment, Lessee shall not be required to deliver
materials directly to Trustee unless Lessee is specifically requested to do
so by Agent, it being the responsibility of Agent and its counsel to
coordinate the funding of each Advance (Agent will provide Trustee with
copies of all such materials approved by the Agent as needed). The
parties acknowledge that it may be necessary, in certain cases, for Agent
to obtain approval of one or more such items by one or more of the
Purchasers to fulfill Agent's obligation to such Purchasers, but Agent shall
be responsible for obtaining a timely response from any such Purchaser,
and any Purchaser that does not respond to Agent in a timely manner shall
be deemed to have consented to or approved the matter in question.
Trustee and Lessee may rely upon any consent or approval of any matter
given by Agent without inquiry as to whether any required approvals of
any Purchasers have in fact been obtained by Agent.
(c) In connection with each Advance, Agent shall
prepare the necessary supplements to the Lease, and other documents, if
any, reasonably required in connection with such Advance and submit
counterparts of the necessary documents to all applicable parties for
execution and delivery. Agent shall submit to the Trustee all such
supplements or other documents requiring the Trustee's signature with
instructions authorizing the Trustee's execution and delivery of the same.
Upon completion of the documents executed in connection with any
Advance, Agent shall deliver to Trustee a copy of the document transcript
for such Advance.
(d) Lessee and Agent, and Trustee (where necessary)
shall make such mutually satisfactory arrangements for the closing and
funding of the Advance, including, without limitation, escrow
arrangements with a Title Company or closing attorney where applicable,
as may be necessary or appropriate under the circumstances.
(e) In no event shall any Advance be available after
August 31, 1998 ("Outside Funding Date"). On the Outside Funding
Date, any unused Commitment of the Purchasers shall be canceled and of
no further effect.
Section 1.06. Form of Documents. All instruments, documents,
or materials executed by or for the benefit of, or submitted to, Agent or
Purchasers in connection with this Agreement, including, without
limitation, documents submitted in connection with Advances, shall be in
form and substance reasonably acceptable to Agent and its counsel.
Section 1.07. Transaction Fees. Lessee shall pay from time to
time the following fees related to the transactions contemplated herein:
(a) Arranging/Structuring Fee. Lessee shall pay to CLI
or an Affiliate of CLI a structuring fee in the amount of $247,500 cash
upon execution of this Agreement.
(b) Servicing Fee.
Subject to the terms of a certain side
letter agreement of even date herewith between Agent and Lessee
regarding a limitation on such fee, on
each
December 15 (starting
December 15, 1997)
throughout the term of this Agreement, as well as on
the Maturity Date, Lessee shall pay to CLI or an Affiliate of CLI a
servicing fee in an amount equal to 0.125% of the
weighted average
outstanding
principal balance of the Notes and the weighted-average
outstanding amount of the Certificates for the preceding year. The first
payment shall be prorated on a daily basis for the period from the date
hereof through
December 15, 1997,
and the last payment due on the
Maturity Date shall also be a prorated payment covering the period
December 16, 2002,
through the Maturity Date.
(c) Commitment Fee. On each March 30, June 30,
September 30, and December 30 through and including September 30,
1998, Lessee shall pay to the Purchasers a commitment fee (computed
quarterly in arrears) in an amount equal to one-fourth of the amount
determined by multiplying the unused portion of the Commitment
(computed on a weighted average daily basis during the quarter) by the
applicable percentage provided for in the following chart:
Lessee's Debt Rating Commitment Fee Rate
BBB+ (or higher) 15.0 basis points
BBB 20.0 basis points
BBB- 26.5 basis points
lower than BBB- 32.5 basis points
The first payment due on March 30, 1997, shall be prorated on a daily
basis for the period from the date hereof through March 30, 1997, and the
last payment due September 30, 1998, shall also be a prorated payment
reflecting only the period July 1, 1998, through the Outside Funding Date.
In the event the Outside Funding Date is extended, the obligation to
continue to pay a commitment fee on the unused portion of the
Commitment shall be likewise extended. In the event that Lessee desires
to terminate its right to obtain Advances hereunder prior to the Outside
Funding Date, Agent and Trustee agree to enter into an amendment to this
Agreement and the other Transaction Documents as necessary to terminate
the obligation of the Purchasers to advance the unused portion of the
Commitment, and after such termination no further commitment fees shall
be due.
(d) Trustee Fees. From time to time the Lessee shall
pay to the Trustee the various fees and other payments provided for in the
Declaration of Trust and/or in the Fee Letter.
Section 1.08. Extension of Lease Term.
(a) Anything to the contrary in the Lease or any other
Transaction Document to the contrary notwithstanding, it is expressly
agreed that the Term of the Lease may not be extended without the
unanimous approval of the Instrument Holders, which approval may be
withheld or conditioned in such Instrument Holders' sole discretion.
Neither Agent nor Trustee shall have the authority to grant approval of
any extension of the Term of the Lease requested by Lessee unless all
Instrument Holders have approved the extension in question. Agent shall
be responsible for polling the Instrument Holders in the event Lessee
requests an extension of the Term of the Lease, and Lessee and Trustee
shall be entitled to rely on any statement or certificate issued by Agent
confirming that all Instrument Holders have approved the requested
extension. In connection with any such extension of the Term of the
Lease, Lessee, Trustee, Agent, and the Instrument Holders shall enter into
such supplements and amendments to all Transaction Documents
(including, without limitation, amendments or reissuance of the
Instruments themselves), as any party may reasonably require to reflect
the agreements of the parties with respect to such extension.
(b) In the event that Lessee and Agent desire to extend
the term of the Lease and one or more Instrument Holders are unwilling
to approve such extension, Lessee and Agent shall endeavor, as more fully
described in the Lease, but at Lessee's sole cost, to arrange for
replacement of the Instrument Holders that do not desire to extend the
Lease.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Section 2.01. Lessee's Representations and Warranties. The
Lessee hereby represents and warrants to the Trustee, Agent, Purchasers,
and the Instrument Holders that the following statements are true and
correct as of the date hereof:
(a) Organization and Authority. Lessee (i) is duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Pennsylvania, (ii) has full corporate power
and authority to own and operate its properties and to conduct its business
as presently conducted, and full corporate power, authority and legal right
to execute, deliver and perform its obligations under this Agreement and
all other Transaction Documents to which Lessee is a party, and (iii) is
duly qualified to do business as a foreign corporation in good standing in
each jurisdiction in which its ownership or leasing of properties or the
conduct of its business requires such qualification.
(b) Enforceability. This Agreement and all other
Transaction Documents to which Lessee is a party have been duly
authorized, executed and delivered by Lessee and each is a legal, valid
and binding obligation of Lessee, enforceable according to its terms
(subject as to enforcement of remedies to any applicable bankruptcy,
reorganization, moratorium, or other Laws or principles of equity
affecting the enforcement of creditors' rights generally).
(c) No Conflict. The execution, delivery and
performance by Lessee of this Agreement and all other Transaction
Documents to which Lessee is a party will not result in any violation of
any term of the certificate or articles of incorporation or the by-laws of
Lessee, does not require stockholder approval or the approval or consent
of any trustee or holders of debt of Lessee except such as have been
obtained prior to the date hereof, and will not conflict with or result in a
breach of any terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien upon, any property or
assets of Lessee under, any indenture, mortgage or other agreement or
instrument to which Lessee is a party or by which it or any of its property
is bound, or to Lessee's knowledge, any existing applicable law, rule,
regulation, license, judgment, order or decree of any government,
governmental body or court having jurisdiction over Lessee or any of its
activities or properties, including, without limitation, any rule or order of
any public utility commission or other governmental body.
(d) Consents and Approvals. There are no consents,
licenses, orders, authorizations or approvals of, or notices to or
registrations with any governmental or public body or authority which are
required in connection with the valid execution, delivery and performance
of this Agreement and all other Transaction Documents to which Lessee
is a party by Lessee that have not been obtained or made, and any such
consents, licenses, orders, authorizations, approvals, notices and
registrations that have been obtained or made are in full force and effect.
(e) Pending Matters. Except as disclosed in writing to
Agent by Lessee concurrently herewith, there is no action, suit,
proceeding or investigation at law or in equity by or before any court,
governmental body, agency, commission or other tribunal now pending
or, to the best knowledge of Lessee, threatened against or affecting Lessee
or any property or rights of Lessee as to which there is a significant
possibility of an adverse determination, and which if adversely
determined, may have a material adverse effect on the financial condition
or business of Lessee or which, if adversely determined could materially
impair the ability of Lessee to perform its obligations under the Lease or
any Transaction Document to which Lessee is a party, and there is no
action, suit, proceeding or investigation at law or in equity by or before
any court, governmental body, agency, commission or other tribunal now
pending or, to the best knowledge of Lessee after due inquiry, threatened
against Lessee which questions or would question the validity of the Lease
or any Transaction Agreement.
(f) No Default. Lessee is not in default under or with
respect to any agreement or other instrument to which it is party or by
which it or its assets may be bound which would have a material adverse
effect on the financial condition of Lessee or the ability of Lessee to
perform its obligations under the Lease or any other Transaction
Document to which Lessee is a party. Lessee is not subject to or in
default under any order, award or decree of any court, arbitrator, or other
governmental authority binding upon or affecting it or by which any of its
assets may be bound or affected which would have a material adverse
effect on the ability of Lessee to carry on its business as presently
conducted or to perform its obligations under this Agreement and all other
Transaction Documents to which Lessee is a party.
Section 2.02. Trust Company Representations. Trust Company,
in its individual capacity and not as Trustee (with the exception of clauses
[d][ii] and [f][ii], which representations are made solely in its trust
capacity), represents and warrants to the Lessee, to Agent, and the
Instrument Holders that the following statements are and shall be true and
correct as of the Closing Date:
(a) Organization and Authority. Trust Company is a
trust company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts,
and Trust Company has all requisite corporate power and authority
to execute and deliver the Instruments, the Declaration of Trust,
and each Transaction Document to which it is a party (regardless
of the capacity in which it is a party thereto) and to comply with
the terms thereof and perform its obligations thereunder. The trust
created by the Trust Declaration is a trust formed by Trust
Company for the sole purpose of acquiring, financing, and leasing
the Property.
(b) No Actions Pending. There is no action, suit,
proceeding or investigation at law or in equity by or before any
court, governmental body, agency, commission or other tribunal
now pending or, to the knowledge of the Trust Company,
threatened, against or affecting the Trust Company, (i) which
questions the validity or enforceability of this Agreement or any of
the other Transaction Documents to which the Trust Company is
a party (regardless of its capacity therein), or (ii) the probable
outcome of which would impair the ability of the Trust Company
to perform its obligations under any Transaction Document to
which it is or is to be a party.
(c) No Violation. The Trust Company's or the
Trustee's respective execution, delivery and performance of its
obligations under each Transaction Document to which it is or is
to be a party (including, without limitation, the execution,
delivery, and performance by Trustee of the Lease in its capacity
as Lessor thereunder) will not violate such party's charter or by-
laws, will not contravene any federal or state law, governmental
rule or regulation (which representation shall be limited to the laws
of Massachusetts and United States federal law) pertaining to its
banking or trust powers, judgment or order applicable to such
party or any of its assets, and will not require the consent or
approval of any stockholders of the Trust Company or of any
trustee or holder of any material indebtedness of the Trust
Company, will not conflict with or result in a breach of any term
or provision of, or constitute any default under, indebtedness for
the repayment of borrowed money or any other material indenture,
mortgage, contract, agreement or other instrument to which it is
a party or by which it or any of its assets is bound, will not result
in any violation of any Laws (which representation shall be limited
to the laws of Massachusetts and United States federal law
pertaining to its banking or trust powers), which violation of any
such Law would materially adversely affect the ability of such
party to perform its obligations under any Transaction Document
to which it is or is to be a party or question the validity or
enforceability of the Transaction Documents to which it is or is to
be a party or require the consent or approval of, the giving of
notice to, the registration, qualification or filing with, or the taking
of any other action with respect to, any federal or state
governmental commission, authority, body or agency under any
existing law (which representation shall be limited to the laws of
Massachusetts and United States federal law) governing the
banking or trust or fiduciary powers of the Trust Company, except
for filings, if any, made pursuant to any periodic reporting
requirements applicable to it.
(d) Authorization, Execution, Delivery and
Enforceability of Transaction Documents. Each of the Transaction
Documents to which Trust Company is or is to become a party,
and any other agreement entered into in connection with any
transaction contemplated by any Transaction Document, has been
duly authorized by all necessary action on the part of Trust
Company, has been duly executed and delivered, and is the legal,
valid and binding obligation of Trust Company enforceable against
Trust Company in accordance with its terms, except as
enforceability thereof may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and by general
principles of equity. Each of the Transaction Documents to which
the Trustee (including, without limitation, in its capacity as Lessor)
is or is to become a party, and any other agreement entered into
in connection with any transaction contemplated by any
Transaction Document, (i) has been duly authorized by all
necessary action on the part of the Trustee, has been duly executed
and delivered, and (ii) is the legal, valid and binding obligation of
Trustee (but not Trust Company) enforceable against such party in
accordance with its terms, except as enforceability thereof may be
limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally and by general principles of equity.
(e) Authorizations and Consents. The nature of Trust
Company, its execution and delivery of each Transaction
Document to which it is a party (regardless of the capacity in
which it is a party), its consummation of the transactions
contemplated thereby, its compliance with the terms thereof or any
circumstance in connection with the transactions contemplated
thereby does not require the consent of any Person or the approval
or authorization of, or filing, registration or qualification with, any
Massachusetts or federal governing authority governing the
banking or trust powers of Trust Company (other than such as
have been obtained) as a condition to such execution, delivery and
compliance. All authorizations, consents, licenses, orders,
approvals, waivers, extensions or variances of, or notices to or
registrations or filings with any governmental department,
commission, board, bureau, agency or instrumentality (which
representation shall be limited to the laws of Massachusetts and
United States federal law pertaining to its banking or trust powers)
necessary to the valid execution, delivery and performance by the
Trust Company and the Trustee, respectively, of the Declaration
of Trust, this Agreement and the other Transaction Documents to
which such party is or is to be a party have been obtained.
