<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998.
------------------
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. 0-19357
MONRO MUFFLER BRAKE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 16-0838627
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
200 Holleder Parkway, Rochester, New York 14615
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(Address of principal executive offices) (Zipcode)
Registrant's telephone number, including area code 716-647-6400
------------------------------
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 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 October 31, 1998, 8,321,701 shares of the Registrant's Common Stock, par
value $ .01 per share, were outstanding after giving effect to the five percent
stock dividend, paid June 18, 1998, to stockholders of record as of June 8,
1998.
<PAGE> 2
MONRO MUFFLER BRAKE, INC.
INDEX
-----
<TABLE>
<CAPTION>
<S> <C>
Part I. Financial Information
Page No.
--------
Item 1. Financial Statements
Consolidated Balance Sheet at
September 30, 1998 and March 31, 1998 3
Consolidated Statement of Income for the quarter
and six months ended September 30, 1998 and 1997 4
Consolidated Statement of Changes in Common
Shareholders' Equity for the six months ended September 30, 1998 5
Consolidated Statement of Cash Flows for the
six months ended September 30, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
</TABLE>
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<PAGE> 3
MONRO MUFFLER BRAKE, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1998 1998
-------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents, including interest-bearing accounts of $4,454 $ 4,454 $ 5,315
at September 30, 1998 and $5,315 at March 31, 1998
Trade receivables 960 841
Inventories, at LIFO cost 39,199 27,492
Deferred income tax asset 1,725 1,725
Other current assets 6,989 4,115
-------------- --------------
Total current assets 53,327 39,488
-------------- --------------
Property, plant and equipment 189,846 165,839
Less - Accumulated depreciation and amortization (53,590) (49,429)
-------------- --------------
Net property, plant and equipment 136,256 116,410
Other noncurrent assets 10,263 3,190
============== ==============
Total assets $ 199,846 $ 159,088
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,832 $ 3,582
Trade payables 12,213 11,633
Federal and state income taxes payable 988 2
Accrued expenses and other current liabilities
Accrued interest 188 233
Accrued payroll, payroll taxes and other payroll benefits 5,094 3,764
Accrued insurance 2,111 2,441
Accrued restructuring costs 4,768
Other current liabilities 7,495 4,316
-------------- --------------
Total current liabilities 37,689 25,971
Long-term debt 73,423 54,102
Other long-term liabilities 3,567 576
Deferred income tax liability 1,881 1,881
-------------- --------------
Total liabilities 116,560 82,530
-------------- --------------
Commitments
Shareholders' equity:
Class C Convertible Preferred Stock, $1.50 par value, $.216 and $.227
conversion value at September 30, 1998 and March 31, 1998, respectively;
150,000 shares authorized; 91,727 shares issued and outstanding 138 138
Common Stock, $.01 par value, 15,000,000 shares authorized; 8,321,701
shares and 7,876,901 shares issued and outstanding at September 30, 1998
and March 31, 1998, respectively 83 79
Additional paid-in capital 36,370 29,284
Retained earnings 46,695 47,057
-------------- --------------
Total shareholders' equity 83,286 76,558
============== ==============
Total liabilities and shareholders' equity $ 199,846 $ 159,088
============== ==============
</TABLE>
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K (File
No. 0-19357), filed by the Company with the Securities and Exchange Commission
on June 29, 1998.
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<PAGE> 4
MONRO MUFFLER BRAKE, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C> <C>
Sales $ 46,385 $ 41,540 $ 90,498 $ 82,313
Cost of sales, including distribution and
occupancy costs (a) 26,770 23,231 51,090 45,862
---------- ---------- ---------- ----------
Gross profit 19,615 18,309 39,408 36,451
Operating, selling, general and
administrative expenses 14,330 11,735 26,720 23,227
---------- ---------- ---------- ----------
Operating income 5,285 6,574 12,688 13,224
Interest expense, net of interest income for
the quarter of $5 in 1998 and $22 in
1997, and year to date of $20 in 1998
and $44 in 1997 (a) 1,077 903 1,982 1,770
Other expense, net 194 86 302 172
---------- ---------- ---------- ----------
Income before provision for income taxes 4,014 5,585 10,404 11,282
Provision for income taxes 1,603 2,233 4,136 4,513
---------- ---------- ---------- ----------
Net income $ 2,411 $ 3,352 $ 6,268 $ 6,769
========== ========== ========== ==========
Basic earnings per share $ .29 $ .41 $ .76 $ .82
========== ========== ========== ==========
Diluted earnings per share $ .27 $ .37 $ .70 $ .75
========== ========== ========== ==========
Weighted average number of shares of
common stock and common stock
equivalents used in computing earnings
per share: Basic 8,277 8,260 8,291 8,251
========== ========== ========== ==========
Diluted 8,947 9,038 8,993 9,037
========== ========== ========== ==========
(a) Amounts paid under operating and capital leases with affiliated parties totaled $467 and $474 for the quarters
ended September 30, 1998 and 1997, respectively, and $963 and $957 for the six months ended September 30, 1998
and 1997, respectively.
</TABLE>
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K (File
No. 0-19357), filed by the Company with the Securities and Exchange Commission
on June 29, 1998.
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<PAGE> 5
MONRO MUFFLER BRAKE, INC.
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------ PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
------ ------ ------- --------
(Amounts in thousands)
<S> <C> <C> <C> <C>
Balance at March 31, 1998 7,877 $ 79 $ 29,284 $ 47,057
Net income 6,268
Exercise of stock options 49 462
5% stock dividend 396 4 6,624 (6,629)
Rounding (1)
---------- ---------- ---------- ----------
Balance at September 30, 1998 8,322 $ 83 $ 36,370 $ 46,695
========== ========== ========== ==========
</TABLE>
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K (File
No. 0-19357), filed by the Company with the Securities and Exchange Commission
on June 29, 1998.
- 5 -
<PAGE> 6
MONRO MUFFLER BRAKE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
-------------
1998 1997
-------------- --------------
(DOLLARS IN THOUSANDS)
INCREASE (DECREASE) IN
CASH
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,268 $ 6,769
-------------- --------------
Adjustments to reconcile net income to net cash provided
by operating activities -
Depreciation and amortization 4,889 4,541
(Gain) loss on disposal of property, plant and equipment (65) 17
(Increase) decrease in trade receivables (119) 308
Increase in inventories (1,285) (3,779)
Decrease in other current assets 320 120
(Increase) decrease in other noncurrent assets (1,168) 24
(Decrease) increase in trade payables (550) 2,439
Increase (decrease) in accrued expenses 846 (1,359)
Increase in federal and state income taxes payable 986 1,169
Increase in other long-term liabilities 14
-------------- --------------
Total adjustments 3,868 3,480
-------------- --------------
Net cash provided by operating activities 10,136 10,249
-------------- --------------
Cash flows from investing activities:
Capital expenditures (10,035) (12,573)
Proceeds from the disposal of property, plant and equipment 65 22
Payment for purchase of Speedy Muffler King (21,490)
-------------- --------------
Net cash used for investing activities (31,460) (12,551)
-------------- --------------
Cash flows from financing activities:
Proceeds from the sale of common stock (option exercises) 462 52
Proceeds from borrowings 91,670 30,534
Principal payments on long-term debt and capital
lease obligations (71,669) (30,803)
-------------- --------------
Net cash provided by (used for) financing activities 20,463 (217)
-------------- --------------
Decrease in cash (861) (2,519)
Cash at beginning of year 5,315 6,438
============== ==============
Cash at September 30 $ 4,454 $ 3,919
============== ==============
</TABLE>
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K (File
No. 0-19357), filed by the Company with the Securities and Exchange Commission
on June 29, 1998.
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<PAGE> 7
MONRO MUFFLER BRAKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Acquisition of Speedy Stores
- -------------------------------------
In September 1998, the Company completed the acquisition of 189
company-operated and 14 franchised Speedy stores, all located in the United
States, from SMK Speedy International Inc. of Toronto Canada. Speedy stores
provide automotive repair services, specializing in undercar care, in 11 states
located primarily in the Northeast. The acquisition was accounted for as a
purchase, and accordingly, the operating results of Speedy have been included
in the Company's consolidated financial statements since the date of
acquisition.
Approximately $51 million was borrowed under a new $135 million
secured credit facility to pay the all-cash purchase price, with an additional
$16 million to be borrowed to provide for the closing of up to 20
underperforming or redundant Speedy stores, capital expenditures at remaining
Speedy stores and transaction expenses.
The excess of the aggregate purchase price over the fair value of net
assets acquired is being amortized on a straight-line basis over 20 years.
Note 2 - Stock Dividend
- -----------------------
On May 13, 1998, the Board of Directors declared a five percent stock
dividend, paid June 18, 1998, to stockholders of record as of June 8, 1998. The
consolidated financial statements, including all share information therein, have
been restated to reflect this dividend.
Additionally, in accordance with antidilution provisions of the Class C
Convertible Preferred Stock, the conversion value of the preferred stock was
restated from $.227 per share to $.216 per share.
Shares reserved for issuance to officers and key employees under
outstanding options and under the 1984, 1987 and 1989 Incentive Stock Option
Plans have also been retroactively adjusted for the five percent stock dividend.
Note 3 - Inventories
- -------------------
The Company's inventories consist of automotive parts and tires.
Substantially all merchandise inventories are valued under the last-in,
first-out (LIFO) method. Under the first-in, first-out (FIFO) method, these
inventories would have been $480,000 and $426,000 higher at September 30, 1998
and March 31, 1998, respectively. The FIFO value of inventory approximates the
current replacement cost.
Note 4 - Cash and Equivalents
- ----------------------------
The Company's policy is to invest cash in excess of operating
requirements in income producing investments. Cash equivalents of $4,454,000 at
September 30, 1998 and $5,315,000 at March 31, 1998 include money market
accounts, which have maturities of three months or less.
Note 5 - Supplemental Disclosure of Cash Flow Information
- ---------------------------------------------------------
The following transactions represent noncash investing and financing
activities during the periods indicated:
SIX MONTHS ENDED SEPTEMBER 30, 1998:
Capital lease obligations of $170,000 were incurred under various lease
obligations.
In connection with the declaration of a five percent stock dividend
(see Note 2), the Company increased accrued expenses, common stock and
additional paid-in capital by $1,000, $4,000 and $6,624,000, respectively, and
decreased retained earnings by $6,629,000.
- 7 -
<PAGE> 8
MONRO MUFFLER BRAKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED SEPTEMBER 30, 1997:
Capital lease obligations of $236,000 were incurred under various lease
obligations.
In connection with the declaration of a five percent stock dividend,
the Company increased accrued expenses, common stock and additional paid-in
capital by $1,000, $4,000 and $7,014,000, respectively, and decreased retained
earnings by $7,019,000.
CASH PAID DURING THE PERIOD:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
-------------
1998 1997
---- ----
<S> <C> <C>
Interest, net $2,211,000 $1,983,000
Income taxes 3,152,000 3,344,000
</TABLE>
Note 6 - Other
- --------------
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Annual Report on Form
10-K (File No. 0-19357), filed by the Company with the Securities and Exchange
Commission on June 29, 1998.
-8-
<PAGE> 9
MONRO MUFFLER BRAKE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The statements contained in this Form 10-Q which are not historical
facts, including (without limitation) statements made in the Management's
Discussion and Analysis of Financial Condition and Results of Operations, may
contain statements of future expectations and other forward-looking statements
that are subject to important factors that could cause actual results to differ
materially from those in the forward-looking statements, including (without
limitation) product demand, the effect of economic conditions, the impact of
competitive services and pricing, product development, parts supply restraints
or difficulties, industry regulation, the continued availability of capital
resources and financing and other risks set forth or incorporated elsewhere
herein and in the Company's Securities and Exchange Commission filings.
RESULTS OF OPERATIONS
The following table sets forth income statement data of Monro Muffler
Brake, Inc. ("Monro" or the "Company") expressed as a percentage of sales for
the fiscal periods indicated.
<TABLE>
<CAPTION>
Quarter ended September 30, Six Months ended September 30,
--------------------------- ------------------------------
1998 1997 1998 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Sales .................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales, including distribution
and occupancy costs ................... 57.7 55.9 56.4 55.7
----- ----- ----- -----
Gross profit ........................... 42.3 44.1 43.6 44.3
Operating, selling, general and
administrative expenses ............... 30.9 28.3 29.6 28.2
----- ----- ----- -----
Operating income ....................... 11.4 15.8 14.0 16.1
Interest expense - net ................. 2.3 2.2 2.2 2.2
Other expenses - net ................... .4 .2 .3 .2
----- ----- ----- -----
Income before provision for income taxes 8.7 13.4 11.5 13.7
Provision for income taxes ............. 3.5 5.3 4.6 5.5
----- ----- ----- -----
Net income ............................. 5.2% 8.1% 6.9% 8.2%
===== ===== ===== =====
</TABLE>
-9-
<PAGE> 10
SECOND QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO
SECOND QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 1997
On September 17, 1998, the Company completed its acquisition of 189
company-owned and 14 franchised Speedy stores, all located in the United States,
from SMK Speedy International Inc. of Toronto, Canada (the "Acquisition").
Sales for the fiscal year ended January 3, 1998 for the 189 company-operated
stores, some of which were opened only part of the year, were approximately
$86 million. While management expects the acquisition to have a slightly
dilutive impact on earnings in the current 1999 fiscal year, management
anticipates that the acquired operations should begin to contribute to earnings
per share during fiscal 2000, and should be increasingly accretive in
subsequent years.
Sales were $46.4 million for the quarter ended September 30, 1998
compared with $41.5 million in the quarter ended September 30, 1997. The sales
increase of $4.8 million, or 11.7%, was due to an increase in sales of
approximately $5.7 million relating to stores opened since April 1, 1997,
partially offset by a comparable store sales decrease of 1.4%. Sales for the six
months ended September 30, 1998 were $90.5 million compared with $82.3 million
for the comparable period of the prior year. The sales increase of $8.2 million
or 9.9% was due to an increase in sales of approximately $9.2 million relating
to stores opened since April 1, 1997, partially offset by a comparable store
sales decrease of .7%. At September 30, 1998, the Company had 530
company-operated stores in operation (including the stores acquired from
Speedy) compared to 332 at September 30, 1997.
Gross profit for the quarter ended September 30, 1998 was $19.6 million
or 42.3% of sales compared with $18.3 million or 44.1% of sales for the quarter
ended September 30, 1997. Gross profit for the six months ended September 30,
1998 was $39.4 million, or 43.6% of sales, compared to $36.5 million or 44.3% of
sales, for the six months ended September 30, 1997. The decline in gross profit
as a percentage of sales was due, in part, to an increase in labor costs. During
periods of slower sales when technicians may not be fully productive, they will
receive a minimum base level wage. Secondly, there was an increase in
distribution and occupancy costs as a percent of sales for the second quarter of
fiscal 1999 as compared to the second quarter of fiscal 1998, primarily due to
an increase in the number of stores and increased occupancy costs against
negative comparable store sales.
Additionally, the Speedy stores caused .4 of the decline in gross
profit as a percent of sales, primarily in the "cost of goods" component of
cost of sales. Historically, Speedy's cost of goods has averaged approximately
six percentage points more than the Company's due to more expensive parts
acquisition costs. This resulted from a higher percentage of outside purchases,
and Speedy's distribution methods (store-door from vendors vs. Monro's central
distribution facility). Management is confident that, over time, the Speedy
stores will experience the same lower cost of goods as the Monro stores. One
measure leading to this will be the inclusion of all Speedy stores in the
Company's central distribution/automatic replenishment system by December 31,
1998. As of November 10, 1998, over 50% of the Speedy stores were receiving
product from the Company's central warehouse facility in Rochester, New York.
Operating, selling, general and administrative expenses for the quarter
ended September 30, 1998 increased by $2.6 million to $14.3 million over the
quarter ended September 30, 1997, and were 30.9% of sales compared to 28.3% in
the same quarter of the prior year. For the six months ended September 30, 1998,
these expenses increased by $3.5 million to $26.7 million over the comparable
period of the prior year and were 29.6% of sales compared to 28.2% in the
comparable period of the prior year. During the second quarter of fiscal 1999,
costs associated with the Speedy stores and acquisition-related activities
accounted for 1.1 percentage points of the increase. The remainder is primarily
due to increases in fixed, store-related operating and support costs (such as
store supervision and utilities) against negative comparable store sales.
Net interest expense for the quarter ended September 30, 1998 increased
by approximately $.2 million compared to the comparable period in the prior
year, and increased from 2.2% to 2.3% as a percentage of sales for the same
period. Net interest expense for the six months ended September 30, 1998
increased by approximately $.2 million compared to the same period in the prior
year, and was 2.2% of sales for both periods. The increase in expense is due to
an increase in the weighted average debt outstanding for the quarter and six
months ended September 30, 1998 as compared to the same periods in the previous
year.
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<PAGE> 11
Net income for the quarter ended September 30, 1998 of $2.4 million
decreased 28.1% from net income for the quarter ended September 30, 1997. For
the six months ended September 30, 1998 net income of approximately $6.3 million
decreased 7.4%, due to the factors discussed above.
Interim Period Reporting
The data included in this report are unaudited and are subject to
year-end adjustments; however, in the opinion of management, all known
adjustments (which consist only of normal recurring adjustments) have been made
to present fairly the Company's operating results for the unaudited periods. The
results for interim periods are not necessarily indicative of results to be
expected for the fiscal year.
CAPITAL RESOURCES AND LIQUIDITY
Capital Resources
Other than the funding of the Acquisition, the Company's primary
capital requirement has been the funding of its new store expansion program and
the upgrading of facilities and systems in existing stores. For the six months
ended September 30, 1998, the Company spent approximately $10.0 million for
equipment and new store construction, in addition to the expenditures related
to the Acquisition discussed below. Funds for equipment and new store
construction were provided primarily by cash flow from operations. Management
believes that the Company has sufficient resources available (including cash
and equivalents, net cash flow from operations and bank financing) to expand
its business as currently planned for the next several years.
Liquidity
Concurrent with the closing of the Acquisition, Monro obtained a new
$135 million secured credit facility from lenders led by The Chase Manhattan
Bank. Approximately $51 million was borrowed under this facility to pay the
all-cash purchase price in the Acquisition, with an additional $16 million to be
borrowed to provide for the closing of up to 20 underperforming or redundant
Speedy stores, capital expenditures at remaining Speedy stores and transaction
expenses. In addition, Monro refinanced approximately $35 million of
indebtedness through the new credit facility, with the balance of the facility
available for future working capital needs. More specifically, the new financing
structure consists of a $25 million term loan (all of which was outstanding at
September 30, 1998), a $75 million Revolving Credit facility (of which
approximately $33 million was outstanding at September 30, 1998), and synthetic
lease (off-balance sheet) financing for a significant portion of the Speedy real
estate, totaling $35 million. The loans bear interest at the prime rate or other
LIBOR-based rate options tied to the Company's financial performance.
The Company has outstanding $1.8 million in principal amount of its
10.65% Senior Notes due 1999 (the "Senior Notes") with Massachusetts Mutual Life
Insurance Company pursuant to a Senior Note Agreement. The fifth of six equal
annual installments of principal in the amount of $1.8 million was paid on April
1, 1998.
Certain of the Company's stores were financed by mortgages currently
bearing interest at LIBOR plus 100 basis points.
The Company has financed its office/warehouse facility via a 10-year
mortgage with a current balance of $2.5 million, amortizable over 20 years, and
an eight-year term loan with a balance of $.5 million.
Certain of the Company's long-term debt agreements require, among other
things, the maintenance of specified current ratios, interest and rent coverage
ratios and amounts of tangible net worth, and also contain restrictions on
dividend payments.
The Company enters into interest rate hedge agreements which involve
the exchange of fixed and floating rate interest payments periodically over the
life of the agreement without the exchange of the underlying principal amounts.
The differential to be paid or received is accrued as interest rates change and
is recognized over the life of the agreements as an adjustment to interest
expense.
-11-
<PAGE> 12
MONRO MUFFLER BRAKE, INC.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The 1998 Annual Meeting of Shareholders of the Company (the
"1998 Meeting") was held on August 3, 1998. At the 1998 Meeting, the Company's
common shareholders elected management's nominees, Burton S. August, Robert W.
August, Donald Glickman, Lionel B. Spiro, and W. Gary Wood to Class 1 of the
Board of Directors, to serve until the election and qualification of their
respective successors at the 2000 Annual Meeting of Shareholders. Such nominees
for director received the following votes:
Name Votes For Votes Withheld
---- --------- --------------
Burton S. August 6,187,745 1,942
Robert W. August 6,187,745 1,942
Donald Glickman 6,187,745 1,942
Lionel B. Spiro 6,187,745 1,942
W. Gary Wood 6,187,745 1,942
As required under the Company's Certificate of Incorporation,
such election of directors and other matters were confirmed by the holders of
all 91,727 outstanding shares of the Company's Class C Convertible Preferred
Stock, par value $1.50 per share, by written consent dated as of August 3, 1998.
In addition, Charles J. August, Frederick M. Danziger, Jack M.
Gallagher, and Peter J. Solomon will continue as Class 2 directors until the
election and qualification of their respective successors at the 1999 Annual
Meeting of Shareholders.
Also approved by the following votes were:
(i) a proposal to ratify the re-appointment of
PricewaterhouseCoopers LLP as the independent auditors of the Company for the
fiscal year ending March 31, 1999 (6,186,614 shares in favor, 1,642 shares
against, 1,431 shares abstaining and zero broker non-votes).
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
10.1 - Credit Agreement, dated as of September 15,
1998, by and among the Company, The Chase
Manhattan Bank, as agent, and certain lenders
party thereto.
10.2 - Credit Agreement, dated as of September 15,
1998, executed by and among Brazos Automotive
Properties, L.P., The Chase Manhattan Bank,
and certain lenders party thereto.
10.3 - Residual Guaranty, dated as of September 15,
1998, between the Company and The Chase
Manhattan Bank.
10.4 - Agreement for Facilities Lease, dated as of
September 15, 1998, between Brazos Automotive
Properties, L.P. and Monro Leasing LLC.
10.5 - Facilities Lease Agreement, dated as of
September 15, 1998, between Brazos Automotive
Properties, L.P. and Monro Leasing LLC.
10.6 - Agreement for Ground Lease, dated as of
September 15, 1998, between Brazos Automotive
Properties, L.P. and Monro Leasing LLC.
10.7 - Ground Lease Agreement, dated as of September
15, 1998, between Brazos Automotive
Properties, L.P. and Monro Leasing LLC.
10.8 - Guaranty, dated as of September 15, 1998,
between the Company and Brazos Automotive
Properties, L.P.
10.9 - Agreement of Sublease, dated as of September
15, 1998, by and among Monro Leasing LLC,
the Company and Brazos Automotive Properties,
L.P.
11 - Statement of Computation of Per Share
Earnings.
b. Reports on Form 8-K
The Company filed a report on Form 8-K on September
23, 1998 in connection with the completion of its
acquisition of 189 company-owned stores and 14
franchised stores from Bloor Automotive and Speedy
Car-X in the United States for an aggregate purchase
price of $52.0 million, as adjusted.
Additionally, prior to the completion of the
acquisition, the Company and SMK Speedy
International, Inc. agreed to amend the definitive
agreement on August 31, 1998 to, among other things,
extend the termination date.
-12-
<PAGE> 13
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.
MONRO MUFFLER BRAKE, INC.
<TABLE>
<S> <C>
DATE: November 13, 1998 By /s/ Jack M. Gallagher
-----------------------------------------
Jack M. Gallagher
President and Chief Executive Officer
DATE: November 13, 1998 By /s/ Catherine D'Amico
-----------------------------------------
Catherine D'Amico
Senior Vice President-Finance, Treasurer
and Chief Financial Officer
</TABLE>
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<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
----------- ----------- --------
<S> <C> <C> <C>
10.1 Credit Agreement, dated as of September 15,
1998, by and among the Company, The Chase
Manhattan Bank, as agent, and certain lenders
party thereto.
10.2 Credit Agreement, dated as of September 15,
1998, executed by and among Brazos Automotive
Properties, L.P., The Chase Manhattan Bank,
and certain lenders party thereto.
10.3 Residual Guaranty, dated as of September 15,
1998, between the Company and The Chase
Manhattan Bank.
10.4 Agreement for Facilities Lease, dated as of
September 15, 1998, between Brazos Automotive
Properties, L.P. and Monro Leasing LLC.
10.5 Facilities Lease Agreement, dated as of
September 15, 1998, between Brazos Automotive
Properties, L.P. and Monro Leasing LLC.
10.6 Agreement for Ground Lease, dated as of
September 15, 1998, between Brazos Automotive
Properties, L.P. and Monro Leasing LLC.
10.7 Ground Lease Agreement, dated as of September
15, 1998, between Brazos Automotive
Properties, L.P. and Monro Leasing LLC.
10.8 Guaranty, dated as of September 15, 1998,
between the Company and Brazos Automotive
Properties, L.P.
10.9 Agreement of Sublease, dated as of September
15, 1998, by and among Monro Leasing LLC,
the Company and Brazos Automotive Properties,
L.P.
11 Statement of computation of per share earnings
</TABLE>
-14-
<PAGE> 1
EXHIBIT 10.1
CREDIT AGREEMENT
among
MONRO MUFFLER BRAKE, INC.,
Borrower
THE CHASE MANHATTAN BANK,
Agent
FLEET NATIONAL BANK,
Syndication Agent
and
THE LENDERS NAMED HEREIN,
Lenders
SENIOR SECURED CREDIT FACILITY
SEPTEMBER 15, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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SECTION 1 DEFINITIONS AND TERMS...........................................................................1
1.1 Definitions.....................................................................................1
1.2 Number and Gender of Words.....................................................................12
1.3 Accounting Principles..........................................................................12
SECTION 2 COMMITMENT.....................................................................................12
2.1 Facilities A and B.............................................................................12
2.1.1 Facility A............................................................................12
2.1.2 Facility B.............................................................................13
2.2 Borrowing Procedure............................................................................13
2.3 LC Subfacility.................................................................................14
2.4 Swing Line Subfacility.........................................................................16
2.5 Termination....................................................................................17
SECTION 3 TERMS OF PAYMENT...............................................................................17
3.1 Notes and Payments.............................................................................17
3.2 Interest and Principal Payments................................................................17
3.3 Interest Options...............................................................................19
3.4 Quotation of Rates.............................................................................19
3.5 Default Rate...................................................................................19
3.6 Interest Recapture.............................................................................19
3.7 Interest Calculations..........................................................................20
3.8 Maximum Rate...................................................................................20
3.9 Interest Periods...............................................................................20
3.10 Conversions....................................................................................20
3.11 Order of Application...........................................................................21
3.12 Sharing of Payments, Etc.......................................................................21
3.13 Offset.........................................................................................21
3.14 Booking Borrowings.............................................................................21
3.15 Basis Unavailable or Inadequate for LIBOR......................................................21
3.16 Additional Costs...............................................................................22
3.17 Change in Laws.................................................................................22
3.18 Funding Loss...................................................................................23
3.19 Foreign Lenders................................................................................23
SECTION 4 FEES...........................................................................................23
4.1 Treatment of Fees..............................................................................23
4.2 Intentionally Omitted..........................................................................23
4.3 LC Fees........................................................................................23
4.4 Facility A Commitment Fee......................................................................24
SECTION 5 SECURITY.......................................................................................24
5.1 Intentionally Omitted..........................................................................24
5.2 Collateral.....................................................................................24
5.3 Additional Security and Guaranties.............................................................24
5.4 Financing Statements...........................................................................24
SECTION 6 CONDITIONS PRECEDENT...........................................................................24
SECTION 7 REPRESENTATIONS AND WARRANTIES.................................................................25
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
7.1 Purpose of Credit Facility.....................................................................25
7.2 Corporate Existence, Good Standing, Authority and Compliance...................................25
7.3 Subsidiaries...................................................................................25
7.4 Authorization and Contravention................................................................25
7.5 Binding Effect.................................................................................25
7.6 Financial Statements; Fiscal Year..............................................................26
7.7 Litigation.....................................................................................26
7.8 Taxes..........................................................................................26
7.9 Environmental Matters..........................................................................26
7.10 Employee Plans.................................................................................26
7.11 Properties; Liens..............................................................................26
7.12 Location; Real Estate Interests................................................................26
7.13 Government Regulations.........................................................................27
7.14 Transactions with Affiliates...................................................................27
7.15 Debt...........................................................................................27
7.16 Material Agreements............................................................................27
7.17 Insurance......................................................................................27
7.18 Labor Matters..................................................................................27
7.19 Solvency.......................................................................................27
7.20 Trade Names....................................................................................27
7.21 Intellectual Property..........................................................................27
7.22 Full Disclosure................................................................................28
7.23 Year 2000......................................................................................28
SECTION 8 AFFIRMATIVE COVENANTS..........................................................................28
8.1 Items to be Furnished..........................................................................28
8.2 Use of Proceeds................................................................................29
8.3 Books and Records..............................................................................29
8.4 Inspections....................................................................................29
8.5 Taxes..........................................................................................29
8.6 Payment of Obligations.........................................................................29
8.7 Expenses.......................................................................................29
8.8 Maintenance of Existence, Assets, and Business.................................................30
8.9 Insurance......................................................................................30
8.10 Preservation and Protection of Rights..........................................................30
8.11 Environmental Laws.............................................................................30
8.12 Subsidiaries...................................................................................30
8.13 Indemnification................................................................................30
8.14 Further Assurances.............................................................................31
8.15 Change of Control..............................................................................31
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
SECTION 9 NEGATIVE COVENANTS.............................................................................31
9.1 Taxes..........................................................................................31
9.2 Payment of Obligations.........................................................................31
9.3 Employee Plans.................................................................................31
9.4 Debt and Debt Instruments......................................................................31
9.5 Liens..........................................................................................31
9.6 Transactions with Affiliates...................................................................31
9.7 Compliance with Laws and Documents.............................................................32
9.8 Loans, Advances and Investments................................................................32
9.9 Dividends and Distributions....................................................................32
9.10 Sale of Assets.................................................................................32
9.11 Mergers and Dissolutions.......................................................................32
9.12 Assignment.....................................................................................33
9.13 Fiscal Year and Accounting Methods.............................................................33
9.14 New Businesses.................................................................................33
9.15 Government Regulations.........................................................................33
9.16 Leases; Sale-Leasebacks........................................................................33
9.17 Subsidiaries...................................................................................33
SECTION 10 FINANCIAL COVENANTS............................................................................33
SECTION 11 DEFAULT........................................................................................34
11.1 Payment of Obligation..........................................................................34
11.2 Covenants......................................................................................34
11.3 Debtor Relief..................................................................................34
11.4 Judgments and Attachments......................................................................34
11.5 Government Action..............................................................................35
11.6 Misrepresentation..............................................................................35
11.7 [Intentionally Omitted]........................................................................35
11.8 Material Adverse Event. ......................................................................35
11.9 Default Under Other Agreements.................................................................35
11.10 LCs............................................................................................35
11.11 Validity and Enforceability of Loan Papers.....................................................35
11.12 Employee Benefit Plans.........................................................................35
SECTION 12 RIGHTS AND REMEDIES............................................................................35
12.1 Remedies Upon Default..........................................................................35
12.2 Company Waivers. .............................................................................36
12.3 Performance by Agent...........................................................................36
12.4 Not in Control.................................................................................36
12.5 Course of Dealing..............................................................................36
12.6 Cumulative Rights..............................................................................36
12.7 Application of Proceeds........................................................................36
12.8 Diminution in Value of Collateral..............................................................37
12.9 Certain Proceedings............................................................................37
12.10 Change of Control..............................................................................37
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C>
SECTION 13 AGREEMENT AMONG LENDERS........................................................................37
13.1 Agent..........................................................................................37
13.2 Expenses.......................................................................................38
13.3 Proportionate Absorption of Losses.............................................................38
13.4 Delegation of Duties; Reliance.................................................................38
13.5 Limitation of Agent's Liability................................................................39
13.6 Default; Collateral............................................................................40
13.7 Limitation of Liability........................................................................40
13.8 Relationship of Lenders........................................................................40
13.9 Collateral Matters.............................................................................40
13.10 Benefits of Agreement..........................................................................41
SECTION 14 MISCELLANEOUS..................................................................................41
14.1 Headings.......................................................................................41
14.2 Nonbusiness Days; Time.........................................................................41
14.3 Communications.................................................................................41
14.4 Form and Number of Documents...................................................................41
14.5 Exceptions to Covenants........................................................................41
14.6 Survival.......................................................................................41
14.7 Governing Law..................................................................................41
14.8 Invalid Provisions.............................................................................41
14.9 Venue; Service of Process; Jury Trial..........................................................42
14.10 Amendments, Consents, Conflicts and Waivers....................................................42
14.11 Multiple Counterparts..........................................................................43
14.12 Successors and Assigns; Participations.........................................................43
14.13 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances....................45
14.14 Confidentiality................................................................................45
14.15 Entirety.......................................................................................45
</TABLE>
(iv)
<PAGE> 6
(v)
<PAGE> 7
(vi)
<PAGE> 8
SCHEDULES AND EXHIBITS
----------------------
<TABLE>
<S> <C>
Schedule 1 Parties, Addresses, Committed Sums and Wiring Information
Schedule 6 Conditions Precedent
Schedule 7.2 Jurisdictions of Incorporation and Business
Schedule 7.3 Corporate Structure
Schedule 7.7 Litigation
Schedule 7.9 Environmental Matters
Schedule 7.11 Permitted Liens
Schedule 7.12 Chief Executive Office, Location of Material Assets and Real Estate Interests
7.12A Monro Stores
7.12B Speedy Stores
Schedule 7.14 Transactions with Affiliates
Schedule 7.15 Permitted Debt
Schedule 7.16 Material Agreements
Schedule 9.10 Existing Sale\Leaseback Properties
Exhibit A Facility A Note
Exhibit B Facility B Note
Exhibit B-1 Swing Line Note
Exhibit C LC Request
Exhibit D Borrowing Request
Exhibit E Conversion Request
Exhibit F Compliance Certificate
Annex I Financial Covenants Calculation Worksheet
Exhibit G Assignment
</TABLE>
(vii)
<PAGE> 9
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is entered into as of September 15, 1998, among
Monro Muffler Brake, Inc., a New York corporation ("BORROWER"), Lenders (defined
below), The Chase Manhattan Bank, as Agent for itself and the other Lenders, and
Fleet National Bank, as Syndication Agent.