(f) Authorization, Execution, Delivery and
Enforceability of Instruments. Each of the Notes and the
Certificates (i) has been duly authorized by all necessary corporate
action on the part of the Trust Company, in its capacity as
Trustee, has been duly executed and delivered by the Trustee, and
(ii) constitutes a legal, valid and binding obligation of the Trustee
(acting solely as Trustee under the Declaration of Trust, and not
in its individual capacity), enforceable against the Trustee in
accordance with their terms and the terms of the Declaration.
(g) Liens. Trust Company has not voluntarily created
or granted any Lien upon any portion of the Property other than
in accordance with the terms of the Transaction Documents.
(h) No Brokers. Trust Company has entered into no
agreements, arrangements or negotiations that would require the
payment of any fees or compensation to any brokers, finders, or
similar persons in connection with the transactions contemplated
hereby except for such fees and expense reimbursements to the
parties hereto and their respective counsel as are provided for in
the Transaction Documents and, in the case of the Trustee, the Fee
Letter, and Trust Company (solely with respect to the above
actions taken by it in its individual capacity) agrees to indemnify,
defend and save harmless each other party hereto from and against
any claims for fees or commissions from any Person engaged by
the Trust Company.
(i) Offer of Interests. Neither the Trust Company nor
any Person authorized to act on its behalf has directly or indirectly
offered any interest in the Trust Estate or under the Declaration of
Trust or any interests similar thereto or the Instruments or any
similar security, or offered any thereof for sale to, or solicited any
offer to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any Person, which offer or
solicitation would require registration under the Securities Act.
ARTICLE III.
TRUSTEE AND TRUST COMPANY COVENANTS
Until the Trustee's obligations hereunder, under the Declaration of
Trust, and all other Transaction Documents have been paid and performed
in full, unless Trustee receives from Agent a written statement specifying
that the Majority Holders do not object to a deviation, Trustee covenants
and agrees with Lessee, Agent, and each of the Instrument Holders as
follows:
Section 3.01. Lien Claims. Trustee shall (a) promptly furnish to
Agent and Lessee a copy of any notice of claims sent to Trustee by any
person claiming or asserting any Lien on any portion of the Property, and
(b) not create or authorize any Liens (other than the Permitted
Encumbrances) on the Property arising by, through, or under Trustee.
Section 3.02. Inspection of Property. At all reasonable times,
Trustee shall permit Agent and/or its representatives to inspect the
Property, provided that such inspection rights are subject to all limitations
and restrictions upon the right of Trustee (as "lessor" under the Lease) to
inspect the Property under the Lease.
Section 3.03. Notice of Significant Matters.
(a) Trustee shall promptly supply to Agent and Lessee
copies of any tax or other bills, and any other notices or other material
communications received by Trustee from any Person (including, without
limitation, Lessee, Lease Guarantor, or any Tribunal) relating to the
Property or any Transaction Document unless it is evident that Agent
and/or Lessee, as the case may be, shall have independently received such
communication. Without limitation, it is expressly intended that the
foregoing covenant shall require delivery to Agent and Lessee of any
notice or communication received by Trustee with respect to any
compliance or non-compliance of the Property with respect to
Environmental Laws, or the presence of Hazardous Materials on or
emanating from the Property. Notwithstanding the foregoing, however,
Trustee shall have no obligation to provide Lessee with copies of any
instructions, communications, directions, or authorizations received from
Agent or any Instrument Holder with respect to or relating to actions to
be taken by the Trustee as a result of an Event of Default or Incipient
Default.
(b) Trustee shall give at least thirty (30) days prior
written notice to Agent, each Instrument Holder, and Lessee of any
change in the place of business of, or the change in the legal, trade or
fictitious business names used by Trustee and shall, upon Agent's or
Lessee's request, execute any additional certificates or instruments that
Agent or Lessee may deem appropriate or necessary in connection with
any such change.
(c) Trustee shall also notify Agent and Lessee in writing
within five (5) Business Days after Trustee acquires knowledge of the
occurrence of any event or circumstance that would, with or without
notice and or the passage of time, be or become an "Event of Default,"
"Default" or "Environmental Event," under any of the Transaction
Documents.
Section 3.04. Qualification; Business; Use of Advances. The
Trustee covenants and agrees (i) to appoint a Co-Trustee pursuant to
Section 8.04 of the Declaration of Trust, if required, to qualify in each
state in which a Parcel is located, (ii) to conduct no business other than
in respect of the Property, and (iii) to use the Advances solely to acquire
the Parcels and Improvements, as the Agent may direct, in accordance
with the Transaction Documents.
Section 3.05. Encumbrances.
(a) Trustee shall not, directly or indirectly, (i) authorize
any materials, equipment, fixtures, or any other part of the Property to be
purchased or installed under any arrangement wherein a Lien (other than
a Permitted Encumbrance) on such property is retained or the right is
reserved or accrues to any Person to remove or repossess any such items
or to consider such as personal property, or permit any lease of any
equipment or improvements related to the operation of the Improvements,
or (ii) otherwise create, incur, or suffer or permit to be created or
incurred or to exist any Lien upon any of the Parcels or Improvements,
except Permitted Encumbrances, or authorize any financing agreement
pertaining to the financing of any equipment or improvements related to
the Property and its operation; provided, however, that Trustee shall not
be in violation of this covenant if Lessee is making a valid contest to such
Lien in compliance with all applicable Laws and in accordance with the
contest provisions of the Lease.
(b) The foregoing limitations and restrictions shall not
apply to Lessee's Equipment, as to which Lessee, but not Trustee, may
grant encumbrances or take other actions as may be permitted under the
terms of the Lease.
Section 3.06. Transaction Documents.
(a) Trustee shall not (and shall not purport to) enter
into, amend, modify, permit an assignment or subletting with respect to,
terminate, surrender, take discretionary action with respect to, or cancel
any Transaction Documents, including, without limitation, the Declaration
of Trust, without the consent of the Majority Holders, which consent may
be withheld in such Holders' discretion except in those instances where
the Transaction Documents require that such approval be exercised
reasonably, in which event the Holders shall not unreasonably withhold
or delay their approval of the matter in question.
(b) Trustee shall not amend, supplement, modify, or
terminate the Declaration of Trust without the prior written consent of
Lessee, which consent shall not be unreasonably withheld so long as
Lessee's rights and interests are not materially adversely affected thereby.
The Lessee shall be deemed to be a third party beneficiary under the
Declaration of Trust to the extent of the rights (including, without
limitation, rights relating to any monies, consents, approvals and notices)
given to the Lessee thereunder, and the Lessee shall have a direct right to
enforce all such rights. Notwithstanding the foregoing, Lessee shall not
be responsible for any costs or expenses incurred in connection with any
modifications to the Declaration of Trust that are not requested by Lessee.
Section 3.07. Transactions with Affiliates. Trustee will not,
directly or indirectly, enter into any transaction with respect to the
ownership of the Property (or, if at any time the Trustee obtains
possession of the Property as a result of the expiration or termination of
the Lease, the operation of the Property) with any of its Affiliates other
than in the ordinary course of business and upon fair and reasonable terms
no less favorable than Trustee could obtain or could become entitled to in
an arm's-length transaction with a Person which was not an Affiliate of
Trustee. No transactions by Trustee (whether with Affiliates of Trustee
or otherwise) shall affect Lessee's rights with respect to the Property
pursuant to the Lease so long as no Event of Default exists.
Section 3.08. Transfer or Encumbrance of the Property. Except
as a result of the exercise by Lessee or a nominee of Lessee of any
options to purchase the Property or a portion thereof contained in the
Lease, or at the request of Agent or the Majority Holders after the
occurrence of an Event of Default, Trustee will not, directly or indirectly,
voluntarily or by operation of Law, sell, convey, transfer, assign,
encumber, pledge, lease, rezone, or permit to be sold, conveyed,
transferred, assigned, encumbered, pledged, leased (except for the Lease
and any sublease permitted under the terms of the Lease) or rezoned, or
otherwise dispose of, any interest in all or any part of the Property
without Agent's prior written approval, which approval may be withheld
for any reason in the sole and absolute discretion of Agent. So long as
the Lease remains in effect, any transaction by Trustee with respect to the
Property approved by Agent shall be made expressly subject to the rights
of Lessee under the Lease, including Lessee's purchase options
thereunder. Notwithstanding the foregoing, Agent agrees to execute such
instruments or documents as Lessee may request in connection with the
granting of easements or other such interests affecting the Property under
those circumstances where the Lessee is permitted to grant such rights
pursuant to the Lease and after Lessee has satisfied all requirements of the
Lease with respect to such matters. In no event shall Agent be obligated
to grant any recognition, non-disturbance or other rights to any subtenant
of Lessee under the Lease that would survive termination or expiration of
the Lease. The Trustee shall not voluntarily create or grant any Lien
upon any portion of the Property other than in accordance with the terms
of the Transaction Documents.
Section 3.09. Compliance with Laws and Documents. Trustee will
not, directly or indirectly, violate, or permit or authorize Lessee to
violate, the provisions of any Laws, any Transaction Document, or any
of the instruments and documents constituting or evidencing Permitted
Encumbrances. Further, Trustee will not change, or cause or seek a
change (nor, to the extent within Trustee's control, will Trustee permit
Lessee or any third party to do so) in any Laws or any private contracts
or other agreements that may cause a material adverse effect on the
ownership, use, or operation of the Property without the prior written
consent of Agent; provided, however, that Trustee shall not be in violation
of the covenants in this Section if Lessee is making a valid contest to such
Lien in compliance with all applicable Laws and in accordance with the
contest provisions of the Lease.
Section 3.10. Assignment. Trustee will not, directly or indirectly,
assign or transfer, or attempt to do so, any of its Rights, duties, or
obligations under any of the Transaction Documents except to a successor
trustee appointed in accordance with Section 8.02 of the Declaration of
Trust. Any resignation by Trustee (whether permitted or not) of Trustee
under the Declaration of Trust shall not affect Lessee's rights with respect
to the Property under the Lease. If the Trustee is replaced by a successor
trustee, all reasonable costs incurred by Agent, Trustee, or the successor
trustee in connection with the substitution of the Trustee, the assignment
of the rights and duties of the Trustee to the successor trustee, and the
transfer of the Trust Estate to the successor trustee shall be borne by
Lessee.
Section 3.11. Other Tenant Leases. Other than the Lease, Trustee
shall not enter into any lease, tenancy, occupancy arrangement, or other
similar agreement with respect to the Property, or any portion thereof nor
shall Trustee consent to the entry by Lessee into any sublease of all or any
portion of the Property other than to subleases specifically approved or
permitted pursuant to Section 17 of the Lease, without Agent's prior
written consent, which consent may be withheld for any reason in Agent's
sole discretion. Nothing in the foregoing shall be deemed to prohibit or
further condition assignments or subleases by the Lessee, or the addition
of Additional Lessees to the Lease where permitted under the terms of the
Lease.
Section 3.12. Agent's Approval of Settlements. Subject to the
rights of Lessee under the Lease unilaterally to settle certain claims,
Trustee shall not settle or compromise any claims relating to damage
claims, insurance proceeds, or condemnation awards relating to the
Property without the prior written consent of Agent, which shall not be
unreasonably withheld so long as no Event of Default exists.
Section 3.13. Notice of Actions; Prosecution. Promptly upon
obtaining actual knowledge of any condemnation or threatened
condemnation, or any damage or destruction, of any portion of the
Property, Trustee shall notify Agent and Lessee of such fact. Trustee
shall then take such actions, including, without limitation, exercise of
rights provided for in the Lease arising out of such condemnation, as may
be directed by Agent to protect and/or defend the positions and interests
of Trustee and the Instrument Holders with respect to such matter, but
subject to the rights of Lessee under the Lease if the Lease then remains
in effect as to the affected Parcel(s). Agent, on behalf of the Instrument
Holders, shall be entitled to direct the exercise of Trustee's rights in
respect of, and control, such actions (except to the extent that Lessee has
the unilateral right to control such matters under the Lease), including
being represented by separate counsel at Lessee's expense if reasonably
deemed necessary by Agent, and Trustee shall deliver, or cause to be
delivered, to Agent such instruments as Agent may request from time to
time to permit such participation.
Section 3.14. Covenants of Trust Company.
(a) The Trust Company shall give at least thirty (30)
days prior written notice to Agent, each Instrument Holder and Lessee of
any change in the place of business of, or the change in the legal, trade
or fictitious business names used by Trust Company and shall, upon
Agent's or Lessee's request, execute any additional certificates or
instruments that Agent may deem appropriate or necessary in connection
with any such change.
(b) The Trust Company shall not directly or indirectly
create or permit to be created or remain or leave undischarged any Lien
attributable to it, which is not related to the transactions contemplated by
the Transaction Documents, on any Parcel or Improvements thereon or
any interest therein or in the Trust Estate other than Permitted
Encumbrances. The Trust Company agrees that it will, at its own cost
and expense, take such action as may be necessary duly to discharge and
satisfy in full, promptly after the same first becomes known to the Trust
Company, any Lien attributable to it unrelated to the transactions
contemplated by the Transaction Documents.
(c) The Trust Company shall not transfer any of the
estates, properties, rights, powers, duties or trusts of the Trustee to any
successor trustee or to any additional or separate trustee under the
Declaration of Trust without giving written notice thirty (30) days prior
to such transfer to the Agent and the Lessee (unless such transfer is
effected pursuant to Section 8.02(d) of the Declaration of Trust, in which
event, written notice thereof shall be provided promptly following such
transfer). The Trust Company covenants and agrees that all such transfers
to a successor trustee shall be done in compliance with and pursuant to the
terms and conditions of this Agreement.
(d) Trust Company shall not amend, supplement, modify
or terminate the Declaration of Trust or any of the other Transaction
Documents without the prior written consent of Lessee, which consent
shall not be unreasonably withheld so long as Lessee's rights and interests
are not materially adversely affected thereby. The Lessee shall be deemed
to be a third party beneficiary under the Declaration of Trust to the extent
of the rights (including, without limitation, rights relating to any monies,
consents, approvals and notices) given to the Lessee thereunder, and the
Lessee shall have a direct right to enforce all such rights.
Notwithstanding the foregoing, Lessee shall not be responsible for any
costs or expenses incurred in connection with any modifications to the
Declaration of Trust that are not requested by Lessee.
(e) Trust Company shall maintain its existence as a
Massachusetts trust company and preserve and keep in full force and
effect its rights and franchises as necessary to permit it to serve as Trustee
hereunder so long as it is the Trustee; provided, that the sole obligation
of the Trust Company with respect to a breach of this covenant shall be
to resign as Trustee in accordance with Section 8.02 of the Declaration of
Trust.