Borrower has requested Lenders to extend credit not to exceed an
aggregate principal amount of $102,767,300, to be allocated as follows:
a. A revolving facility of $77,767,300, to be funded by Lenders
("FACILITY A") and
b. A term loan in a principal amount of $25,000,000, to be funded
by Lenders ("FACILITY B").
Lenders are willing to extend the requested credit on the terms and conditions
of this Agreement. Accordingly, the undersigned agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 Definitions. As used in the Loan Papers:
ABR means, for any day, the higher of (a) Federal Funds Rate plus fifty
(50) basis points, or (b) Prime Rate.
ABR BORROWING means a Borrowing bearing interest at the sum of the ABR
plus the Applicable Margin.
ACCOUNTANTS mean Pricewaterhouse Coopers, LLP or other firm of
independent public accountants of nationally recognized standing retained by
Borrower or any other firm acceptable to the Lenders.
ACQUISITION means the acquisition of certain assets by Borrower
pursuant to the APA.
ADJUSTED DEBT means Funded Debt, plus the product of eight (8) times
Rental Payments.
AFFILIATE means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether as
general partner, through ownership of a Control Percentage of such Person or the
general partner of such Person, by contract or otherwise.
AGENT means The Chase Manhattan Bank, a national banking association,
and its successor or successors as administrative agent for Lenders under this
Agreement.
AGREEMENT means this Credit Agreement, as amended, supplemented or
restated from time to time in accordance with SECTION 14.10.
APA means the Asset Purchase Agreement, dated as of April 13, 1998
among Borrower, Speedy Muffler King, Inc., Bloor Automotive, Inc., Speedy Car-X,
Inc., Speedy (U.S.A.), Inc., Speedy Holding Corp., as amended, supplemented or
modified prior to the Closing Date.
APPLICABLE MARGIN means at all times during the applicable periods set
forth below: (a) with respect to all LIBOR Borrowings, the applicable percentage
set forth below in the column entitled "Applicable Margin for LIBOR Borrowings",
(b) with respect to all ABR Borrowings, the applicable percentage set forth
below in the column entitled "Applicable Margin for ABR Borrowings" and (c) with
respect to the Commitment Fee, the applicable percentage set forth below in the
column entitled "Applicable Margin for Commitment Fee".
<PAGE> 10
<TABLE>
<CAPTION>
===========================================================================================================
Applicable Applicable
Margin Margin Applicable
for LIBOR for ABR Margin
Period Borrowings Borrowings for Commitment Fee
===========================================================================================================
<S> <C> <C> <C> <C>
Level I: When the AD (less than) 2.50x 75bp 0bp 20bp
- -----------------------------------------------------------------------------------------------------------
Level II: When the AD (greater than) 2.50x 100bp 0bp 25bp
- -----------------------------------------------------------------------------------------------------------
Level III: When the AD (greater than) 3.00x 125bp 0bp 30bp
- -----------------------------------------------------------------------------------------------------------
Level IV: When the AD (greater than) 3.50x 150bp 25bp 37.5bp
- -----------------------------------------------------------------------------------------------------------
Level V: When the AD (greater than) 4.00x 175bp 50bp 37.5bp
Level VI: When the AD (greater than) 4.50x 212.5bp 75bp 50bp
===========================================================================================================
</TABLE>
Definition: "AD" is the abbreviation for Adjusted Debt/EBITDAR Ratio.
If equity or equity related securities of the Borrower in the amount of
$25,000,000 are not in place within ninety (90) days after the Closing Date, the
Applicable Margin for LIBOR Borrowings and ABR Borrowings set forth above shall
increase by 12.5 basis points in every level as indicated in the table above; if
such equity or equity related securities are not in place within one hundred
eighty (180) days after the Closing Date, the Applicable Margin for LIBOR
Borrowings and ABR Borrowings set forth above shall increase by an additional
12.5 basis points as indicated in the table above. Upon receipt of the proceeds
derived from the placement of equity or equity related securities of the
Borrower in the amount of $25,000,000 and application of such proceeds in
accordance with SECTION 3.2(B), the increase in the Applicable Margin for LIBOR
Borrowings and ABR Borrowings as set forth in this paragraph will no longer be
applicable and the Applicable Margin set forth in the table above shall
automatically be reinstated commencing on the next Business Day following
receipt of such prepayment.
Notwithstanding anything to the contrary above, commencing on the Closing Date
until six (6) months from the Closing Date, the Applicable Margin will be
calculated at Level V, as adjusted in accordance with the above paragraph with
respect to the equity or equity related securities. Commencing at the end of six
(6) months from the Closing Date, the Applicable Margin will be calculated based
on Adjusted Debt to EBITDAR Ratio as set forth in this Agreement.
Adjusted Debt and EBITDAR are calculated for the most recently-completed Four
Quarter Period and the ratio of Adjusted Debt to EBITDAR is calculated as of the
last day of such Four Quarter Period. The Applicable Margin, as adjusted to
reflect such calculations, shall become effective on the date of receipt by the
Agent of the Compliance Certificate applicable to such Four Quarter Period. If
Borrower fails to timely furnish to Agent the Current Financials and any related
Compliance Certificate or, if for some other reason, a new Applicable Margin for
a current period cannot be calculated, then the Applicable Margin in effect on
the last day of the last Four Quarter Period for which the ratio of Adjusted
Debt to EBITDAR was calculated shall remain in effect until a new Applicable
Margin can be calculated, which new Applicable Margin shall become effective as
provided in the immediately preceding sentence.
ARRANGER means Chase Securities, Inc. as Arranger and book manager.
BORROWER is defined in the preamble to this Agreement.
BORROWING means (without duplication) any amount disbursed by (a) one
or more Lenders to or on behalf of Borrower under the Loan Papers, whether such
amount constitutes an original disbursement of funds, the continuation of an
amount outstanding under Facility A or Facility B or under the Swing Line
Subfacility or the financing of a LC
<PAGE> 11
reimbursement obligation under Facility A or (b) any Lender in accordance with,
and to satisfy the obligations of any Company under, any Loan Paper.
BORROWING DATE means for any Borrowing the date for which funds are
requested by Borrower.
BORROWING REQUEST means a request substantially in the form of the
attached EXHIBIT D.
BUSINESS DAY means (a) for all purposes, any day other than Saturday,
Sunday, and any other day that commercial banks are authorized by Law to be
closed in New York, New York and (b) for purposes of any LIBOR Rate Borrowing, a
day that satisfies the requirements of clause (a) and is a day that commercial
banks are open for domestic or international business in London.
CAPEX means, for any Four Quarter Period, capital expenditures for
fixed or capital assets that are required to be capitalized on a balance sheet
prepared in accordance with GAAP minus any net proceeds of allowable
sale/leasebacks permitted by SECTION 9.16.
CAPITALIZED LEASE means any lease the obligation for Rental Payments
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.
CASH EQUIVALENTS means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government of any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers acceptances and repurchase
agreements of any commercial bank which has capital and surplus in excess of
$100,000,000 having maturities of one year or less from the date of acquisition,
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Group or P-2 by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments, (d) money market
accounts or funds with or issued by "Qualified Issuers", (e) repurchase
obligations with a term of not more than 90 days for underlying securities of
the types described in clause (a) above entered into with any bank meeting the
qualifications specified in clause (b) above, (f) demand deposit accounts
maintained in the ordinary course of business with any bank, or with any bank
that is not a bank, not in excess of $100,000 in the aggregate on deposit with
any such bank, and (g) marketable securities of the same or similar type as
owned by Borrower as of July 31, 1998, the aggregate actual purchase price of
which shall not exceed $100,000 at any time.
CHANGE OF CONTROL shall mean the occurrence of one or more of the
following: (a) until Borrower hires a Chief Executive Officer, members of the
Ownership Group ceasing to own in the aggregate, directly or indirectly,
beneficially or of record, at least (i) sixty percent (60%) of the Preferred
Stock, issued and outstanding at any time or (ii) fifteen percent (15%) of the
Common Stock, issued and outstanding at any time, or (b) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any person or
group, other than the Ownership Group, of (i) shares representing more than
thirty-five percent (35%) of the Common Stock, issued and outstanding at any
time or (ii) more than sixty percent (60%) of the Preferred Stock, issued and
outstanding at any time, or (c) the occupancy of a majority of the seats (other
than vacant seats) on the board of directors of Borrower or any Subsidiary of
Borrower by persons who were neither (i) nominated by the board of directors of
Borrower nor (ii) appointed by directors so nominated. As used in this
definition of "Change of Control," terms defined in the Securities Exchange Act
of 1934 or the rules of the Securities and Exchange Commission thereunder as in
effect on the date hereof shall have the respective meanings ascribed to them
therein.
CLOSING DATE means the date this Agreement and the Loan Papers are
fully executed and delivered.
CODE means the Internal Revenue Code of 1986, as amended from time to
time, and related rules and regulations promulgated thereunder by the Internal
Revenue Service.
COLLATERAL is defined in SECTION 5.2.
<PAGE> 12
COMMITMENT FEE is defined in SECTION 4.4.
COMMITMENT USAGE means, at any time, for each Lender, the sum of its
Facility A Commitment Usage and its Facility B Principal Debt.
COMMITTED SUM means, with respect to each Lender, the several
obligation of such Lender to lend to Borrower one or more Borrowings in the
aggregate principal amounts (which amount is subject to reduction and
cancellation as provided in this Agreement) stated beside such Lender's name for
Facility A and Facility B on SCHEDULE 1 as most recently amended under this
Agreement.
COMMON STOCK means the Borrower's common stock, $.01 par value per
share.
COMPANY OR COMPANIES means, at any time, Borrower and each of its
Subsidiaries.
COMPLIANCE CERTIFICATE means a certificate substantially in the form of
the attached EXHIBIT F and signed by a Responsible Officer.
CONTROL PERCENTAGE means, with respect to any Person (a) in the case of
a corporation, the percentage of the outstanding capital stock of such Person
having ordinary voting power which gives the direct or indirect holder of such
stock the power to elect a majority of the Board of Directors of such Person and
(b) in the case of a limited partnership, the percentage of the outstanding
limited partnership interests of such Person which gives the direct or indirect
holder of such limited partnership interests the power to remove the general
partner or partners of such Person or to take actions reserved for the limited
partners under the applicable limited partnership act.
CONVERSION REQUEST means a request substantially in the form of the
attached EXHIBIT E.
CURRENT FINANCIALS means, at any time, the consolidated Financial
Statements of Borrower and its Subsidiaries most recently delivered to Agent
under SECTIONS 8.1(A) or 8.1(B), as the case may be.
DEBT means (without duplication), for any Person, (a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of property or services; (d)
obligations of such Person as lessee under Capitalized Leases required to be
capitalized under GAAP; (e) reimbursement obligations in respect of bonds or
letters of credit; (f) obligations of such Person under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) of such
Person to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness of others of the kinds referred to in
clauses (a) through (e) above; and (g) indebtedness of others of the kinds
referred to in clauses (a) through (f) secured by any Lien on or in respect of
any property of such Person whether or not assumed by such Person; provided,
however, that all trade accounts payable and accrued expenses incurred in the
ordinary course of business of such Person and not overdue shall be excluded
from the foregoing.
DEBTOR RELIEF LAWS means Title 11 of the United States Code and all
other applicable state or federal liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments or similar Laws affecting creditors' Rights in effect from time to
time.
DEFAULT is defined in SECTION 11.
DEFAULT RATE means an annual rate of interest equal from day to day to
the lesser of (a) (i) for the principal of all Borrowings, the applicable
interest rate for such Borrowing plus 2%, or (ii) the then-existing ABR plus 2%
of all fees, interest and other amounts due hereunder and (b) the Maximum Rate.
DISTRIBUTION means, with respect to any shares of any capital stock or
other equity securities or other interests issued by a Person, (a) the
retirement, redemption, purchase or other acquisition for value of those
securities by such Person, (b) the declaration or payment of any dividend on or
with respect to those securities by such Person (except
<PAGE> 13
distributions in the form of such securities), (c) any loan or advance by that
Person to, or other investment by that Person in, the holder of any of those
securities, and (d) any other payment by that Person with respect to those
securities.
DOLLARS and $ means lawful money of the United States of America.
EBITDAR means, as determined, on a rolling twelve month basis and in
respect of any Person the sum of (i) the Net Income of such Person, plus (ii)
the Interest Expense of such Person for such period as determined in accordance
with GAAP and as such item is reported on such Person's financial statements,
(iii) the income tax expense of such Person for such period, (iv) the amount
reported as the depreciation of the assets of such Person for such period,
computed in accordance with GAAP, and as such item is used in the computation of
such Person's Net Income for such period, (v) the amount reported as the
amortization of intangibles for such Person for such period, computed in
accordance with GAAP, and as such item is used in the computation of such
Person's Net Income for such period, and (vi) Rental Payments.
EMPLOYEE PLAN means an employee pension benefit plan covered by Title
IV of ERISA and established or maintained by any Company.
ENVIRONMENTAL LAW means any Law that relates to the pollution or
protection of the environment or to Hazardous Substances.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and related rules and regulations.
FACILITIES means, collectively, Facility A and Facility B.
FACILITY A is defined in the preamble to this Agreement.
FACILITY A COMMITMENT USAGE means, at any time, the sum of (a) the
Facility A Principal Debt, whether under the Swing Line Subfacility or
otherwise, plus (b) the LC Exposure.
FACILITY A COMMITTED SUM means, at any time, the sum of all Committed
Sums for all Lenders under Facility A (as reduced or cancelled under this
Agreement) then in effect.
FACILITY A MATURITY DATE means the earlier of (a) September 15, 2003,
and (b) the effective date that Lenders' commitments to lend under Facility A
are otherwise cancelled or terminated in accordance with this Agreement.
FACILITY A NOTE means a promissory note substantially in the form of
the attached EXHIBIT A.
FACILITY A PRINCIPAL DEBT means, at any time, the unpaid principal
balance of all Borrowings under Facility A.
FACILITY B is defined in the preamble to this Agreement.
FACILITY B COMMITTED SUM means, at any time, the sum of all Committed
Sums for all Lenders under Facility B (as reduced or cancelled under this
Agreement) then in effect.
FACILITY B MATURITY DATE means the earlier of (a) September 15, 2003 or
(b) the acceleration of maturity of Facility B in accordance with SECTION 12 of
this Agreement.
FACILITY B NOTE means a promissory note substantially in the form of
the attached EXHIBIT B.
FACILITY B PRINCIPAL DEBT means, at any time, the unpaid principal
balance of all Borrowings under Facility B.
<PAGE> 14
FEDERAL FUNDS RATE means, on any day, the weighted average (rounded
upwards, if necessary, to the nearest 0.01%) equal to the rates on overnight
federal funds transactions with member banks of the Federal Reserve System
arranged by federal funds brokers as published by the Federal Reserve Bank of
New York on the next successive Business Day; provided, however, that (i) if
such day is not a Business Day, the Federal Funds Rate for such day shall be the
rate for such transactions on the next preceding Business Day as published on
the next successive Business Day or, (ii) if those rates are not published for
any Business Day, the Federal Fund Rate shall be the average of the quotations
at approximately 10:00 a.m. on such Business Day received by Agent from three
federal funds brokers of recognized standing selected by Agent in its reasonable
discretion.
FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract
between any Company and any Lender or another Person reasonably acceptable to
Majority Lenders, which is intended to reduce or eliminate the risk of
fluctuations in interest rates and which is legal and enforceable under
applicable Law.
FINANCIAL STATEMENTS of a Person means balance sheets, profit and loss
statements, reconciliations of capital and surplus, and statements of cash flow
prepared (a) according to GAAP, (b) except as stated in SECTION 1.3, in
comparative form to prior year-end figures or corresponding periods of the
preceding fiscal year, as applicable, and (c) on a consolidated basis if that
Person had any consolidated Subsidiaries during the applicable period.
FIXED COVERAGE RATIO means, as determined, on a rolling twelve month
basis the ratio of (a) EBITDAR minus CAPEX for such period, to (b) (i) Rental
Payments, plus (ii) Interest Expense due in respect of Debt for such period of
Borrower and its Subsidiaries on a consolidated basis determined in accordance
with GAAP.
FOUR QUARTER PERIOD means a period of four full consecutive fiscal
quarter-annual periods, taken together as one accounting period; provided,
however, for the (a) first fiscal quarter period following the Closing Date and
ending on December 31, 1998, the income statement times four (4) annualized
shall be utilized; (b) second fiscal quarter period following the Closing Date
and ending March 31, 1999, the six (6) months income statement times two (2)
annualized shall be utilized; and (c) third fiscal quarter period following the
Closing Date and ending June 30, 1999, the nine (9) months income statement
divided by three (3) then multiplied times four (4) annualized shall be
utilized.
FUNDED DEBT means, when determined, on a rolling twelve-month basis,
calculated using the month-end balance for each month on a consolidated basis
for the Companies in accordance with GAAP: (a) indebtedness of such Person for
borrowed money; (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, and (c) obligations of such Person as lessee
under Capitalized Leases; excluding notes generated in the ordinary course of
business payable within one year not to exceed $1,000,000, trade payables and
accrued expenses; provided however, the calculation for the period commencing
with the Closing Date and ending twelve months thereafter, shall be based on the
average of the month-end balance for the months elapsed since the Closing Date.
FUNDING LOSS means, without duplication, (a) the administrative or
reemployment costs customarily charged by any Lender (consistent with such
Lender's policies with respect to its other customers) when (i) Borrower fails
or refuses (for any reason other than Lender's failure to comply with this
Agreement) to take any Borrowing that it has requested under this Agreement, or
(ii) Borrower prepays or pays any Borrowing or converts any Borrowing to a
Borrowing of another Type, in each case, before the last day of the applicable
Interest Period, plus (b) an amount equal to the excess, if any, of the amount
of interest that would have accrued on the Borrowing at the elected interest
rate during the remainder of the applicable Interest Period (but for such
failure, refusal, payment, prepayment or conversion) over the amount of interest
that would accrue on the same Type of Borrowing for an interest period of the
same duration as the remainder of the applicable Interest Period.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time,
applied on a basis consistent with those used in preparation of the audited
consolidated financial statements referred to in PARAGRAPH (F) of SCHEDULE 6
(except for changes concurred in by Borrower's Accountants).
<PAGE> 15
HAZARDOUS SUBSTANCE means any substance (a) the presence of which
requires removal, remediation, or investigation under any Environmental Law, or
(b) that is defined or classified as a hazardous waste, hazardous material,
pollutant, contaminant or toxic or hazardous substance under any Environmental
Law.
INTEREST EXPENSE means, in respect of a Person, for any Four Quarter
Period, all interest paid or accrued and amortization of debt discount with
respect to all Funded Debt of such Person for such period (after giving effect
to the net cost associated with all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements, or other financial arrangements
designed to protect such Person against fluctuations in interest rates) and
after giving credit for interest income and construction period interest income.
INTEREST PERIOD is determined in accordance with SECTION 3.9.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions and
interpretations of any Tribunal, as in effect from time to time.
LC means a letter of credit (in such form as shall be customary in
respect of obligations of a similar nature) issued by Agent under this Agreement
and under an LC Agreement.
LC AGREEMENT means a letter of credit application and reimbursement
agreement (in form and substance satisfactory to Agent) submitted by Borrower to
Agent for a letter of credit for the account of any Company.
LC EXPOSURE means, at any time, (without duplication) the sum of (a)
the aggregate undrawn and uncancelled portions of all outstanding LCs plus (b)
the aggregate unpaid reimbursement obligations of Borrower under drawings or
drafts under any LC, excluding Borrowings to fund such reimbursement obligations
under SECTION 2.3(C).
LC REQUEST means a request substantially in the form of the attached
EXHIBIT C.
LEASE FACILITY FUND has the meaning set forth in SECTION 2.1.1.
LENDER LIENS means Liens in favor of Lenders, or Agent on behalf of
Lenders, securing any of the Obligation.
LENDERS means the financial institutions named on the attached SCHEDULE
1 or on the most recently amended SCHEDULE 1, if any, delivered by Agent under
this Agreement, and, subject to this Agreement, their respective successors and
assigns (but not any Participant who is not otherwise a party to this
Agreement).
LIBOR RATE BORROWING means a Borrowing bearing interest at the sum of
the LIBOR Rate plus the Applicable Margin.
LIBOR RATE means, for any LIBOR Rate Borrowing, for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; divided by one minus the
Reserve Percentage (expressed as a decimal) applicable to the relevant Interest
Period. If for any reason such rate is not available, the term "LIBOR Rate"
shall mean, for any LIBOR Rate Borrowing for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds prior
to the claims of other creditors or the owners.
LITIGATION means any action by or before any Tribunal.
<PAGE> 16
LOAN PAPERS means (a) this Agreement, certificates and reports
delivered under this Agreement, and exhibits and schedules to this Agreement,
(b) the Notes and all agreements, documents and instruments in favor of Agent or
Lenders (or Agent on behalf of Lenders) ever delivered in connection with or
under this Agreement or otherwise delivered in connection with all or any part
of the Obligation, (c) all LCs and LC Agreements, (d) any Financial Hedge
between any Company and any Lender, and (e) all renewals, extensions and
restatements of, and amendments and supplements to, any of the foregoing.
MAJORITY LENDERS means any combination of Lenders holding at least (a)
66-2/3% of the Total Commitment, if no Principal Debt or LC Exposure is
outstanding, or (b) 66-2/3% of the Total Commitment Usage if any Principal Debt
or LC Exposure is outstanding.
MATERIAL ADVERSE EVENT means any circumstance or event that,
individually or collectively with other circumstances or events, reasonably is
expected to result in any (a) impairment of the ability of any Company to
perform any of its payment or other material obligations under any Loan Paper,
(b) impairment of the ability of Agent or any Lender to enforce (i) any of the
material obligations of any Company under this Agreement or (ii) any of their
respective Rights under the Loan Papers, or (c) material and adverse effect on
the business, assets, property or condition (financial or otherwise) of the
Companies as a whole as represented to Lenders in the Current Financials.
MATERIAL AGREEMENT means, for any Person, any agreement (excluding
purchase orders for material or inventory in the ordinary course of business) to
which that Person is a party, by which that Person is bound, or to which any
assets of that Person may be subject, and that is not cancelable by that Person
upon thirty (30) or fewer days' notice without liability for further payment
other than nominal penalty, and that requires that Person to pay more than
$1,000,000 during any 12-month period.
MATURITY DATE means, as applicable, the Facility A Maturity Date, the
Facility B Maturity Date or the Swing Line Maturity Date.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for a Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest that,
under applicable Law, such Lender is permitted to contract for, charge, take,
reserve or receive on the Obligation.
MINORITY INTERESTS means any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that are
not owned by the Borrower and/or one or more of its Wholly-Owned Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests constituting
preferred stock at the voluntary or involuntary liquidating value of such
preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in Preferred Stock.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which any Company
(or any Person that, for purposes of Title IV of ERISA, is a member of
Borrower's controlled group or is under common control with Borrower within the
meaning of Section 414 of the Code) is making, or has made, or is accruing, or
has accrued, an obligation to make contributions.
NET INCOME means, in respect of a Person, the net income of such Person
computed in accordance with GAAP and as such item is reported from time to time
on such Person's statement of income and retained earnings (or similar
statement) (after deduction for payment of all taxes).
NON-U.S. LENDER is defined in SECTION 3.19.
NOTES means all outstanding and unpaid Facility A Notes, Facility B
Notes and the Swing Line Note.
<PAGE> 17
OBLIGATION means all present and future indebtedness and obligations,
and all renewals, increases and extensions thereof, or any part thereof, now or
hereafter owed to Agent or any Lender by any Company under any Loan Paper,
together with all interest accruing thereon, fees, costs and expenses
(including, without limitation, all attorneys' fees and expenses incurred in the
enforcement or collection thereof) payable under the Loan Papers or in
connection with the protection of Rights under the Loan Papers.
OWNERSHIP GROUP means Peter J. Solomon, Donald Glickman, Richard
Solomon and their spouses or lineal descendants, or any estate of such parties
or any trust of which any of the foregoing are the exclusive beneficiaries.
PARTICIPANT is defined in SECTION 14.12(B).
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established under ERISA.
PERMITTED DEBT means Debt described on the attached SCHEDULE 7.15.
PERMITTED LIENS means Liens described on the attached SCHEDULE 7.11.
PERSON means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof, or any trustee, receiver, custodian or similar official.
POTENTIAL DEFAULT means the occurrence of any event or the existence of
any circumstance that would, upon notice or lapse of time or both, become a
Default.
PREFERRED STOCK means the Borrower's Class C Convertible Preferred
Stock, $1.50 par value per share.
PRIME RATE means, for any day, the rate of interest announced publicly
from time to time by Chase, after taking into account such factors as Agent
shall in its sole discretion deem appropriate, as its prime rate in effect at
its principal office in New York, New York automatically fluctuating upward and
downward with and at the time specified in each such announcement without
special notice to Borrower or any other Person. However, Agent's prime rate may
(i) be one of several interest rates, (ii) serve as a basis upon which effective
rates of interest are from time to time calculated for loans referring to the
prime rate, and (iii) not be Agent's lowest lending interest rate. Agent may
from time to time make various loans at rates of interest having no relationship
to such prime rate.
PRINCIPAL DEBT means, at any time, the unpaid principal balance of all
Borrowings.
PRO RATA and PRO RATA PART means, when determined for any Lender, (a)
if there is no Principal Debt or LC Exposure, the proportion (stated as a
percentage) that such Lender's Committed Sum bears to the Total Commitment, or
(b) if there is any Principal Debt or LC Exposure, the proportion (stated as a
percentage) that the sum of (i) the Principal Debt owed to such Lender and (ii)
and (without duplication) the LC Exposure of such Lender, bears to the (x)
aggregate Principal Debt owed to and (y) (without duplication) the LC Exposure
of all Lenders.
PURCHASER is defined in SECTION 14.12(C).
QUALIFIED ISSUER means any commercial bank (a) which has capital and
surplus in excess of $100,000,000 and (b) the outstanding long term debt
securities of which are rated at least A-2 by Standard & Poors Ratings Group or
at least P-2 by Moody's Investors Service, Inc., or carry an equivalent rating
by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments.
REGULATION D means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
<PAGE> 18
REGULATION U means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
RENTAL PAYMENTS means, as determined, on a rolling twelve month basis
ending on the last day of the accounting period covered by the consolidated
financial statements of Borrower and its Subsidiaries, and delivered pursuant to
this Agreement, the dollar amount of the fixed payments which Borrower or its
Subsidiaries are required to make by the terms of any lease to its landlords
during such period; (a) excluding, however (i) rentals under Capitalized Leases,
(ii) maintenance, repairs, taxes and other similar charges included in such
payments, and (iii) amounts constituting step rent in accordance with GAAP, and
(b) less (x) rental income and (y) amortization of deferred gains on
sale-leasebacks, such amortization not to exceed $1,000,000 for purposes hereto;
provided however, the calculation for the period commencing with the Closing
Date and ending twelve months thereafter, shall be based on (1) the Four Quarter
Period for all lease or ground lease payments which the Borrower or its
Subsidiaries are required to make to Brazos Automotive Properties, L.P., as
lessor under the operating lease with Monro Leasing, LLC, and (2) the average of
all lease or ground lease payments which Borrower or its Subsidiaries are
required to make in connection with properties acquired under the APA.
REPORTABLE EVENT means an event described in Section 4043 of ERISA
excluding any such event for which the notice requirement is waived under
applicable regulations of the PBGC.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys and agents.
RESERVE PERCENTAGE means, for all Lenders of a LIBOR Rate Borrowing for
the relevant Interest Period, the weighted average of the Reserve Requirements,
if any, incurred by each Lender on its Pro Rata Part of such Borrowing.
RESERVE REQUIREMENT means, with respect to any LIBOR Rate Borrowing for
the relevant Interest Period, the maximum aggregate reserve requirements
(including all basic, supplemental, emergency, special, marginal and other
reserves required by applicable Law) applicable to a member bank of the Federal
Reserve System for eurocurrency fundings or liabilities.
RESPONSIBLE OFFICER means the chairman, president, senior
vice-president, executive vice-president, chief executive officer or chief
financial officer of Borrower.
RIGHTS means rights, remedies, powers, privileges and benefits.
SECURITY DOCUMENTS means, collectively, any security agreement, pledge
agreement, mortgage, deed of trust or other agreement or document, together with
all related financing statements and stock powers, in form and substance
satisfactory to Agent and its legal counsel, executed and delivered by any
Person in connection with this Agreement to create a Lender Lien on any of its
real or personal property, as amended, supplemented or restated from time to
time.
SOLVENT means, as to a Person, that (a) the aggregate fair market value
of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable
it to pay its Debts as they mature, and (c) it does not have unreasonably small
capital to conduct its businesses.
SUBSIDIARY of any Person means any entity of which at least 50% (in
number of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person.
SWING LINE BORROWING means any Borrowing under the Swing Line
Subfacility.
SWING LINE MATURITY DATE means the earlier of (a) September 15, 2003 or
(b) the date of the acceleration of maturity of the Swing Line Subfacility in
accordance with Section 12.
<PAGE> 19
SWING LINE NOTE means a promissory note substantially in the form of
the attached EXHIBIT B-1, as amended, supplemented, and restated.
SWING LINE SUBFACILITY means the facility under Facility A described in
SECTION 2.4.
SYNDICATION AGENT means Fleet National Bank, and its successors or
successors as syndication agent under this Agreement.
TANGIBLE ASSETS of any Person means, as of the date of any
determination thereof, the total amount of all assets of such Person (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting the following: good will, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets (other than prepaid insurance and
deferred taxes), any write up in the book value of any asset resulting from a
revaluation thereof subsequent to December 31, 1998, and such other assets as
are properly classified as "intangible assets" in accordance with GAAP.
TANGIBLE NET WORTH means as of the date of any determination thereof,
the sum of the capital stock of all classes, paid-in-capital and surplus
accounts (net of treasury shares) plus (or minus in the case of a deficit) the
retained earnings of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, after elimination of Minority
Interests, less all assets which are not Tangible Assets.
TAXES means, for any Person, taxes, assessments or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises or assets.
TOTAL COMMITMENT means, at any time, the sum of the Facility A
Committed Sum and the Facility B Committed Sum.
TOTAL COMMITMENT USAGE means, at any time, the sum of (a) the Facility
A Commitment Usage and (b) the Facility B Principal Debt.
TRIBUNAL means any (a) local, state, or federal judicial, executive, or
legislative instrumentality, (b) private arbitration board or panel having
binding authority with respect to any party to be bound thereby pursuant to a
written agreement entered into by such party, or (c) central bank.
TYPE means any type of Borrowing determined with respect to the
applicable interest option.
UCP means the Uniform Customs and Practices for Documentary Credit
(1993 version), International Chamber of Commerce Publication No. 500 (as
amended or modified from time to time).
WHOLLY-OWNED SUBSIDIARY means a Subsidiary owned 100% by Borrower.
1.2 NUMBER AND GENDER OF WORDS. The singular includes the plural where
appropriate and vice versa, and words of any gender include each other gender
where appropriate.
1.3 ACCOUNTING PRINCIPLES. Unless otherwise stated, (a) GAAP determines
all accounting and financial terms and compliance with financial covenants, (b)
all accounting principles applied in a current period must be consistent in all
material respects with those applied during the preceding comparable period,
unless (i) the Borrower shall have objected in writing to determining such
compliance on such basis within ten (10) days of delivery to the Agent of the
financial statements relating to such period, or (ii) the Majority Lenders shall
so object in writing within thirty (30) days after receipt of such financial
statements, in either of which events such calculations shall be made on a basis
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made (which, if objection is made
in respect of the first financial statements delivered under SECTION 8.1 hereof,
shall mean the Current Financials), and (c) the Borrower shall deliver to the
Agent at the same time as the delivery of any annual or quarterly financial
statement under SECTION 8.1 hereof (i) a description in reasonable detail
<PAGE> 20
of any material variation between the application of accounting principles
employed in the preparation of such statement and the application of accounting
principles employed in the preparation of the next preceding annual or quarterly
financial statements as to which no objection has been made in accordance with
the last sentence of PARAGRAPH (A) above and (ii) reasonable estimates of the
difference between such statements arising as a consequence thereof.
SECTION 2 COMMITMENT.
2.1 FACILITIES A AND B. Subject to the provisions in the Loan Papers,
each Lender severally and not jointly agrees to lend to Borrower under Facility
A and under Facility B on the following conditions:
2.1.1 FACILITY A. Each Lender agrees to lend to Borrower its
Pro Rata Part of one or more Borrowings under Facility A which Borrower
may borrow, repay and reborrow under this Agreement;
(a) Each Borrowing under Facility A must occur on a
Business Day and no later than the Business Day immediately
preceding the Facility A Maturity Date;
(b) Each Borrowing must be in an amount not less
than (i) $1,000,000 or a greater integral multiple of $100,000
(if an ABR Borrowing other than a Swing Line Borrowing) or
(ii) $2,000,000 or a greater integral multiple of $100,000 (if
a LIBOR Rate Borrowing);
(c) When determined, (i) the Facility A Commitment
Usage may not exceed the Facility A Committed Sum, (ii) no
Lender's Pro Rata Part of the Facility A Commitment Usage may
exceed such Lender's Facility A Committed Sum, and (iii) the
Facility A Commitment Usage, when aggregated with the Facility
B Principal Debt may not exceed the Total Commitment;
(d) The Borrower shall make a Borrowing under
Facility A on the Closing Date in an amount sufficient to
refinance its existing revolving credit facility with The
Chase Manhattan Bank, as Agent; and
(e) The principal amount of $2,512,300 of the
Facility A Committed Sum shall be available to Borrower from
the date hereof until March 15, 1999, (the "LEASE FACILITY
FUND") at which time the Facility A Committed Sum shall be
permanently reduced by the Lease Facility Fund and no amounts
of the Lease Facility Fund may be drawn by Borrower
thereafter. Borrowings from the Lease Facility Fund shall be
used solely for the purchase by Borrower of certain designated
properties approved by Agent and subject to the lease
agreements between Monro Leasing, LLC, a Delaware limited
liability company, and a Wholly Owned Subsidiary of Borrower,
as Lessee, and Brazos Automotive Properties, L.P., as Lessor.
2.1.2 FACILITY B. Each Lender agrees to lend to Borrower its
Pro Rata Part of one Borrowing under Facility B, a term loan under
which Borrower may borrow and may repay or prepay under the terms of
this Agreement, but under which a Borrowing, after it has been paid or
prepaid, may not be reborrowed.
Borrowings are subject to the following conditions:
(a) The Borrowing under Facility B must occur on
the Closing Date;
(b) The Borrowing must be in an amount equal to the
Facility B Committed Sum; and
(c) The Facility B Principal Debt may not exceed
the Facility B Committed Sum.
2.2 BORROWING PROCEDURE. The following procedures apply to Borrowings
other than Swing Line Borrowings (see SECTION 2.4) and drawings under an LC (see
SECTION 2.3):
<PAGE> 21
(a) Borrower may request a Borrowing by submitting to Agent
a Borrowing Request. The Borrowing Request must be received by Agent no
later than (i) 12:00 noon on the third Business Day preceding the
Borrowing Date for any LIBOR Rate Borrowing or (ii) 11:00 a.m. on the
Borrowing Date for any ABR Borrowing. Agent shall promptly notify each
Lender of its receipt of any Borrowing Request and its contents. A
Borrowing Request is irrevocable and binding on Borrower.
(b) By 2:00 p.m. on the applicable Borrowing Date, each
Lender shall remit its Pro Rata Part of each requested Borrowing by
wire transfer to Agent pursuant to Agent's wire transfer instructions
on SCHEDULE 1 (or as otherwise directed by Agent) in funds that are
available for immediate use by Agent. Subject to receipt of such funds,
Agent shall make such funds available to Borrower as directed in the
Borrowing Request (unless it has actual knowledge that any applicable
condition precedent either has not been satisfied by Borrower or has
been waived by Majority Lenders).
(c) Absent contrary written notice from a Lender, Agent may
assume that each Lender has made its Pro Rata Part of the requested
Borrowing available to Agent on the applicable Borrowing Date, and
Agent may, in reliance upon such assumption (but is not required to),
make available to Borrower a corresponding amount. If a Lender fails to
make its Pro Rata Part of any requested Borrowing available to Agent on
the applicable Borrowing Date, Agent may recover the applicable amount
on demand (i) from that Lender, together with interest at the Federal
Funds Rate for the period commencing on the date the amount was made
available to Borrower by Agent and ending on (but excluding) the date
Agent recovers the amount from that Lender, or (ii), if that Lender
fails to pay its amount upon demand, then from Borrower, together with
interest at an annual interest rate equal to the rate applicable to the
requested Borrowing for the period commencing on the Borrowing Date and
ending on (but excluding) the date Agent recovers the amount from
Borrower. No Lender is responsible for the failure of any other Lender
to make its Pro Rata Part of any Borrowing.
2.3 LC SUBFACILITY.
(a) Subject to the terms and conditions of this Agreement
and applicable Law, Agent agrees to issue LCs under Facility A upon
Borrower's delivery of an LC Request and a duly executed LC Agreement,
each of which must be received by Agent no later than 12:00 noon on the
third Business Day before the requested LC is to be issued; provided
that the LC Exposure may not exceed $7,000,000 and the Facility A
Commitment Usage may not exceed the Facility A Commitment Sum. Each LC
must expire no later than the earlier of five (5) days before the
Facility A Maturity Date and one (1) year after such LC's issuance
(provided that, LCs may, if so requested by Borrower, be self-extending
with up to one hundred twenty (120) days cancellation notice by Agent
to beneficiary).
(b) Immediately upon Agent's issuance of any LC, Agent shall
be deemed to have sold and transferred to each other Lender, and each
other Lender shall be deemed irrevocably and unconditionally to have
purchased and received from Agent, without recourse or warranty, an
undivided interest and participation (to the extent of such Lender's
Pro Rata Part of the Facility A Commitment Sum) in the LC and all
applicable Rights of Agent in the LC (other than Rights to receive
certain fees provided for in SECTION 4.3). Agent agrees to provide a
copy of each LC to each other Lender promptly after issuance. However,
Agent's failure to promptly send to Lenders a copy of an issued LC
shall not affect the rights and obligations of Agent and Lenders under
this Agreement.
(c) To induce Agent to issue and maintain LCs, and to induce
Lenders to participate in issued LCs, Borrower agrees to pay or
reimburse Agent (i) within one (1) Business Day after Borrower receives
notice from Agent that any draft or draw request has been properly
presented under any LC, or, if the draft of draw request is for payment
at a future date, within one (1) Business Day before the payment date
specified in the draw request, the amount paid or to be paid by Agent
and (ii) promptly, upon demand, the amount of any additional fees Agent
customarily charges for the application and issuance of an LC, for
confirming, negotiating or amending LC Agreements, for honoring drafts
and draw requests, and taking similar action in
<PAGE> 22
connection with letters of credit. If Borrower does not timely pay or
reimburse Agent for any drafts or draw requests paid or to be paid,
Agent shall fund Borrower's reimbursement obligations as an ABR
Borrowing under Facility A and the proceeds of the Facility A ABR
Borrowing shall be advanced directly to Agent to pay Borrower's unpaid
reimbursement obligations. If funds cannot be advanced under Facility A
for the immediately preceding sentence to fund the reimbursement
obligations as a Borrowing under Facility A, then Borrower's
reimbursement obligation shall constitute a demand obligation.
Borrower's reimbursement obligations shall accrue interest (x) at the
ABR plus the Applicable Margin from the date Agent pays the applicable
draft or draw request through the date Agent is paid or reimbursed by
Borrower and, (y) if funds are not advanced under Facility A, at the
Default Rate from the date Agent pays the applicable draft or draw
request through the date Agent is paid or reimbursed by Borrower.
Borrower's obligations under this SECTION 2.3(C) are absolute and
unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment that Borrower may have at
any time against Agent or any other Person. Agent shall promptly
distribute reimbursement payments received from Borrower to all Lenders
according to their Pro Rata Part of the Facility A Commitment Sum.
(d) Agent shall promptly notify Borrower of the date and
amount of any draft or draw request presented for honor under any LC
(but failure to give notice will not affect Borrower's obligations
under this Agreement). Agent shall pay the requested amount upon
presentment of a draft or draw request unless presentment on its face
does not comply with the terms of the applicable LC. When making
payment, Agent may disregard (i) any default or potential default that
exists under any other agreement and (ii) obligations under any other
agreement that have or have not been performed by the beneficiary or
any other Person (and Agent is not liable for any of those
obligations). Borrower's reimbursement obligations to Agent and
Lenders, and each Lender's obligations to Agent, under this SECTION 2.3
are absolute and unconditional irrespective of, and Agent is not
responsible for, (1) the validity, enforceability, sufficiency,
accuracy or genuineness of documents or endorsements (even if they are
in any respect invalid, unenforceable, insufficient, inaccurate,
fraudulent or forged), (2) any dispute by any Company with or any
Company's claims, setoffs, defenses, counterclaims or other Rights
against Agent, any Lender or any other Person, or (iii) the occurrence
of any Potential Default or Default.
(e) If Borrower fails to reimburse Agent as provided in
SECTION 2.3(C) and funds are not advanced under Facility A to satisfy
the reimbursement obligations, Agent shall promptly notify each Lender
of Borrower's failure, of the date and amount paid, and of each
Lender's Pro Rata Part of the unreimbursed amount. Each Lender shall
promptly and unconditionally make available to Agent in immediately
available funds its Pro Rata Part of the unpaid reimbursement
obligation. Such funds are due and payable to Agent before the close of
business on (i) the Business Day Agent gives notice to each Lender of
Borrower's reimbursement failure if the notice is received by a Lender
before 2:00 p.m. in the time zone where such Lender's office listed on
SCHEDULE 1 is located, or (ii) on the next succeeding Business Day
after the Business Day Agent gives notice to each Lender of Borrower's
reimbursement failure, if notice is received after 2:00 p.m. in the
time zone where such Lender's office listed on SCHEDULE 1 is located.
All amounts payable by any Lender accrue interest at the Federal Funds
Rate from the day the applicable draft or draw is paid by Agent to (but
not including) the date the amount is paid by the Lender to Agent.
(f) Borrower acknowledges that each LC is deemed issued upon
delivery to the beneficiary or Borrower. If Borrower requests that any
LC be delivered to Borrower rather than the beneficiary, and Borrower
subsequently cancels that LC, Borrower agrees to return it to Agent
together with Borrower's written certification that it has never been
delivered to the beneficiary. If any LC is delivered to the beneficiary
under Borrower's instructions, Borrower's cancellation is ineffective
without Agent's receipt of the LC and the beneficiary's written consent
to the cancellation.
(g) Agent agrees with each Lender that it will examine all
documents with reasonable care to ascertain that they appear on their
face to be in accordance with the terms and conditions of the LC. Each
Lender and Borrower agree that, in paying any draft or draw under any
LC, Agent has no responsibility to obtain any document (other than any
documents expressly required by the respective LC) or to ascertain or
<PAGE> 23
inquire as to any document's validity, enforceability, sufficiency,
accuracy or genuineness or the authority of any Person delivering it.
Neither Agent nor its Representatives will be liable to any Lender or
any Company for any LC's use or for any beneficiary's acts or
omissions. Any action, inaction, error, delay or omission taken or
suffered by Agent or any of its Representatives in connection with any
LC, applicable draws, drafts or documents, or the transmission,
dispatch or delivery of any related message or advice, if in conformity
with applicable Laws and in accordance with the standards of care
specified in the UCP, is binding upon the Companies and Lenders. Agent
is not liable to any Company or any Lender for any action taken or
omitted by Agent or its Representative in connection with any LC in the
absence of gross negligence or willful misconduct.
(h) On the Facility A Maturity Date, upon a termination
under SECTION 2.5, during the continuance of a Default under SECTION
11.3, or upon any demand by Agent during the continuance of any other
Default, Borrower shall provide to Agent, for the benefit of Lenders,
cash collateral in an amount equal to the then-existing LC Exposure.
Any cash collateral provided by Borrower to Agent in accordance with
this SECTION 2.3(H) shall be deposited by Agent in an interest bearing
cash collateral account maintained with Agent at the office of Agent
and invested in obligations issued or guaranteed by the United States
and, upon the surrender of any LC, Agent shall deliver the appropriate
funds on deposit in such collateral account to Borrower together with
interest accrued on such funds.
(i) BORROWER SHALL PROTECT, INDEMNIFY, PAY, AND SAVE AGENT,
EACH LENDER AND THEIR RESPECTIVE REPRESENTATIVES HARMLESS FROM AND
AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES,
COSTS, CHARGES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES)
WHICH ANY OF THEM MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE OF THE
ISSUANCE OF ANY LC, ANY DISPUTE ABOUT IT, ANY CANCELLATION OF ANY LC BY
BORROWER, OR THE FAILURE OF AGENT TO HONOR A DRAFT OR DRAW REQUEST
UNDER ANY LC AS A RESULT OF ANY ACT OR OMISSION (WHETHER RIGHT OR
WRONG) OF ANY PRESENT OR FUTURE TRIBUNAL. HOWEVER, NO PERSON IS
ENTITLED TO INDEMNITY UNDER THE FOREGOING FOR ITS OWN GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT. THE PROVISIONS OF AND UNDERTAKINGS AND
INDEMNIFICATION SET FORTH IN THIS PARAGRAPH SHALL SURVIVE THE
SATISFACTION AND PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS
AGREEMENT.
(j) Although referenced in any LC, terms of any particular
agreement or other obligation to the beneficiary are not incorporated
into this Agreement in any manner. The fees and other amounts payable
with respect to each LC are as provided in this Agreement, drafts and
draws under each LC are part of the Obligation, and the terms of this
Agreement control any conflict between the terms of this Agreement and
any LC Agreement.
2.4 SWING LINE SUBFACILITY.
(a) For the convenience of the parties, the Agent, solely
for its own account, may make any requested Borrowing of not less than
$500,000 (or a greater integral multiple of $100,000) directly to
Borrower as a Swing Line Borrowing without requiring each other Lender
to fund its Pro Rata Part thereof unless and until SECTION 2.4(B) is
applicable. Swing Line Borrowings are subject to the following
conditions:
(i) Each Swing Line Borrowing must occur on a
Business Day before the Swing Line Maturity Date;
(ii) When determined, (x) the aggregate Swing Line
Debt outstanding may not exceed $2,000,000, (y) the Facility A
Commitment Usage may not exceed the Facility A Committed Sum
and (z) the Facility A Commitment Usage, when aggregated with
the Facility B Principal Debt, may not exceed the Total
Commitment;
<PAGE> 24
(iii) On any date when Borrowings equal to or in
excess of $2,000,000 are funded under Facility A, all or a
portion of the proceeds of those Borrowings shall be used to
repay in full all indebtedness then outstanding under the
Swing Line Subfacility;
(iv) Each Swing Line Borrowing is deemed an ABR
Borrowing; and
(v) Each Borrowing under the Swing Line
Subfacility is available and may be prepaid on same-day
telephonic notice from Borrower to Agent, if notice is
received by Agent before 11:00 a.m.
(b) If Borrower fails to repay any Swing Line Borrowing within
two (2) Business Days after demand by Agent (or upon the earliest to
occur of a Default, the Facility A Termination Date, or the date when
the aggregate Committed Sums of all Lenders under the entire Facility A
are cancelled), Agent shall promptly notify each Lender of Borrower's
failure and the unpaid amount. No later than the close of business on
the date Agent gives notice (if notice is given before 12:00 noon on
any Business Day, or, if made at any other time, on the next Business
Day following the date of notice), each Lender shall irrevocably and
unconditionally purchase and receive from Agent a ratable participation
in such Swing Line Borrowing and shall make available to Agent in
immediately available funds its Pro Rata Part of such unpaid amount,
together with interest from the date when its payment was due to, but
not including, the date of payment, at the Federal Funds Rate. If a
Lender does not promptly pay its amount upon Agent's demand, and until
Lender makes the required payment, Agent is deemed to continue to have
outstanding a Swing Line Borrowing in the amount of the Lender's unpaid
obligation. Borrower shall make each payment of all or any part of any
Swing Line Borrowing to Agent for the ratable benefit of Agent and
those Lenders who have funded their participations in Swing Line
Borrowings under this SECTION 2.4(b) (but all interest accruing on
Swing Line Borrowings before the funding date of any participation is
payable solely to Agent for its own account).
2.5 TERMINATION. Without premium or penalty, and upon giving
at least ten (10) Business Days prior written and irrevocable notice to
Agent, Borrower may terminate all or part of the unused portion of the
Facility A Committed Sum. Each partial termination must be in an amount
of not less than $5,000,000 or a greater integral multiple of
$1,000,000, and shall be Pro Rata among all Lenders. Once terminated,
the Committed Sum for Facility A may not be increased or reinstated.
SECTION 3 TERMS OF PAYMENT.
3.1 NOTES AND PAYMENTS.
(a (i) The Facility A Principal Debt shall be evidenced
by the Facility A Notes, one payable to each Lender in the stated
principal amount of its Committed Sum for Facility A.
(ii) The Facility B Principal Debt shall be
evidenced by the Facility B Notes, one payable to each Lender in the
stated principal amount of its Committed Sum for Facility B.
(iii) Principal Debt under the Swing Line Subfacility
shall be evidenced by a Swing Line Note payable to the Agent in the
stated principal amount of $2,000,000.
(b Borrower must make each payment and prepayment on the
Obligation, without offset, counterclaim, or deduction, to Agent's
principal office in New York, New York, in funds that will be available
for immediate use by Agent by 12:00 noon on the day due. Payments
received after such time shall be deemed received on the next Business
Day. Agent shall pay to each Lender any payment to which that Lender is
entitled on the same day Agent receives the funds from Borrower if
Agent receives the payment or prepayment before 12:00 noon, and
otherwise before 12:00 noon on the following Business Day. If and to
the extent that Agent does not make payments to Lenders when due,
unpaid amounts shall accrue interest at the Federal Funds Rate from the
due date until (but not including) the payment date.
<PAGE> 25
3.2 INTEREST AND PRINCIPAL PAYMENTS.
(a INTEREST PAYMENTS. Accrued interest on each Borrowing
is due and payable on the last day of its respective Interest Period.
If any Interest Period with respect to a LIBOR Rate Borrowing is a
period greater than three (3) months, then accrued interest is also due
and payable on the date three (3) months after the commencement of the
Interest Period. Accrued interest on each ABR Borrowing is due and
payable on each March 31, June 30, September 30, and December 31
(commencing September 30, 1998) and on the Maturity Date.
(b PRINCIPAL PAYMENTS.
(i The Facility A Principal Debt is due and
payable on the Facility A Maturity Date.
(ii Principal payments on the Facility B Note
are due and payable as follows: (a) commencing on September 30, 1999
and continuing quarterly thereafter on each December 31, March 31, June
30, and September 30 thereafter through June 30, 2001 in quarterly
payments, each in the amount of $1,250,000, (b) commencing on September
30, 2001 and continuing quarterly thereafter on each December 31, March
31, June 30, and September 30 thereafter until the Facility B Maturity
Date in quarterly payments, each in the amount of $1,875,000, (c) on
the Facility B Maturity Date when the entire unpaid principal balance
shall be due and payable.
(c MANDATORY REDUCTION.
(i The Facility A Committed Sums and Facility B
Committed Sums, as applicable, shall be permanently reduced to
the amounts specified below on the corresponding reduction
date set forth below:
MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS: The
following amounts shall be applied to prepay the Facilities.
(1) 100% of the net proceeds of any sale
or issuance of equity of the
Borrower, except as provided in
CLAUSE (3) below or for Securities
issued pursuant to employee stock
options or similar plans;
(2) 100% of the net proceeds of any sale
or other disposition by the Borrower
or any of its subsidiaries of any
assets (except for sales permitted
under Section 9.10);
(3) 100% of the first $25,000,000 of net
proceeds resulting from the issuance
by Borrower of convertible preferred
securities or subordinated debt, and
75% of the net proceeds of any
subordinated debt issued thereafter,
shall be applied FIRST, to the
prepayment of Facility B Principal
Debt and reduction of Facility B
Committed Sum and, SECOND, to the
prepayment of Facility A Principal
Debt and reduction of Facility A
Committed Sum, each in accordance
with this SECTION 3.2(C).
All such proceeds shall be applied in the
following priority: (A) first, to the
permanent reduction of the Facility B
Principal Debt and such amount shall be
applied ratably to each remaining principal
payment so that the Facility B Note matures
on the Facility B Maturity Date, and (B)
second, all remaining proceeds shall be
applied to the reduction of the Facility A
Principal Debt and shall permanently reduce
the Facility A Committed Sum.
<PAGE> 26
(ii The Facility B Committed Sum shall be
permanently reduced on the last day of each calendar quarter
by an amount necessary to satisfy the scheduled reduction with
a final payment to be made on the Facility B Maturity Date
equal to all amounts then outstanding under Facility B.
(d MANDATORY PREPAYMENT. If (i) the Facility A Commitment
Usage ever exceeds the Facility A Committed Sum, (ii) the Facility B
Principal Debt ever exceeds the Facility B Committed Sum, (iii) the sum
of the Facility A Principal Debt and the Facility B Principal Debt,
together with the LC Exposure, ever exceeds the Total Commitment, (iv)
Borrower's property becomes the subject of a casualty or condemnation,
the proceeds of which exceed $500,000 in the aggregate, then Borrower
shall prepay (1) the Principal Debt under Facility A or Facility B, as
the case may be, in at least the amount of the excess described in (i)
through (iii) above, (2) the Principal Debt under Facility A by the
amount of proceeds of sales described in SECTION 3.2(C)(I)(2) above,
and (3) the Principal Debt under Facility A by the amount of proceeds
of casualty or condemnation described in (iv) above, together with (x)
all accrued and unpaid interest on the principal amount so prepaid and
(y) any resulting Funding Loss; provided, however, that Borrower shall
not be required to make any prepayment required by this SECTION3.2(D)
until the last day of the Interest Period with respect to such
Principal Debt so long as an amount equal to such prepayment is
deposited by Borrower in a cash collateral account with Agent to be
held in such account on terms reasonably satisfactory to Agent..
(e VOLUNTARY PREPAYMENT. Borrower may voluntarily repay or
prepay all or any part of the Principal Debt at any time without
premium or penalty, subject to the following conditions:
(i Agent must receive Borrower's written payment
notice by (A) 12:00 noon on the third Business Day preceding
the date of payment of a LIBOR Rate Borrowing and (B) 11:00
a.m. on the date of payment of an ABR Borrowing which shall
specify the payment date, the facility or the subfacility
under this Agreement being paid and the Type and amount of the
Borrowing(s) to be paid, and which shall constitute an
irrevocable and binding obligation of Borrower to make a
repayment or prepayment on the designated date;
(ii each partial repayment or prepayment must be
in a minimum amount of at least $2,000,000 or a greater
integral multiple of $100,000 (if a LIBOR Rate Borrowing), or
$1,000,000 or a greater integral multiple of $100,000 (if an
ABR Borrowing other than under the Swing Line Subfacility) or
$500,000 or a greater multiple (if a Borrowing under the Swing
Line Subfacility);
(iii all accrued interest on the portion of the
Obligation being prepaid must also be paid in full on the date
of payment; and
(iv Borrower shall pay any related Funding Loss
upon demand.
3.3 INTEREST OPTIONS. Except as specifically otherwise provided,
Borrowings bear interest at an annual rate equal to the lesser of (a) the ABR
plus the Applicable Margin or LIBOR plus the Applicable Margin (in each case as
designated or deemed designated by Borrower and, in the case of LIBOR Rate
Borrowings, for the Interest Period designated by Borrower), as the case may be,
and (b) the Maximum Rate. Each change in the ABR and Maximum Rate is effective,
without notice to Borrower or any other Person, upon the effective date of
change.
3.4 QUOTATION OF RATES. A Responsible Officer of Borrower may call
Agent before delivering a Borrowing Request to receive an indication of the
interest rates then in effect, but the indicated rates do not bind Agent or
Lenders or affect the interest rate that is actually in effect when Borrower
delivers its Borrowing Request or on the Borrowing Date.
3.5 DEFAULT RATE. If permitted by Law, all past-due Principal Debt,
Borrower's past-due payment and reimbursement obligations in connection with
LCs, and past-due interest accruing on any of the foregoing, bears
<PAGE> 27
interest from the date due (stated or by acceleration) at the Default Rate until
paid, regardless whether payment is made before or after entry of a judgment.
3.6 INTEREST RECAPTURE. If the designated interest rate applicable
to any Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing
is limited to the Maximum Rate, but, to the extent permitted by applicable Laws,
any subsequent reductions in the designated rate shall not reduce the interest
rate thereon below the Maximum Rate until the total amount of accrued interest
equals the amount of interest that would have accrued if that designated rate
had always been in effect. If at maturity (stated or by acceleration), or at
final payment of the Notes, the total interest paid or accrued is less than the
interest that would have accrued if the designated rates had always been in
effect, then, at that time and to the extent permitted by applicable Law,
Borrower shall pay an amount equal to the difference between (a) the lesser of
the amount of interest that would have accrued if the designated rates had
always been in effect and the amount of interest that would have accrued if the
Maximum Rate had always been in effect, and (b) the amount of interest actually
paid or accrued on the Notes.
3.7 INTEREST CALCULATIONS.
(a Interest will be calculated on the basis of actual
number of days elapsed (including the first day but excluding the last
day) but computed as if each calendar year consisted of three hundred
sixty (360) days for LIBOR Rate Borrowings (unless the calculation
would result in an interest rate greater than the Maximum Rate, in
which event interest will be calculated on the basis of a year of 365
or 366 days, as the case may be), and 365 or 366 days, as the case may
be, for ABR Borrowings. All interest rate determinations and
calculations by Agent are conclusive and binding absent manifest error.