ARTICLE IV.
THE NOTES AND THE CERTIFICATES
Section 4.01. Rates Applicable to Instruments. Each of the Notes
shall bear interest at the Note Rate applicable to such Note, and each
Certificate shall earn a yield at the Certificate Rate applicable to such
Certificate. All payments of principal, interest, yield and stated amount
on the Instruments that are not paid when due in accordance with the
terms of this Agreement and the applicable Instruments shall bear interest
at the Default Rate until paid. To the extent permitted by applicable Law,
interest on the unpaid principal balance of the Notes and yield on the
Certificates from time to time outstanding at the rates provided in this
Agreement shall be calculated on the basis of the actual number of days
elapsed, but computed as if each year consisted of three hundred and sixty
(360) days. However, any calculations of the Maximum Rate shall be
made on the basis of a 365 (or 366, as applicable) day year. Acceptance
by Trustee or any Instrument Holder of any payment in an amount less
than the amount then due shall be deemed an acceptance on account only.
Section 4.02. Assignments and Participations.
(a) The Lessee may not assign its rights or delegate its
obligations under this Agreement without the prior written consent of all
of the Instrument Holders. The foregoing shall not, however, be deemed
to limit Lessee's rights under the Lease with respect to the Property,
including the right to assign to other parties that constitute "Lessee" under
the Lease.
(b) Each Instrument Holder may assign all or a portion
of the Instruments then held by it and its rights and obligations under this
Agreement and the other Transaction Documents to another bank or
financial institution approved by Lessee, which approval shall not be
unreasonably withheld or delayed. The parties to each such assignment
shall execute and deliver to the Agent for its acceptance and recording in
the Register (as defined in the Declaration of Trust) an "Assignment
Agreement" (herein so-called) in substantially the form attached hereto as
Exhibit "A". Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment Agreement
(which effective date shall be at least five (5) Business Days after the
execution of such Assignment Agreement), (x) the assignee thereunder
(the "Assignee") shall, to the extent that rights and obligations hereunder
have been assigned to it, have the rights and obligations of an Instrument
Holder hereunder and a Holder under the Transaction Documents arising
subsequent to such assignment and (y) the assignor thereunder (the
"Assignor") shall, to the extent that rights and obligations hereunder have
been assigned by it, relinquish its rights (other than any rights to
indemnification it may have hereunder under the Transaction Documents)
under this Agreement with respect to the Instruments (or interests therein)
assigned. No Assignee of an Instrument or an interest therein shall
become a "Purchaser" hereunder nor shall any Assignee have any
Commitment for Advances hereunder as a result of such assignment, and
no Purchaser shall be released from any unfunded Commitment hereunder
as a result of an assignment of the Instruments then held by such
Purchaser. Any Advance made by a Purchaser against its Instruments
after the assignment of an interest in such Instrument to a third party shall
be deemed to have been made by such Purchaser against the portion of the
Instrument that is still held by the Purchaser in question. No Assignee of
an Instrument or an interest therein shall acquire any greater rights with
respect to or arising out of such Instrument therein than were available to
the original Holder thereof (or would be available to such original Holder
if it were the then Holder thereof). Lessee shall not be responsible for
any costs, expenses or other charges in connection with any assignment
hereunder.
(c) By executing and delivering an Assignment
Agreement, the Assignor thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i)
such Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement and the other Transaction
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Transaction Documents
or any other instrument or document furnished pursuant hereto; (ii) such
Assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Lessee or the
performance or observance by the Lessee of any of its obligations under
this Agreement or any other Transaction Document, any other instrument
or document furnished pursuant hereto; (iii) such Assignee confirms that
it has received a copy of this Agreement, together with such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision with respect to entering into such Assignment
Agreement; and (iv) such Assignee will, independently and without
reliance upon the Lessee, the Agent, the Trustee, such Assignor or any
other Instrument Holder and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
(d) Each Instrument Holder may sell participations (as
opposed to assignments of Instruments or assignments of partial interests
in Instruments) to one or more banks or other entities in or to all or a
portion of the Instruments then held by it and its rights and obligations
under this Agreement and the other Transaction Documents; provided,
however, that (i) such Instrument Holder shall remain the Holder of any
such Instrument for all purposes under this Agreement and the other
Transaction Documents and the Lessee, the Trustee, the Agent and the
other Instrument Holders shall continue to deal solely and directly with
such Instrument Holder in connection with such Instrument Holder's rights
and obligations under this Agreement; (ii) no participant shall be entitled
to receive any greater payment than such Instrument Holder would have
been entitled to receive with respect to the rights participated except as a
result of circumstances arising after the date of such participation to the
extent that such circumstances affect other Instrument Holders and
participants generally; and (iii) no Instrument Holder shall grant a
participation that conveys to the participant the direct right to vote or
receive notices under this Agreement or other Transaction Documents in
respect of the Instrument in which such participant holds a participation.
(e) Any Instrument Holder may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section 4.02, disclose to the assignee or participant or
proposed assignee or participant any information relating to the Lessee
furnished to such Instrument Holder by or on behalf of the Lessee;
provided, that, prior to any such disclosure, the assignee or participant or
proposed assignee or participant shall agree to preserve the confidentiality
of any confidential information relating to the Lessee received by it from
such Instrument Holder in a manner consistent with that set forth in
Section 6.17 hereof and any other provision of the Transaction Documents
relating to the preservation of confidentiality.
(f) Anything in this Section 4.02 to the contrary
notwithstanding, any Instrument Holder may assign and pledge all or any
of the Instruments held by it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to applicable regulations of
the Board of Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve Bank; provided that any payment
made by the Lessee to the Trustee for the benefit of such assigning and/or
pledging Instrument Holder in accordance with the terms of the
Transaction Documents shall satisfy the Lessee's obligations under the
Transaction Documents in respect thereof to the extent of such payment.
(g) No assignment shall result in a change in the Note
Rate or Certificate Rate applicable to the Instrument in question.
(h) Regardless of the number of Instrument Holders, at
all times the Instrument Holders shall designate a single "Agent" to
interface with Lessee and the Trustee, and the Lessee and Trustee shall be
required to pay to or otherwise deal only with the Agent and not the
individual Instrument Holders. Wherever the Transaction Documents
grant rights or remedies to the Instrument Holders (either in the aggregate
or to a particular class of Instrument Holders) all such rights and remedies
shall be exercised through the Agent. Lessee and Trustee shall be free to
ignore directions or instructions delivered directly by any Instrument
Holder rather than by Agent on behalf of the Instrument Holders (or
applicable portion thereof).
Section 4.03. Taxes.
(a) Any and all payments by the Lessee or the Trustee
hereunder or under any of the Transaction Documents (including, without
limitation, payments of Net Rent, Contingent Rent Payments, Offer
Purchase Price, and Additional Rent (as such terms are defined in the
Lease), interest, current yield, fees and principal and stated amounts of
the Instruments) shall be made free and clear of and without deduction for
any and all present or future Taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding, in the
case of payments made to each Instrument Holder or the Trustee (as the
case may be), (1) taxes imposed on the Trustee's or such Instrument
Holder's income, and franchise taxes imposed on it, by the jurisdiction
under the Laws of which such Instrument Holder or the Trustee (as the
case may be) is organized or any political subdivision thereof and, in the
case of each Instrument Holder, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Instruments
Holder's office where Instrument Holder's interest in the Instruments is
administered or any political subdivision thereof and (2) any taxes
imposed by the United States of America by means of withholding at the
source if and to the extent that such taxes shall be in effect and shall be
applicable, on the more recent to occur of (x) the original issuance of the
applicable Instrument, or (y) the date of adjustment of the Note Rate or
Certificate Rate applicable to such Instrument or applicable interest therein
in connection with the Secondary Transaction, to payments to be made to
such Instrument Holder or the Trustee, as the case may be (all such non-
excluded Taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Charges" and all such excluded
Taxes, levies, imposts, deductions, charges, withholdings, and liabilities
being hereinafter referred to as "Excluded Charges"). If the Lessee or the
Trustee shall be required by Law to deduct any Charges from or in
respect of any sum payable hereunder or under any of the Transaction
Documents to the Trustee or any Instrument Holder (i) the sum otherwise
payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 4.03) the Trustee or such Instrument Holder (as
the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Lessee or the Trustee
shall make such deductions, and (iii) the Lessee or the Trustee shall pay
the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Law.
(b) Notwithstanding anything to the contrary contained
in this Agreement, the Lessee and/or the Trustee, as applicable, shall be
entitled, to the extent it is required to do so by law, to deduct or withhold
income or other similar taxes imposed by the United States of America on
Net Rent, Contingent Rent Payments, Offer Purchase Price, and
Additional Rent, interest, current yield, fees, principal and stated amounts
of the Instruments or other amounts payable hereunder or under the other
Transaction Documents for the account of the Trustee or any Instrument
Holder (without the payment of increased amounts to such Instrument
Holder or the Trustee pursuant to subsection (a) above in the case of
Excluded Charges) other than the Trustee (or any successor thereto) or an
Instrument Holder (i) that is a domestic corporation for Federal income
tax purposes or (ii) which has filed with the Lessee and/or the Trustee all
applicable forms, affidavits, or certificates for the applicable year to the
extent deduction or withholding of such taxes is not required as a result
of the filing. If the Lessee or the Trustee shall so deduct or withhold any
such taxes, it shall provide a statement to the Lessee, Trustee and Agent,
as applicable, setting forth the amount of such taxes so deducted or
withheld, the applicable rate and any other information or documentation
which such Instrument Holder or the Trustee may reasonably request for
assisting such Instrument Holder or the Trustee to obtain any allowable
credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Instrument Holder is subject to
taxes.
(c) In addition, the Lessee agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder
or under the Transaction Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any of the
Transaction Documents (hereinafter referred to as "Other Taxes").
(d) The Lessee will indemnify the Trustee and each
Instrument Holder for the full amount of any Charges and Other Taxes
(including, without limitation, any Other Taxes imposed by any
jurisdiction on amounts payable under this Section 4.03) paid by the
Trustee or such Instrument Holder (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto except as a result of the negligence or willful misconduct
of such Instrument Holder or the Trustee, as the case may be, whether or
not such Charges or Other Taxes were correctly or legally asserted.
Payments under this indemnification shall be made within thirty (30) days
from the date such Instrument Holder or the Trustee (as the case may be)
makes written demand therefor accompanied by reasonable substantiation
of the requested payment. Lessee shall not be responsible for any interest
or penalties in connection with such Charges or Other Taxes unless Lessee
has been notified of such Charges or Other Taxes as provided above at
least thirty (30) days prior to the imposition of any such interest or
penalties (or, if later, within thirty (30) days after the Trustee or
Instrument Holder, as applicable, obtained actual knowledge that a Charge
or Other Tax for which Lessee has responsibility hereunder has been
imposed).
(e) Within thirty (30) days after the date of the payment
of Charges by or at the direction of the Lessee, the Lessee will furnish to
the Trustee the original or a certified copy of a receipt evidencing
payment thereof. Should any Instrument Holder or the Trustee ever
receive any refund, credit or deduction from any taxing authority to which
such Instrument Holder or the Trustee would not be entitled but for the
payment by the Lessee of Charges as required by Section 4.03 (it being
understood that the decision as to whether or not to claim, and if claimed,
as to the amount of any such refund, credit or deduction shall be made by
such Instrument Holder or the Trustee in its sole discretion), such
Instrument Holder or the Trustee thereupon shall repay to the Lessee an
amount with respect to such refund, credit or reduction equal to any net
reduction in taxes actually obtained by such Instrument Holder to the
extent attributable to such refund, credit or deduction.
(f) Without prejudice to the survival of any other
agreement of the Lessee hereunder, the agreements and obligations of the
Lessee contained in this Section 4.03 shall survive the payment in full of
principal and stated amount of and interest and current yield on the
Instruments.
Section 4.04. Avoidance of Taxes, Other Charges and Increased
Costs.
(a) Each Instrument Holder shall use reasonable efforts
(consistent with its internal policies and legal and regulatory restrictions)
to select a jurisdiction for its purchasing office or change the jurisdiction
of its purchasing office (or other office where its interest in the
Instruments is administered), as the case may be, so as to avoid the
imposition of any Increased Costs, Charges or Other Taxes or to eliminate
any additional Increased Costs, Charges or Other Taxes which may
thereafter accrue; provided, that no such selection or change of the
jurisdiction for its purchasing or other office shall be made if, in the
reasonable judgment of such Instrument Holder, such selection or change
would be disadvantageous to such Instrument Holder.
(b) In the event that any Instrument Holder (other than
CLI) shall claim payment of any additional amounts pursuant to Section
4.03 or payment of Increased Costs, the Lessee shall have the right, if no
Incipient Default or Event of Default exists, to replace such Instrument
Holder with another Approved Instrument Holder provided that such
Approved Instrument Holder unconditionally offers in writing (with a copy
to the Trustee) to purchase, in accordance with the provisions of Section
4.02, all of such Instrument Holder's rights hereunder and under the
Transaction Documents, including the Instruments held by such Instrument
Holder, without recourse, at the principal and stated amount of such
Instruments plus interest and current yield accrued thereon to the date of
such purchase on a date therein specified. If the Instrument Holder accepts
such purchase offer and such purchase is consummated, the Lessee shall
be obliged to pay, simultaneously with such purchase and sale, the
additional amounts to such Instrument Holder pursuant to Section 4.03 and
the Increased Costs attributable to such Instrument Holder in the manner
provided in the Transaction Documents to the date of such purchase as
well as all other amounts due and payable under the Transaction
Documents to or for the benefit of such Instrument Holder; provided, that
(x) if a Instrument Holder accepts such an offer and such bank or financial
institution fails to purchase such rights and interest on such specified date
in accordance with the terms of such offer, the Lessee shall continue to
be obliged to pay the additional amounts to such Instrument Holder
pursuant to Section 4.03 and to pay the Increased Costs attributable to
such Instrument Holder in the manner provided in the Transaction
Documents and (y) if such Instrument Holder fails to accept such purchase
offer, the Lessee shall not be obliged to pay such Instrument Holder such
additional amounts pursuant to Section 4.03 or the Increased Costs
attributable to such Instrument Holder from and after the date of such
purchase offer.