(b The provisions of this Agreement relating to calculation
of the ABR and LIBOR Rates are included only for the purpose of
determining the rate of interest or other amounts to be paid under this
Agreement that are based upon those rates.
3.8 MAXIMUM RATE. Regardless of any provision contained in any
Loan Paper or any document related thereto, it is the intent of the parties to
this Agreement that neither Agent nor any Lender contract for, charge, take,
reserve, receive or apply, as interest on all or any part of the Obligation any
amount in excess of the Maximum Rate or the Maximum Amount or receive any
unearned interest in violation of any applicable Law, and, if Lenders ever do
so, then any excess shall be treated as a partial repayment or prepayment of
principal and any remaining excess shall be refunded to Borrower. In determining
if the interest paid or payable exceeds the Maximum Rate, Borrower and Lenders
shall, to the maximum extent permitted under applicable Law, (a) treat all
Borrowings as but a single extension of credit (and Lenders and Borrower agree
that is the case and that provision in this Agreement for multiple Borrowings is
for convenience only), (b) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (c) exclude voluntary repayments or
prepayments and their effects, and (d) amortize, prorate, allocate and spread
the total amount of interest throughout the entire contemplated term of the
Obligation. However, if the Obligation is paid in full before the end of its
full contemplated term, and if the interest received for its actual period of
existence exceeds the Maximum Amount, Lenders shall refund any excess (and
Lenders may not, to the extent permitted by Law, be subject to any penalties
provided by any Laws for contracting for, charging, taking, reserving or
receiving interest in excess of the Maximum Amount).
3.9 INTEREST PERIODS. When Borrower requests any LIBOR Rate
Borrowing, Borrower may elect the applicable interest period (each an "INTEREST
PERIOD"), which may be, at Borrower's option, one (1) , two (2) , three (3) or
six (6) months for LIBOR Rate Borrowings, subject to the following conditions:
(a) the initial Interest Period for a LIBOR Rate Borrowing commences on the
applicable Borrowing Date or conversion date, and each subsequent Interest
Period applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a LIBOR Rate
Borrowing begins on a day for which there exists no numerically corresponding
Business Day in the calendar month at the end of the Interest Period ("ENDING
CALENDAR MONTH"), then the Interest Period ends on the next succeeding Business
Day of the Ending Calendar Month, unless there is no succeeding Business Day in
the Ending Calendar Month in which case the Interest Period ends on the next
preceding Business Day of the Ending Calendar Month; (C) no Interest Period for
any portion of Principal Debt may extend beyond
<PAGE> 28
the scheduled repayment date for that portion of Principal Debt; and (d) there
may not be in effect at any one time more than six (6) Interest Periods under
Facility A.
3.10 CONVERSIONS. Borrower may (a) on the last day of the
applicable Interest Period convert all or part of a LIBOR Rate Borrowing to an
ABR Borrowing (b) at any time convert all or part of an ABR Borrowing to a LIBOR
Rate Borrowing, and (c) elect a new Interest Period for a LIBOR Rate Borrowing.
Any such conversion is subject to the dollar limits and denominations of SECTION
2.1 and may be accomplished by delivering a Conversion Request to Agent no later
than (i) 12:00 noon on the third Business Day before the conversion date for
conversion to a LIBOR Rate Borrowing and the last day of the Interest Period,
for the election of a new Interest Period, and (ii) 11:00 a.m. on the last day
of the Interest Period for conversion to an ABR Borrowing. Absent Borrower's
notice of conversion or election of a new Interest Period, a LIBOR Rate
Borrowing shall be converted to an ABR Borrowing when the applicable Interest
Period expires.
3.11 ORDER OF APPLICATION.
(a If no Default or Potential Default exists, any payment
shall be applied to the Obligation in the order and manner as provided
in this Agreement.
(b If a Default or Potential Default exists, any payment
(including proceeds from the exercise of any Rights) shall be applied
in the following order: (i) to all fees and expenses for which Agent or
Lenders have not been paid or reimbursed in accordance with the Loan
Papers (and if such payment is less than all unpaid or unreimbursed
fees and expenses, then the payment shall be paid against unpaid and
unreimbursed fees and expenses in the order of incurrence or due date);
(ii) to accrued interest on the Principal Debt; (iii) to the Principal
of Debt outstanding under the Swing Line Subfacility; (iv) to any LC
reimbursement obligations that are due and payable and that remain
unfunded by any Borrowing under Facility A; (v) to the remaining
Obligation in the order and manner Majority Lenders deem appropriate;
and (vi) as a deposit with Agent, for the benefit of Lenders, as
security for and payment of any subsequent LC reimbursement
obligations.
3.12 SHARING OF PAYMENTS, ETC.. If any Lender obtains any amount
(whether voluntary, involuntary or otherwise, including, without limitation, as
a result of exercising its Rights under SECTION 3.13) that exceeds its combined
Pro Rata Part of the Total Commitment Usage, then that Lender shall purchase
from the other Lenders participations that will cause the purchasing Lender to
share the excess amount ratably with each other Lender. If all or any portion of
any excess amount is subsequently recovered from the purchasing Lender, then the
purchase shall be rescinded and the purchase price restored to the extent of the
recovery. Borrower agrees that any Lender purchasing a participation from
another Lender under this section may, to the fullest extent permitted by Law,
exercise all of its Rights of payment (including the Right of offset) with
respect to that participation as fully as if that Lender were the direct
creditor of Borrower in the amount of that participation.
3.13 OFFSET. If a Default exists, each Lender is entitled, but is
not obligated, to exercise (for the benefit of all Lenders in accordance with
SECTION 3.12) the Rights of offset and banker's Lien against each and every
account and other property, or any interest therein, that any Company may now or
hereafter have with, or which is now or hereafter in the possession of, that
Lender to the extent of the full amount of the Obligation owed to it.
3.14 BOOKING BORROWINGS. To the extent permitted by Law, any Lender
may make, carry or transfer its Borrowings at, to, or for the account of any of
its branch offices or the office of any of its Affiliates. However, no Affiliate
is entitled to receive any greater payment under SECTION 3.16 than the
transferor Lender would have been entitled to receive with respect to those
Borrowings.
3.15 BASIS UNAVAILABLE OR INADEQUATE FOR LIBOR. If, on or before
any date when LIBOR Rate is to be determined for a Borrowing, Agent or any
Lender determines (and Majority Lenders agree with that determination) that the
basis for determining the applicable rate is not available or that the resulting
rate does not accurately reflect the cost to Lenders of making or converting
Borrowings at that rate for the applicable Interest Period, then Agent shall
<PAGE> 29
promptly notify Borrower and Lenders of that determination (which is conclusive
and binding on Borrower absent manifest error) and the applicable Borrowing
shall bear interest at the sum of the ABR plus the Applicable Margin. Until
Agent notifies Borrower that those circumstances no longer exist, Lenders'
commitments under this Agreement to make, or to convert to, LIBOR Rate
Borrowings (as the case may be) will be suspended.
3.16 ADDITIONAL COSTS.
With respect to any Law, requirement, request, directive or
change affecting banking institutions generally:
(a With respect to any LIBOR Rate Borrowing or ABR
Borrowing, if (i) any change in present Law or any future Law imposes,
modifies, or deems applicable (or if compliance by any Lender with any
such requirement of any Tribunal results in) any such requirement that
any reserves (including, without limitation, any marginal, emergency,
supplemental or special reserves) be maintained, and (ii) those
reserves reduce any sums receivable by that Lender under this Agreement
or increase the costs incurred by that Lender in advancing or
maintaining any portion of any LIBOR Rate Borrowing, or ABR Borrowing,
then (unless the effect is already reflected in the rate of interest
then applicable under this Agreement) that Lender (through Agent) shall
deliver to Borrower a certificate setting forth in reasonable detail
the basis and calculation of the amount necessary to compensate it for
its reduction or increase (which certificate is conclusive and binding
absent manifest error), and Borrower shall promptly pay that amount to
that Lender upon demand. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the
satisfaction and payment of the Obligation and termination of this
Agreement.
(b With respect to any Borrowing or LC, if any change in
present Law or any future Law regarding capital adequacy or compliance
by Agent (as issuer of LCs) or any Lender with any request, directive
or requirement now existing or hereafter imposed by any Tribunal
regarding capital adequacy, or any change in its written policies or in
the risk category of this transaction, reduces the rate of return on
its capital as a consequence of its obligations under this Agreement to
a level below that which it otherwise could have achieved (taking into
consideration its policies with respect to capital adequacy) by an
amount deemed by it to be material (and it may, in determining the
amount, use reasonable assumptions and allocations of costs and
expenses and use any reasonable averaging or attribution method), then
(unless the effect is already reflected in the rate of interest then
applicable under this Agreement) Agent or that Lender (through Agent)
shall notify Borrower and deliver to Borrower a certificate setting
forth in reasonable detail the calculation of the amount necessary to
compensate it (which certificate is conclusive and binding absent
manifest error), and Borrower shall promptly pay that amount to Agent
or that Lender upon demand. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the
satisfaction and payment of the Obligation and termination of this
Agreement.
(c Any Taxes payable by Agent or any Lender or ruled (by a
Tribunal) payable by Agent or any Lender in respect of this Agreement
or any other Loan Paper shall, if permitted by Law, be paid by
Borrower, together with interest and penalties, if any (except for
(i)(1) Taxes imposed on or measured by the net income of Agent or that
Lender (2) franchise or similar taxes of the Agent or that Lender and
(3) amounts requested to be withheld for Taxes pursuant to the last
sentence of SECTION 3.19 and (ii) and except for interest and penalties
incurred as a result of the gross negligence or willful misconduct of
Agent or any Lender). Agent or that Lender (through Agent) shall notify
Borrower and deliver to Borrower a certificate setting forth in
reasonable detail the basis and calculation of the amount of payable
Taxes, which certificate is conclusive and binding (absent manifest
error), and Borrower shall promptly pay that amount to Agent for its
account or the account of that Lender, as the case may be. If Agent or
that Lender subsequently receives a refund of the Taxes paid to it by
Borrower, then the recipient shall promptly pay the refund to Borrower.
3.17 CHANGE IN LAWS. If any Law makes it unlawful for any Lender to
make or maintain any Borrowing based on the LIBOR Rate Borrowings, then that
Lender shall promptly notify Borrower and Agent, and (a) as to undisbursed
funds, that requested Borrowing shall be made as an ABR Borrowing subject to the
higher of the Prime Rate and the Federal Funds Rate plus 1%, and (b), as to any
outstanding Borrowing, (i) if maintaining the Borrowing
<PAGE> 30
until the last day of the applicable Interest Period is unlawful, the Borrowing
shall be converted to an ABR Borrowing as of the date of notice, and Borrower
shall pay any related Funding Loss, or (ii) if not prohibited by Law, the
Borrowing shall be converted to an ABR Borrowing as of the last day of the
applicable Interest Period, or (iii) if any conversion will not resolve the
unlawfulness, Borrower shall promptly prepay the Borrowing, without penalty,
together with any related Funding Loss.
3.18 FUNDING LOSS. BORROWER AGREES TO INDEMNIFY EACH LENDER
AGAINST, AND PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. When any
Lender demands that Borrower pay any Funding Loss, that Lender shall deliver to
Borrower and Agent a certificate setting forth in reasonable detail the basis
for imposing Funding Loss and the calculation of the amount, which calculation
is conclusive and binding absent manifest error. The provisions of and
undertakings and indemnification set forth in this paragraph shall survive the
satisfaction and payment of the Obligation and termination of this Agreement.
3.19 FOREIGN LENDERS. Each Lender that is organized under the Laws
of any jurisdiction other than the United States of America or any State thereof
(a "NON-U.S. LENDER") (a) represents to Agent and Borrower that (i) no Taxes are
required to be withheld by Agent or Borrower with respect to any payments to be
made to it in respect of the Obligation and (ii) it has furnished to Agent and
Borrower two duly completed copies of U.S. Internal Revenue Service Form 4224,
Form 1001, Form W-8, or any other tax form acceptable to Agent and Borrower
(wherein it claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments under the Loan Papers) or, in the case
of a Non-U.S. Lender claiming exemption from U.S. federal tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio interest",
Form W-8 or successor applicable form (and, if such Non-U.S. Lender delivers
copies of Form W-8, a certificate representing that such Non-U.S. Lender is not
a bank for purposes of Section 881(c) of the Code, is not a ten percent (10%)
shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the
Code and is not a controlled foreign corporation related to the Borrower within
the meaning of Section 864(d)(4) of the Code), and (b) covenants to (i) provide
Agent and Borrower a new tax form upon the expiration or obsolescence of any
previously delivered form according to Law, duly executed and completed by it,
and (ii) comply from time to time with all Laws with regard to the withholding
tax exemption. If any of the foregoing is not true or the applicable forms are
not provided, then Borrower and Agent (without duplication) may deduct and
withhold from interest payments under the Loan Papers United States federal
income tax at the full rate applicable under the Code. The Borrower shall not be
required to indemnify or pay any additional amounts to any Non-U.S. Lender in
respect of U.S. federal income tax pursuant to this Agreement to the extent that
the obligation to pay U.S. federal income tax would not have occurred but for
the failure of such Non-U.S. Lender to deliver the forms or other certifications
required pursuant to this SECTION 3.19.
SECTION 4 FEES.
4.1 TREATMENT OF FEES. The fees described in this SECTION 4 (a)
are not compensation for the use, detention, or forbearance of money, (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this Agreement, (c) are payable in accordance with SECTION 3.1, (d) are
non-refundable, (e) to the fullest extent permitted by Law, bear interest, if
not paid when due, at the Default Rate, and (f) are calculated on the basis of
actual number of days (including the first day but excluding the last day)
elapsed, but computed as if each calendar year consisted of three hundred sixty
(360) days, unless computation would result in an interest rate in excess of the
Maximum Rate in which event the computation is made on the basis of a year of
365 or 366 days, as the case may be. The fees described in this SECTION 4 are in
all events subject to the provisions of SECTION 3.8 of this Agreement.
4.2 INTENTIONALLY OMITTED
4.3 LC FEES. As a condition to the issuance or extension of a LC,
Borrower shall pay to Agent (and such payment shall accompany each LC Request) a
fee equal to (a) one-eighth of one percent (0.125%) multiplied by (b) the face
amount of the LC, payable quarterly in arrears. Borrower shall also pay a
commission on all outstanding LC's at a per annum rate equal to the Applicable
Margin with respect to LIBOR Rate Borrowings on the face amount of each L.C.
Such commission shall be payable quarterly in arrears to Agent for ratable
distribution among the
<PAGE> 31
Lenders participating in Facility A. Borrower also agrees to pay on demand and
solely for the account of Agent, any and all additional customary LC fees
including those relating to confirming, negotiating or amending LCs.
4.4 FACILITY A COMMITMENT FEE. Borrower shall pay to Agent for the
account of each Lender a commitment fee, payable as it accrues on each March 31,
June 30, September 30, and December 31 (commencing September 30, 1998), and on
the Facility A Maturity Date, equal to the Applicable Margin times the amount by
which (a) such Lender's Facility A Committed Sum exceeds (b) such Lender's
average daily Facility A Commitment Usage, in each case during the calendar
quarter ending on such date. If there is any change in the Applicable Margin
during any quarter, the average daily amount shall be computed and multiplied by
the Applicable Margin separately for each period that such Applicable Margin was
in effect during such quarter.
SECTION 5 SECURITY.
5.1 INTENTIONALLY OMITTED.
5.2 COLLATERAL. Full and complete payment of the Obligation is
secured by all of the property (together with proceeds thereof and any
additional collateral ever furnished under SECTION 5.3, the "COLLATERAL")
described in the following Security Documents: a security agreement in respect
of all accounts receivable, inventory, escrow accounts and other personal
property of the Borrower, a pledge agreement executed by the Borrower of all
owned capital stock of any Subsidiary, provided that the pledge as respects the
capital stock of a foreign Subsidiary shall be limited to sixty-five percent
(65%) of such Subsidiary's capital stock, and a negative pledge agreement of the
Borrower not to encumber any real property, whether owned or leased, with any
Liens not agreed to by Agent.
5.3 ADDITIONAL SECURITY AND GUARANTIES. Agent may, without notice
or demand and without affecting any Person's obligations under the Loan Papers,
from time to time (a) receive and hold additional collateral from any Person for
the payment of all or any part of the Obligation and exchange, enforce or
release all or any part of that collateral and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligation and
release any endorser or guarantor, or any Person who has given any other
security for the payment of all or any part of the Obligation, or any other
Person in any way obligated to pay all or any part of the Obligation.
5.4 FINANCING STATEMENTS. Borrower will execute, or cause to be
executed, financing statements, stock powers and other writings in the form and
content reasonably required by Agent, and Borrower will pay all costs of filing
any financing, continuation or termination statements, or other action taken by
Agent relating to the Collateral, including, without limitation, costs and
expenses of any Lien search reasonably required by Agent.
SECTION 6 CONDITIONS PRECEDENT. Lenders will not be obligated to fund
the initial Borrowing and Agent will not be obligated to issue the initial LC,
unless Agent has timely received (a) a Borrowing Request or LC Request (together
with the applicable duly executed LC Agreement), as the case may be, and (b) all
of the items described on the attached SCHEDULE 6. In addition, Lenders will not
be obligated to fund (as opposed to continue or convert) any Borrowing, and
Agent will not be obligated to issue any LC, as the case may be, unless on the
applicable Borrowing Date, issue date, or creation date (and after giving effect
to the requested Borrowing or LC), as the case may be: (i) Agent shall have
timely received a Borrowing Request or LC Request (together with the applicable
duly executed LC Agreement), as the case may be; (ii) Agent shall have received
any applicable LC fee; (iii) all of the representations and warranties of the
Borrower in the Loan Papers are true and correct in all material respects
(unless they speak to a specific date or are based on facts which have changed
by transactions contemplated or permitted by this Agreement); (iv) no Default or
Potential Default exists; and (v) the funding of the Borrowing, issuance of the
LC, as the case may be, is permitted by Law. Upon Agent's request, Borrower
shall deliver to Agent evidence substantiating any of the matters in the Loan
Papers that are necessary to enable Borrower to qualify for the Borrowing or LC,
as the case may be. Each condition precedent in this Agreement (including,
without limitation, those on the attached SCHEDULE 6) is material to the
transactions contemplated by this Agreement, and time is of the essence with
respect to each condition precedent. Subject to the prior approval of Majority
Lenders, Lenders may fund any Borrowing, and Agent may issue any LC, without all
conditions being satisfied, but, to the extent permitted by Law, that funding
and issuance shall not be deemed to be a waiver of the requirement that each
condition precedent be
<PAGE> 32
satisfied as a prerequisite for any subsequent funding or issuance, unless
Majority Lenders specifically waive each item in writing.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
to Agent and Lenders as follows:
7.1 PURPOSE OF CREDIT FACILITY. Borrower will use proceeds of
Facility A Borrowings and LCs for working capital and general corporate purposes
of the Companies, to refinance certain indebtedness of Borrower and to finance
the Acquisition and proceeds of Facility B Borrowings to finance the Acquisition
and for general corporate purposes. No Company is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended. No part of
the proceeds of any LC draft or drawing, or Borrowing will be used, directly or
indirectly, for a purpose that violates any Law, including without limitation,
the provisions of Regulation U.
7.2 CORPORATE EXISTENCE, GOOD STANDING, AUTHORITY AND COMPLIANCE.
Each Company is duly organized, validly existing and in good standing under the
Laws of the jurisdiction in which it is incorporated or organized as identified
on the attached SCHEDULE 7.2 or on the most recently amended SCHEDULE 7.2.
Except where failure is not a Material Adverse Event, each Company (a) is duly
qualified to transact business and is in good standing as a foreign corporation
or other entity in each jurisdiction where the nature and extent of its business
and properties require due qualification and good standing (those jurisdictions
being identified on the attached SCHEDULE 7.2 or on the most recently amended
SCHEDULE 7.2, (b) possesses all requisite authority, permits and power to
conduct its business as is now being, or is contemplated by this Agreement to
be, conducted, and (C) is in compliance with all applicable Laws, except in each
case where the failure to so qualify, to possess such authority, permits or
power or to comply with such Law would not cause a Material Adverse Event.
7.3 SUBSIDIARIES. As of the date of this Agreement, Borrower has no
Subsidiaries except as disclosed on the attached SCHEDULE 7.3 or on the most
recently amended SCHEDULE 7.3 reflecting changes to the schedule as a result of
transactions permitted by this Agreement. All of the outstanding shares of
capital stock (or similar voting interests) of those Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and are owned of record
and beneficially as set forth thereon, free and clear of any Liens,
restrictions, claims or Rights of another Person, other than Permitted Liens,
and are not subject to any warrant, option or other acquisition Right of any
Person or subject to any transfer restriction except for restrictions imposed by
securities Laws and general corporate Laws.
7.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery by
each Company of each Loan Paper or related document to which it is a party and
the performance by it of its obligations thereunder (a) are within its corporate
power, (b) have been duly authorized by all necessary corporate action, (c)
require no action by or filing with any Tribunal (other than any action or
filing that has been taken or made on or before the date of this Agreement or
which would not cause a Material Adverse Event), (d) do not violate any
provision of its charter or bylaws, (e) do not violate any provision of Law or
order of any Tribunal applicable to it, other than violations that individually
or collectively are not a Material Adverse Event, (f) do not violate any
Material Agreements to which it is a party, other than a violation which would
not cause a Material Adverse Event, or (g) do not result in the creation or
imposition of any Lien (other than the Lender Liens) on any asset of any
Company.
7.5 BINDING EFFECT. Upon execution and delivery by all parties
thereto, each Loan Paper will constitute a legal and binding obligation of each
Company party thereto, enforceable against it in accordance with its terms,
except as enforceability may be limited by applicable Debtor Relief Laws and
general principles of equity.
7.6 FINANCIAL STATEMENTS; FISCAL YEAR. The Current Financials were
prepared in accordance with GAAP and present fairly, in all material respects,
the consolidated financial condition, results of operations, and cash flows of
the Companies as of, and for the portion of the fiscal year ending on the date
or dates thereof (subject only to normal year-end adjustments). All material
liabilities of the Companies as of the date or dates of the Current Financials
are reflected therein or in the notes thereto. Except for transactions directly
related to, or specifically contemplated by,
<PAGE> 33
the Loan Papers, no subsequent material adverse changes have occurred in the
consolidated financial condition of the Companies from that shown in the Current
Financials, nor has any Company incurred any subsequent material liability. The
fiscal year of each Company ends on March 31.
7.7 LITIGATION. Except as disclosed on the attached SCHEDULE 7.7 or
the most recently amended SCHEDULE 7.7, no Company is subject to, or aware of
the threat of, any Litigation that is reasonably likely to be determined
adversely to any Company or, if so adversely determined, is a Material Adverse
Event. Except as permitted under SECTION 11.4, no outstanding and unpaid
judgments against any Company exist.
7.8 TAXES. All Tax returns of each Company required to be filed have
been filed (or extensions have been granted) before delinquency, except for
returns for which the failure to file is not a Material Adverse Event, and all
Taxes imposed upon each Company that are due and payable have been paid before
delinquency, other than Taxes for which the criteria for Permitted Liens have
been satisfied or for which nonpayment is not a Material Adverse Event.
7.9 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 7.9 or on
the most recently amended SCHEDULE 7.9, (a) no Company knows of any
environmental condition or circumstance materially adversely affecting any
Company's properties taken as a whole or operations, (b) no Company has received
any report of any Company's material violation of any Environmental Law, (c) no
Company knows that any Company is under any obligation to remedy any material
violation of any Environmental Law, or (d) no facility of any Company is used
for, or to the knowledge of any Company has been used for, storage, treatment or
disposal of any Hazardous Substance, excluding the storage of Hazardous
Substances in amounts commonly and lawfully used in automotive repair shops
which have been handled in compliance with applicable Environmental Law. Except
as disclosed in Schedule 7.9, each Company has taken prudent steps to determine
that its properties and operations do not violate any Environmental Law, other
than violations that are not, individually or in the aggregate, a Material
Adverse Event, except where such condition, circumstance, violation or
non-compliance would not reasonably be expected to have a monetary impact or
cost to the Borrower equal to or in excess of five percent (5%) of the
Borrower's pre-tax income during the preceding Four Quarter Period, such amount
not to exceed $1,000,000.
7.10 EMPLOYEE PLANS. Except where occurrence or existence is not a
Material Adverse Event, (a) no Employee Plan has incurred an "accumulated
funding deficiency" (as defined in section 302 of ERISA or section 412 of the
Code), (b) no Company has incurred liability under ERISA to the PBGC in
connection with any Employee Plan (other than required insurance premiums, all
of which have been paid), (c) no Company has withdrawn in whole or in part from
participation in a Multiemployer Plan, (d) no Company has engaged in any
"prohibited transaction" (as defined in section 406 of ERISA or section 4975 of
the Code), and (e) no Reportable Event has occurred, excluding events for which
the notice requirement is waived under applicable PBGC regulations.
7.11 PROPERTIES; LIENS. Each Company has good and marketable title to
all its property reflected on the Current Financials (except for property that
is obsolete or that has been disposed in the ordinary course of business or,
after the date of this Agreement, as otherwise permitted by SECTION 9.10 or
SECTION 9.11). Except for Permitted Liens, no Lien exists on any property of any
Company, and the execution, delivery, performance or observance of the Loan
Papers will not require or result in the creation of any Lien (other than Lender
Liens) on any Company's property.
7.12 LOCATION; REAL ESTATE INTERESTS. Each Company's chief executive
office is located at the address on the attached SCHEDULE 7.12 or on the most
recently amended SCHEDULE 7.12. Each Company's books and records concerning
accounts and accounts receivable are located at its chief executive office, and
all of its inventory (other than inventory on consignment, in transit or in the
possession of a subcontractor of any Company) is in its possession and, together
with the Company's other material assets, are located, until sold in the
ordinary course of business, at one or more of the locations on the attached
SCHEDULE 7.12 or on the most recently amended SCHEDULE 7.12. Except as described
on the attached SCHEDULE 7.12, or on the most recently amended SCHEDULE 7.12, no
Company has any ownership, leasehold, or other interest in real estate.
7.13 GOVERNMENT REGULATIONS. No Company is subject to regulation under
the Investment Company Act of 1940, as amended, or the Public Utility Holding
Company Act of 1935, as amended.
<PAGE> 34
7.14 TRANSACTIONS WITH AFFILIATES. Except as disclosed on the attached
SCHEDULE 7.14 other than the most recently amended SCHEDULE 7.14 (if the
disclosures are approved by Majority Lenders), no Company is a party to a
material transaction with any of its Affiliates (excluding other Companies),
other than transactions in the ordinary course of business and upon fair and
reasonable terms not materially less favorable than it could obtain or could
become entitled to in an arm's-length transaction with a Person that was not its
Affiliate. For purposes of this SECTION 7.14, a transaction is "material" if it
requires any Company to pay more than $1,000,000 during the term of the
governing agreement.
7.15 DEBT. No Company is an obligor on any Funded Debt, other than
Permitted Debt.
7.16 MATERIAL AGREEMENTS. No Company is a party to any Material
Agreement, other than the Loan Papers and the Material Agreements described on
the attached SCHEDULE 7.16. All described Material Agreements are in full force
and effect, and no default or potential default exists on the part of any
Company thereunder that is a Material Adverse Event.
7.17 INSURANCE. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against casualties and contingencies
and of types and in amounts (and with co-insurance and deductibles) as is
customary in the case of similar businesses.
7.18 LABOR MATTERS. No actual or threatened strikes, labor disputes,
slow downs, walkouts, or other concerted interruptions of operations by the
employees of any Company that are a Material Adverse Event exist. Hours worked
by and payment made to employees of the Companies have not been in violation of
the Fair Labor Standards Act or any other applicable Law dealing with labor
matters, other than any violations, individually or collectively, that are not a
Material Adverse Event. All payments due from any Company for employee health
and welfare insurance have been paid or accrued as a liability on its books,
other than any nonpayments that are not, individually or collectively, a
Material Adverse Event.
7.19 SOLVENCY. On each Borrowing Date, each Company is, and after
giving effect to the requested Borrowing will be, Solvent.
7.20 TRADE NAMES. No Company has used or transacted business under any
other corporate or trade name in the five-year period preceding the initial
Borrowing Date, except as disclosed on the attached SCHEDULE 7.20.
7.21 INTELLECTUAL PROPERTY. Each Company owns or has the right to use
all material licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications and trade names necessary to continue to
conduct its businesses as presently conducted by it and proposed to be conducted
by it immediately after the date of this Agreement. Each Company is conducting
its business without infringement or claim of infringement of any license,
patent, copyright, service mark, trademark, trade name, trade secret or other
intellectual property right of others, other than any infringements or claims
that, if successfully asserted against or determined adversely to any Company,
would not, individually or collectively, constitute a Material Adverse Event. To
the knowledge of any Company, no infringement or claim of infringement by others
of any material license, patent, copyright, service mark, trademark, trade name,
trade secret or other intellectual property of any Company exists.
7.22 FULL DISCLOSURE. All information previously furnished, furnished
on the date of this Agreement, and furnished in the future, by any Company to
Agent in connection with the Loan Papers (a) was, is, and will be, true and
accurate in all material respects or based on reasonable estimates on the date
the information is stated or certified, and (b) did not, does not, and will not,
fail to state any fact the omission of which would otherwise make any such
information materially misleading.
<PAGE> 35
7.23 YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the Borrower's and its
Subsidiaries' computer systems and (b) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Borrower's or
its Subsidiaries' systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by October 1, 1999; provided,
however, Borrower shall provide to Agent a status report on the efforts of
Borrower and its Subsidiaries to complete the foregoing reprogramming by July 1,
1999. The cost to the Borrower and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower and its Subsidiaries (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) will not result in a
Default or a Material Adverse Event.
SECTION 8 AFFIRMATIVE COVENANTS. So long as Lenders are committed to fund
any Borrowings and Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid in full, Borrower covenants and agrees
as follows:
8.1 ITEMS TO BE FURNISHED. Borrower shall cause the following to be
furnished to Agent:
(a) Promptly after preparation, and no later than one
hundred (100) days after the last day of each fiscal year of Borrower,
Financial Statements showing the consolidated financial condition and
results of operations of the Companies as of, and for the year ended
on, that last day, accompanied by:
(i) the unqualified opinion of Borrower's
Accountants, based on an audit using generally accepted
auditing standards, that the Financial Statements were
prepared in accordance with GAAP and present fairly, in all
material respects, the consolidated financial condition and
results of operations of the Companies,
(ii) a certificate from the accounting firm to
Agent indicating that during its audit it obtained no
knowledge of any Default or Potential Default or, if it
obtained knowledge, the nature and period of existence
thereof, and
(iii) a Compliance Certificate with respect to the
Financial Statements.