Section 4.05. Sharing of Payments, Etc. If any Instrument Holder
shall obtain any payment (whether voluntary or involuntary), on account
of the Instruments held by it (other than on account of Reserve Costs,
Break Costs, or Increased Costs and other than pursuant to Section 4.03
or any indemnification provision of the Transaction Documents) in excess
of its ratable share of payments on account of the Instruments obtained by
all the Instrument Holders, such Instrument Holders (or Agent on behalf
of the Instrument Holders) shall forthwith make appropriate payments or
distributions to other Instrument Holders calculated so that each
Instrument Holder receives the benefit of its ratable share of each
payment.
Section 4.06. Instrument Holders' Credit Decisions. By its
acceptance of its Instruments each Instrument Holder (whether it acquires
such Instrument as a Purchaser or as an Assignee) acknowledges that it
has, independently and without reliance upon the Trustee, Agent, or any
other Instrument Holder and based on such financial statements and/or
other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement or to acquire
an Instrument. Each Instrument Holder also acknowledges that it will,
independently and without reliance upon the Trustee, Agent, or any other
Instrument Holder and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions with respect to this Agreement or any of the other Transaction
Documents. Without limitation, each Instrument Holder acknowledges
that it has not relied upon statements or representations of Lessee
regarding its financial condition other than the financial information
provided by Lessee to Agent in connection with the execution of this
Agreement, the specific representations contained in the Transaction
Documents, and where applicable, the financial reports and information
supplied by Lessee to Agent during the Term of the Lease pursuant to the
Lease, the Lease Guarantee, or the other Transaction Documents.
ARTICLE V.
MISCELLANEOUS
Section 5.01. Survival. Except as otherwise expressly provided
herein or other applicable instrument or document, the parties' obligations
under this Agreement and in any certificate or other instrument delivered
by any party or on such party's behalf pursuant to this Agreement shall
not survive payment in full of all amounts due on the Notes and the
Certificates and under any of the Transaction Documents, the execution
and delivery of any Transaction Document, any issuance or disposition of
any of the Instruments, any disposition of any interest in the Property or
the termination of any Transaction Document, and shall continue in effect
regardless of any investigation made by or on behalf of any party hereto
and notwithstanding that any party may waive compliance with any other
provision of any Transaction Document. However, it is expressly agreed
that all indemnification provisions for the benefit of Trustee, Agent,
Purchasers, and/or Instrument Holders provided herein or in any such
other instrument or document shall survive any such payments, whether
or not expressly so stated.
Section 5.02. Notices. Unless specifically otherwise provided,
whenever any of the Transaction Documents requires or permits any
consent, approval, notice, request, or demand from one party to another,
the consent, approval, notice, request, or demand must be in writing to be
effective and shall be deemed delivered one (1) Business Day after deposit
with a nationally recognized overnight courier service for overnight
delivery addressed to the parties hereto at the respective addresses
specified below or at such other address as they may specify by written
notice. The address for each party for purposes hereof is as follows:
Holders, Purchasers and Agent:
Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: EFL/CBL Credit Head
FAX No. 914/899-7308
with copies to:
Brown McCarroll & Oaks Hartline
300 Crescent Court
Suite 1400
Dallas, Texas 75201
Attention: Charles W. Morris, Esq.
FAX No. 214/999-6170
Trustee:
State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Fourth Floor
Boston, Massachusetts 02110
Attention: Donald E. Smith,
Vice President
FAX No. 617/664-5371
with copies to:
Bingham, Dana & Gould LLP
100 Pearl Street
Hartford, Connecticut 06103
Attention: James G. Scantling, Esq.
FAX No. 860/527-5188
and a courtesy copy to Agent at:
Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: EFL/CBL Credit Head
FAX No. 914/899-7308
Lessee:
The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention: Michael Holden
Senior Vice President-Finance
FAX No. 215/227-9533
with copies to:
The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention: Ronald M. Neifield, Esq.
Real Estate Counsel
FAX No. 215/229-5076
Notices sent by any other method (including certified mail, personal
delivery, or facsimile transmission) shall be deemed delivered when
actually received by the addressee. Any notice of change of address shall
be effective only upon actual receipt, regardless of delivery method, and
such new address shall be effective as to notices given by the other parties
commencing ten (10) days after such change of address notice is received
by such parties. No party may establish an official address for notice
outside the continental United States.
Section 5.03. Severability. If any provision hereof or the
application thereof to any Person or circumstance shall be invalid, illegal
or unenforceable, the remaining provisions or the application of such
provision to Persons or circumstances other than those as to which it is
invalid or enforceable, shall continue to be valid and enforceable.
Section 5.04. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Lessee
therefrom, shall in any event be effective unless the same shall be in
writing and signed by Agent (with the consent of the Majority Holders),
the Lessee and the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given unless otherwise provided in such written instrument.
Section 5.05. Headings. The table of contents and headings of the
Articles, Sections and subsections are for convenience only and shall not
affect the meaning of this Agreement.
Section 5.06. Definitions. Except as otherwise expressly
provided, capitalized terms used in this Agreement shall have the
meanings given in Schedule 1 hereto.
Section 5.07. Benefit. The parties hereto and their permitted
successors and assigns, but no others, shall be bound hereby and entitled
to the benefit hereof. Each registered assignee of a partial interest in an
Instrument (regardless of whether a New Instrument is issued to such
assignee) shall be treated as an Instrument Holder and shall be a
beneficiary hereof; however, no holder of a participation or other
derivative interest in an Instrument shall be a beneficiary hereof.
Section 5.08. Place of Payment. The Trustee will cause all
amounts to be paid by Trustee which become due and payable on the
Instruments to be paid by bank wire transfer of immediately available
funds or, at the option of such Instrument Holder, such Affiliate, bank or
institutional investor, by check of the Agent, duly mailed, delivered or
made at the address or account provided in writing by such Instrument
Holder to the Trustee and Agent.
Section 5.09. Counterparts. The parties may sign this Agreement
in any number of counterparts and on separate counterparts, each of which
shall be an original but all of which together shall constitute one and the
same instrument.
Section 5.10. Governing Law; Venue.
(a) THIS AGREEMENT AND ALL TRANSACTION
DOCUMENTS SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF
PENNSYLVANIA, WITHOUT REGARD TO ITS CONFLICT OF
LAWS PRINCIPLES; PROVIDED THAT TO THE EXTENT THAT A
PORTION OF THE PROPERTY IS LOCATED IN A STATE OTHER
THAN THE STATE OF PENNSYLVANIA THE LAWS OF SUCH
STATE SHALL GOVERN SUCH PROVISIONS, IF ANY, OF THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS, TO
THE EXTENT THAT THE STATE IN WHICH SUCH PORTION OF
THE PROPERTY IS LOCATED REQUIRES THAT THE LAWS OF
SUCH STATE BE APPLIED THERETO, IN WHICH CASE AND TO
SUCH EXTENT THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF SUCH
STATE, IT IS EXPRESSLY AGREED, HOWEVER, THAT IT IS THE
DESIRE AND INTENT OF THE PARTIES THAT THE LAW OF THE
STATE OF PENNSYLVANIA GOVERN ALL PORTIONS OF THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS
(UNLESS OTHERWISE EXPRESSED THEREIN) TO THE EXTENT
THAT SUCH INTENT MAY BE HONORED WITHOUT VIOLATION
OF THE LAW OR PUBLIC POLICY OF THE STATE IN WHICH ANY
PORTION OF THE PROPERTY IS LOCATED. All references in this
Agreement or other Transaction Documents to "applicable Law" or terms
of similar import shall be interpreted consistent with the foregoing.
(b) Each of the parties hereto hereby submits to personal
jurisdiction in the State of Pennsylvania for the enforcement of its
obligations hereunder and under any and all other of the Transaction
Documents and waives any and all rights to be sued elsewhere. Each of
the parties hereto hereby acknowledges and agrees that the courts of the
State of Pennsylvania are an appropriate venue for any action, litigation
or lawsuit filed in connection with this Agreement or any of the other
Transaction Documents.
Section 5.11. Business Day. If the date scheduled for any
payment or action under any Transaction Document shall not be a
Business Day, then (unless such Transaction Document provides
otherwise) such payment shall be made or such action shall be taken on
the next succeeding Business Day.
Section 5.12. The Trustee. Except for liability for the
representations and warranties made by Trust Company in its individual
capacity in Section 2.02, and for the gross negligence and willful
misconduct of Trust Company, it is expressly understood and agreed by
the parties hereto that (a) this Agreement is executed and delivered by
Trust Company, not in its individual capacity but solely as Trustee under
the Declaration, in the exercise of the powers and authority conferred and
vested in it as the Trustee, (b) each of the representations, undertakings
and agreements herein made on the part of the Trustee is made and
intended not as personal representations, undertakings and agreements by
Trust Company, but is made and intended for the purpose of binding only
the Property created by the Declaration of Trust, (c) nothing herein
contained shall be construed as creating any liability on Trust Company,
individually or personally, to perform any covenant of the Trustee either
expressed or implied contained herein or in the Transaction Documents,
all such liability, if any, being expressly waived by the parties to this
Agreement and by any Person claiming by, through or under the parties
to this Agreement, and (d) under no circumstances shall Trust Company
be personally liable for the payment of any indebtedness or expenses of
the Trustee or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trustee
under this Agreement or the other Transaction Documents.
Section 5.13. Estoppel Certificates. At any party's request each
other party hereto will execute, acknowledge, and deliver a written
statement, addressed to such Person as the party making the request may
reasonably designate, certifying that this Transaction Agreement or other
applicable Transaction Document is unmodified and in full force and
effect (or, if there have been modifications, that this Transaction
Agreement or other applicable Transaction Document is in full force and
effect as modified, and identifying such modifications), and certifying to
such other matters concerning the Transaction as may reasonably be
requested. In the case of Trustee or Agent, the certificate shall state (in
the case of Trustee, after consultation with Agent) the amount of
outstanding principal and accrued interest or stated amount and accrued
certificate yield, as applicable, due under the Instruments
Section 5.14. Transaction Documents; Further Assurances. Each
of the parties hereto does hereby covenant and agree to perform and be
governed and restricted by the Transaction Documents to which it is a
party and, subject to the terms and conditions thereof, to take or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable in connection therewith. The Lessee, the Trustee,
Agent, and the Purchasers will, at the expense of the Lessee, execute and
deliver such further instruments and do such further acts as may be
necessary or proper to carry out more effectively the purposes of the
Transaction Documents and the transactions contemplated thereby. The
Lessee, Agent, the Trustee, and the Purchasers may at any time, subject
to the conditions and restrictions contained in the Transaction Documents,
enter into supplements which shall form a part hereof, when required or
permitted by any of the provisions of the Transaction Documents.
Section 5.15. Confidentiality. Each of the parties hereto (and any
Person that hereafter becomes an Instrument Holder) agrees that unless
otherwise required by Law or by any governmental authority or body or
consented to by the Lessee and CLI it will maintain the confidentiality of
all non-public information (i) regarding the financial terms of this
transaction or (ii) regarding the Lessee or the Property which shall be
furnished to it by the Lessee in connection with the transactions
contemplated by the Transaction Documents, in accordance with the
procedures it generally applies to confidential material. The parties hereto
agree not to publish tombstones or other public announcements in
connection with the transactions contemplated hereby without the consent
of the Lessee and the Agent.
Section 5.16. Interest. It is the intention of the parties hereto to
conform strictly to usury Laws applicable to each Instrument Holder and
the Transactions. Accordingly, if the Transactions would be usurious as
to any Instrument Holder under Applicable Law, then, notwithstanding
anything to the contrary in the Instruments, this Agreement or in any
other Transaction Document or agreement entered into in connection with
the Transactions, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest or current yield as to any
Instrument Holder under Applicable Law that is contracted for, taken,
reserved, charged or received by any Instrument Holder under the
Instruments, this Agreement or under any of such other Transaction
Documents or agreements or otherwise in connection with the
Transactions shall under no circumstances exceed the maximum amount
allowed by such Applicable Law, (ii) in the event that the maturity of the
Instruments is accelerated for any reason, or in the event of any required
or permitted prepayment, then such consideration that constitutes interest
or current yield as to any Instrument Holder under Applicable Law may
never include more than the maximum amount allowed by such Applicable
Law, and (iii) interest or current yield, if any, in excess of that permitted
by Applicable Law provided for in this Agreement or otherwise in
connection with the Transactions shall be, subject to the following
provisions, canceled automatically and, if theretofore paid, shall be
credited by such Instrument Holder on the principal or stated amount of
the Instruments (or, to the extent that the principal or stated amount of the
Instruments shall have been or would thereby be paid in full, refunded by
such Instrument Holder to the party entitled thereto). If at any time the
amount or rate of interest or yield (as applicable) contractually called for
in any Instrument or other Transaction Document (as the same may vary
from time to time pursuant to the terms of such Instrument or other
Transaction Document, the "Stated Rate") exceeds the maximum amount
of interest or yield allowed by Applicable Law in respect of such
Instrument or other Transaction Document, then the rate of interest or
yield to accrue on such Instrument or other Transaction Document shall
be limited to the maximum amount allowed by such Applicable Law, but
any subsequent reduction in the Stated Rate applicable to such Instrument
or other Transaction Document shall not reduce the interest or yield to
accrue on such Instrument or other Transaction Document below the
maximum amount allowed by such Applicable Law until the total amount
of interest or yield on such Instrument or other Transaction Document
equals the amount of interest or yield which would have accrued if the
Stated Rate applicable to such Instrument or other Transaction Document
had at all times been in effect. If at the maturity or final payment of any
Instrument or other Transaction Document the total amount of interest or
yield paid or accrued on such Instrument or other Transaction Document
under the preceding sentence is less than the total amount of interest or
yield which would have accrued if the Stated Rate applicable to such
Instrument or other Transaction Document had at all times been in effect,
then to the fullest extent permitted by Applicable Law, there shall be due
and payable under, and to the Holders of, such Instrument or other
Transaction Document of an amount equal to the difference between (a)
the lesser of (x) the amount of interest or yield (as applicable) which
would have accrued on such Instrument or other Transaction Document
if the maximum amount allowed by Applicable Law had at all times been
in effect and been chosen as the rate or interest or yield to be applicable
throughout the term of such Instrument or other Transaction Document
and (y) the amount of interest or yield (as applicable) which would have
accrued on such Instrument or other Transaction Document if the Stated
Rate applicable to such Instrument or other Transaction Document had at
all times been in effect, and (b) the amount of interest or yield (as
applicable) accrued in accordance with the provisions of such Instrument
or other Transaction Document after giving effect to the preceding
sentence. All sums paid or agreed to be paid to each Instrument Holder
for the use, forbearance or detention of sums included in the Instruments
shall, to the extent permitted by Applicable Law, be amortized, prorated,
allocated and spread throughout the full term of the Instruments until
payment in full so that the rate or amount of interest on account of the
Instruments does not exceed the applicable usury ceiling, if any.
Section 5.17. Money. Unless stipulated otherwise, all references
in any of the Transaction Documents to "dollars," "money," "payments,"
or other similar financial or monetary terms, are references to currency
of the United States of America.
Section 5.18. Number and Gender of Words. Whenever in any
Transaction Document the singular number is used, the same shall include
the plural where appropriate, and vice versa; and other words of any
gender in any Transaction Document shall include each other gender
where appropriate. The words "herein" and "hereunder," and other
words of similar import, refer to the relevant Transaction Document as a
whole and not to any particular part or subdivision thereof.
Section 5.19. Articles, Sections, Exhibits, and Schedules. All
references to "Article," "Articles," "Section," "Sections," "Subsection,"
or "Subsections" contained in this Agreement are, unless specifically
indicated otherwise, references to articles, sections, and subsections of this
Agreement. All references to "Exhibits" and "Schedules" contained in
this Agreement are references to exhibits and schedules attached to this
Agreement, all of which are made a part of this Agreement for all
purposes, the same as if set forth in this Agreement verbatim, it being
understood that if any Exhibit, which is to be executed and delivered,
contains blanks, the same shall be completed correctly and in accordance
with the terms and provisions contained and as contemplated in this
Agreement prior to or at the time of, or after, the execution and delivery
thereof.
Section 5.20. Decisions of Parties. Except as expressly otherwise
provided herein, all opinions, approvals, decisions, and determinations are
to be in such party's discretion and need not be reasonable.
Section 5.21. Restructure of Transaction. Notwithstanding the
provisions of Section 13(b)(i)(B) or (C) of the Lease, in the event of the
occurrence of a change in GAAP or the interpretive rulings applicable
thereunder, or a change in SEC rulings and/or requirements, which in
either case requires the recharacterization of the Lease as a "capital lease"
rather than an "operating lease", Lessee may request that the transaction
be restructured in a manner that will maintain the economic interests of
the parties and will permit Lessee to continue to have the Lease treated as
an "operating lease" for its financial accounting purposes. If Lessee so
requests, and Agent, CLI, all other Purchasers, and the Majority Holders
agree to such a restructure, then the parties will proceed in good faith, but
at Lessee's expense, to negotiate such changes in the structure of the
transaction and the Transaction Documents as the parties may mutually
determine to be necessary to effect such intention. While the parties agree
to cooperate in good faith to negotiate modifications to the Transaction
Documents to achieve operating lease treatment for the Lessee, no party
will be obligated to accept a restructure of the transaction and/or any
modification to any Transaction Document that is, in such party's opinion,
materially adverse to its legal or financial interest. In the event that the
parties are unable to agree to a restructuring or modification which is
acceptable to Lessee, Lessee shall be entitled to exercise the right set forth
in Section 13(b) of the Lease in accordance with the terms and conditions
therein contained.
Section 5.22. Construction of Agreement. Should any provision
of this Agreement require interpretation or construction in any judicial,
administrative, or other proceeding or circumstance, it is agreed that the
parties hereto intend that the court, administrative body, or other entity
interpreting or construing the same shall not apply a presumption that the
provisions hereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be construed more
strictly against the party who itself or through its agents prepared the
same, it being agreed that the agents of both parties hereto have fully
participated in the preparation of all provisions of this Agreement and all
of the Transaction Documents.
THIS WRITTEN TRANSACTION
AGREEMENT, TOGETHER WITH THE OTHER
TRANSACTION DOCUMENTS, REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 5.23. Brokers. Except to the extent of fees or other
payments specifically provided to be paid by Lessee under the Transaction
Documents, each party hereto shall pay or cause to be paid any and all
valid claims of any brokers or agents with whom such party has dealt who
claim a right to any fees or other compensation in connection with
arranging the financing of the Property provided hereby and shall
indemnify, defend and hold all other parties hereto harmless from such
claims, whether or not they are valid.
Section 5.24. WAIVER OF JURY TRIAL. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND FOR THE PURPOSE
OF REDUCING THE TIME AND EXPENSE OF LITIGATION, THE
PARTIES HERETO EACH WAIVE TRIAL BY JURY IN ANY
ACTION BROUGHT ON, UNDER, OR BY VIRTUE OF THIS
AGREEMENT, ANY OF THE TRANSACTION DOCUMENTS, OR
ANY OF THE TRANSACTIONS CONTEMPLATED OR
GOVERNED THEREBY.
ARTICLE VI.
THE AGENT
Section 6.01. Appointment.
(a) The Purchasers and the Instrument Holders hereby
designate and appoint CLI as the initial administrative agent (herein
"Agent") on behalf of the Purchasers and the Instrument Holders, as
applicable, under this Agreement and the Transaction Documents. By its
execution hereof CLI authorizes, and by its execution of an Assignment
Agreement and/or by its execution of a supplement hereto becoming a
Purchaser hereunder, each such additional Purchaser and each such
Instrument Holder hereby irrevocably authorizes the Agent to perform the
rights and obligations of the "Agent" hereunder and under the other
Transaction Documents. The Agent shall serve without compensation,
except as otherwise agreed in writing by the Lessee and the Majority
Holders, but the Agent shall be entitled to payment or reimbursement of
its out-of-pocket expenses incurred in the performance of its duties as
provided for in the applicable provisions of the Transaction Documents.
Without limitation, to the extent that any Transaction Document provides
for the payment or reimbursement of expenses incurred by the Purchasers
or Instrument Holders, or any of them, any such expenses incurred by the
Agent in connection with such matters shall be deemed to have been
incurred by the Instrument Holders or Purchasers, as applicable, and the
Agent shall be entitled to the same reimbursement rights.
(b) In performing its functions and duties under this
Agreement, the Agent shall act solely as agent of the Purchasers or
Instrument Holders, as applicable (or in certain specified circumstances
the Trustee), and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or
for Lessee.
Section 6.02. Nature of Duties.
(a) The Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement or in the other
Transaction Documents. The Agent has a contractual obligation, as
provided herein and in the Transaction Documents, but shall not have by
reason of this Agreement or any other Transaction Document a trust or
fiduciary relationship in respect of any Instrument Holder. Nothing in this
Agreement or any of the other Transaction Documents, expressed or
implied, is intended to or shall be construed to impose upon the Agent any
obligations in respect of this Agreement or any of the Transaction
Documents except as expressly set forth herein or therein.
(b) Each Purchaser and Instrument Holder shall make
its own independent investigation of the financial condition and affairs of
Lessee in connection with the Transactions contemplated hereunder and
shall make its own appraisal of the creditworthiness of Lessee, and the
Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Instrument Holder with any credit or
other information with respect thereto, whether coming into its possession
before the Closing Date or at any time or times thereafter. Each
Purchaser and Instrument Holder acknowledges that neither the Agent nor
counsel to the Agent nor any other Instrument Holder is providing any
assurances, or shall have any responsibility, with respect to the ownership
of any Property or the absence of any Liens or defects of title, or the
authorization, execution, legality, sufficiency or effect of any Transaction
Document or any other document, or the validity, creation, perfection or
priority of any Right, or to investigate or not to investigate any of those
matters, and each Instrument Holder agrees to look solely to its rights as
one of the Instrument Holders with respect to any of the foregoing.
(c) The Agent may at any time request instructions from
the Instrument Holders or Purchasers, as applicable, with respect to any
actions or approvals which by the terms of this Agreement or of any of
the other Transaction Documents the Agent is permitted to take or to
grant, and if such instructions are promptly requested, the Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the
Transaction Documents until it shall have received such instructions from
the Majority Holders or Majority Purchasers, as applicable. Without
limiting the foregoing, no Instrument Holder shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining
from acting under this Agreement, the Instruments, or any of the other
Transaction Documents in accordance with the instructions of the Majority
Holders or Majority Purchasers, as applicable.
(d) If the Agent seeks the consent or approval of the
Instrument Holders or Purchasers (either collectively or with respect to
any particular series of Instruments) to the taking or refraining from
taking any action hereunder, the Agent shall send written notice thereof
to each Instrument Holder or Purchaser, as the case may be (either
collectively or as to the affected series, as applicable) based on the most
recent information known to Agent with respect to such ownership as set
forth in the Register maintained by the Agent. The Agent shall promptly
notify each Instrument Holder or Purchaser, as applicable, at any time that
the Majority Holders or Majority Purchasers, as applicable, have
instructed the Agent to act or refrain from acting in any particular manner
pursuant hereto. Upon request Agent shall supply a copy of the Register
to Lessee.
(e) Whenever this Agreement or any other Transaction
Document requires that the Agent take action at the direction of the
Majority Holders of the Instruments or any particular series of
Instruments, or at the direction of the Majority Purchasers, then prior to
taking the action in question (including, without limitation, prior to giving
directions to the Trustee in connection therewith), Agent shall seek
direction from the Instrument Holders (or applicable series thereof) or
Purchasers, as applicable, and shall take actions or give directions
consistent with the desires of the Majority Holders (with respect to the
applicable series thereof) or the Majority Purchasers, as applicable.
Where this Agreement or the other Transaction Documents do not require
approval of the Majority Holders or Majority Purchasers with respect to
any particular action or direction, then Agent may, but need not, seek
input from the Instrument Holders or Purchasers as to the appropriate
course of action, but in the absence of any such direction Agent shall be
free to take such actions as Agent may deem appropriate and in the best
interests of the Instrument Holders (or the applicable series thereof) or
Purchasers, as applicable, as a whole. In the exercise of its powers and
rights hereunder Agent shall exercise the same care as it exercises with
respect to similar transactions entered into solely for its own account and
shall otherwise have no liability or responsibility to the Instrument Holders
or Purchasers except for actions taken by Agent in bad faith, actions
which are grossly negligent, or actions which constitute willful misconduct
by the Agent.
(f) The Majority Holders (either of the Instruments as
a whole, or of the applicable series of Instruments) shall at any time have
the right to direct the Agent in the exercise of any rights or options that
may then be available to the Instrument Holders of the Instruments (or the
applicable series thereof), and upon receipt of any such direction Agent
shall proceed in the manner directed by the Majority Holders; provided,
that in no event shall Agent have any obligation to proceed in any manner
that Agent in good faith believes may expose Agent to any risk or
obligation unless and until Agent has been provided by the Instrument
Holders with security satisfactory to Agent to protect Agent with respect
to the risk or obligation in question. Similarly, the Majority Purchasers
shall at any time have the right to direct the Agent in the exercise of any
rights or options that may then be available to the Purchasers, and upon
receipt of any such direction Agent shall proceed in the manner directed
by the Majority Purchasers; provided, that in no event shall Agent have
any obligation to proceed in any manner that Agent in good faith believes
may expose Agent to any risk or obligation unless and until Agent has
been provided by the Purchasers with security satisfactory to Agent to
protect Agent with respect to the risk or obligation in question.
(g) In its dealings with the Trustee, the Lessee, or the
Instrument Holders the Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, power
of attorney, or other paper or document which Agent in good faith
believes to be genuine and what it purports to be.
(h) In the event of any good faith disagreement between
any of the parties to this Agreement resulting in adverse claims or
demands being made upon Agent, or if Agent, in good faith, is in doubt
as to what action it should take hereunder, Agent may, at its option,
refuse to comply with any claims or demands on it so long as such
disagreement continues or such doubt exists, and in any such event, Agent
shall not be or become liable in any way or to any person for its failure
or refusal to act, and Agent shall be entitled to continue so to refrain from
acting until (i) the rights of all parties shall have been fully and finally
adjudicated by a court of competent jurisdiction or (ii) all differences shall
have been adjusted and all doubt resolved by agreement among all of the
interested persons and Agent shall have been notified thereof in writing
signed by all such persons. The rights of Agent under this paragraph are
cumulative of all other rights which it may have under law or otherwise.
Section 6.03. Rights, Exculpation, etc. Neither the Agent nor any
of its Affiliates, officers, directors, employees, agents, attorneys or
consultants shall be liable to any Instrument Holder for any action taken
or omitted by them hereunder or under any of the Transaction Documents,
or in connection herewith or therewith, except that (i) the Agent shall be
obligated on the terms set forth herein for performance of its express
obligations hereunder, and (ii) Agent shall be liable to the Instrument
Holders for damages caused by its gross negligence in the discharge of its
duties hereunder or its own willful misconduct. The Agent shall not be
responsible to any Instrument Holder for any recitals, statements,
representations or warranties herein or for the execution, effectiveness,
genuineness, validity, enforceability, collectability, or sufficiency of this
Agreement, or any of the other Transaction Documents, or any of the
transactions contemplated hereby and thereby, or for the financial
condition of Lessee. The Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any of the Transaction
Documents or the financial condition of Lessee, or the existence or
possible existence of any Incipient Default or Event of Default.
Section 6.04. Reliance. The Agent shall be entitled to rely upon
any written notices, statements, certificates, orders or other documents or
any telephone message believed by it in good faith to be genuine and
correct and to have been signed, sent or made by the proper Person, and
with respect to all matters pertaining to this Agreement or any of the
Transaction Documents and its duties hereunder or thereunder, upon
advice of legal counsel, independent public accountants and other experts
selected by it. Lessee and Trustee shall be entitled to rely upon any
written notices, requests, waivers, consents, receipts, authorizations,
powers of attorney, statements, certificates, orders, approvals, directions,
or other documents or matters issued by or from Agent and shall be
entitled to give notices to, make requests of and otherwise deal solely with
Agent, as administrative agent for the Holders, the Purchasers and the
Trustee, as the case may be, except as expressly provided herein.