(b) Promptly after preparation, and no later than fifty
(50) days after the last day of the first three fiscal quarters of
Borrower, Financial Statements showing the consolidated financial
condition and results of operations of the Companies for the fiscal
quarter and for the period from the beginning of the current fiscal
year to the last day of the fiscal quarter, subject to ordinary
year-end adjustments, accompanied by a Compliance Certificate with
respect to the Financial Statements.
(c) Within thirty (30) days after the end of each fiscal
year of Borrower (commencing with the fiscal year ending March 31,
1999, in the case of financial projections, and commencing with the
fiscal year ending March 31, 1999, in the case of financial budgets),
financial projections for the succeeding three (3) fiscal years and the
financial budget for the next succeeding fiscal year, accompanied by a
certificate executed by a Responsible Officer certifying that the
projections and budget were prepared by Borrower based on assumptions
that, in light of the historical performance of the Companies and their
prospects for the future, are reasonable as of the date prepared.
(d) Promptly after receipt, a copy of each interim or
special audit report and management letter issued by Borrower's
Accountants with respect to any Company or its financial records.
(e) Notice, promptly after Borrower knows or has reason
to know, of (i) the existence and status of any Litigation that, if
determined adversely to any Company, would be a Material Adverse Event,
(ii) any change in any material fact or circumstance represented or
warranted by any Company in any Loan Paper, (iii) the receipt by any
Company of notice of any violation or alleged violation of ERISA or any
Environmental Law (which individually or collectively with other
violations or allegations could constitute
<PAGE> 36
a Material Adverse Event), or (iv) a Default or Potential Default,
specifying the nature thereof and what action the Companies have taken,
are taking, or propose to take.
(f) Promptly after filing, copies of all material reports
or filings filed by or on behalf of any Company with any Tribunal.
(g) Promptly upon reasonable request by Agent or Majority
Lenders (through Agent), information (not otherwise required to be
furnished under the Loan Papers) respecting the business affairs,
assets and liabilities of the Companies and opinions, projections,
certifications and documents in addition to those mentioned in this
Agreement.
8.2 USE OF PROCEEDS. Borrower shall use the proceeds of Borrowings
only for the purposes represented in this Agreement.
8.3 BOOKS AND RECORDS. Borrower will, and will cause each other
Company to maintain books, records and accounts necessary to prepare financial
statements in accordance with GAAP.
8.4 INSPECTIONS. Upon reasonable request and reasonable prior
notice, Borrower will, and will cause each other Company to allow Agent or any
Lender (or their Representatives) to inspect any of its properties, to review
reports, files and other records and to make and take away copies, to conduct
tests or investigations, and to discuss any of its affairs, conditions and
finances with its other creditors, directors, officers, employees or
representatives from time to time, during reasonable business hours.
8.5 TAXES. Borrower will, and will cause each other Company to
promptly pay when due any and all Taxes, other than Taxes which are being
contested in good faith by lawful proceedings diligently conducted, against
which reserve or other provision required by GAAP has been made, and in respect
of which levy and execution of any Lien have been and continue to be stayed.
8.6 PAYMENT OF OBLIGATIONS. Borrower will, and will cause each
other Company, to promptly pay (or renew and extend) all of its material
obligations as they become due (unless the obligations are being contested in
good faith by appropriate proceedings).
8.7 EXPENSES. Borrower shall promptly pay, within five (5) days
following the receipt of an invoice therefor setting forth the amount thereof
(a) all costs, fees and expenses paid or incurred by Agent and Arranger in
connection with the arrangement, syndication and negotiation of the Facilities
and the negotiation, preparation, delivery and execution of the Loan Papers and
any related amendment, waiver or consent (including in each case, without
limitation, the reasonable fees and expenses of Agent's and Arranger's counsel)
and (b) all costs, fees and expenses of Lenders, Agent and Arranger incurred by
Agent, Arranger or any Lender in connection with the enforcement of the
obligations of any Company arising under the Loan Papers or the exercise of any
Rights arising under the Loan Papers (including, but not limited to, reasonable
attorneys' fees, expenses and costs paid or incurred in connection with any
workout or restructure and any action taken in connection with any Debtor Relief
Laws), all of which shall be a part of the Obligation and shall bear interest,
if not paid upon demand, at the Default Rate until repaid.
8.8 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as
otherwise permitted by SECTION 9.11, Borrower will, and will cause each other
Company to (a) maintain its corporate existence and good standing in its state
of incorporation and its authority to transact business in all other states
where failure to maintain its authority to transact business is a Material
Adverse Event; (b) maintain all licenses, permits and franchises necessary for
its business where failure to do so is a Material Adverse Event; (c) keep all of
its assets that are useful in and necessary to its business in good working
order and condition (ordinary wear and tear excepted) and make all necessary
repairs and replacements.
8.9 INSURANCE. Borrower will, and will cause each other Company
to, maintain with financially sound, responsible and reputable insurance
companies or associations (or, as to workers' compensation or similar insurance,
with an insurance fund or by self-insurance authorized by the jurisdictions in
which it operates) insurance concerning
<PAGE> 37
its properties and businesses against casualties and contingencies and of types
and in amounts (and with co-insurance and deductibles) as is customary in the
case of similar businesses similarly situated, which insurance may provide for
reasonable deductibility from coverage thereof. Borrower shall, and shall cause
each other Company to, deliver to Agent certificates of insurance for each
policy of insurance and evidence of payment of all premiums which certificates
of insurance shall name Agent as an additional insured, secured party, mortgagee
and loss payee and which provide Agent with at least thirty (30) days notice of
cancellation or reduction in coverage. If any insurance policy covered by an
insurance certificate previously delivered to Agent is altered or canceled, then
Borrower shall cause to be promptly delivered to Agent a replacement certificate
(in form and substance satisfactory to Agent).
8.10 PRESERVATION AND PROTECTION OF RIGHTS. Borrower will, and will
cause each other Company to, perform the acts and duly authorize, execute,
acknowledge, deliver, file and record any additional writings as Agent or
Majority Lenders may reasonably deem necessary or appropriate to perfect and
maintain the Lender Liens and preserve and protect the Rights of Agent and
Lenders under any Loan Paper.
8.11 ENVIRONMENTAL LAWS. Borrower will, and will cause each other
Company to, (a) conduct its business so as to comply with all applicable
Environmental Laws and shall promptly take corrective action to remedy any
non-compliance with any Environmental Law, except where failure to comply or
take action would not have a monetary impact or cost to the Borrower equal to or
in excess of five percent (5%) of the Borrower's pre-tax income during the
preceding Four Quarter Period, or would otherwise be a Material Adverse Event,
such amount in no event to exceed $1,000,000, and (b) establish and maintain a
management system designed to ensure compliance with applicable Environmental
Laws and minimize financial and other risks to each Company arising under
applicable Environmental Laws or as the result of environmentally related
injuries to Persons or property. Borrower shall deliver reasonable evidence of
compliance with the foregoing covenant to Agent within thirty (30) days after
any request from Majority Lenders.
8.12 SUBSIDIARIES. Borrower shall pledge to Agent for the benefit of
Lenders all stock of each Person that becomes a Subsidiary of Borrower after the
date of this Agreement (whether as a result of acquisition, creation or
otherwise) within ten (10) days after becoming a Subsidiary of Borrower.
8.13 INDEMNIFICATION. BORROWER WILL, AND WILL CAUSE EACH OTHER
COMPANY TO, JOINTLY AND SEVERALLY, INDEMNIFY, PROTECT AND HOLD AGENT, ARRANGER
AND LENDERS AND THEIR RESPECTIVE PARENTS, SUBSIDIARIES, REPRESENTATIVES,
SUCCESSORS AND ASSIGNS (INCLUDING ALL OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS)(COLLECTIVELY, THE "INDEMNIFIED PARTIES") HARMLESS FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS AND PROCEEDINGS AND ALL COSTS, EXPENSES (INCLUDING,
WITHOUT LIMITATION, ALL ATTORNEYS' FEES AND LEGAL EXPENSES WHETHER OR NOT SUIT
IS BROUGHT) AND DISBURSEMENTS OF ANY KIND OR NATURE (THE "INDEMNIFIED
LIABILITIES") THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST THE INDEMNIFIED PARTIES, IN ANY WAY RELATING TO OR ARISING OUT OF (A)
THE DIRECT OR INDIRECT RESULT OF THE VIOLATION BY ANY COMPANY OF ANY
ENVIRONMENTAL LAW, (B) ANY COMPANY'S GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR PRESENCE IN
CONNECTION WITH ITS PROPERTIES OF A HAZARDOUS SUBSTANCE (INCLUDING, WITHOUT
LIMITATION, (I) ALL DAMAGES OF ANY USE, GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR PRESENCE, OR (II)
THE COSTS OF ANY ENVIRONMENTAL INVESTIGATION, MONITORING, REPAIR, CLEANUP OR
DETOXIFICATION AND THE PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL
OR OTHER PLANS), OR (C) THE LOAN PAPERS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN. HOWEVER, ALTHOUGH EACH INDEMNIFIED PARTY HAS THE RIGHT TO BE
INDEMNIFIED UNDER THE LOAN PAPERS FOR ITS OWN ORDINARY NEGLIGENCE, NO
INDEMNIFIED PARTY HAS THE RIGHT TO BE INDEMNIFIED UNDER THE LOAN PAPERS FOR ITS
OWN FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE PROVISIONS OF AND
UNDERTAKINGS AND INDEMNIFICATION SET FORTH IN THIS PARAGRAPH SHALL SURVIVE THE
SATISFACTION AND PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS AGREEMENT.
<PAGE> 38
8.14 FURTHER ASSURANCES. The Borrower shall, and shall cause each
Guarantor to, do such further things and execute such additional documents
(including, without limitation, the perfection of security interest, in
after-acquired property) as are reasonably requested by Lenders or the Agent.
8.15 CHANGE OF CONTROL. Borrower shall promptly, but in any event
within five (5) Business Days, give written notice to Agent upon obtaining
knowledge of the occurrence of a Change of Control.
SECTION 9 NEGATIVE COVENANTS. So long as Lenders are committed to fund
Borrowings and the Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid in full, Borrower covenants and agrees
as follows:
9.1 TAXES. Borrower may not and may not permit any Company to use
any portion of the proceeds of any Borrowing to pay the wages of employees,
unless a timely payment to or deposit with the United States of America of all
amounts of Tax required to be deducted and withheld with respect to such wages
is also made.
9.2 PAYMENT OF OBLIGATIONS. Borrower may not and may not permit any
Company to voluntarily prepay principal of, or interest on, any Debt other than
the Obligation, if a Default or Potential Default exists.
9.3 EMPLOYEE PLANS. Except where a Material Adverse Event would not
result, Borrower may not and may not permit any Company to permit any of the
events or circumstances described in SECTION 7.10 to exist or occur.
9.4 DEBT AND DEBT INSTRUMENTS. Borrower may not and may not permit
any Company to create, incur or suffer to exist any Funded Debt, other than
Permitted Debt, nor materially modify any Debt that is subordinate to the
Obligations or any document or instrument evidencing such Debt.
9.5 LIENS. Borrower may not and may not permit any Company to (a)
create, incur or suffer or permit to be created or incurred or to exist any Lien
upon any of its assets other than Permitted Liens or (b) enter into or permit to
exist any arrangement or agreement that directly or indirectly prohibits any
Company from creating or incurring any Lien on any of its assets, other than the
Loan Papers and leases that place a Lien prohibition on only the leased
property.
9.6 TRANSACTIONS WITH AFFILIATES. Except as disclosed on the
attached SCHEDULE 7.14, or on the most recently amended SCHEDULE 7.14, (if the
disclosures are approved by Majority Lenders), Borrower may not and may not
permit any Company to enter into any material transaction with any of its
Affiliates (excluding other Companies), other than transactions in the ordinary
course of business and upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate. For purposes of this
SECTION 9.6, a transaction is "material" if it requires any Company to pay more
than $1,000,000 during the term of the agreement governing such transaction.
9.7 COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower may not and may not
permit any Company to (a) violate the provisions of any Laws applicable to it or
of any Material Agreement to which it is a party if that violation alone, or
when aggregated with all other violations, would be a Material Adverse Event,
(b) violate the provisions of its charter or bylaws, or (c) repeal, replace or
amend any provision of its charter or bylaws if that action would be a Material
Adverse Event.
9.8 LOANS, ADVANCES AND INVESTMENTS. Except as permitted by SECTION
9.9 or SECTION 9.11, Borrower may not and may not permit any Company to make any
loan, advance, extension of credit or capital contribution to, make any
investment in, or purchase or commit to purchase any stock or other securities
or evidences of Debt of, or interests in, any other Person; provided, however,
that Borrower or a Company may make an advance to, investment in or purchase
from another Person if (1) (a) such action results in the acquisition of such
Person by Borrower or such Company, (b) such action results in the Borrower's
direct or indirect ownership of new stores, (c) the Person being acquired is in
a line of business which is substantially the same as or complimentary to the
Borrower's principal line of business, and (d) immediately after giving effect
to such acquisition, the Companies shall be in compliance with
<PAGE> 39
all covenants under ARTICLE 10 and shall not be in Default or Potential Default
under this Agreement; provided, further, that if any acquisition is in excess of
an aggregate cost to the Borrower or such Company of more than $5,000,000, the
Borrower shall provide to the Lenders evidence of compliance with all covenants
in this Agreement prior to the consummation of such acquisition or (2) such
action is for investments in Cash Equivalents.
9.9 DIVIDENDS AND DISTRIBUTIONS. Borrower may not and may not permit
any Company to declare, make or pay any Distribution other than Distributions
declared, made or paid by (a) Borrower wholly in the form of its capital stock,
(b) any other Company to Borrower, or (c) Borrower on its planned issuance of
$25,000,000 in convertible preferred shares; provided that such shares are
issued by Borrower at the then market rate for similar such securities. Borrower
may not and may not permit any Company to enter into or permit to exist any
arrangement or agreement (other than the Loan Papers) that prohibits it from
paying dividends or other distributions to its shareholders.
9.10 SALE OF ASSETS. Borrower may not and may not permit any Company
to sell, assign, lease, transfer or otherwise dispose of any of its assets,
other than (a) sales of inventory in the ordinary course of business, (b) the
sale, discount or transfer of delinquent accounts receivable in the ordinary
course of business for purposes of collection, (c) occasional sales, leases or
other dispositions of immaterial assets for consideration not less than fair
market value, (d) sales, leases or other dispositions of assets that are
obsolete or have negligible fair market value, (e) sales of equipment for a fair
and adequate consideration (but if replacement equipment is necessary for the
proper operation of the business of the seller, the seller must promptly replace
the sold equipment), (f) sale and leasebacks of real property which do not in
the aggregate exceed forty percent (40%) of the Borrower's capital expenditures
in the applicable fiscal year, (g) sale, lease or other disposition by a Company
of its assets to the Borrower, (h) sales of assets having an aggregate fair
market value not exceeding $2,000,000 during any fiscal year of Borrower and
sold for a price which is within a fair market value for such assets, or (i) as
disclosed on the attached SCHEDULE 9.10.
9.11 MERGERS AND DISSOLUTIONS. Borrower may not and may not permit
any Company to merge or consolidate with any other Person or liquidate, wind up
or dissolve (or suffer any liquidation or dissolution); provided, however, if
after giving effect thereto, no Default shall have occurred and be continuing
(a) any Person (other than Monro Leasing, LLC) may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (b) any Person
other than the Borrower may merge into any Subsidiary of the Borrower (other
than Monro Leasing, LLC) in a transaction in which the surviving entity is such
Subsidiary and (c) any Subsidiary of the Borrower (other than Monro Leasing,
LLC) may liquidate or dissolve so long as the Borrower determines in good faith
that such liquidation or dissolution is in the best interest of the Borrower.
9.12 ASSIGNMENT. Borrower may not and may not permit any Company to
assign or transfer any of its Rights, duties, or obligations under any of the
Loan Papers.
9.13 FISCAL YEAR AND ACCOUNTING METHODS. Borrower may not and may not
permit any Company to change its fiscal year or its method of accounting (other
than immaterial changes in methods or as required or permitted by GAAP).
9.14 NEW BUSINESSES. Borrower may not and may not permit any Company
to engage in any business except the businesses in which they are presently
engaged and any other reasonably related business.
9.15 GOVERNMENT REGULATIONS. Borrower may not and may not permit any
Company to conduct its business in a way that it becomes regulated under the
Investment Company Act of 1940, as amended, or the Public Utility Holding
Company Act of 1935, as amended.
9.16 LEASES; SALE-LEASEBACKS. Except as otherwise provided herein the
Borrower will not, and will not permit any Subsidiary to, enter into any
arrangement whereby the Borrower or any such Subsidiary shall sell or transfer
property owned by the Borrower or such Subsidiary and then or thereafter as
Lessee rent or lease such property (any such arrangement being herein referred
to as a "sale-leaseback") other than (i) a sale-leaseback solely with the
Borrower or a Wholly-Owned Subsidiary, (ii) sale-leasebacks of equipment
pursuant to an off-balance sheet transaction with Fleet National Bank existing
on the date hereof (and extensions and renewals thereof), or (iii) a lease for
temporary period,
<PAGE> 40
not in excess of three (3) months, to permit the orderly relocation of
operations carried on in or at a facility subsequent to the sale thereof and
prior to the surrender of possession thereof, unless (x) such sale-leaseback
transaction is completed within one hundred eighty (180) days of the date of
acquisition of the property involved, and (y) such sale-leaseback is entered
into in compliance with any applicable limitations hereof and (z) at the time of
consummation thereof and after giving effect thereto no Default or Potential
Default exists.
9.17 SUBSIDIARIES. Permit any Person other than a Company to acquire,
directly or indirectly, beneficially or of record, shares representing more than
20% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of any Subsidiary of the Borrower.
SECTION 10 FINANCIAL COVENANTS. So long as Lenders are committed to fund
Borrowings and Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid and performed in full, Borrower
covenants and agrees to comply with the following financial covenants as
calculated on the last day of each fiscal quarter period and certified by
Borrower in the most recent Compliance Certificate delivered to Agent, on behalf
of the Lenders, from time to time in accordance with the terms of this
Agreement:
<TABLE>
<CAPTION>
============================================================================================================
Maximum Minimum EBITDAR less
Adjusted Debt/EBITDAR CAPEX to Interest Minimum Tangible
Expense plus Rental Net Worth
Payments
============================================================================================================
<S> <C> <C> <C>
At 12/31/98 Not greater than 5.30 to 1.0 Not less than .85 to 1.0 $70,000,000 at 12/31/98
- ------------------------------------------------------------------------------------------------------------
At 3/31/99 thru 06/30/99 Not greater than 5.30 to 1.0 Not less than .85 to 1.0 $70,000,000 at 3/31/99
- ------------------------------------------------------------------------------------------------------------
At 9/30/99 thru 12/31/99 Not greater than 4.70 to 1.0 Not less than .85 to 1.0 $70,000,000 at 9/30/99
- ------------------------------------------------------------------------------------------------------------
At 3/31/00 thru 12/31/00 Not greater than 4.25 to 1.0 Not less than 1.30 to 1.0 $80,000,000 at 3/31/00
- ------------------------------------------------------------------------------------------------------------
At 3/31/01 thru 12/31/01 Not greater than 3.85 to 1.0 Not less than 1.50 to 1.0 $92,600,000 at 3/31/01
- ------------------------------------------------------------------------------------------------------------
At 3/31/02 and thereafter Not greater than 3.55 to 1.0 Not less than 1.70 to 1.0 $110,000,000 at 3/31/02
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing covenants, upon receipt of the proceeds
from the issuance of at least $25,000,000 of equity or equity related securities
to the Borrower, the following covenants shall apply:
<TABLE>
<CAPTION>
===============================================================================================================
Maximum Minimum EBITDAR less
Adjusted Debt/EBITDAR CAPEX to Interest Minimum Tangible
Expense plus Rental Payments Net Worth
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
At 12/31/98 Not greater than 4.60 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 12/31//98
- ---------------------------------------------------------------------------------------------------------------
At 3/31/99 thru 06/30/99 Not greater than 4.60 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 3/31/99
- ---------------------------------------------------------------------------------------------------------------
At 9/30/99 thru 12/31/99 Not greater than 4.10 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 9/30/99
- ---------------------------------------------------------------------------------------------------------------
At 3/31/00 thru 12/31/00 Not greater than 3.70 to 1.0 Not less than 1.40 to 1.0 $105,000,000 at 3/31/00
- ---------------------------------------------------------------------------------------------------------------
At 3/31/01 thru 12/31/01 Not greater than 3.35 to 1.0 Not less than 1.70 to 1.0 $117,600,000 at 3/31/01
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 41
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
At 3/31/02 and thereafter Not greater than 3.05 to 1.0 Not less than 1.90 to 1.0 $135,000,000 at 3/31/02
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SECTION 11 DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following events:
11.1 PAYMENT OF OBLIGATION. The failure of any Company to pay any
part of the Obligation within five (5) Business Days after it becomes due and
payable under the Loan Papers.
11.2 COVENANTS. The failure of Borrower (and, if applicable, any
other Company) to punctually and properly perform, observe and comply with:
(a) Any covenant or agreement contained in SECTIONS 8.2,
9.2, 9.9, 9.10, 9.11, 9.12, OR 9.16;
(b) Any covenant or agreement contained in SECTION 8.1(A)
AND (B), 8.3, 8.4, 8.8, 9.3, 9.4, 9.8, 9.13, 9.14, 9.15 or 9.17, and
failure continues for ten (10) days after the first to occur of (i)
Borrower knows of or (ii) Borrower receives notice from Agent of, such
failure; or
(c) Any other covenant or agreement contained in any Loan
Paper (other than the covenants to pay the Obligation and the covenants
in CLAUSES (A) AND (B) preceding), and failure continues for thirty
(30) days after the first to occur of (i) Borrower knows of or (ii)
Borrower receives notice from Agent of, such failure.
11.3 DEBTOR RELIEF. Any Company (a) is not Solvent, (b) fails to
pay its Debts generally as they become due, (c) voluntarily seeks, consents to,
or acquiesces in the benefit of any Debtor Relief Law, or (d) becomes a party to
or is made the subject of any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise adversely
affect the Rights of Agent or any Lender granted in the Loan Papers (unless, if
the proceeding is involuntary, the applicable petition is dismissed within sixty
(60) days after its filing).
11.4 JUDGMENTS AND ATTACHMENTS. Any Company fails, within sixty
(60) days after entry, to pay, bond or otherwise discharge any judgment or order
for the payment of money in excess of $1,000,000 (individually or collectively)
or any warrant of attachment, sequestration or similar proceeding against any
Company's assets having a value (individually or collectively) of $1,000,000,
which is neither (a) stayed on appeal nor (b) diligently contested in good faith
by appropriate proceedings and adequate reserves have been set aside on its
books in accordance with GAAP.
11.5 GOVERNMENT ACTION. (a) A final non-appealable order is issued
by any Tribunal (including, but not limited to, the United States Justice
Department) seeking to cause any Company to divest a significant portion of its
assets under any antitrust, restraint of trade, unfair competition, industry
regulation or similar Laws, or (b) any Tribunal condemns, seizes or otherwise
appropriates, or takes custody or control of all or any substantial portion of
the assets of any Company.
11.6 MISREPRESENTATION. Any material representation or warranty
made by any Company contained in any Loan Paper at any time proves to have been
materially incorrect when made.
11.7 [Intentionally Omitted]
11.8 MATERIAL ADVERSE EVENT. A Material Adverse Event occurs and is
continuing.
11.9 DEFAULT UNDER OTHER AGREEMENTS. (a) Any Company fails to pay
when due (after lapse of any applicable grace period) any Debt in excess
(individually or collectively) of $1,000,000; (b) any default exists under any
agreement to which a Company is a party, the effect of which is to cause, or to
permit any Person (other than a Company) to cause, an amount in excess
(individually or collectively) of $1,000,000 to become due and payable by
<PAGE> 42
any Company before its stated maturity; (c) any Debt in excess (individually or
collectively) of $1,000,000 is declared to be due and payable or required to be
prepaid by any Company before its stated maturity; or (d) a default occurs under
any lease agreement between any Company and Brazos Automotive Properties, L.P.
11.10 LCS. Agent is served with, or becomes subject to, a court
order, injunction, or other process or decree restraining or seeking to restrain
it from paying any amount under any LC and either (a) a drawing has occurred
under the LC and Borrower has refused to reimburse Agent for payment or (b) the
expiration date of the LC has occurred but the right of any beneficiary
thereunder to draw under the LC has been extended past the expiration date in
connection with the pendency of the related court action or proceeding and
Borrower has failed to deposit with Agent cash collateral in an amount equal to
Agent's maximum exposure under the LC.
11.11 VALIDITY AND ENFORCEABILITY OF LOAN PAPERS. Except in
accordance with its terms or as otherwise expressly permitted by this Agreement,
any Loan Paper at any time after its execution and delivery ceases to be in full
force and effect in any material respect or is declared by a Tribunal to be null
and void or its validity or enforceability is contested in writing by any
Company party thereto or any Company denies in writing that it has any further
liability or obligations under any Loan Paper to which it is a party.
11.12 EMPLOYEE BENEFIT PLANS. Any of the following exists with
respect to any Employee Plan of any Company: (a) a Reportable Event; (b)
disqualification or involuntary termination proceedings; (c) voluntary
termination proceedings are initiated while a funding deficiency (as determined
under section 412 of the Code) exists; (d) withdrawal liability exists with
respect to a Multiemployer Plan; (e) a trustee is appointed by any federal
district court or the PBGC to administer an Employee Plan; (f) termination
proceedings are initiated by the PBGC; (g) failure by any Company to promptly
notify Agent upon its receipt of notice of any proceeding or other actions that
may result in termination of an Employee Plan if the proceeding or termination
would constitute a Material Adverse Event.
SECTION 12 RIGHTS AND REMEDIES.
12.1 REMEDIES UPON DEFAULT.
(a) If a Default (i) occurs under SECTION 11.3(C) or (ii)
occurs and is continuing under SECTION 11.3(A), (B) OR (D), the
commitment to extend credit under this Agreement automatically
terminates, the entire unpaid balance of the Obligation automatically
becomes due and payable without any action of any kind whatsoever, and
Borrower must provide cash collateral in an amount equal to the
then-existing LC Exposure.
(b) If a Default occurs and is continuing, subject to the
terms of SECTION 13.5(B), Agent may (with the consent of, and must,
upon the request of, Majority Lenders), do any one or more of the
following: (i) if the maturity of the Obligation has not already been
accelerated under SECTION 12.1(a), declare the entire unpaid balance of
all or any part of the Obligation immediately due and payable,
whereupon it is due and payable; (ii) terminate the commitments of
Lenders to extend credit under this Agreement; (iii) reduce any claim
to judgment; (iv) to the extent permitted by Law, exercise (or request
each Lender to, and each Lender is entitled to, exercise) the Rights of
offset or banker's Lien against the interest of any Company in and to
every account and other property of any Company that are in the
possession of Agent or any Lender to the extent of the full amount of
the Obligation (and to the extent permitted by Law, each Company is
deemed directly obligated to each Lender in the full amount of the
Obligation for this purpose); (v) demand Borrower to provide cash
collateral in an amount equal to the LC Exposure then existing; and
(vi) exercise any and all other legal or equitable Rights afforded by
the Loan Papers, the Laws of the State of New York, or any other
applicable jurisdiction.
(c) If, in reliance on SECTION 13.5(B), Agent refuses to take
any action under SECTION 12.1(B) at the request of Majority Lenders,
then Majority Lenders may take that action.
12.2 COMPANY WAIVERS. To the extent permitted by Law, each Company
waives presentment and demand for payment, protest, notice of intention to
accelerate, notice of acceleration and notice of protest and nonpayment, and
<PAGE> 43
agrees that its liability with respect to all or any part of the Obligation is
not affected by any renewal or extension in the time of payment of all or any
part of the Obligation, by any indulgence, or by any release or change in any
security for the payment of all or any part of the Obligation.
12.3 PERFORMANCE BY AGENT. If any covenant, duty or agreement of any
Company is not performed in accordance with the terms of the Loan Papers, Agent
may, while a Default exists, at its option (but subject to the approval of
Majority Lenders), perform or attempt to perform that covenant, duty or
agreement on behalf of that Company (and any amount expended by Agent in its
performance or attempted performance is payable by the Companies, jointly and
severally, to Agent on demand, becomes part of the Obligation, and bears
interest at the Default Rate from the date of Agent's expenditure until paid).
However, neither Agent nor any Lender assumes or shall have, except by its
express written consent, any liability or responsibility for the performance of
any covenant, duty or agreement of any Company.
12.4 NOT IN CONTROL. None of the covenants or other provisions
contained in any Loan Paper shall, or shall be deemed to, give Agent or Lenders
the Right to exercise control over the assets (including, without limitation,
real property), affairs, or management of any Company; the power of Agent and
Lenders is limited to the Right to exercise the remedies provided in this
SECTION 12.
12.5 COURSE OF DEALING. The acceptance by Agent or Lenders of any
partial payment on the Obligation shall not be deemed to be a waiver of any
Default then existing. No waiver by Agent, Majority Lenders or Lenders of any
Default shall be deemed to be a waiver of any other then-existing or subsequent
Default. No delay or omission by Agent, Majority Lenders or Lenders in
exercising any Right under the Loan Papers will impair that Right or be
construed as a waiver thereof or any acquiescence therein, nor will any single
or partial exercise of any Right preclude other or further exercise thereof or
the exercise of any other Right under the Loan Papers or otherwise.
12.6 CUMULATIVE RIGHTS. All Rights available to Agent, Majority
Lenders, and Lenders under the Loan Papers are cumulative of and in addition to
all other Rights granted to Agent, Majority Lenders, and Lenders at law or in
equity, whether or not the Obligation is due and payable and whether or not
Agent, Majority Lenders, or Lenders have instituted any suit for collection,
foreclosure, or other action in connection with the Loan Papers.
12.7 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Agent or Lenders from the exercise of any Rights pertaining to the Obligation
shall be applied to the Obligation according to SECTION 3.11.
12.8 DIMINUTION IN VALUE OF COLLATERAL. Neither Agent nor any Lender
has any liability or responsibility whatsoever for any diminution in or loss of
value of any collateral now or hereafter securing payment or performance of all
or any part of the Obligation (other than diminution in or loss of value caused
by its gross negligence or willful misconduct).
12.9 CERTAIN PROCEEDINGS. Borrower will promptly execute and deliver,
or cause the execution and delivery of, all applications, certificates,
instruments, registration statements and all other documents and papers Agent or
Majority Lenders reasonably request in connection with the obtaining of any
consent, approval, registration, qualification, permit, license or authorization
of any Tribunal or other Person necessary or appropriate for the effective
exercise of any Rights under the Loan Papers. Because Borrower agrees that
Agent's and Majority Lenders' remedies at Law for failure of Borrower to comply
with the provisions of this paragraph would be inadequate and that failure would
not be adequately compensable in damages, Borrower agrees that the covenants of
this paragraph may be specifically enforced.