Section 6.05. Indemnification. To the extent that the Agent is not
reimbursed and indemnified by the Lessee in accordance with the express
terms of the Transaction Documents, or Lessee fails upon demand by the
Agent to perform its obligations to reimburse or indemnify the Agent, the
Instrument Holders will reimburse and indemnify the Agent for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent or in any way relating to or arising out of this
Agreement or any of the other Transaction Documents or any action taken
or omitted by the Agent under this Agreement or any of the other
Transaction Documents, in proportion to their respective proportions of
the principal amount of Notes and outstanding amounts of Certificates;
provided that no Instrument Holder shall be liable 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. The obligations of the Instrument
Holders under this Section shall survive the discharge in full of the
Instruments. If the Agent is or becomes a Instrument Holder, the Agent
shall have and may exercise the same rights and powers hereunder and is
subject to the same obligations and liabilities as and to the extent set forth
herein for any other Instrument Holder. The terms "Instrument Holder"
or "Majority Holder" or any similar terms shall, unless the context clearly
otherwise indicates, include the Agent in its individual capacity as a
Instrument Holder or one of the Majority Holders. The Agent and its
Affiliates may accept deposits from, lend money to, and generally engage
in any kind of banking, trust or other business with Lessee as if it were
not acting as Agent pursuant hereto.
Section 6.06. Successor Agent; Resignation of Agent.
(a) The Majority Holders may, at any time by written
notice to Lessee, Trustee, and the Agent then serving, designate a
successor Agent, with or without cause; provided, however, that so long
as CLI has an outstanding Commitment hereunder, the Agent shall not be
removed, except for cause, without the approval of CLI. For this
purpose, "cause" shall mean the gross neglect by Agent of its duties
hereunder. Any such successor Agent shall have all rights, powers, and
duties assigned to the "Agent" hereunder from and after the effective date
of its appointment. Except in cases where the Agent is being replaced as
a result of a material default or dereliction of its duties by the existing
Agent, the effective date of the appointment of a successor Agent shall be
not less than thirty (30) days after the notice of appointment of the
successor Agent is given.
(b) The Agent may resign at any time upon written
notice given to the Lessee, the Trustee, and each Instrument Holder. The
effective date of the resignation shall be not less than sixty (60) days after
the notice of resignation is given. In the event of any such resignation by
Agent, the Majority Holders shall promptly appoint a successor agent and,
if no successor agent is so appointed within thirty (30) days thereafter the
Agent shall be (i) the Purchaser with the largest outstanding Commitment,
or (ii) if no Commitment remains outstanding hereunder, the Instrument
Holder that holds the largest aggregate amount of Instruments (measured
by dollar amount).
(c) In the event of the appointment of a successor Agent
(whether as a result of the resignation of the previous Agent or otherwise),
the outgoing Agent shall reasonably cooperate with the successor Agent,
the Trustee, the Purchasers, Lessee, and the Instrument Holders to
provide for a smooth transition of the function of the Agent hereunder.
Any books and records of the outgoing Agent relating to its service as
Agent hereunder (but not books and records relating to any Instruments
that the outgoing Agent may hold for its own account) shall be turned over
to the successor Agent.
Section 6.07. Authorization to Act as Agent of Trustee. In
addition, the Trustee hereby appoints and authorizes the Agent to collect,
disburse, invest and otherwise administer on the Trustee's behalf all funds
paid or payable to the Trustee hereunder or under any of the Transaction
Documents, in each case, in accordance with the terms hereof and thereof,
and the Trust Company, in its individual capacity, shall not be liable for
the actions or inactions of the Agent in connection with the Agent's
collection, disbursement, investment and administration of such funds. As
to any matters not expressly provided for by this Agreement or the other
Transaction Documents, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Majority Purchasers or the Majority
Holders, and such instructions shall be binding upon all Purchasers or
Holders, as applicable; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to personal liability
or which is contrary to this Agreement or applicable Law.
IN WITNESS WHEREOF, intending to be legally bound
hereby, the parties have caused this Agreement to be duly executed on the
attached Signature Pages by their respective officers thereunto duly
authorized as of the day and year first above written.
[SEE ATTACHED SIGNATURE PAGES]
<PAGE>
SIGNATURE PAGE OF LESSEE AND LESSEE PARENT
ATTACHED TO
TRANSACTION AGREEMENT
(1997 PEP BOYS II LEASED PROPERTY)
LESSEE AND LESSEE
PARENT:
THE PEP BOYS - MANNY,
MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
<PAGE>
SIGNATURE PAGE OF TRUSTEE AND TRUST COMPANY
ATTACHED TO
TRANSACTION AGREEMENT
(1997 PEP BOYS II LEASED PROPERTY)
TRUSTEE:
STATE STREET BANK AND
TRUST COMPANY,
a Massachusetts trust company
(not in its individual
capacity, but solely as Trustee)
By:
Name:
Title:
TRUST COMPANY:
STATE STREET BANK AND
TRUST COMPANY,
a Massachusetts trust company
(in its individual
capacity, but only as expressly
stated herein)
By:
Name:
Title:
<PAGE>
SIGNATURE PAGE OF CLI,
AS AGENT, PURCHASER AND INSTRUMENT HOLDER
ATTACHED TO
TRANSACTION AGREEMENT
(1997 PEP BOYS II LEASED PROPERTY)
AGENT, PURCHASER and
INSTRUMENT HOLDER:
CITICORP LEASING, INC.,
a Delaware corporation
By:
Name:
Title:
<PAGE>
SIGNATURE PAGE OF BANK OF MONTREAL,
AS PURCHASER AND INSTRUMENT HOLDER
ATTACHED TO
TRANSACTION AGREEMENT
(1997 PEP BOYS II LEASED PROPERTY)
PURCHASER and
INSTRUMENT HOLDER:
BANK OF MONTREAL
By:
Name:
Title:
SCHEDULE 1
Certain Definitions
As used herein, the following terms have the meanings indicated:
"A-Note" means any of, and "A-Notes" means all of, the Series
A Trust Notes, due on the Maturity Date issued and, unless otherwise
specified or the context otherwise requires, outstanding under the
Declaration of Trust.
"Acquisition Price" shall have the meaning provided therefor in
Exhibit A attached to the Lease.
"Advance" and "Advances" shall have the meaning provided
therefor in Section 1.01(c).
"Affiliate" means a Person directly or indirectly, through one or
more intermediaries, controlling, controlled by, or under common control
with the Person in question. The term "control," as used in the
immediately preceding sentence, means, with respect to a Person that is
a corporation, the right to exercise, directly or indirectly, more than ten
percent (10%) of the voting rights attributable to the shares of the
controlled corporation and, with respect to a Person that is not a
corporation, the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of the controlled
Person.
"Agent" means the administrative agent for the Instrument Holders
and Purchasers appointed from time to time under this Agreement. CLI
is the initial Agent appointed under this Agreement.
"Agreement" means this Transaction Agreement, as it may be
amended, modified, supplemented, renewed, extended, and/or restated,
from time to time, it being acknowledged and agreed that the parties may
elect, by mutual agreement, to amend this Agreement to increase the
amount of Advances available to Trustee hereunder, but expressly
acknowledging that Purchasers have not agreed, and have no obligation
whatsoever to do so under any circumstances.
"Applicable Rate" shall have the meaning provided therefor in the
Lease.
"Approved Purposes" means (i) the purchase price paid by
Trustee from time to time to acquire portions of the Property, (ii) amounts
advanced from time to time by Trustee to Lessee in respect of
Construction Advances (including, without limitation, Interim Advances)
under the Lease, and (iii) reasonable costs and expenses incurred in
connection with the purchase of the Property and/or the closing of the
transactions contemplated hereby from time to time, all as properly
substantiated to, and approved by, Agent.
"B-Note" means any of, and "B-Notes" means all of, the Series B
Trust Notes, due on the Maturity Date, issued and, unless otherwise
specified or the context otherwise requires, outstanding under the
Declaration of Trust.
"Bankruptcy Code" means Title 11 of the United States Code, as
amended from time to time.
"Break Costs" shall mean an amount equal to the amount (if any)
required to compensate any Instrument Holder for any additional losses
(including, without limitation, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or funds acquired by such Instrument Holder to
fund or maintain any Instrument) it may reasonably incur as a result of the
payment of the principal balance of a Note or the stated amount of a
Certificate, as applicable, on any date other than a Payment Date.
"Business Day" means every day on which banks in the Cities of
New York, New York, Chicago, Illinois, Boston, Massachusetts, and
Philadelphia, Pennsylvania, are open for business and are not required to
be closed.
"Certificate" means any of, and "Certificates" means all of, the
Series C Trust Certificates, due on the date of the expiration or
termination (for any reason) of the Lease, issued, and unless otherwise
specified or the context otherwise requires, outstanding under the
Declaration of Trust.
"Certificate Holder" means any of, and "Certificate Holders"
means all of, the Holders from time to time of the Certificates.
"Certificate Rate" means, with respect to each Certificate or an
applicable portion thereof and with respect to each day during an Interest
Period, a rate per annum determined for such day equal to the LIBO Rate,
plus the Spread applicable to such Certificate or portion thereof.
"Commitment" means, with respect to a Purchaser, the amount of
such Purchaser's commitment to make Advances pursuant to Section 1.01
of this Agreement. In the case of the original Purchasers the amount of
their respective Commitments is specified in subsections 1.01(a) and (b)
hereof; in the case of any subsequent Purchaser(s) the amount of its
Commitment shall be specified as provided for in subsections 1.01(f) and
(g) hereof.
"Construction Advance" and "Construction Advances" shall have
the meanings provided therefor in Section 1.01(d) hereof.
"Construction Supplement" and "Construction Supplements"
shall have the meanings provided therefor in Section 1.01(d) hereof.
"Debt Rating" means, as of any date, the then current rating
issued by Standard & Poor's Corporation for Lessee's senior unsecured
debt, or if Lessee then has no senior unsecured debt rated by Standard &
Poor's Corporation, such other rating (including, without limitation, a
rating issued by another rating service if any such rating is then available
or a rating determined by the internal analysts of Agent or an Affiliate of
Agent) as Agent may deem most closely corresponds thereto.
"Debtor Relief Laws" means the Bankruptcy Code and all other
applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of
payments, or similar debtor relief Laws from time to time in effect
affecting the Rights of creditors generally.
"Declaration" or "Declaration of Trust" means that certain
Declaration of Trust of even date herewith executed by Trustee with
respect to the Property and the Transactions contemplated hereby, as
amended, restated, supplemented, or otherwise modified from time to
time.
"Default Rate" means the lesser rate per annum of (i) two percent
(2%) in excess of the effective prime interest rate quoted by Citibank,
N.A., from time to time in effect as its base or reference rate for short-
term floating rate commercial loans (whether or not such rate is actually
charged in any particular instance), or (ii) the Maximum Rate.
"Environmental Indemnity Agreement" means collectively that
certain Environmental Indemnity Agreement of even date herewith
executed by Lessee (and the other lessees under the Lease) for the benefit
of Trustee, Agent and the Instrument Holders, as amended, restated,
supplemented, or otherwise modified from time to time.
"Event of Default" has the meaning given thereto in the Lease.
"Fee Letter" means that certain letter dated January 10, 1997,
from Trust Company to Lessee describing certain costs and charges to be
paid to Trust Company in connection herewith.
"Hold Position" has the meaning provided therefor in Section
1.01(a) hereof.
"Holder" has the same meaning as "Instrument Holder."
"Improvements" has the meaning provided therefor in the
Preliminary Statement hereof.
"Increased Costs" means any additional amounts required to be
paid to any Instrument Holder to compensate such Instrument Holder for
any increased costs of maintaining the Instrument (the effect of which is
not included in the applicable Instrument Holder's determination of such
costs at the more recent to occur of the original issuance of such
Instrument or the adjustment of the Note Rate or Certificate Rate
applicable to such Instrument or applicable interest therein in connection
with the Secondary Transaction (as defined in the Lease) as a result of the
implementation after the date hereof of any applicable Law regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Instrument Holder (or any
lending office thereof) with any request or directive regarding capital
adequacy (whether or not having the force of Law) of any such authority,
central bank or comparable agency which has the effect of increasing the
amount of capital required or expected to be maintained as a result of its
maintaining the Instrument.
"Instrument" means any of, and "Instruments" means all of,
collectively, the Notes and the Certificates.
"Interim Advance" and "Interim Advances" shall have the
meanings provided therefor in Section 1.01(d) hereof.
"Interim Supplement" and "Interim Supplements" shall have the
meanings provided therefor in Section 1.01(d) hereof.
"Instrument Holder" or "holder" when used with respect to any
Instrument(s), means the Person whose name appears on the Register as
the registered owner of such Instrument(s) or the registered assigns of a
portion of an Instrument, as applicable. It is acknowledged that each
Purchaser shall be an Instrument Holder for all purposes hereof (until such
time as it has disposed of all of its Instruments) and entitled to the benefit
of all provisions hereof respecting the Instrument Holders, in addition to
and not in lieu of, its rights as the Purchaser hereunder.
"Interest Period" means, as applicable to an Instrument, (i) the
period commencing on the date of the first Advance under such Instrument
through the day immediately preceding the first Payment Date, or (ii) the
period commencing on any Payment Date through the day immediately
preceding the next Payment Date.
"Law" or "Laws" means, either singularly or collectively, as
applicable, all applicable statutes, laws, ordinances, regulations, orders,
writs, injunctions, decisions, opinions or decrees of any governmental
authority or any Tribunal.
"Lease" means, collectively, that certain Master Lease of even date
herewith, executed by Trustee, as lessor, and Lessee, as lessee, covering
portions of the Property, together with such supplements or amendments
thereto as may be executed from time to time by Lessee (or any
Additional Lessees) and Trustee and approved by Agent, including,
without limitation, supplements thereto adding Parcels to the Property or
"Additional Lessees" as a party to the Lease.
"Lease Guarantee" means that certain Lease Guarantee of even
date herewith executed by Lease Guarantor with respect to the Lease, as
amended, restated, supplemented, or otherwise modified from time to
time.
"Lease Guarantor" means The Pep Boys - Manny, Moe & Jack,
a Pennsylvania corporation.
"Lessee" means The Pep Boys - Manny, Moe & Jack, a
Pennsylvania corporation, its permitted successors and assigns. For
purposes of this Agreement any other Person that is a party to the Lease
shall not be treated as "Lessee" unless the context otherwise requires.
"Lessee's Equipment" shall have the meaning given to such term
in the Lease.
"LIBO Business Day" means a day of the year on which dealings
are carried on in the London interbank market and banks are open for
business in London and not required or authorized to close in New York
City.