12.10 CHANGE OF CONTROL. The Majority Lenders shall, upon the
happening of a Change of Control, have the privilege of declaring the Notes to
be due and payable on a date not earlier than sixty (60) days from the date of
the exercise of said privilege. The Notes then outstanding shall thereupon
become due and payable on the date specified in the notice sent to Borrower by
Agent including all Principal Debt plus accrued interest thereon to the Maturity
Date and any amounts owed by Borrower to Agent or the Lenders pursuant to this
Credit Agreement or the other Loan Papers.
<PAGE> 44
SECTION 13 AGREEMENT AMONG LENDERS.
13.1 AGENT.
(a) Each Lender appoints Agent (and Agent accepts appointment)
as its nominee and agent, in its name and on its behalf: (i) to act as
its nominee and on its behalf in, under and in accordance with all Loan
Papers; (ii) to arrange the means whereby its funds are to be made
available to Borrower under the Loan Papers; (iii) to take any action
that it properly requests under the Loan Papers (subject to the
concurrence of other Lenders as may be required under the Loan Papers);
(iv) to receive all documents and items to be furnished to it under the
Loan Papers; (v) to be the secured party, mortgagee, beneficiary,
recipient and similar party in respect of any collateral for the
benefit of Lenders; (vi) to promptly distribute to it all material
information, requests, documents and items received from Borrower under
the Loan Papers; (vii) to promptly distribute to it its ratable part of
each payment or prepayment (whether voluntary, as proceeds of
collateral upon or after foreclosure, as proceeds of insurance thereon,
or otherwise) in accordance with the terms of the Loan Papers
(including without limitation, environmental notices, notices of
default and all financial statements and Compliance Certificates); and
(viii) to deliver to the appropriate Persons requests, demands,
approvals and consents received from it. However, Agent may not be
required to take any action that exposes it to personal liability or
that is contrary to any Loan Paper or applicable Law.
(b) If the initial or any successor Agent ever ceases to be a
party to this Agreement or if the initial or any successor Agent ever
resigns (whether voluntarily or at the request of Majority Lenders),
then Majority Lenders shall appoint the successor Agent from among the
Lenders with Commitment Sums of at least $10,000,000 (other than the
resigning Agent). If Majority Lenders fail to appoint a successor Agent
within thirty (30) days after the resigning Agent has given notice of
resignation or Majority Lenders have removed the resigning Agent, then
the resigning Agent may, on behalf of Lenders and with the consent of
the Borrower, which shall not be unreasonably withheld or delayed,
appoint a successor Agent, which must be a commercial bank having a
combined capital and surplus of at least $1,000,000,000 (as shown on
its most recently published statement of condition). Upon its
acceptance of appointment as successor Agent, the successor Agent
succeeds to and becomes vested with all of the Rights of the prior
Agent, and the prior Agent is discharged from its duties and
obligations of Agent under the Loan Papers (but, when used in
connection with LCs issued and outstanding before the appointment of
the successor Agent, "Agent" shall continue to refer solely to The
Chase Manhattan Bank), and each Lender shall execute such documents as
any Lender, the resigning or removed Agent, or the successor Agent
reasonably request to reflect the change. After any Agent's resignation
or removal as Agent under the Loan Papers, the provisions of this
SECTION 13 inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under the Loan Papers.
(c) Agent, in its capacity as a Lender, has the same Rights
under the Loan Papers as any other Lender and may exercise those Rights
as if it were not acting as Agent; the term "Lender" shall, unless the
context otherwise indicates, include Agent; and Agent's resignation or
removal shall not impair or otherwise affect any Rights that it has or
may have in its capacity as an individual Lender. Each Lender and
Borrower agree that Agent is not a fiduciary for Lenders or for
Borrower but simply is acting in the capacity described in this
Agreement to alleviate administrative burdens for Borrower and Lenders,
that Agent has no duties or responsibilities to Lenders or Borrower
except those expressly set forth in the Loan Papers, and that Agent in
its capacity as a Lender has all Rights of any other Lender.
(d) Agent may now or hereafter be engaged in one or more loan,
letter of credit, leasing or other financing transactions with
Borrower, act as trustee or depositary for Borrower, or otherwise be
engaged in other transactions with Borrower (collectively, the "OTHER
ACTIVITIES") not the subject of the Loan Papers. Without limiting the
Rights of Lenders specifically set forth in the Loan Papers, Agent is
not responsible to account to Lenders for those other activities, and
no Lender shall have any interest in any other activities, any present
or future guaranties by or for the account of Borrower that are not
contemplated or included in the Loan Papers, any present or future
offset exercised by Agent in respect of those other activities, any
present or future property taken as security for any of those other
activities, or any property now or hereafter in
<PAGE> 45
Agent's possession or control that may be or become security for the
obligations of Borrower arising under the Loan Papers by reason of the
general description of indebtedness secured or of property contained in
any other agreements, documents, or instruments related to any of those
other activities (but, if any payments in respect of those guaranties
or that property or the proceeds thereof is applied by Agent to reduce
the Obligation, then each Lender is entitled to share ratably in the
application as provided in the Loan Papers).
13.2 EXPENSES. Each Lender shall pay its Pro Rata Part of any
reasonable expenses (including, without limitation, court costs, reasonable
attorneys' fees and other costs of collection) incurred by Agent (while acting
in such capacity) in connection with any of the Loan Papers if Agent is not
reimbursed from other sources within thirty (30) days after incurrence. Each
Lender is entitled to receive its Pro Rata Part of any reimbursement that it
makes to Agent if Agent is subsequently reimbursed from other sources.
13.3 PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise provided
in the Loan Papers, nothing in the Loan Papers gives any Lender any advantage
over any other Lender insofar as the Obligation is concerned or to relieve any
Lender from ratably absorbing any losses sustained with respect to the
Obligation (except to the extent unilateral actions or inactions by any Lender
result in Borrower or any other obligor on the Obligation having any credit,
allowance, setoff, defense, or counterclaim solely with respect to all or any
part of that Lender's Pro Rata Part of the Obligation).
13.4 DELEGATION OF DUTIES; RELIANCE. Lenders may perform any of their
duties or exercise any of their Rights under the Loan Papers by or through
Agent, and Lenders and Agent may perform any of their duties or exercise any of
their Rights under the Loan Papers by or through their respective
Representatives. Agent, Lenders and their respective Representatives (a) are
entitled to rely upon (and shall be protected in relying upon) any written or
oral statement believed by it or them to be genuine and correct and to have been
signed or made by the proper Person and, with respect to legal matters, upon
opinion of counsel selected by Agent or that Lender (but nothing in this CLAUSE
(A) permits Agent to rely on (i) oral statements if a writing is required by
this Agreement or (ii) any other writing if a specific writing is required by
this Agreement), (b) are entitled to deem and treat each Lender as the owner and
holder of its Pro Rata Part of the Principal Debt for all purposes until,
subject to SECTION 14.12, written notice of the assignment or transfer is given
to and received by Agent (and any request, authorization, consent or approval of
any Lender is conclusive and binding on each subsequent holder, assignee or
transferee of or Participant in that Lender's Pro Rata Part of the Principal
Debt until that notice is given and received), (c) are not deemed to have notice
of the occurrence of a Default unless a responsible officer of Agent, who
handles matters associated with the Loan Papers and transactions thereunder, has
actual knowledge or Agent has been notified by a Lender or Borrower, and (d) are
entitled to consult with legal counsel (including counsel for Borrower),
independent accountants, and other experts selected by Agent and are not liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of counsel, accountants, or experts.
13.5 LIMITATION OF AGENT'S LIABILITY.
(a) Neither Agent nor any of its Representatives will be
liable for any action taken or omitted to be taken by it or them under
the Loan Papers in good faith and believed by it or them to be within
the discretion or power conferred upon it or them by the Loan Papers or
be responsible for the consequences of any error of judgment (except
for fraud, gross negligence or willful misconduct), and neither Agent
nor any of its Representatives has a fiduciary relationship with any
Lender by virtue of the Loan Papers (but nothing in this Agreement
negates the obligation of Agent to account for funds received by it for
the account of any Lender).
(b) Unless indemnified to its satisfaction, Agent may not be
compelled to do any act under the Loan Papers or to take any action
toward the execution or enforcement of the powers thereby created or to
prosecute or defend any suit in respect of the Loan Papers. If Agent
requests instructions from Lenders, or Majority Lenders, as the case
may be, with respect to any act or action in connection with any Loan
Paper, Agent is entitled to refrain (without incurring any liability to
any Person by so refraining) from that act or action unless and until
it has received instructions. In no event, however, may Agent or any of
its Representatives be required to take any action that it or they
determine could incur for it or them criminal or onerous civil
<PAGE> 46
liability. Without limiting the generality of the foregoing, no Lender
has any right of action against Agent as a result of Agent's acting or
refraining from acting under this Agreement in accordance with
instructions of Majority Lenders, or, if unanimity is required, in
accordance with instructions of all Lenders.
(c) Agent is not responsible to any Lender or any Participant
for, and each Lender represents and warrants that it has not relied
upon Agent in respect of, (i) the creditworthiness of any Company and
the risks involved to that Lender, (ii) the effectiveness,
enforceability, genuineness, validity or due execution of any Loan
Paper (other than by Agent), (iii) any representation, warranty,
document, certificate, report or statement made therein (other than by
Agent) or furnished thereunder or in connection therewith, (iv) the
adequacy of any collateral now or hereafter securing the Obligation or
the existence, priority or perfection of any Lien now or hereafter
granted or purported to be granted on the collateral under any Loan
Paper, or (v) the observance of or compliance with any of the terms,
covenants or conditions of any Loan Paper on the part of any Company.
EACH LENDER AGREES TO INDEMNIFY AGENT AND ITS REPRESENTATIVES AND HOLD
THEM HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S PRO RATA
PART OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES AND
REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER THAT MAY BE
IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THEM IN ANY WAY RELATING
TO OR ARISING OUT OF THE LOAN PAPERS OR ANY ACTION TAKEN OR OMITTED BY
THEM UNDER THE LOAN PAPERS IF AGENT AND ITS REPRESENTATIVES ARE NOT
REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH AGENT AND ITS
REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT
FOR ITS OR THEIR OWN ORDINARY NEGLIGENCE, AGENT AND ITS REPRESENTATIVES
DO NOT HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR
THEIR OWN FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
13.6 DEFAULT; COLLATERAL. If Agent receives notice of a Default
from Borrower or any Lender, Agent shall notify Lenders of such Default and
Lenders agree to promptly confer in order that Majority Lenders or Lenders, as
the case may be, may agree upon a course of action for the enforcement of the
Rights of Lenders. Unless and until Agent receives directions from Majority
Lenders, Agent shall refrain from taking any action (without incurring any
liability to any Person for so refraining), provided that, unless and until the
Agent has received such directions, the Agent may, at its option, take such
actions as it deems appropriate without the direction of the Majority Lenders in
circumstances where the ability of Lenders to recover the Obligation may
otherwise be materially impaired. In actions with respect to any property of
Borrower, Agent is acting for the ratable benefit of each Lender. Agent shall
hold, for the ratable benefit of all Lenders, any security it receives for the
Obligation or any guaranty of the Obligation it receives upon or in lieu of
foreclosure.
13.7 LIMITATION OF LIABILITY. No Lender or any Participant will
incur any liability to any other Lender or Participant except for acts or
omissions in bad faith, and neither Agent nor any Lender or Participant will
incur any liability to any other Person for any act or omission of any other
Lender or any Participant.
13.8 RELATIONSHIP OF LENDERS. The Loan Papers, and the documents
delivered in connection therewith, do not create a partnership or joint venture
among Agent and Lenders or among Lenders.
13.9 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs Agent to enter into the
Security Documents for the ratable benefit of Lenders. Each Lender
agrees that any action taken by Agent concerning any Collateral with
the consent of, or at the request of, Majority Lenders in accordance
with the provisions of this Agreement, the Security Documents or the
other Loan Papers, and the exercise by Agent (with the consent of, or
at the request of, Majority Lenders) of powers concerning the
Collateral set forth in any Loan Paper, together with other reasonably
incidental powers, shall be authorized and binding upon all Lenders.
(b) Agent is authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from
time to time before a Default or Potential Default, to take any action
with respect to any Collateral or Security Documents that may be
necessary to perfect and maintain perfected the Lender Liens upon the
Collateral granted by the Security Documents.
<PAGE> 47
(c) Agent has no obligation whatsoever to any Lender or to any
other Person to assure that the Collateral exists or is owned by any
Company or is cared for or protected.
(d) Agent shall exercise the same care and prudent judgment
with respect to the Collateral and the Security Documents as it
normally and customarily exercises in respect of similar collateral and
security documents.
(e) Lenders irrevocably authorize Agent, at its option and in
its discretion, to release any Lender Lien upon any Collateral (i) upon
full payment of the Obligation; (ii) constituting property being sold
or disposed of as permitted under SECTION 9.10, if Agent determines
that the property being sold or disposed is being sold or disposed in
accordance with the requirements and limitations of SECTION 9.10 and
Agent concurrently receives all mandatory prepayments with respect
thereto, if any, in accordance with SECTION 9.10; (iii) constituting
property in which no Company owned any interest at the time the Lender
Lien was granted or at any time thereafter; (iv) constituting property
leased to any Company under a lease that has expired or been terminated
in a transaction permitted under this Agreement or is about to expire
and that has not been, and is not intended by that Company to be,
renewed; (v) consisting of an instrument evidencing Debt pledged to
Agent (for the benefit of Lenders), if the Debt evidenced thereby has
been paid in full; or (vi) if approved, authorized or ratified in
writing by Majority Lenders subject to SECTION 14.10(B)(VI). Upon
request by Agent at any time, Lenders will confirm in writing Agent's
authority to release particular types or items of Collateral under this
SECTION 13.9(E).
13.10 BENEFITS OF AGREEMENT. None of the provisions of this SECTION
13 inure to the benefit of any Company or any other Person other than Agent and
Lenders; consequently, no Company or any other Person is entitled to rely upon,
or to raise as a defense, in any manner whatsoever, the failure of Agent or any
Lender to comply with these provisions.
SECTION 14 MISCELLANEOUS.
14.1 HEADINGS. The headings, captions and arrangements used in any
of the Loan Papers are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify or modify the terms of the Loan Papers,
nor affect the meaning thereof.
14.2 NONBUSINESS DAYS; TIME. Any payment or action that is due
under any Loan Paper on a non-Business Day may be delayed until the
next-succeeding Business Day (but interest shall continue to accrue on any
applicable payment until payment is in fact made) unless the payment concerns a
LIBOR Rate Borrowing, in which case if the next-succeeding Business Day is in
the next calendar month, then such payment shall be made on the next-preceding
Business Day. Unless otherwise indicated, all time references (e.g., 10:00 a.m.)
are to New York, New York time.
14.3 COMMUNICATIONS. Unless otherwise specifically provided,
whenever any Loan Paper requires or permits any consent, approval, notice,
request, demand or other communication from one party to another, communication
must be in writing (which may be by telex or telecopy) to be effective and shall
be deemed to have been given (a) if by telex, when transmitted to the
appropriate telex number and the appropriate answerback is received, (b) if by
telecopy, when transmitted to the appropriate telecopy number (and all
communications sent by telecopy must be confirmed promptly thereafter by
telephone; but any requirement in this parenthetical shall not affect the date
when the telecopy shall be deemed to have been delivered), (c) if by mail, on
the third Business Day after it is enclosed in an envelope and properly
addressed, stamped, sealed, certified mail, return receipt requested, and
deposited in the appropriate official postal service, or (d) if by any other
means, when actually delivered. Until changed by notice pursuant to this
Agreement, the address (and telecopy number) for each party to a Loan Paper is
set forth on the attached SCHEDULE 1.
<PAGE> 48
14.4 FORM AND NUMBER OF DOCUMENTS. The form, substance, and number
of counterparts of each writing to be furnished under this Agreement must be
satisfactory to Agent and its counsel.
14.5 EXCEPTIONS TO COVENANTS. Borrower may not and may not permit
any Company to take or fail to take any action that is permitted as an exception
to any of the covenants contained in any Loan Paper if that action or omission
would result in the breach of any other covenant contained in any Loan Paper.
14.6 SURVIVAL. All covenants, agreements, undertakings,
representations and warranties made in any of the Loan Papers survive all
closings under the Loan Papers and, except as otherwise indicated, are not
affected by any investigation made by any party.
14.7 GOVERNING LAW. Except as expressly provided in a Loan Paper,
the Laws (other than conflict-of-laws provisions) of the State of New York and
of the United States of America govern the Rights and duties of the parties to
the Loan Papers and the validity, construction, enforcement and interpretation
of the Loan Papers.
14.8 INVALID PROVISIONS. Any provision in any Loan Paper held to be
illegal, invalid or unenforceable is fully severable; the appropriate Loan Paper
shall be construed and enforced as if that provision had never been included;
and the remaining provisions shall remain in full force and effect and shall not
be affected by the severed provision. Agent, Lenders, and each Company party to
the affected Loan Paper agree to negotiate, in good faith, the terms of a
replacement provision as similar to the severed provision as may be possible and
be legal, valid and enforceable. However, if the provision held to be illegal,
invalid or unenforceable is a material part of this Agreement, such invalid,
illegal or unenforceable provision shall be, to the extent permitted by Law,
replaced by a clause or provision judicially construed and interpreted to be as
similar in substance and content to the original terms of such illegal, invalid
or unenforceable clause or provision as the context thereof would reasonably
allow, so that such clause or provision would thereafter be legal, valid and
enforceable.
14.9 VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY TO ANY LOAN
PAPER, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS (AND IN THE CASE OF
BORROWER, FOR EACH OTHER COMPANY), (a) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF NEW YORK, (b)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING
OUT OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE OBLIGATION BROUGHT IN
DISTRICT COURTS OF NEW YORK, NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK, (c) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY
LITIGATION BROUGHT IN ANY OF THE AFOREMENTIONED COURTS HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, (d) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THOSE COURTS IN ANY LITIGATION BY THE MAILING OF COPIES THEREOF BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND-DELIVERY, OR
BY DELIVERY BY A NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE
DEEMED COMPLETE UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS SET FORTH IN
THIS AGREEMENT, (e) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY
PARTY TO ANY LOAN PAPER ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS OR
THE OBLIGATION MAY BE BROUGHT IN ONE OF THE AFOREMENTIONED COURTS, AND (f)
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
LOAN PAPER. The scope of each of the foregoing waivers is intended to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including, without limitation,
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Borrower (for itself and on behalf of each other Company)
acknowledges that these waivers are a material inducement to Agent's and each
Lender's agreement to enter into a business relationship, that Agent and each
Lender has already relied on these waivers in entering into this Agreement, and
that Agent and each Lender will continue to rely on each of these waivers in
related future dealings. Borrower (for itself and on behalf of each other
Company) further warrants and represents that it has reviewed these waivers with
its legal counsel, and that it knowingly and voluntarily agrees to each waiver
following consultation with legal counsel. THE WAIVERS IN THIS
<PAGE> 49
SECTION 14.9 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS, OR REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN PAPER.
In the event of Litigation, this Agreement may be filed as a written consent to
a trial by the court.
14.10 AMENDMENTS, CONSENTS, CONFLICTS AND WAIVERS.
(a) Unless otherwise specifically provided, (i) this
Agreement may be amended only by an instrument in writing executed by
Borrower, Agent and Majority Lenders and supplemented only by documents
delivered or to be delivered in accordance with the express terms of
this Agreement, and (ii) the other Loan Papers may only be the subject
of an amendment, modification or waiver that has been approved by
Majority Lenders and Borrower.
(b) Any amendment, consent or waiver under this Agreement or
any Loan Paper that purports to accomplish any of the following must be
in writing and executed by Borrower and Agent and executed (or
approved, as the case may be) by each Lender: (i) extend the due date
or decrease the amount of any scheduled payment of the Obligation
beyond the date specified in the Loan Papers; (ii) decrease any rate or
amount of interest, fees or other sums payable to Agent or Lenders
under this Agreement (except such reductions as are contemplated by
this Agreement); (iii) change the definition of "APPLICABLE MARGIN,"
COMMITMENT USAGE," "COMMITTED SUM," "FACILITY A COMMITTED SUM,"
"FACILITY B COMMITTED SUM," "MAJORITY LENDERS," "MATURITY DATE," "TERM
CONVERSION DATE", "FACILITY A MATURITY DATE," "FACILITY B MATURITY
DATE," "TOTAL COMMITMENT USAGE" or "TOTAL COMMITMENT"; (iv) increase or
decrease any one or more Lenders' Committed Sums except as provided in
this Agreement; (v) except as permitted by SECTION 9.10, consent to the
release of all or a material portion of the Collateral under the
Security Documents; (vi) change the provisions of SECTION 13 to the
detriment of any Lender; (vii) change any provision requiring ratable
distributions to Lenders; (viii) subject any Lender to a greater
obligation than expressly provided in this Agreement; or (ix) change
this CLAUSE (B) or any other matter specifically requiring the consent
of all Lenders under this Agreement.
(c) Any conflict or ambiguity between the terms and
provisions of this Agreement and terms and provisions in any other Loan
Paper is controlled by the terms and provisions of this Agreement.
(d) No course of dealing or any failure or delay by Agent, any
Lender, or any of their respective Representatives with respect to
exercising any Right of Agent or any Lender under this Agreement
operates as a waiver thereof. A waiver must be in writing and signed by
Agent and Lenders (or Majority Lenders, if permitted under this
Agreement) to be effective, and a waiver will be effective only in the
specific instance and for the specific purpose for which it is given.
14.11 MULTIPLE COUNTERPARTS. Any Loan Paper may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one agreement; but, in
making proof of thereof, it shall not be necessary to produce or account for
more than one counterpart. Each Lender need not execute the same counterpart of
this Agreement so long as identical counterparts are executed by Borrower, each
Lender, and Agent. This Agreement shall become effective when counterparts of
this Agreement have been executed and delivered to Agent by each Lender, Agent
and Borrower, or, in the case only of Lenders, when Agent has received
telecopied, telexed or other evidence satisfactory to it that each Lender has
executed and is delivering to Agent a counterpart of this Agreement.
14.12 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) Each Loan Paper binds and inures to the benefit of the
parties thereto, any intended beneficiary thereof, and each of their
respective successors and permitted assigns. No Lender may transfer,
pledge, assign, sell any participation in, or otherwise encumber its
portion of the Obligation except as permitted by this SECTION 14.12.
<PAGE> 50
(b) Subject to the provisions of this section and in
accordance with applicable Law, any Lender may, in the ordinary course
of its commercial banking business, at any time sell to one or more
Persons (each a "PARTICIPANT") participating interests in its portion
of the Obligation. The selling Lender shall remain a "Lender" under
this Agreement (and the Participant shall not constitute a "Lender"
under this Agreement) and its obligations under this Agreement shall
remain unchanged. The selling Lender shall remain solely responsible
for the performance of its obligations under the Loan Papers and shall
remain the holder of its share of the Principal Debt for all purposes
under this Agreement. Borrower and Agent shall continue to deal solely
and directly with the selling Lender in connection with that Lender's
Rights and obligations under the Loan Papers. Participants have no
Rights under the Loan Papers, other than certain voting Rights as
provided below. Subject to the following, each Lender may obtain (on
behalf of its Participants) the benefits of SECTION 3 with respect to
all participations in its part of the Obligation outstanding from time
to time so long as Borrower is not obligated to pay any amount in
excess of the amount that would be due to that Lender under SECTION 3
calculated as though no participations have been made. No Lender may
sell any participating interest under which the Participant has any
Rights to approve any amendment, modification or waiver of any Loan
Paper, except to the extent the amendment, modification or waiver
extends the due date for payment of any principal, interest or fees due
under the Loan Papers, reduces the interest rate or the amount of
principal or fees applicable to the Obligation (except reductions
contemplated by this Agreement), or releases a material portion of the
Collateral, if any, for the Obligation (other than releases of
collateral permitted by SECTION 13.9(E)). However, if a Participant is
entitled to the benefits of SECTION 3 or a Lender grants Rights to its
Participants to approve amendments to or waivers of the Loan Papers
respecting the matters described in the previous sentence, then that
Lender must include a voting mechanism in the relevant participation
agreement whereby a majority of its portion of the Obligation (whether
held by it or participated) shall control the vote for all of that
Lender's portion of the Obligation. Except in the case of the sale of a
participating interest to another Lender, the relevant participation
agreement shall prohibit the Participant from transferring, pledging,
assigning, selling participations in, or otherwise encumbering its
portion of the Obligation.
(c) Subject to the provisions of this section, any Lender
may at any time, in the ordinary course of its commercial banking
business, (i) without the consent of Borrower or Agent, assign all or
any part of its Rights and obligations under the Loan Papers to any of
its Affiliates (each a "Purchaser") and (ii) if no Default exists, upon
the prior written consent of Borrower and Agent (which will not be
unreasonably withheld), assign to any other Person that is not a
business competitor of any Company (each of which is also a
"PURCHASER") a proportionate part (not less than the greater of (x)
$5,000,000 or (y) its remaining balance, and an integral multiple of
$1,000,000) of all or any part of its Rights and obligations under the
Loan Papers; provided, however, that such assigning Lender must retain
an obligation hereunder to fund at least $5,000,000 of the Facilities,
unless otherwise agreed by the Borrower and Agent (such consent not to
be unreasonably withheld). In each case, the Purchaser shall assume
those Rights and obligations under an assignment agreement
substantially in the form of the attached EXHIBIT G. Each assignment
under this SECTION 14.12 (C) shall include a ratable interest in the
assigning Lender's Rights and obligations under both Facility A and
Facility B. Upon (i) delivery of an executed copy of the assignment
agreement to Borrower and Agent and (ii) payment of a fee of $2,500
from the transferee to Agent, from and after the assignment's effective
date (which shall be after the date of delivery), the Purchaser shall
for all purposes be a Lender party to this Agreement and shall have all
the Rights and obligations of a Lender under this Agreement to the same
extent as if it were an original party to this Agreement with
commitments as set forth in the assignment agreement, and the
transferor Lender shall be released from its obligations under this
Agreement to a corresponding extent, and, except as provided in the
following sentence, no further consent or action by Borrower, Lenders
or Agent shall be required. Upon the consummation of any transfer to a
Purchaser under this CLAUSE (C), the then-existing SCHEDULE 1 shall
automatically be deemed to reflect the name, address, and Committed Sum
of such Purchaser, Agent shall deliver to Borrower and Lenders an
amended SCHEDULE 1 reflecting those changes, Borrower shall execute and
deliver to each of the transferor Lender and the Purchaser a Facility A
Note and a Facility B Note in the face amount of its respective
Committed Sum under Facility A and Facility B following transfer, and,
upon receipt of its new Facility A Note and Facility B Note, the
transferor Lender shall return to Borrower the Facility A Note and
Facility B Note previously delivered to it under this
<PAGE> 51
Agreement. A Purchaser is subject to all the provisions in this section
as if it were a Lender signatory to this Agreement as of the date of
this Agreement.
(d) Any Lender may at any time, without the consent of
Borrower or Agent, assign all or any part of its Rights under the Loan
Papers to a Federal Reserve Bank without releasing the transferor
Lender from its obligations thereunder.
(e) Notwithstanding any contrary provision in this
Agreement, a Lender may not sell or participate any of its interests
for a purchase price that, directly or indirectly, reflects a discount
from face value, without first offering the sale or participation to
the other Lenders on a Pro Rata basis (which must be accepted or
rejected within five (5) Business Days after the offer).
14.13 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. Each Company's obligations under the Loan Papers remain in full
force and effect until the Total Commitment is terminated and the Obligation is
paid in full (except for provisions under the Loan Papers which by their terms
expressly survive payment of the Obligation and termination of the Loan Papers).
If at any time any payment of the principal of or interest on any Note or any
other amount payable by Borrower or any other obligor on the Obligation under
any Loan Paper is rescinded or must be restored or returned upon the insolvency,
bankruptcy or reorganization of Borrower or otherwise, the obligations of each
Company under the Loan Papers with respect to that payment shall be reinstated
as though the payment had been due but not made at that time.
14.14 CONFIDENTIALITY. Borrower and Lenders agree to keep all
information concerning the structure and documentation of this Agreement
confidential, including without limitation all information of a confidential
nature received by them from Borrower pursuant to this Agreement; provided,
however, that such information may be disclosed: (a) to directors, officers,
employees, agents, representatives or outside counsel of Borrower or of the
Agent or any Lender or any Affiliate of any Lender; (b) to any auditor,
government official or examiner; (c) pursuant to any subpoena or other order of
any court or administrative agency or otherwise as may be required by applicable
law, rule or regulation; (d) to any other Person if reasonably incidental to the
administration of the credit facility provided herein; (e) in connection with
any litigation to which such Lender or any of its Affiliates may be a party; (f)
to the extent necessary in connection with the exercise of any remedy under this
Agreement or any other Loan Paper; (g) subject to provisions substantially
similar to those contained in this SECTION 14.14 to any actual or proposed
participant or assignee; or (h) to any assignee of or participant in, or
prospective assignee of or participant in, any Lender's Borrowings or its
Committed Sum or any part thereof under any credit agreement who, in each case
set forth in CLAUSES (A) through (H), agrees in writing to be bound by the terms
of this Section; and provided further, that no confidentiality obligation shall
attach to any information which (1) is or becomes publicly known, through no
wrongful act on the part of any Person who shall have received such information,
(2) is rightfully received by such Person from a third party, (3) is
independently developed by such Person, or (4) is explicitly approved for
release by Borrower.
14.15 ENTIRETY. THIS AGREEMENT AND THE OTHER WRITTEN LOAN PAPERS
(EACH AS AMENDED IN WRITING FROM TIME TO TIME) EXECUTED BY ANY COMPANY, ANY
LENDER OR AGENT REPRESENT THE FINAL AGREEMENT AMONG THE COMPANIES, LENDERS AND
AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 52
EXECUTED as of the day and year first mentioned.
MONRO MUFFLER BRAKE, INC.,
a New York corporation, as Borrower
By: /s/ Catherine D'Amico
--------------------------------------------
Catherine D'Amico, Senior Vice President
And Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Agent and a Lender
By: /s/ Philip M. Hendrix
--------------------------------------------
Philip M. Hendrix, Vice President
FLEET NATIONAL BANK,
as Syndication Agent and a Lender
By: /s/ Martin K. Birmingham
--------------------------------------------
Name: Martin K. Birmingham
--------------------------------------------
Title: Vice President
-----------------------------------------
MANUFACTURERS AND TRADERS TRUST COMPANY,
as a Lender
By: /s/ J. Theodore Smith
--------------------------------------------
Name: J. Theodore Smith
------------------------------------------
Title: Vice President
-----------------------------------------
<PAGE> 53
KEYBANK, NA,
as a Lender
By: /s/ Timothy Beers
------------------------------------------
Name: Timothy Beers
----------------------------------------
Title: Vice President
---------------------------------------
MARINE MIDLAND BANK,
as a Lender
By: /s/ Richard L. Ford
------------------------------------------
Name: Richard L. Ford
----------------------------------------
Title: Vice President
---------------------------------------
STATE STREET BANK & TRUST CO.,
as a Lender
By: /s/ David G. Case
------------------------------------------
Name: David G. Case
----------------------------------------
Title: Vice President
---------------------------------------
NATIONAL CITY BANK,
as a Lender
By: /s/ Joseph D. Robison
------------------------------------------
Name: Joseph D. Robison
----------------------------------------
Title: Vice President
---------------------------------------
USTRUST,
as a Lender
By: /s/ Daniel G. Eastman
------------------------------------------
Name: Eastman, D. G.
----------------------------------------
Title: Vice President
---------------------------------------
<PAGE> 1
EXHIBIT 10.2
================================================================================
$33,702,650
CREDIT AGREEMENT
Dated as of September 15, 1998
Among
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
as Borrower,
THE BANKS NAMED IN THIS CREDIT AGREEMENT
as Banks,
and
THE CHASE MANHATTAN BANK
as Administrative Agent
and
FLEET NATIONAL BANK
as Syndication Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS.......................................................................1
Section 1.1. Certain Defined Terms..................................................................1
Section 1.2. Computation of Time Periods...........................................................13
Section 1.3. Accounting Terms......................................................................13
Section 1.4. Types of Advances.....................................................................13
Section 1.5. Miscellaneous.........................................................................13
ARTICLE 2 THE ADVANCES..........................................................................................13
Section 2.1. Making Advances.......................................................................13
Section 2.2. Method of Borrowing...................................................................14
Section 2.3. Fees..................................................................................16
Section 2.4. Reduction of the Commitments..........................................................17
Section 2.5. Repayment.............................................................................17
Section 2.6. Interest..............................................................................17
Section 2.7. Prepayments...........................................................................18
Section 2.8. Breakage Costs........................................................................19
Section 2.9. Increased Costs.......................................................................19
Section 2.10. Payments and Computations.............................................................20
Section 2.11. Taxes.................................................................................21
Section 2.12. Sharing of Payments Etc...............................................................22
ARTICLE 3 CONDITIONS OF LENDING.................................................................................23
Section 3.1. Conditions Precedent to Initial Borrowing.............................................23
Section 3.2. Conditions Precedent to Each Borrowing................................................26
Section 3.3. Conditions Precedent for the Benefit of the Agent.....................................27
ARTICLE 4 REPRESENTATIONS AND WARRANTIES........................................................................27
Section 4.1. Partnership Existence; Subsidiaries...................................................27
Section 4.2. Partnership Power.....................................................................27
Section 4.3. Authorization and Approvals...........................................................27
Section 4.4. Enforceable Obligations...............................................................27
Section 4.5. Financials............................................................................28
Section 4.6. True and Complete Disclosure..........................................................28
Section 4.7. Litigation............................................................................28
Section 4.8. Use of Proceeds.......................................................................28
Section 4.9. Investment Company Act................................................................28
Section 4.10. Public Utility Holding Company Act....................................................28
Section 4.11. Taxes.................................................................................28
Section 4.12. Pension Plans.........................................................................29
Section 4.13. Condition of Property: Casualties.....................................................29
Section 4.14. Insurance.............................................................................29
Section 4.15. No Burdensome Restrictions; No Defaults...............................................29
Section 4.16. Environmental Condition...............................................................29
Section 4.17. Permits, Licenses, Etc................................................................29
Section 4.18. Principal Place of Business...........................................................30
Section 4.19. Government Requirements...............................................................30
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 4.20. Year 2000.............................................................................30
ARTICLE 5 AFFIRMATIVE COVENANTS.................................................................................30
Section 5.1. Compliance with Laws, Etc.............................................................30
Section 5.2. Maintenance of Insurance..............................................................31
Section 5.3. Preservation of Partnership Existence.................................................31
Section 5.4. Payment of Taxes, Etc.................................................................31
Section 5.5. Visitation Rights.....................................................................31
Section 5.6. Reporting Requirements................................................................31
Section 5.7. Maintenance of Property...............................................................33
Section 5.8. Performance of Lease Documents........................................................33
Section 5.9. Protection of Liens...................................................................33
Section 5.10. [Intentionally Omitted]...............................................................34
Section 5.11. Relief from Automatic Stay............................................................34
ARTICLE 6 NEGATIVE COVENANTS....................................................................................34
Section 6.1. Liens, Etc............................................................................34
Section 6.2. Debts, Guaranties and Other Obligations...............................................34
Section 6.3. Merger or Consolidation; Asset Sales..................................................34
Section 6.4. Investments...........................................................................35
Section 6.5. Affiliate Transactions................................................................35
Section 6.6. [Intentionally Omitted]...............................................................35
Section 6.7. Compliance with ERISA.................................................................35
Section 6.8. [Intentionally Omitted]. ............................................................35
Section 6.9. Lease Documents.......................................................................35
Section 6.10. Lines of Business.....................................................................36
ARTICLE 7 REMEDIES..............................................................................................36
Section 7.1. Events of Default.....................................................................36
Section 7.2. Optional Acceleration of Maturity.....................................................37
Section 7.3. Automatic Acceleration of Maturity....................................................38
Section 7.4. Non-exclusivity of Remedies...........................................................38
Section 7.5. Right of Set-off......................................................................38
Section 7.6. Management of Collateral..............................................................38
ARTICLE 8 THE AGENT.............................................................................................38
Section 8.1. Authorization and Action..............................................................38
Section 8.2. Agent's Reliance, Etc.................................................................39
Section 8.3. The Agent and Its Affiliates..........................................................39
Section 8.4. Bank Credit Decision..................................................................39
Section 8.5. Indemnification.......................................................................39
Section 8.6. Successor Agent.......................................................................40
ARTICLE 9 MISCELLANEOUS..........................................................................................40
Section 9.1. Amendments, Etc.......................................................................40
Section 9.2. Notices, Etc..........................................................................40
Section 9.3. No Waiver; Remedies...................................................................41
Section 9.4. Costs and Expenses....................................................................41
Section 9.5. Binding Effect........................................................................41
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 9.6. Bank Assignments and Participations...................................................42
Section 9.7. Indemnification.......................................................................43
Section 9.8. Execution in Counterparts.............................................................44
Section 9.9. Survival of Representations, etc......................................................44
Section 9.10. Severability..........................................................................44
Section 9.11. Business Loans........................................................................44
Section 9.12. Usury Not Intended....................................................................44
Section 9.13. Governing Law.........................................................................45
Section 9.14. No Recourse...........................................................................45
Section 9.15. Confidentiality.......................................................................45
Section 9.16. No Oral Acknowledgment................................................................46
</TABLE>
-iii-
<PAGE> 5
EXHIBITS AND SCHEDULES
- ----------------------
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Assignment of Leases and Rents
Exhibit C - Form of Guarantor Consent
Exhibit D-1 - Form of Guaranty
Exhibit D-2 - Form of Residual Guaranty
Exhibit E - Form of Lessee Consent
Exhibit F - Form of Deed of Trust
Exhibit G - Form of Promissory Note
Exhibit H - Form of Notice of Borrowing
Exhibit I - Form of Notice of Conversion or Continuation
Exhibit J - Form of Security Agreement
Exhibit K - Form of Subordination and Attornment Agreement
Exhibit L - Form of Borrower's Outside Counsel Opinion
Exhibit M - Form of Lessee's and Guarantor's Counsel Opinion
Exhibit N - Form of Agent's Counsel Opinion
Exhibit O - Form of Local Counsel Opinion
Exhibit P - Form of Compliance Certificate
Schedule 1 - List of Addresses for Banks and Commitments
-iv-
<PAGE> 6
CREDIT AGREEMENT
This Credit Agreement dated as of September 15, 1998 is among (a)
BRAZOS AUTOMOTIVE PROPERTIES, L.P., a Delaware limited partnership ("BORROWER");
(b) the Banks (as defined below); (c) THE CHASE MANHATTAN BANK, as Agent for the
Banks, and (d) FLEET NATIONAL BANK, as the Syndication Agent.
The Borrower, the Banks, the Agent and the Syndication Agent agree as
follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the term
"Borrower" shall have the meaning set forth above and the following terms shall
have the following meanings (unless otherwise indicated, such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"ABR" means, for any day, the higher of (a) Federal Funds Rate plus
fifty (50) basis points, or (b) Prime Rate.
"ABR ADVANCE" means an Advance based on the ABR as provided in SECTION
2.6(c).
"ACCEPTABLE SECURITY INTEREST" in any property means a Lien (a) which
exists in favor of the Agent for the benefit of the Banks, (b) which is superior
to all other Liens, other than Permitted Encumbrances, which are not Liens of
Record, (c) which secures the Obligations, and (d) which is perfected.
"ACQUISITION COST" means, for any Unit of Property, the sum of (a) the
outstanding Advances made pursuant to this Agreement with respect to such Unit
of Property, and (b) the outstanding advances of all capital contributions made
by the Borrower with respect to such Unit of Property.
"ADDITIONAL ADVANCE" has the meaning set forth in the Agreement for
Facilities Lease or the Agreement for Ground Lease, as applicable.
"ADJUSTED DEBT" means Funded Debt, plus the product of eight (8) times
Rental Payments.
"ADVANCE" means any advance by a Bank to the Borrower as part of a
Borrowing pursuant to this Agreement and refers to an ABR Advance and a LIBOR
Rate Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether as
general partner, through ownership of a Control Percentage of such Person or the
general partner of such Person, by contract or otherwise.
"AGENT" means The Chase Manhattan Bank, in its capacity as
administrative agent pursuant to ARTICLE 8 and any successor agent pursuant to
SECTION 8.6.
Page 1
<PAGE> 7
"AGREEMENT" means this Credit Agreement dated as of September 15, 1998
among the Borrower, the Banks, and the Agent, as it may be amended, amended and
restated, modified or supplemented from time to time in accordance with SECTION
9.1.
"AGREEMENT FOR FACILITIES LEASE" means the Agreement for Facilities
Lease dated as of September 15, 1998 between the Borrower and the Lessee, as it
may be restated, amended or supplemented from time to time in accordance with
its terms and this Agreement.
"AGREEMENT FOR GROUND LEASE" means the Agreement for Ground Lease dated
as of September 15, 1998 between the Borrower and the Lessee, as it may be
restated, amended or supplemented from time to time in accordance with its terms
and this Agreement.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of an ABR Advance and such Bank's
LIBOR Lending Office in the case of a LIBOR Rate Advance.
"APPLICABLE MARGIN" shall mean, at all times during the applicable
periods set forth below: (a) with respect to all LIBOR Rate Advances, the
applicable percentage set forth below in the column entitled "Applicable Margin
for LIBOR Rate Advances", (b) with respect to all ABR Advances, the applicable
percentage set forth below in the column entitled "Applicable Margin for ABR
Advances", and (c) with respect to the Commitment Fee, the applicable percentage
set forth below in the column entitled "Applicable Margin for Commitment Fee".
<TABLE>
<CAPTION>
============== ==================================== =================== =============== =================
Applicable
Applicable Applicable Margin
Margin Margin for Commitment
for LIBOR for ABR Fee
Period Advances Advances
- -------------- ------------------------------------ ------------------- --------------- -----------------
<S> <C> <C> <C> <C>
Level I: When the AD is less than 2.50x 87.5bp 0bp 20bp
- -------------- ------------------------------------ ------------------- --------------- -----------------
Level II: When the AD is greater than 2.50x 112.5bp 0bp 25bp
- -------------- ------------------------------------ ------------------- --------------- -----------------
Level III: When the AD is greater than 3.00x 137.5bp 12.5bp 30bp
- -------------- ------------------------------------ ------------------- --------------- -----------------
Level IV: When the AD is greater than 3.50x 162.5bp 37.5bp 37.5bp
- -------------- ------------------------------------ ------------------- --------------- -----------------
Level V: When the AD is greater than 4.00x 187.5bp 62.5bp 37.5bp
- -------------- ------------------------------------ ------------------- --------------- -----------------
Level VI: When the AD is greater than 4.50x 225bp 87.5bp 50bp
============== ==================================== =================== =============== =================
</TABLE>
Definition: "AD" is the abbreviation for Adjusted Debt/EBITDAR Ratio.
If equity or equity related securities of the Guarantor in the amount of
$25,000,000 are not in place within ninety (90) days after the Effective Date,
the Applicable Margin for LIBOR Borrowings and ABR Borrowings set forth above
shall increase by 12.5 basis points in every level as indicated in the table
above; if such equity or equity related securities are not in place within one
hundred eighty (180) days after the Effective Date, the Applicable Margin for
LIBOR Borrowings and ABR Borrowings set forth above shall increase by an
additional 12.5 basis points as indicated in the table above. Upon receipt of
the proceeds derived from the placement of equity or equity related securities
of the Guarantor in the amount of $25,000,000 and application of such proceeds
in accordance with Section 3.2(b) of the Chase Credit Agreement, the increase in
the Applicable Margin for LIBOR Borrowings and ABR Borrowings as set
Page 2
<PAGE> 8
forth in this paragraph will no longer be applicable and the Applicable Margin
set forth in the table above shall automatically be reinstated commencing on the
next Business Day following receipt of such prepayment.
Notwithstanding anything to the contrary above, commencing on the Effective Date
until six (6) months from the Effective Date, the Applicable Margin will be
calculated at Level V, as adjusted in accordance with the above paragraph with
respect to the equity or equity related securities. Commencing at the end of six
(6) months from the Effective Date, the Applicable Margin will be calculated
based on Adjusted Debt to EBITDAR Ratio as set forth in this Agreement.
Adjusted Debt and EBITDAR are calculated for the most recently-completed Four
Quarter Period and the ratio of Adjusted Debt to EBITDAR is calculated as of the
last day of such Four Quarter Period. The Applicable Margin, as adjusted to
reflect such calculations, shall become effective on the date of receipt by the
Agent of the Compliance Certificate applicable to such Four Quarter Period. If
Guarantor fails to timely furnish to Borrower and Agent the Current Financials
and any related Compliance Certificate or, if for some other reason, a new
Applicable Margin for a current period cannot be calculated, then the Applicable
Margin in effect on the last day of the last Four Quarter Period for which the
ratio of Adjusted Debt to EBITDAR was calculated shall remain in effect until a
new Applicable Margin can be calculated, which new Applicable Margin shall
become effective as provided in the immediately preceding sentence.
"APPRAISAL" shall mean, with respect to any Property, an appraisal to
be delivered in accordance with the terms of the applicable Lease Document, in
each case prepared by a reputable appraiser reasonably acceptable to the Agent,
which in the judgment of counsel to the Agent, complies with all of the
provisions of the Financial Institutions Reform, Recovery and Enforcement Act of
1989, as amended, the rules and regulations adopted pursuant thereto, and all
other applicable Legal Requirements.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee, and accepted by the Agent, in
substantially the form of the attached EXHIBIT "A".
"ASSIGNMENT OF LEASES" means an Assignment of Leases and Rents by the
Borrower to the Agent in substantially the form of the attached EXHIBIT "B" with
such modifications as are required by the Agent to provide an Acceptable
Security Interest in the Rents (as defined in such Assignment of Leases and
Rents).
"BANKRUPTCY CODE" means Title 11 of the United States Code, 11 U.S.C.,
Section 161 et. seq., as amended and in effect from time to time.
"BANKS" means the banks listed on the signature pages of this Agreement
and each Eligible Assignee that shall become a party to this Agreement pursuant
to SECTION 9.6.
"BORROWER'S PARTNERSHIP AGREEMENT" means that certain First Amended and
Restated Agreement of Limited Partnership of Borrower dated as of September 15,
1998, as amended, modified, restated or supplemented from time to time.
"BORROWING" means a borrowing consisting of one or more simultaneous
Advances of the same Type made by the Banks pursuant to SECTION 2.1(a),
converted or continued by the Banks pursuant to SECTION 2.2(b), or converted by
the Banks to Advances of a different Type pursuant to SECTION 2.2(c) or 2.7(d).
"bp" means basis points, each basis point being equal to 1/100th of one
percent (1%).
Page 3
<PAGE> 9
"BUSINESS DAY" means any day of the year other than a Saturday or
Sunday or any other day on which banks are not required or authorized to close
in New York, New York and, if the applicable Business Day relates to any LIBOR
Rate Advances, on which dealings are carried on by banks in the London interbank
market.
"CAPITALIZED LEASES" means, as applied to any Person, any lease of any
Property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on the balance
sheet of such Person.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, state and local analogs, and all rules
and regulations and requirements thereunder in each case as now or hereafter in
effect.
"CHASE CREDIT AGREEMENT" means that certain Credit Agreement dated as
of September 15, 1998 executed among Guarantor, Agent, and the other financial
institutions from time to time party thereto, as the same may have been amended
and in effect on the date hereof.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute and the regulations, rules, rulings, and interpretations
promulgated or adopted by the Internal Revenue Service thereunder (or any
successor thereto).
"COLLATERAL" means the Collateral (as defined in the Security
Agreement), the Rents (as defined in the Assignment of Leases), and the
Mortgaged Premises.
"COMMITMENT" as to any Bank has the meaning set forth in SECTION
2.1(a).
"COMMITMENT FEE" has the meaning set forth in SECTION 2.3(a).
"COMPANY" or "COMPANIES" means, at any time, Guarantor and each of its
Subsidiaries.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT "P".
"CONSOLIDATED SUBSIDIARY" means, at any date, any Subsidiary the
accounts of which, in accordance with GAAP, would be consolidated with those of
the Guarantor in its consolidated financial statements if such statements were
prepared as of such date.
"CONTROL PERCENTAGE" means, with respect to any Person (a) in the case
of a corporation, the percentage of the outstanding capital stock of such Person
having ordinary voting power which gives the direct or indirect holder of such
stock the power to elect a majority of the Board of Directors of such Person and
(b) in the case of a limited partnership, the percentage of the outstanding
limited partnership interests of such Person which gives the direct or indirect
holder of such limited partnership interests the power to remove the general
partner or partners of such Person or to take actions reserved for the limited
partners under the applicable limited partnership act.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"CORPORATE CREDIT AGREEMENT" means the Chase Credit Agreement as the
same may hereafter be amended, amended and restated, renewed, extended or
otherwise modified or supplemented from time to time, together with any credit
agreement or similar instrument, agreement or document executed from time to
time in respect of any
Page 4
<PAGE> 10
financing arrangement entered into to replace, or which is in substitution for,
the financing arrangement evidenced by the Chase Credit Agreement.
"CORPORATE CREDIT DOCUMENTS" means any and all notes, guarantees and
other loan documents executed pursuant to the Corporate Credit Agreement and any
document, instrument or other agreement entered in replacement or substitution
of such document or instrument.
"CREDIT DOCUMENTS" means (a) (i) this Agreement, (ii) the Notes, (iii)
the Residual Guaranty, (iv) the Security Documents, (v) the Lease Documents,
(vi) the Guarantor Consent, (vii) the Lessee Consent, and (viii) each other
agreement, instrument, certificate, or document executed at any time by and
between or by and among, as the case may be, any of the parties to any of the
foregoing documents in connection with this Agreement and (b) any restatements,
amendments, modifications, renewals, or extensions of any of the foregoing
documents.
"CURRENT FINANCIALS" means, at any time, the consolidated financial
statements of Guarantor and its Subsidiaries most recently delivered to Agent
under Sections 8.1(a) or 8.1(b) of the Chase Credit Agreement, as the case may
be.
"DEBT" for any Person, means (a) indebtedness of such Person for
borrowed money; (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) obligations of such Person to pay the
deferred purchase price of property or services; (d) obligations of such Person
as lessee under Capitalized Leases required to be capitalized under GAAP; (e)
reimbursement obligations in respect of bonds or letters of credit; (f)
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) of such Person to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (e) above; and (g) indebtedness or obligations of others of the kinds
referred to in clauses (a) through (f) secured by any Lien on or in respect of
any Property of such Person whether or not assumed by such Person; provided,
however, that all trade accounts payable and accrued expenses incurred in the
ordinary course of business of such Person and not overdue shall be excluded
from the foregoing.
"DEBTOR RELIEF LAW" means the Bankruptcy Code and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments or similar Laws
from time to time in effect affecting the rights of creditors generally.
"DEFAULT" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived, become
an Event of Default.
"DEFAULT RATE" means a rate per annum equal at all times to the lesser
of (a) (i) for the principal of all Advances, the applicable interest rate for
such Advances plus two percent (2%) or (ii) the then-existing ABR plus two
percent (2%) of all fees, interest and other amounts due hereunder and (b) the
Maximum Rate.
"DOLLAR EQUIVALENT" means for all purposes of this Agreement, the
equivalent in another currency of an amount in Dollars to be determined by
reference to the rate of exchange quoted by The Chase Manhattan Bank at 11:00
a.m. (New York, New York time) on the date of determination, for the spot
purchase in the foreign exchange market of such amount of Dollars with such
other currency.
"DOLLARS" and "$" means lawful money of the United States of America
and, in relation to any amount to be advanced or paid hereunder, funds having
same day value.
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"DOMESTIC LENDING OFFICE" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
"SCHEDULE 1" or such other office of such Bank as such Bank may from time to
time specify to the Borrower and the Agent.
"EBITDAR" means, as determined, on a rolling twelve (12) month basis
and in respect of any Person the sum of (i) the Net Income of such Person, plus
(ii) the Interest Expense of such Person for such period as determined in
accordance with GAAP and as such item is reported on such Person's financial
statements, (iii) the income tax expense of such Person for such period, (iv)
the amount reported as the depreciation of the assets of such Person for such
period, computed in accordance with GAAP, and as such item is used in the
computation of such Person's Net Income for such period, (v) the amount reported
as the amortization of intangibles for such Person for such period, computed in
accordance with GAAP, and as such item is used in the computation of such
Person's Net Income for such period, and (vi) Rental Payments.
"EFFECTIVE DATE" means the date on which the initial Borrowing is made.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the
laws of the United States, or any State thereof, and having primary capital of
not less than $500,000,000, and (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development and having primary capital (or its equivalent) of
not less than $500,000,000 (or its Dollar Equivalent); and provided further that
an assignee which would otherwise be an Eligible Assignee hereunder is not an
Eligible Assignee unless either such assignee is a U.S. resident for U.S.
tax purposes or such assignee complies with SECTION 2.11(e) hereof.
"ENVIRONMENT" or "ENVIRONMENTAL" have the meanings set forth in 42
U.S.C. Sec. 9601(8) (1988) as amended.
"ENVIRONMENTAL CLAIM" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including material claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
"ENVIRONMENTAL LAW" means any Law that relates to the pollution or
protection of the Environment or to Hazardous Substances.
"ENVIRONMENTAL PERMIT" means any permit, license, order, approval or
other authorization under Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and related rules and regulations.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.
"EVENTS OF DEFAULT" has the meaning specified in SECTION 7.1.
"FACILITIES LEASE" means the Facilities Lease Agreement dated as of
September 15, 1998 between the Borrower and the Lessee, as it may be amended,
amended and restated, modified or supplemented from time to time in accordance
with its terms and this Agreement or re-executed to comply with any state's law.
"FACILITY" has the meaning set forth in the Facilities Lease.
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"FEDERAL FUNDS RATE" means, on any day, the weighted average (rounded
upwards, if necessary, to the nearest 0.01%) equal to the rates on overnight
federal funds transactions with member banks of the Federal Reserve System
arranged by federal funds brokers as published by the Federal Reserve Bank of
New York on the next successive Business Day; provided, however, that (i) if
such day is not a Business Day, the Federal Funds Rate for such day shall be the
rate for such transactions on the next preceding Business Day as published on
the next successive Business Day or, (ii) if those rates are not published for
any Business Day, the Federal Fund Rate shall be the average of the quotations
at approximately 10:00 a.m. on such Business Day received by Agent from three
federal funds brokers of recognized standing selected by Agent in its reasonable
discretion.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any of its successors.
"FINANCIAL STATEMENTS" means the (a) balance sheet of Borrower dated as
of August 1, 1998, copies of which have been delivered to the Agent and the
Banks and (b) audited consolidated financial statements of the financial
condition of Guarantor and its Subsidiaries dated March 31, 1998, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the Guarantor's and its Subsidiaries' fiscal year ended on that date.
"FOUR QUARTER PERIOD" means a period of four full consecutive fiscal
quarter periods, taken together as one accounting period; provided, however, for
the (a) first fiscal quarter period following the Effective Date and ending on
December 31, 1998, the income statement times four (4) annualized shall be
utilized; (b) second fiscal quarter period following the Effective Date and
ending March 31, 1999, the six (6) months income statement times two (2)
annualized shall be utilized; and (c) third fiscal quarter period following the
Effective Date and ending June 30, 1999, the nine (9) months income statement
divided by three (3) then multiplied times four (4) annualized shall be
utilized.
"FUNDED DEBT" means, when determined, on a rolling twelve (12) month
basis, calculated using the month-end balance for each month on a consolidated
basis for the Companies in accordance with GAAP: (a) indebtedness of such Person
for borrowed money; (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, and (c) obligations of such
Person as lessee under Capitalized Leases; excluding notes generated in the
ordinary course of business payable within one (1) year not to exceed
$1,000,000, trade payables and accrued expenses; provided however, the
calculation for the period commencing with the Closing Date and ending twelve
months thereafter, shall be based on the average of the month-end balance for
the months elapsed since the Closing Date.
"GAAP" means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
Financial Accounting Standards Board that are applicable from time to time,
applied on a basis consistent with those used in preparation of the audited
consolidated financial statements referred to in SECTION 5.6(G) (except for
changes concurred in by Guarantor's accountants).
"GENERAL PARTNER" means Brazos Automotive Properties Management, Inc.,
a Delaware corporation, the general partner of the Borrower.
"GOVERNMENTAL AUTHORITY" means any foreign governmental authority, the
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
any Bank, the Borrower, the Guarantor, the Lessee, or any of their respective
properties.
"GOVERNMENTAL PROCEEDINGS" means any action or proceedings by or before
any Governmental Authority, including, without limitation, the promulgation,
enactment or entry of any Legal Requirement.
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"GOVERNMENTAL REQUIREMENTS" shall mean all statutes, laws, ordinances,
orders, writs, injunctions, decrees, rules and regulations of any Governmental
Authority applicable to the Borrower, the Property or the Facility.
"GROUND" means the Property as set forth in the Ground Lease.
"GROUND LEASE" means the Ground Lease Agreement dated as of September
15, 1998 between the Borrower and the Lessee, as it may be amended, amended and
restated, modified or supplemented from time to time in accordance with its
terms and this Agreement.
"GUARANTOR" means Monro Muffler Brake, Inc., a New York corporation.
"GUARANTOR CONSENT" means the Consent and Agreement dated as of
September 15, 1998 among the Guarantor, the Borrower, and the Agent
substantially in the form of the attached EXHIBIT "C", as it may be amended,
amended and restated, modified or supplemented from time to time in accordance
with its terms and this Agreement.
"GUARANTY" means the Guaranty dated as of September 15, 1998 in the
form of the attached EXHIBIT "D-1" executed by Guarantor as it may be amended,
amended and restated, modified or supplemented from time to time in accordance
with its terms and this Agreement.
"HAZARDOUS SUBSTANCE" means the substances identified as such pursuant
to CERCLA and those substances regulated under any other Environmental Law,
including without limitation, pollutants, contaminants, petroleum, petroleum
products, radionuclides, and radioactive materials.
"HAZARDOUS WASTE" means the substances or contaminants regulated as
such pursuant to any Environmental Law.
"INITIAL ADVANCE" has the meaning set forth in the Agreement for
Facilities Lease or the Agreement for Ground Lease, as applicable.
"INTEREST EXPENSE" means, in respect of a Person, for any Four Quarter
Period, all interest paid or accrued and amortization of debt discount with
respect to all Debt of such Person for such period (after giving effect to the
net cost associated with all interest rate swap agreements, interest rate cap
agreements, interest rate collar agreements, or other financial arrangements
designed to protect such Person against fluctuations in interest rates) and
after giving credit for interest income and construction period interest income.
"INTEREST PERIOD" means, for each Advance comprising part of the same
Borrowing, the period commencing on the date of such Advance or the date of the
conversion of any other Type of Advance into such an Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and SECTION 2.2 and, thereafter, each subsequent interest period applicable to a
continuation of such Advance commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and SECTION 2.2. The duration of
each such Interest Period shall be in the case of a LIBOR Rate Advance, one (1),
two (2), three (3), or six (6) months (or such other intermediate period to
which the Banks, in their sole discretion may agree), in each case as the
Borrower may select, upon notice received by the Agent not later than 11:00 a.m.
(New York, New York time) on in the case of a LIBOR Rate Advance, the third
Business Day prior to the first day of such Interest Period selected; provided,
however, that:
(a) the Borrower may not select any Interest Period for any Advance
which ends after the Maturity Date;
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(b) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration;
(c) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day; provided that, in the
case of a LIBOR Rate Advance, if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding Business Day;
(d) any Interest Period for a LIBOR Rate Advance which begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month in which it
would have ended if there were a numerically corresponding day in such calendar
month; and
(e) if the Borrower fails to select an Interest Period in the case of a
LIBOR Rate Advance, the Interest Period for such Advance shall be one (1) month.
"LEASE DOCUMENTS" means the Facilities Lease, the Ground Lease, the
Agreement for Ground Lease, the Agreement for Facilities Lease, the Facility
Leasing Record (as defined in the Facilities Lease), and the Property Leasing
Record (as defined in the Ground Lease), and all documents and instruments
executed by and between or by and among, as the case may be, the Borrower, the
Lessee and the Guarantor in connection therewith, including without limitation,
the Guaranty.
"LEASING RECORDS" means the Property Leasing Record as defined in the
Ground Lease and the Facility Leasing Record as defined in the Facilities Lease.
"LEGAL REQUIREMENT" means any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or official interpretation of
any of the foregoing available to the public) of, and the terms of any license
or permit issued by, any Governmental Authority, including, but not limited to,
Regulations T, U and X.
"LESSEE" means Monro Leasing, LLC, a Delaware limited liability
company.
"LESSEE CONSENT" means the Consent and Agreement dated as of September
15, 1998 among the Lessee, the Borrower, and the Agent in the form of the
attached EXHIBIT "E", as it may be amended or supplemented from time to time in
accordance with its terms and this Agreement.
"LIBOR LENDING OFFICE" means, with respect to any Bank, the office of
such Bank specified as its "LIBOR Lending Office" opposite its name on SCHEDULE
1 (or, if no such office is specified, its Domestic Lending Office) or such
other office of such Bank as such Bank may from time to time specify to the
Borrower and the Agent.