"LIBO Rate" for each Interest Period means an interest rate per
annum equal to the average (rounded, if necessary, to the next highest
1/16 of 1%) of the rates of interest per annum at which deposits in United
States dollars are offered to prime banks in the London interbank market
at 11:00 a.m. (London time) two LIBO Business Days before the first day
of such Interest Period (the "LIBO Rate Setting Date") for a period equal
to such Interest Period.
"LIBO Rate Reserve Percentage" for any Interest Period means
the reserve percentage applicable to the Instrument Holders during such
Interest Period under the regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or if more than one
such percentage is so applicable, the daily average for such percentages
for those days in such Interest Period during which any such percentages
shall be so applicable) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental to other
marginal reserve requirement) for Instrument Holders in respect of
liabilities or assets consisting of or including Eurocurrency Liabilities (as
defined in Regulation D of the Board of Governors of Federal Reserve
System as in effect from time to time) having a term equal to such Interest
Period.
"Lien" means any lien, mortgage, security interest, pledge, charge,
easement or encumbrance (excluding any transfer, assignment, or sublease
permitted under Section 17 of the Lease, or any lien on Lessee's
Equipment) of any kind, including, without limitation, a mechanic's lien,
a materialman's lien, the rights of a vendor, lessor, or similar party under
any conditional sales agreement or other title retention agreement or lease
substantially equivalent thereto, any production payment, and any other
right of or arrangement with any creditor to have his claim satisfied out
of any property or assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.
"Litigation" means any proceeding, claim, and/or lawsuit
conducted by or before any Tribunal.
"Majority Holders" means: (i) with respect to any series of
Instruments, the registered Holders of at least sixty-six and two-thirds
percent (66-2/3%) in aggregate principal or stated amount of such series
of Instruments then outstanding; and (ii) with respect to more than one
series of Instruments, the registered Holders of at least sixty-six and two-
thirds percent (66-2/3%) of the total aggregate principal and stated
amounts of such series of Instruments then outstanding.
"Majority Purchasers" means the Purchaser(s) whose aggregate
outstanding Commitment at any relevant time is at least sixty-six and two-
thirds percent (66-2/3%) of the aggregate outstanding Commitments of all
Purchasers.
"Master Schedule" shall have the meaning provided therefor in the
Declaration of Trust.
"Maturity Date" shall mean August 31, 2003.
"Maximum Rate" means the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on any Note, Certificate, or other applicable
obligation, as the case may be, under the Law of the State of
Pennsylvania, or, if Pennsylvania Law is pre-empted thereby, the Law of
the United States of America applicable to the Holders and the
Transactions that would permit Holders to lawfully contract for, charge,
take, reserve or receive a greater amount of interest than that permitted
under Pennsylvania Law.
"New Improvements" shall have the meaning provided therefor in
the Lease.
"Note" means any of, and "Notes" means all of, collectively, the
A-Notes and the B-Notes outstanding under the Declaration of Trust.
"Note Rate" means, with respect to each Note or an applicable
portion thereof and with respect to each day during an Interest Period, a
rate per annum determined for such day equal to the LIBO Rate, plus the
Spread applicable to such Note or portion thereof.
"Noteholders" means, in the aggregate, the Holders at the time in
question of all of the Notes then outstanding (or, if applicable, the series
of Notes in question).
"Outside Funding Date" has the meaning provided therefor in
Section 1.05(e) hereof.
"Parcels" means any tracts or parcels of real property that may
hereafter be added to the Property, together with any and all structures,
buildings, fixtures, or other improvements from time to time located
thereon and any and all appurtenances thereto; provided, that such term
does not include Lessee's Equipment or any other trade fixtures,
inventory, or other items of personal property located on such parcels that
are owned by any other Person other than Trustee. Nothing in the
foregoing definition or applicable provisions of this Agreement shall be
deemed to limit or restrict Lessee's rights to demolish improvements
located on Parcels at the time such Parcel is added to the Property in
connection with the construction of New Improvements on the Parcel, to
the extent permitted by the express terms of the Lease.
"Payment Date" means the first day of each calendar month to and
including the month in which the Maturity Date falls, as well as the
Maturity Date itself; provided, however, that if such Payment Date is not
a Business Day, such Payment Date shall be the next succeeding Business
Day.
"Pep Boys I Facility" means that certain asset defeasance lease
facility created pursuant to that certain Transaction Agreement dated
November 13, 1995, by and among Lessee, Trustee and CLI, that certain
Declaration of Trust dated November 13, 1995, executed by Trustee, and
that certain Master Lease dated November 13, 1995, by and between
Trustee and Lessee.
"Percentage" means, relative to any Purchaser and any series of
Instruments, the percentage equal to the ratio of such Purchaser's
Commitment in respect of that series of Instruments to the total
Commitments of all Purchasers in respect of that series of Instruments.
"Permitted Encumbrances" shall have the meaning provided
therefor in the Lease.
"Person" means any individual, firm, corporation, association,
partnership, joint venture, other entity, or Tribunal.
"Plans" shall have the meaning provided therefor in the Lease.
"Property" shall have the meaning provided therefor in the Lease.
"Purchaser" means any Person having a Commitment hereunder.
"Reserve Costs" means, so long as Instrument Holders hereafter
shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves in excess of those maintained
at the more recent to occur of the original issuance of the applicable
Instrument or the adjustment of the Note Rate or Certificate Rate
applicable to such Instrument or the applicable interest therein in
connection with the Secondary Transaction with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional
amounts equal to the product of (1) the outstanding balance of the
Instruments, multiplied by (2) an interest rate per annum equal, at all
times during the period in which such reserves were assessed, to the
remainder obtained by subtracting (a) the LIBO Rate for such Interest
Period from (b) the rate obtained by dividing such LIBO Rate applicable
during such Interest Period by a percentage equal to 100% minus the
applicable LIBO Rate Reserve Percentage, payable on each Payment Date.
"Rights" means rights, remedies, powers, and privileges.
"Securities Act" means the Securities Act of 1933, as amended.
"Spread" shall be either (A) in the case of the Certificates, 225
basis points, or (B) in the case of the A-Notes and the B-Notes, the
number of basis points determined by reference to the following chart,
based on the Debt Rating of Lessee as of the beginning of the applicable
Interest Period:
Lessee s Most Recent
Debt Rating Spread
BBB+ (or higher) 37.5 basis points (0.375%)
BBB 42.5 basis points (0.425%)
BBB- 52.5 basis points (0.525%)
less than BBB- 75.0 basis points (0.75%)
"Taxes" means all taxes, assessments, fees, levies, impositions,
duties, deductions, withholdings, or other charges of any nature
whatsoever from time to time or at any time imposed by any Laws or by
any Tribunal as well as any other item included within the term
"Impositions" under the Lease.
"Term" shall have the meaning provided therefor in the Lease.
"Title Company" means one or more title insurance companies
reasonably acceptable to Agent which shall issue the Title Policies.
"Title Policies" means, collectively, (A) one or more Owner s
Title Insurance Policies (collectively, the "Owner's Title Policy") issued
to Trustee by the Title Company, in the aggregate amount of the
Advances hereunder, insuring that Trustee owns fee simple title to the
Property, subject to no exceptions other than the Permitted Encumbrances,
and (B) one or more Mortgagee Title Insurance Policies (collectively, the
"Mortgagee Title Policy") issued to Agent (for the benefit of the
Noteholders) by the Title Company, in the aggregate amount of the Notes
issued hereunder, insuring that the Transaction Mortgage is a first
mortgage lien on fee simple title to the Property subject to no exceptions
other than the Permitted Encumbrances. Each of the Owners Title Policy
and the Mortgagee Title Policy shall provide such other coverages as
Agent may reasonably require and as may be available from time to time.
The parties acknowledge that the Title Policies will be a series of separate
policies in the aggregate required amount, with such separate policies
providing coverage in the amount of the respective Acquisition Prices (in
the case of the Owner's Title Policy) or the relevant Note amounts
attributable to the Parcels covered (in the case of the Mortgagee Title
Policy) of the respective Parcels of Property from time to time subject to
this Agreement. The term "Title Policy" shall include any endorsements
to previously issued title insurance policies that the Purchaser may deem
appropriate in connection with any Advance, and any endorsements that
Lessee may cause to be provided to insure over title problems that can not
be removed where Lessee is permitted to do so under the terms of the
Lease or this Agreement.
"Transaction Documents" means this Agreement, the Lease, the
Lease Guarantee, the Declaration of Trust, the Environmental Indemnity
Agreement, the Instruments and any and all other agreements, documents,
and instruments executed and delivered to or for the benefit of Trustee,
Purchasers, or Instrument Holders by pursuant to the terms of, or
otherwise in connection with, this Agreement, and any future amendments
hereto or restatements hereof, or pursuant to the terms of any of the other
Transaction Documents, together with any and all renewals, extensions,
and restatements of, and amendments and modifications to, any of the
foregoing.
"Transaction Mortgage" means one or more mortgages, deeds of
trust, deeds to secure debt, or similar security instruments executed by
Trustee and granting to Agent, for the benefit of the Noteholders (but not
the Certificate Holders), a first mortgage lien on the Property and each
Parcel thereof. The Transaction Mortgage shall, as to each Parcel, be in
form and substance acceptable to Agent and shall be subject to no liens or
encumbrances other than the Permitted Encumbrances.
"Transactions" means the transactions provided for in and
contemplated by this Agreement and the other Transaction Documents.
"Tribunal" means court, department, commission, board, bureau,
agency, or instrumentality of any governmental authority.
"Trust Estate" shall have the meaning provided therefor in the
Declaration of Trust.
SCHEDULE 2
Underwriting Guidelines
1. TITLE MATTERS.
1.1 The title insurance required by Agent and Trustee for any
Parcel shall be that which is customary in the jurisdiction in which the
Parcel is located for institutional investors and lenders in large commercial
transactions. Agent and Trustee shall be reasonable in negotiating and
agreeing to title insurance coverage.
1.2 Reinsurance or coinsurance will not be required if (1) the
amount to be insured for the Parcel, following completion of all
Improvements, is less than $ 4,000,000.00 and (2) one of the following
title insurance companies is the title insurer: Chicago Title Insurance
Corporation (or one of its wholly owned affiliates, such as TICOR or
Safeco), Commonwealth Land Title Insurance Corporation, First
American Title Insurance Corporation, Lawyers Title Insurance
Corporation, Old Republic/Minnesota or Stewart Title (any of the
foregoing being an "Acceptable Insurer"). Agent and/or Trustee shall
have the right to remove any title insurer from the above list at any time
hereafter with respect to closings on Parcels not then acquired, based on
its reasonable determination that such title insurer's financial rating has
been reduced to an unacceptably low level.
1.3 In the event that any mechanics' lien, suppliers' lien, or
similar lien is placed against any Parcel, Lessee shall have the right to
satisfy Agent and/or Trustee with respect to such lien by, among other
means, providing Agent and/or Trustee with affirmative title insurance
coverage over such lien delivered by an Acceptable Insurer which is
insuring the Parcel in question.
2. ENVIRONMENTAL REPORTS.
2.1 Each environmental report shall be addressed to Agent,
Trustee and Lessee, as follows:
"To Citicorp Leasing, Inc. ("Agent"), for
itself and in its capacity as Agent for the
Purchasers and Instrument Holders under the
Transaction Agreement dated __________,
1997, among Agent, Trustee (as defined
below), The Pep Boys - Manny, Moe and
Jack, a Pennsylvania corporation (the
"Transaction Agreement"), State Street
Bank and Trust Company, as Trustee under
the Declaration of Trust dated __________,
1997 ("Trustee") and [insert proper Pep
Boys entity]"
2.2 A reference in an environmental report to the existence of
asbestos, PCBs, lead paint or other hazards located within a building or
other structure that is intended to be demolished or substantially renovated
and improved, shall not be regarded as an impediment to going forward
with the transaction, or to the acquisition of the Parcel by the Trustee, or
the funding of any Advance, so long as (1) prior to the acquisition of the
Parcel in question, Lessee demonstrates to the reasonable satisfaction of
Agent and Trustee that the plans for the demolition and/or improvement
of the Parcel include provisions satisfactory to Agent and Trustee for the
removal, abatement and proper disposal of such materials, in accordance
with all applicable Laws, and (2) prior to the Construction Advance for
any such Parcel, Lessee provides Agent and Trustee with evidence of such
removal, abatement and disposal, and for payment therefor.
2.3 Nothing in the foregoing shall require Agent or Trustee to
accept a Parcel with respect to which the environmental report shows
evidence of underground or soil hazards, such as underground tanks, soil
or groundwater contamination or other problems requiring remediation.
3. SURVEY.
3.1 The survey shall, at a minimum, satisfy the following
requirements unless otherwise approved by Agent:
3.1.1 The surveyor should perform all necessary field
work, field-stake the property, and supply a current plat of survey
(the "Survey") of the property.
3.1.2 Without limitation of other applicable requirements,
the Survey must:
(i) Set forth an accurate metes and bounds
description of the land, as well as a lot/block description if
the property is platted;
(ii) Locate all existing easements (setting forth
recording information with respect to recorded easements
and locating recorded easements per the legal description
contained therein), alleys, streets, and roads;
(iii) Show any encroachments on to the land from
any adjacent property, any encroachments from the land on
to adjacent property, and any encroachments into any
easement or restricted area within the boundaries of the
land;
(iv) Locate all existing improvements (such as
buildings, power lines, fences, and the like);
(v) Locate all dedicated public streets or other
roadways providing access to the land, including all curb
cuts;
(vi) Locate all governmental or privately required
setback lines and similar restrictions affecting the land or
any part thereof and any violations of such restrictions; and
(vii) Set forth the gross square foot area of the
land, together with the net square foot area of the land
which shall be the gross square foot area of the land less
any area of the land located within (A) streets or roadways,
or (B) encroachments, overlaps, or strips, gores or other
areas affected by discrepancies in legal descriptions.
3.2 The Survey should contain a certification with regard to the
matters set forth thereon substantially as follows:
"The undersigned Registered Public
Surveyor (the "Surveyor") hereby certifies
that (a) this plat of survey and the property
description set forth hereon are true and
correct and prepared from an actual on-the-
ground survey of the real property (the
"Property") shown hereon; (b) such survey
was conducted by the Surveyor, or under his
supervision; (c) all monuments shown
hereon actually exist, and the location, size
and type of material thereof are correctly
shown; (d) except as shown hereon, there
are no encroachments onto the Property or
protrusions therefrom, there are no
improvements on the Property, there are no
visible easements or rights-of-way of the
Property and there are no visible
discrepancies, conflicts, shortages in area or
boundary line conflicts; (e) the size, location
and type of improvements are as shown
hereon (including, without limitation, the
parking lots and other parking areas
indicating the number of parking spaces
within each), and, except as shown hereon,
all are located within the boundaries of the
Property and set back from the Property
lines the distances indicated; (f) the distance
from the nearest intersecting street or road
is as shown; (g) the Property has access to
and from a public roadway; (h) except as
shown hereon all recorded easements have
been correctly platted hereon; (i) the
boundaries, dimensions and other details
shown hereon are true and correct; and (j)
except as shown hereon the Property is not
located in a 100-Year Flood Plain or in an
identified "flood prone area", as defined by
the U. S. Department of Housing and Urban
Development, pursuant to the Flood Disaster
Protection Act of 1973, as amended.
"The undersigned does further certify that
the survey was made in accordance with the
"Minimum Standard Detail Requirements of
the ALTA/ACSM Land Title Surveys,
jointly established by ALTA and ACSM in
1992, and includes items 1, 2, 3, 4, 6, 7(a),
8, 9, 10, and 13 of Table A thereof, and is
prepared to the ALTA/ACSM accuracy
standards (as adopted and in effect on the
date of this certification) of an Urban
Survey.
"The Surveyor expressly understands and
agrees that (a)
("Title Company"), Citicorp Leasing, Inc.
("Agent"), for itself and in its capacity as
Agent for the Purchasers and Instrument
Holders under the Transaction Agreement
dated ___________, 1997, among Agent,
Trustee (as defined below), The Pep Boys -
Manny, Moe and Jack, a Pennsylvania
corporation (the "Transaction Agreement"),
State Street Bank and Trust Company, as
Trustee under the Declaration of Trust dated
_________, 1997 ("Trustee"), and [insert
proper Pep Boys entity] are entitled to rely
on this plat of survey as being true and
accurate in all respects and this Certificate
as being true and accurate; and (b) the
consideration paid to the Surveyor for the
preparation and certification of such survey
has been paid, in part, in anticipation of
such reliance hereon.
EXECUTED this ____ day of
_____________, 19__.
By:
Registered Public Surveyor No.
Address:
[S E A L]"
3.3 Specific matters reflected on a survey meeting the standards
set forth above shall be subject to Agent's reasonable review and
approval, such review and approval to be exercised in light of the effect
of the specific matters in question on the value (to the extent that the
appraisal of the Parcel in question does not specifically reflect the effect
on value of the matter in question), utility, and marketability of the Parcel
in question.
4. APPRAISAL.
4.1 The Appraisal shall be addressed as set forth for the
environmental report described above in paragraph 2.1
4.2 The appraiser shall be satisfactory if he/she is an MAI
appraiser with at least five years of experience in appraising similar
properties to the Parcel in the geographic area of the Parcel.
EXHIBIT "A"
Form of Assignment Agreement
Dated ,
Reference is made to the Transaction Agreement, dated as of
____________, 1997 (as the same may hereafter be amended or otherwise
modified from time to time, the "Transaction Agreement"), by and among
THE PEP BOYS - MANNY, MOE & JACK, a Pennsylvania corporation
("Lessee"), CITICORP LEASING, INC., a Delaware corporation (as
Agent, Purchaser and Instrument Holder), BANK OF MONTREAL, as
Purchaser and Instrument Holder, and STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company ("Trustee"), pursuant
to the Declaration of Trust ("Declaration of Trust") of even date with the
Transaction Agreement executed by Trustee.
________________________ , a ____________________
("Assignor") is the Holder of certain Instruments issued by the Trustee
under the Trust Declaration and desires to assign such Instruments to
____________________________, a _________________________
("Assignee"). Certain terms defined in the Transaction Agreement are
used herein with the same meaning.
The Assignor and Assignee agree as follows:
(a) The Assignor hereby sells and assigns, without recourse, to
the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, without recourse to the Assignor, the Instruments listed on
Schedule 1 attached hereto (the "Assigned Instruments"), together with
all of Assignor's rights as an Instrument Holder under the Transaction
Agreement and the Transaction Documents as of the Effective Date (as
defined below) with respect to Assigned Instruments (the Assigned
Instruments, plus all of Assignor's rights with respect thereto being
referred to as the "Assigned Interest"). The effective date of this sale and
assignment shall be the date specified on Schedule 1 hereto (the "Effective
Date"). [IF LESS THAN WHOLE INSTRUMENT IS TO BE
ASSIGNED, MODIFY ACCORDINGLY].
(b) It is expressly acknowledged that Assignor does not hereby
assign to Assignee, and Assignee does not hereby assume from Assignor,
any of Assignor's obligations as a "Purchaser" under the Transaction
Documents to purchase additional Instruments thereunder in connection
with any Advance. [DELETE IF THE ASSIGNOR IS NOT A
PURCHASER UNDER THE TRANSACTION AGREEMENT.]
(c) On the Effective Date, the Assignee will pay to the
Assignor, in same day funds, at such address and account as the Assignor
shall advise the Assignee, the sum of $___________. From and after the
Effective Date, the Assignor agrees that the Assignee shall be entitled to
all rights, powers and privileges of the Assignor under the Transaction
Agreement, the Transaction Documents and the Instruments to the extent
of the Assigned Interest, including without limitation (i) the right to
receive all payments in respect of the Assigned Interest for the period
from and after the Effective Date, whether on account of principal or
stated amount, interest or current yield, fees, indemnities in respect of
claims arising after the Effective Date, Increased Costs, Break Costs, or
otherwise; (ii) the right to vote and to instruct the Agent and/or the
Trustee under the Transaction Documents based on the Assigned Interest;
and (iii) the right to receive notices, requests, demands and other
communications. The Assignor agrees that it will promptly remit to the
Assignee any amount received by it in respect of the Assigned Interest
(whether from the Lessee, the Trustee, the Agent, or otherwise) in the
same funds in which such amount is received by the Assignor.
(d) The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the Assigned Interest and that such interest is free
and clear of any adverse claim; (ii) makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties
or representations made in or in connection with the Transaction
Agreement, the Instruments or the Transaction Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Transaction Agreement, the Instruments, the Transaction
Documents or any other instrument or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Lessee or the
performance or observance by the Lessee of any of its obligations under
the Transaction Agreement, the Instruments, the Transaction Documents
or any other instrument or document furnished pursuant thereto.
(e) Assignor hereby authorizes and requests that Trustee issue
New Notes or New Certificates, as applicable, pursuant to Section 3.08
of the Declaration of Trust, in the name of Assignee (but at the expense
of Assignee) to replace the Assigned Instruments endorsed herewith in
accordance with the terms of the Declaration of Trust. Further, if the
Assigned Interest represents less than all of the indebtedness or equity
evidenced by the Instrument in question, Assignor also hereby requests
that Trustee issue to Assignor a New Note or New Certificate, as
applicable, in the amount of $ , representing the portion of the
Instrument not assigned herein by Assignor.
(f) The Assignee (i) acknowledges that it has received a copy
of the Transaction Agreement, together with such financial information or
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment; (ii) agrees
that it will, independently and without reliance upon the Trustee, the
Assignor or any other Instrument Holder and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the
Transaction Agreement, the Instruments and the other Transaction
Documents; (iii) assumes and agrees to perform in accordance with their
terms all of the obligations which by the terms of the Transaction
Agreement, the Instruments and the other Transaction Documents are
required to be performed by an Instrument Holder and which arise
subsequent to the date hereof; (iv) specifies as its administrative offices
(and address for notices) the offices set forth beneath its name on the
signature pages hereof; (v) represents and warrants to Lessee, Trustee and
Agent that the representations and warranties applicable to a "Holder"
pursuant to Section 2.03 of the Transaction Agreement are true and
correct as to the Assignee as of the date hereof; and (vi) attaches the
forms prescribed by the Internal Revenue Service of the United States of
America certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Transaction Agreement
(and the other Transaction Documents) or such other documents as are
necessary to indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty. Further, Assignee acknowledges
that it is not relying upon any statements of Lessee regarding its financial
condition or that of any of its subsidiaries except to the extent of financial
reports and related information provided by Lessee to Agent pursuant to
the Transaction Documents or in connection with the negotiation and
execution thereof.
(g) Following the execution of this Assignment, it will be
delivered to the Agent for acceptance and recording by the Agent in the
Register. Upon such acceptance and recording and receipt of any consent
of the Lessee required pursuant to the Transaction Documents, as of the
Effective Date, (i) the Assignee shall be a party to the Transaction
Agreement and, to the extent provided in this Transaction Assignment,
have the rights and obligations of an Instrument Holder thereunder and
under the Instruments and the Transaction Documents and (ii) the
Assignor shall, to the extent provided in this Assignment, relinquish its
rights and be released from its obligations under the Transaction
Agreement, the Instruments and the Transaction Documents. Nothing
herein shall release Assignor from any remaining obligations that Assignor
may have as a Purchaser (if Assignor is a Purchaser) under the
Transaction Documents, nor shall this Assignment release Assignor from,
nor reduce Assignor's rights with respect to or relating to, any other
Instruments that Assignor may continue to hold or may hereafter acquire.
(h) Upon such acceptance, recording and consent, from and
after the Effective Date, Trustee shall make all payments under the
Transaction Documents in respect of the Assigned Interest (including,
without limitation, all payments of principal, interest or current yield) to
the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Transaction Documents for periods
prior to the Effective Date directly between themselves.
(i) By its execution hereof Assignee acknowledges that Citicorp
Leasing, Inc. is the currently appointed "Agent" for the Instrument
Holders and Purchasers under the terms of the Transaction Documents,
and that Assignee is acquiring the Instruments subject to the rights (and,
where applicable) the obligations of the Agent or any successor Agent that
may hereafter be appointed pursuant to the Transaction Agreement.
(j) This Assignment shall be governed by, and construed in
accordance with, the laws of the State of Massachusetts.
IN WITNESS WHEREOF, intending to be legally bound hereby,
the parties hereto have caused this Assignment to be executed by their
respective officers thereunto duly authorized on the attached Signature
Pages, as of the date first above written.
[See Attached Signature Pages] SIGNATURE PAGE OF ASSIGNOR
ATTACHED TO
ASSIGNMENT AGREEMENT
[1997 Pep Boys II Leased Property]
"Assignor"
a
By:
Name:
Title:
SIGNATURE PAGE OF ASSIGNEE
ATTACHED TO
ASSIGNMENT AGREEMENT
[1997 Pep Boys II Leased Property]
"Assignee"
a
By:
Name:
Title:
Address of Assignee:
Schedule 1
to
Assignment Agreement
Effective Date ___________, 19___
[DESCRIBE THE NOTES/CERTIFICATES TO BE ASSIGNED
BY DATE, CERTIFICATE OR NOTE NUMBER, FACE
AMOUNT, ETC.]
ACKNOWLEDGMENT OF ASSIGNMENT
BY
TRUSTEE AND AGENT
ATTACHED TO
ASSIGNMENT AGREEMENT
[1997 Pep Boys II Leased Property]
"Trustee"
STATE STREET BANK
AND TRUST
COMPANY, a Massachusetts trust company,
(not in its individual capacity,
but solely as Trustee)
By:
Name:
Title:
"Agent"
CITICORP LEASING, INC.,
a
Delaware corporation
By:
Name:
Title:
TRANSACTION AGREEMENT
Dated as of February 28, 1997
Among
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation,
STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company,
not in its individual capacity except as expressly stated herein, but
solely as Trustee,
and
CITICORP LEASING, INC.,
a Delaware corporation,
as Administrative Agent, Purchaser, and Holder,
and
BANK OF MONTREAL,
as Purchaser and Holder
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES Exhibit 11
COMPUTATION OF NET EARNINGS PER SHARE
(in thousands, except per share data)
(UNAUDITED)
<CAPTION>
- ------------------------------------------------------------------------------------------
Thirteen weeks ended
----------------------------------
May 3, 1997 May 4, 1996
-------------- --------------
<S> <C> <C>
Net Earnings..................................... $23,146 $20,116
Adjustment for interest on 4% convertible
subordinated notes, net of income tax effect... 554 542
Adjustment for interest on zero coupon convertible
subordinated notes, net of income tax effect... 959 -
- ------------------------------------------------------------------------------------------
(a) Adjusted net earnings $24,659 $20,658
- ------------------------------------------------------------------------------------------
Average number of Common Shares outstanding
during the period.............................. 60,924 59,919
Common shares assumed issued upon conversion of
4% convertible subordinated notes.............. 2,104 2,104
Common shares assumed issued upon conversion of
zero coupon convertible subordinated notes..... 3,513 -
Common Shares assumed issued upon exercise
of dilutive stock options, net of assumed
repurchase, at the average market price,
using the treasury stock method (1)............ 671 924
- ------------------------------------------------------------------------------------------
(b) Average number of Common Shares assumed
outstanding during the period.................. 67,212 62,947
- ------------------------------------------------------------------------------------------
Net Earnings per Share (a/b)..................... $ .37 $ .33
- ------------------------------------------------------------------------------------------
<FN>
(1) The number of Common Shares assumed issued upon exercise of dilutive stock options is essentially
the same for fully diluted earnings per share.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE
SHEET AS OF MAY 3, 1997 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE THIRTEEN WEEK
PERIOD ENDED MAY 3, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> MAY-3-1997
<CASH> 6,362
<SECURITIES> 0
<RECEIVABLES> 7,412
<ALLOWANCES> 264
<INVENTORY> 517,851
<CURRENT-ASSETS> 596,884
<PP&E> 1,601,705
<DEPRECIATION> 371,721
<TOTAL-ASSETS> 1,850,979
<CURRENT-LIABILITIES> 436,241
<BONDS> 555,848
0
0
<COMMON> 63,203
<OTHER-SE> 735,439
<TOTAL-LIABILITY-AND-EQUITY> 1,850,979
<SALES> 410,321
<TOTAL-REVENUES> 489,278
<CGS> 284,723
<TOTAL-COSTS> 160,450
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,908
<INCOME-PRETAX> 36,450
<INCOME-TAX> 13,304
<INCOME-CONTINUING> 23,146
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,146
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