"LIBOR RATE" means, for any LIBOR Rate Advance, for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Rate
Advance for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100th of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one (1) rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100th of 1%).
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"LIBOR RATE ADVANCE" means an Advance which bears interest as provided
in SECTION 2.6(a).
"LIBOR RESERVE PERCENTAGE" of any Bank for the Interest Period for any
LIBOR Rate Advance means the reserve percentage applicable during such Interest
Period (or if more than one such percentage shall be so applicable, the daily
average of such percentages for those days in such Interest Period during which
any such percentage shall be so applicable) under regulations issued from time
to time by the Federal Reserve Board for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Bank with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities having a term equal
to such Interest Period.
"LIEN" means any mortgage, lien, pledge, charge, deed of trust,
security interest, encumbrance or other type of preferential arrangement to
secure the payment of any obligation of any Person, whether arising by contract,
operation of law or otherwise (including, without limitation, the interest of a
vendor or lessor under any conditional sale agreement, Capitalized Lease or
other title retention agreement).
"LIENS OF RECORD" has the meaning set forth in the Facilities Lease and
the Ground Lease.
"MAJORITY BANKS" means, at any time, Banks holding at least sixty-six
and two-thirds percent (66-2/3%) of the then aggregate unpaid principal amount
of the Notes held by the Banks at such time, or, if no such principal amount is
then outstanding, Banks having at least sixty-six and two-thirds percent
(66-2/3%) of the aggregate amount of the Commitments at such time.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the
business, financial condition, or results of operations of (i) the Borrower
since the Effective Date, (ii) the Lessee since the date of the Financial
Statements (referred to in clause (b) of the definition of such term), or (iii)
the Guarantor since the date of the Financial Statements (referred to in clause
(b) of the definition of such term) of the Guarantor, or (b) the occurrence and
continuance of any event or circumstance which could reasonably be expected to
have a material adverse effect on the Borrower's ability to perform its
obligations under this Agreement, any Note or any other Credit Document to which
it is a party or on the Lessee's or the Guarantor's ability to perform their
respective obligations under the Corporate Credit Documents, any Credit Document
to which they are a party.
"MATURITY DATE" means the earlier of (a) September 15, 2003 or (b) the
acceleration of the Obligations pursuant to ARTICLE 7.
"MAXIMUM RATE" means the maximum nonusurious interest rate under
applicable law.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means (a) for any Property in which the Borrower has a fee
interest, a Deed of Trust, Security Agreement, Assignment of Rents and Fixture
Filing by the Borrower to the trustee named therein for the Agent's and the
Banks' benefit substantially in the form of the attached EXHIBIT "F" and (b) for
any Property in which the Borrower has a leasehold interest and for each other
state in which a Mortgage is required pursuant to this Agreement, either a Deed
of Trust, Security Agreement, Assignment of Rents, and Fixture Filing by the
Borrower to the trustee named therein for the Agent's and the Banks' benefit or
a Mortgage, Security Agreement, Assignment of Rents and Fixture Filing by the
Borrower to the Agent in substantially the form of EXHIBIT "F", but with respect
to Property located outside of the State of New York with such modifications as
are required by the Agent and local counsel under applicable law to provide an
Acceptable Security Interest in the Property encumbered thereby.
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"MORTGAGED PREMISES" means, collectively, all of the Property made
subject to the Mortgages and shall include each Property which is subject to a
Ground Lease or a Facilities Lease.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a) (3) of ERISA, to which the Borrower or any ERISA Affiliate makes, is
making, or is obligated to make contributions or, during the preceding three (3)
calendar years, has made, or been obligated to make, contributions.
"NET INCOME" means, in respect of a Person, the net income of such
Person computed in accordance with GAAP and as such item is reported from time
to time on such Person's statement of income and retained earnings (or similar
statement) (after deduction for payment of all taxes).
"NON U.S. LENDER" is defined in SECTION 2.11(e).
"NOTE" means, collectively, the promissory notes of the Borrower
payable to the order of a Bank, in substantially the form of the attached
EXHIBIT "G", evidencing indebtedness of the Borrower to such Bank resulting from
Advances owing to such Bank.
"NOTICE OF BORROWING" means a notice of borrowing in the form of the
attached EXHIBIT "H" signed by a Responsible Officer of the General Partner of
the Borrower.
"NOTICE OF CONVERSION OR CONTINUATION" means a notice of conversion or
continuation in the form of the attached EXHIBIT "I" signed by a Responsible
Officer of the General Partner of the Borrower.
"OBLIGATIONS" means all Advances and other amounts payable by the
Borrower to the Agent or the Banks under any of the Credit Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its principal functions under ERISA.
"PERMITTED ENCUMBRANCES" has the meaning set forth in the Ground Lease.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof, or any trustee, receiver, custodian or similar official.
"PLAN" means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Borrower or any member of the Controlled Group
and covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code.
"PRIME RATE" means, for any day, the rate of interest announced
publicly from time to time by Chase, after taking into account such factors as
Agent shall in its sole discretion deem appropriate, as its prime rate in effect
at its principal office in New York, New York automatically fluctuating upward
and downward with and at the time specified in each such announcement without
special notice to Borrower or any other Person. However, Agent's prime rate may
(i) be one of several interest rates, (ii) serve as a basis upon which effective
rates of interest are from time to time calculated for loans referring to the
prime rate, and (iii) not be Agent's lowest lending interest rate. Agent may
from time to time make various loans at rates of interest having no relationship
to such prime rate.
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"PROPERTY" means any property or assets (whether real, personal, or
mixed, tangible or intangible) of the Borrower leased or subleased or purported
to be leased or subleased to the Lessee under the Lease Documents including, but
not limited to, the Ground and the Facility.
"PRO RATA SHARE" means, with respect to any Bank, either (a) the ratio
(expressed as a percentage) of such Bank's Commitment at such time to the
aggregate Commitments at such time or (b) if the Commitments have been
terminated, the ratio (expressed as a percentage) of such Bank's aggregate
outstanding Advances at such time to the aggregate outstanding Advances of all
the Banks at such time.
"RECONCILIATION ADVANCE" has the meaning set forth in the Agreement for
Facilities Lease or the Agreement for Ground Lease, as applicable.
"REGISTER" has the meaning set forth in SECTION 9.6(c).
"REGULATION T" means Regulation T of the Federal Reserve Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"REGULATION U" means Regulation U of the Federal Reserve Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"REGULATION X" means Regulation X of the Federal Reserve Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"RELEASE" shall have the meaning set forth in CERCLA or under any other
Environmental Law.
"RENTAL PAYMENTS" means, as determined, on a rolling twelve month basis
ending on the last day of the accounting period covered by the consolidated
financial statements of Guarantor and its Subsidiaries, and delivered pursuant
to this Agreement, the dollar amount of the fixed payments which Guarantor or
its Subsidiaries are required to make by the terms of any lease to its landlords
during such period; (a) excluding, however (i) rentals under Capitalized Leases,
and (ii) maintenance, repairs, taxes and other similar charges included in such
payments and (b) less (x) rental income and (y) amortization of gains on
sale-leasebacks, such amortization not to exceed $1,000,000 for purposes hereof;
provided however, the calculation for the period commencing with the Closing
Date and ending twelve months thereafter, shall be based on (1) the Four Quarter
Period for all lease or ground lease payments which Guarantor or its
Subsidiaries are required to make to Borrower as lessor under any Lease
Document, and (2) the average of all lease or ground lease payments which
Guarantor or its Subsidiaries are required to make in connection with properties
acquired under the APA as that term is defined in the Corporate Credit
Documents.
"REPLACEMENT BANK" has the meaning set forth in SECTION 2.9(c).
"RESIDUAL GUARANTY" means the Residual Guaranty dated as of even date
herewith in the form of the attached EXHIBIT "D-2" executed by Guarantor, as it
may be amended, amended and restated, modified or supplemented from time to time
in accordance with its terms and this Agreement.
"RESPONSE" shall have the meaning set forth in CERCLA or under any
other Environmental Law.
"RESPONSIBLE OFFICER" means the President, the Treasurer, any Executive
Vice President, or any Senior Vice President, whose name appears on a
certificate of incumbency of such Person delivered in accordance with SECTION
3.1 or on a Certificate of Compliance delivered by the Guarantor in accordance
with SECTION 5.6(g) and as such certificate may be amended or supplemented from
time to time.
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"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"SECURITY AGREEMENT" means the Security Agreement dated as of even date
herewith by and between the Borrower and the Agent, substantially in the form of
the attached EXHIBIT "J", as it may be amended or supplemented from time to time
in accordance with this Agreement.
"SECURITY DOCUMENTS" means (a) the Mortgages, (b) the Security
Agreement, (c) the Assignments of Leases, (d) the Subordination Agreements, (e)
each other agreement, instrument, or document executed at any time in connection
with the Security Agreement, the Mortgages, the Assignments of Leases or the
Subordination Agreements, and (f) each other agreement, instrument or document
executed at any time to secure the Obligations, including all financing
statements.
"SUBORDINATION AGREEMENT" means a Subordination, Non-Disturbance and
Attornment Agreement between the Lessee and the Agent in substantially the form
of the attached EXHIBIT "K" with such modifications as are required by the Agent
and local counsel under applicable state or municipal law.
"SUBSIDIARY" of a Person means any corporation of which more than 50%
of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether
at such time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by such Person, by such Person and one or
more Subsidiaries of such Person, or by one or more Subsidiaries of such Person.
"SYNDICATION AGENT" means Fleet National Bank, and its successors or
successors as syndication agent under this Agreement.
"SURVEY" shall have the meaning set forth in SECTION 3.1(a)(ii)(4).
"TAXES" shall have the meaning set forth in SECTION 2.11.
"TERMINATION DATE" means the earlier of (a) September 30, 1998 or (b)
the acceleration of the Obligations pursuant to ARTICLE 7.
"TITLE POLICY" shall have the meaning set forth in SECTION
3.1(a)(ii)(3).
"TRUST FUND," or "SUPERFUND" means the Hazardous Substance Response
Trust Fund, established pursuant to 42 U.S.C. Sec. 9631 (1988) and the
Post-Closure Liability Trust Fund, established pursuant to 42 U.S.C. Sec. 9641
(1988), which statutory provisions have been amended or repealed by the
Superfund Amendments and Reauthorization Act of 1986, and the "Fund," "Trust
Fund," or "Superfund" that are now maintained pursuant to Sec. 9507 of the Code.
"TYPE" has the meaning set forth in SECTION 1.4.
"UNIT OF PROPERTY" means the real property, buildings, site
improvements and related equipment comprising a Facility and the related Ground.
Section 1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
Section 1.3. ACCOUNTING TERMS. Unless otherwise stated, (a) GAAP
determines all accounting and financial terms and compliance with financial
covenants, and (b) all accounting principles applied in a current period
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must be consistent in all material respects with those applied during the
preceding comparable period, unless (i) the Borrower or the Guarantor, as
applicable, shall have objected in writing to determining such compliance on
such basis within ten (10) days of delivery to the Agent of the financial
statements relating to such period, or (ii) the Majority Banks shall so object
in writing within thirty (30) days after receipt of such financial statements,
in either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 8.1 of the
Chase Credit Agreement shall mean the Current Financials).
Section 1.4. TYPES OF ADVANCES. Advances are distinguished by "Type".
The "Type" of an Advance refers to the determination whether such Advance is a
LIBOR Rate Advance, or an ABR Advance, each of which constitutes a Type.
Section 1.5. MISCELLANEOUS. Article, Section, Schedule and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified.
ARTICLE 2
THE ADVANCES
Section 2.1. MAKING ADVANCES. Each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to make Advances to the Borrower
from time to time on any Business Day from the date of this Agreement until the
Termination Date, in an aggregate amount not to exceed at any time the amount
opposite such Bank's name and address on SCHEDULE 1 of its Commitment (or if
such Bank has entered into any Assignment and Acceptance, set forth for such
Bank as its Commitment in the Register maintained by the Agent pursuant to
SECTION 9.6(c)), as such amount may be reduced pursuant to SECTION 2.4 (such
Bank's "COMMITMENT"). Each Borrowing shall be in an aggregate amount not less
than $5,000,000 and shall consist of Advances of the same Type made on the same
day by the Banks ratably according to their respective Commitments. The Borrower
may not reborrow any Advances that are prepaid or repaid. Neither the conversion
of all or part of one Type of an Advance to another Type of Advance, nor the
continuation of any Advance shall constitute or be deemed to constitute a
prepayment or a repayment of all or a portion of such Advance. The amount of
each Advance with respect to any Unit of Property shall not exceed ninety-seven
percent (97%) of the Acquisition Cost related to such Advance.
Section 2.2. METHOD OF BORROWING.
(a) Notice.
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(i) Each Borrowing shall be made pursuant to a Notice of
Borrowing given to the Agent not later than 12:00 noon (New York, New
York time) by telecopier or telex transmission (promptly confirmed by
"hard copy") on the third Business Day before (in the case of a LIBOR
Rate Advance), or 11:00 a.m. (in the case of an ABR Advance) on the
date of the proposed Borrowing by the Borrower. The Agent shall give to
each Bank prompt notice of such proposed Borrowing.
(ii) Each Notice of Borrowing shall be by telecopier or telex,
confirmed promptly by "hard copy" specifying the requested (A) date of
such Borrowing, which shall be a Business Day, (B) Type of Advance
comprising such Borrowing, (C) aggregate amount of such Borrowing, and
(D) if such Borrowing is to be comprised of LIBOR Rate Advances, the
Interest Period for each such Advance. In the case of a proposed
Borrowing comprised of LIBOR Rate Advances, the Agent shall promptly
notify each Bank of the applicable interest rate under SECTION 2.6(a).
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(iii) In addition, for each Advance, the Borrower shall notify
the Agent in writing as to (A) whether such Advance is to be used for
an Initial Advance, an Additional Advance, or a Reconciliation Advance
pursuant to the Agreement for Ground Lease or the Agreement for
Facilities Lease and (B) the Property or Properties made subject to the
Agreement for Ground Lease or Agreement for Facilities Lease to which
such Advance is attributable and the amount of all Advances
attributable to each such Property made to date including the most
current Advance.
(iv) Each Bank shall, before 2:00 p.m. (New York, New York
time) on the date of such Borrowing, make available for the account of
its Applicable Lending Office to the Agent at its address referred to
in SECTION 9.2, or such other location as the Agent may specify by
notice to the Banks, in same day funds, such Bank's Pro Rata Share of
such Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in ARTICLE 3, the
Agent will make such funds available to the Borrower at the Borrower's
account no. 323522092 at The Chase Manhattan Bank in New York, New York
by no later than the close of business on the Borrowing Date specified
in the relevant Notice of Borrowing.
(b) CONVERSIONS AND CONTINUATIONS. In order to elect to convert or
continue an Advance under this SECTION 2.2, the Borrower shall deliver an
irrevocable Notice of Conversion or Continuation to the Agent at the Agent's
office no later than 12:00 noon (New York, New York time) (i) at least three (3)
Business Days in advance of the proposed date of a conversion to, or a
continuation of, a LIBOR Rate Advance (which proposed date shall be on or about
the first or last Business Day of a month), and (ii) 11:00 a.m. on the proposed
date of a conversion to, or a continuation of, an ABR Advance. Each such Notice
of Conversion or Continuation shall be in writing and may be sent by telex or
telecopier transmission (promptly confirmed by "hard copy") specifying (i) the
requested conversion or continuation date (which shall be a Business Day), (ii)
the amount and Type of the Advance to be converted or continued, (iii) whether a
conversion or a continuation is requested, and (iv) the requested Interest
Period. The conversion of a LIBOR Rate Advance to a new Interest Period or to an
Advance of another Type or the continuation of a LIBOR Rate Advance may be made
only on the last day of the Interest Period for such LIBOR Rate Advance.
Promptly after receipt of a Notice of Conversion or Continuation under this
SECTION 2.2(b), the Agent shall provide each Bank with a copy thereof and notify
each Bank of the applicable interest rate under SECTION 2.6.
(c) CERTAIN LIMITATIONS. Notwithstanding anything in paragraphs (a) and
(b) above:
(i) at no time shall there be more than four (4) Interest
Periods applicable to outstanding LIBOR Rate Advances, except as
provided in this Agreement;
(ii) if any Bank shall, at least one Business Day before the
date of any requested Borrowing, notify the Agent that the introduction
of, or any change in or in the interpretation of, any law or regulation
after the Effective Date makes it unlawful, or that any central bank or
other Governmental Authority asserts after the Effective Date that it
is unlawful, for such Bank or its LIBOR Lending Office to perform its
obligations under this Agreement to make LIBOR Rate Advances or to fund
or maintain LIBOR Rate Advances, the right of the Borrower to select
LIBOR Rate Advances for such Borrowing or for any subsequent Borrowing
shall be suspended until such Bank shall notify the Agent that the
circumstances causing such suspension no longer exist, and until such
time each Advance comprising such Borrowing shall be an ABR Advance;
(iii) if the Agent is unable to determine the LIBOR Rate for
LIBOR Rate Advances comprising any requested Borrowing, the Agent shall
promptly notify the Borrower and the Banks and thereafter the right of
the Borrower to select LIBOR Rate Advances for such Borrowing or for
any subsequent Borrowing shall be suspended until the Agent shall
notify the Borrower and the Banks that the circumstances causing
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such suspension no longer exist, and until such time each Advance
comprising such Borrowing shall be an ABR Advance;
(iv) if the Majority Banks shall, at least one (1) Business
Day before the date of any requested Borrowing, notify the Agent and
the Borrower that the LIBOR Rate for LIBOR Rate Advances comprising
such Borrowing will not adequately reflect the cost to such Banks of
making or funding their respective LIBOR Rate Advances, as the case may
be, for such Borrowing, the right of the Borrower to select LIBOR Rate
Advances for such Borrowing or for any subsequent Borrowing shall be
suspended until the Agent shall notify the Borrower and the Banks that
the circumstances causing such suspension no longer exist, and each
Advance comprising such Borrowing shall be an ABR Advance;
(v) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any LIBOR Rate Advances in
accordance with the provisions contained in the definition of "Interest
Period" in SECTION 1.1 and paragraph (b) above, the Agent will
forthwith so notify the Borrower and the Banks, and such Advances, (A)
if they are new Advances, will be made available to the Borrower on the
date of such Borrowing as LIBOR Rate Advances with a one-month Interest
Period and (B) if they are existing Advances, shall convert into LIBOR
Rate Advances with a one-month Interest Period; and
(vi) if an Event of Default has occurred and is continuing,
the Borrower may not select the conversion to or the continuation of a
LIBOR Rate Advance and each LIBOR Rate Advance shall convert to an ABR
Advance on the last day of the Interest Period therefor.
Before giving any notice to the Agent under CLAUSE (ii) of SECTION
2.2(c), the affected Bank shall designate a different LIBOR Lending Office if
such designation will avoid the need for giving such notice or making such
demand and will not, in the judgment of the Bank, be illegal or otherwise
disadvantageous to the Bank.
(d) NOTICES IRREVOCABLE. Each Notice of Borrowing and Notice of
Conversion or Continuation shall be irrevocable and binding on the Borrower. In
the case of any Borrowing which the related Notice of Borrowing specifies is to
be comprised of LIBOR Rate Advances, the Borrower shall indemnify each Bank
against any loss and reasonable out-of-pocket cost or expense incurred by such
Bank as a result of Borrower's failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in ARTICLE 3, including, without limitation, any loss
(including any loss of anticipated profits) and reasonable cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund the Advance to be made by such Bank as part of
such Borrowing when such Advance, as a result of such failure, is not made on
such date. A certificate as to such amounts submitted to the Borrower by such
Bank shall be conclusive and binding for all purposes, absent error.
(e) AGENT RELIANCE. Unless the Agent shall have received notice from a
Bank before the date of any Borrowing that such Bank will not make available to
the Agent such Bank's Pro Rata Share of such Borrowing, the Agent may assume
that such Bank has made its Pro Rata Share of such Borrowing available to the
Agent on the date of such Borrowing in accordance with paragraph (A) of this
SECTION 2.2 and the Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Bank shall not have so made its Pro Rata Share of such Borrowing available
to the Agent, such Bank agrees to immediately pay to the Agent on demand such
corresponding amount, together with interest on such amount, for each day from
the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at the Federal Funds Rate for such day. If such
Bank shall pay to the Agent such corresponding amount and interest as provided
above, such corresponding amount so paid shall constitute such Bank's Advance as
part of such Borrowing for purposes of this Agreement even though not made on
the same day as the other Advances comprising such Borrowing.
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(f) BANK OBLIGATIONS SEVERAL. The failure of any Bank to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Bank of its obligation, if any, to make its Advance on the date of such
Borrowing. No Bank shall be responsible for the failure of any other Bank to
make the Advance to be made by such other Bank on the date of any Borrowing.
(g) NOTES. The indebtedness of the Borrower to each Bank resulting from
Advances owing to such Bank shall be evidenced by the Note of the Borrower
payable to the order of such Bank.
Section 2.3. FEES.
(a) COMMITMENT FEE. Borrower shall pay to the Agent, for the account of
each Bank a commitment fee equal to the Applicable Margin for the Commitment Fee
times the average daily amount by which such Bank's Commitment exceeds the sum
of such Bank's outstanding Advances ("COMMITMENT FEE"). The Commitment Fee under
the Commitments shall accrue from the Effective Date to but excluding the
Maturity Date and shall be payable quarterly in arrears on the last day of each
quarter and on the Maturity Date. The Commitment Fee shall be calculated
quarterly in arrears; if there is any change in the Applicable Margin during any
quarter, the average daily amount shall be computed and multiplied by the
Applicable Margin separately for each period that such Applicable Margin was in
effect during such quarter.
(b) TREATMENT OF FEES. The fees described in this SECTION 2.3 (i) are
not compensation for the use, detention, or forbearance of money, (ii) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this Agreement, (iii) are payable in accordance with SECTION 2.10, (iv) are
non-refundable, (v) to the fullest extent permitted by law, bear interest, if
not paid when due, at the Default Rate, and (vi) are calculated on the basis of
actual number of days (including the first day but excluding the last day)
elapsed, but computed as if each calendar year consisted of 360 days, unless
such computation would result in an interest rate in excess of the Maximum Rate
in which event the computation is made on the basis of a year of 365 or 366
days, as the case may be. The fees described in this SECTION 2.3 are in all
events subject to the provisions of SECTION 9.12 of this Agreement.
Section 2.4. REDUCTION OF THE COMMITMENTS.
(a) OPTIONAL. Borrower shall have the right, upon at least three (3)
Business Days' notice to Agent, to terminate in whole or reduce ratably in part
the unused portion of the Commitments; provided that each partial reduction
shall be in the aggregate amount of a minimum of Five Million and No/100 Dollars
($5,000,000) plus integral multiples of One Million and No/100 Dollars
($1,000,000). Any notice of reduction sent pursuant to this SECTION 2.4(a) shall
be irrevocable. Any reduction or termination of the Commitments pursuant to this
SECTION 2.4 shall be permanent, with no obligation of the Banks to reinstate
such Commitments, and the Commitment Fees provided for in SECTION 2.3(a) shall
thereafter be computed on the basis of the Commitments as reduced.
(b) MANDATORY. Each Bank's Commitment shall be permanently reduced by
its Pro Rata Share of any prepayments of the Advances.
Section 2.5. REPAYMENT. The Borrower shall repay the outstanding
principal amount of each Advance on the Maturity Date.
Section 2.6. INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance made by each Bank from the date of such Advance
until such principal amount shall be paid in full, at the following rates per
annum:
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(a) LIBOR RATE ADVANCES. If such Advance is a LIBOR Rate Advance, a
rate per annum equal at all times during the Interest Period for such Advance to
the LIBOR Rate for such Interest Period plus the Applicable Margin, payable in
arrears on the last day of each applicable Interest Period and on the date such
LIBOR Rate Advance shall be paid in full (and, if the Interest Period is longer
than three (3) months, on the last day of each three (3) month period during the
Interest Period); provided that any amount of principal which is not paid when
due (whether at the Maturity Date, by acceleration or otherwise) shall bear
interest from the date on which such amount is due until such amount is paid in
full, payable on demand, at the Default Rate.
(b) INTENTIONALLY OMITTED.
(c) ABR ADVANCES. If such Advance is an ABR Advance, a rate per annum
equal at all times during the Interest Period for such Advance to the ABR for
such Interest Period plus the Applicable Margin, payable in arrears on the last
day of each quarter for the immediately preceding quarter and on the date such
ABR Advance shall be paid in full; provided that any amount of principal which
is not paid when due (whether at the Maturity Date, by acceleration or
otherwise) shall bear interest from the date on which such amount is due until
such amount is paid in full, payable on demand, at the Default Rate.
(d) ADDITIONAL INTEREST ON LIBOR RATE ADVANCES. Subject to the
provisions of SECTION 9.12, the Borrower shall pay to each Bank, so long as any
such Bank shall be required under regulations of the Federal Reserve Board to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid principal
amount of each LIBOR Rate Advance of such Bank, from the effective date of such
Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (i) the
interest rate for the Interest Period for such Advance from (ii) the rate
obtained by dividing the LIBOR Rate by a percentage equal to one hundred percent
(100%) minus the LIBOR Reserve Percentage of such Bank for such Interest Period,
payable on each date on which interest is payable on such Advance. Such
additional interest payable to any Bank shall be determined by such Bank and
notice given to the Borrower through the Agent at least ten (10) days before the
date such payment is due (such notice to include the calculation of such
additional interest, which calculation shall be conclusive in the absence of
error).
(e) USURY RECAPTURE. In the event the rate of interest chargeable under
this Agreement or the Notes at any time is greater than the Maximum Rate, the
unpaid principal amount of the Notes shall bear interest at the Maximum Rate
until the total amount of interest paid or accrued on the Notes equals the
amount of interest which would have been paid or accrued on the Notes if the
stated rates of interest set forth in this Agreement had at all times been in
effect. In the event, upon payment in full of the Notes, the total amount of
interest paid or accrued under the terms of this Agreement and the Notes is less
than the total amount of interest which would have been paid or accrued if the
rates of interest set forth in this Agreement had, at all times, been in effect,
then the Borrower shall, to the extent permitted by applicable law, pay the
Agent for the account of the Banks an amount equal to the difference between (i)
the lesser of (A) the amount of interest which would have been charged on the
Notes if the Maximum Rate had, at all times, been in effect and (B) the amount
of interest which would have accrued on the Notes if the rates of interest set
forth in this Agreement had at all times been in effect and (ii) the amount of
interest actually paid or accrued under this Agreement on the Notes.
Section 2.7. PREPAYMENTS.
(a) RIGHT TO PREPAY. The Borrower shall have no right to prepay any
principal amount of any Advance except as provided in this SECTION 2.7.
(b) OPTIONAL. The Borrower may elect to prepay any one or more of the
Advances, after giving by 12:00 noon (New York, New York time) (i) in the case
of LIBOR Rate Advances, at least three (3) Business Days'
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prior written notice, (ii) in the case of ABR Advances, prior written notice by
11:00 a.m. on the date of prepayment to the Agent stating the proposed date and
aggregate principal amount of such prepayment. If any such notice is given, the
Borrower shall prepay Advances comprising part of the same Borrowing in whole or
ratably in part in an aggregate principal amount equal to the amount specified
in such notice, together with accrued interest to the date of such prepayment on
the principal amount prepaid and amounts, if any, required to be paid pursuant
to SECTION 2.8 as a result of such prepayment being made on such date; provided,
however, that each optional partial prepayment shall be in an aggregate
principal amount not less than $500,000 and shall be an integral multiple of
$100,000 in excess thereof.
(c) MANDATORY.
(i) On the date of the receipt of any amount from the Lessee
under the Lease Documents (other than payments of Basic Rent and
Additional Rent (as such terms are defined in the Ground Lease and
Facilities Lease) and of reimbursement of costs payable by the Lessee
to the Borrower under the Lease Documents, unless the payment of
Additional Rent pertains to a transfer by Borrower of its interest in
any Property), the Borrower shall repay the outstanding amount of the
Advances by the amount of such payment by the Lessee;
(ii) On the date of receipt of any payment of insurance or
condemnation proceeds required to be paid by the Borrower to the Agent
for the benefit of the Banks by the Lease Documents or the Security
Documents, the Borrower shall repay the outstanding amount of the
Advances by the amount of such payment;
(iii) Each prepayment pursuant to this SECTION 2.7(c) shall be
accompanied by accrued interest on the amount prepaid to the date of
such prepayment and amounts, if any, required to be paid pursuant to
SECTION 2.8 as a result of such prepayment being made on such DATE;
PROVIDED, however, that Borrower shall not be required to make any
prepayment required by this SECTION until the last day of the Interest
Period with respect to such Advance SO LONG AS an amount equal to such
prepayment is deposited by Borrower in a cash collateral account with
Agent to be held in such account on terms reasonably satisfactory to
Agent; and
(iv) On the date of each reduction of the aggregate
Commitments pursuant to SECTION 2.4, Borrower agrees to make a
prepayment in respect of the outstanding amount of Advances to the
extent, if any, that the aggregate unpaid principal amount of all
Advances exceeds the Commitments, as so reduced.
(d) ILLEGALITY. If any Bank shall notify the Agent and the Borrower
that the introduction of, or any change in or in the interpretation of, any law
or regulation makes it unlawful, or that any central bank or other Governmental
Authority asserts that it is unlawful for such Bank or its LIBOR Lending Office
to maintain any LIBOR Rate Advances of such Bank then outstanding hereunder, (i)
the Borrower shall, no later than 11:00 a.m. (New York, New York time) (A) if
not prohibited by law, on the last day of the Interest Period for each
outstanding LIBOR Rate Advance or (B) if required by such notice, on the second
Business Day following its receipt of such notice, prepay all of the LIBOR Rate
Advances of all of the Banks then outstanding, together with accrued interest on
the principal amount prepaid to the date of such prepayment and amounts, if any,
required to be paid pursuant to SECTION 2.8 as a result of such prepayment being
made on such date, (ii) each Bank shall simultaneously make an ABR Advance to
the Borrower on such date in an amount equal to the aggregate principal amount
of the LIBOR Rate Advances prepaid to such Bank, and (iii) the right of the
Borrower to select LIBOR Rate Advances for any subsequent Borrowing shall be
suspended until the Bank which gave notice referred to above shall notify the
Agent that the circumstances causing such suspension no longer exist.
(e) RATABLE PAYMENTS; EFFECT OF NOTICE. Each payment of any Advance
pursuant to this SECTION 2.7 or any other provision of this Agreement shall be
made in a manner such that all Advances comprising part of the same
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Borrowing are paid in whole or ratably in part. All notices given pursuant to
SECTION 2.7(b) shall be irrevocable and binding upon the Borrower.
Section 2.8. BREAKAGE COSTS. If (a) any payment of principal of any
LIBOR Rate Advance is made other than on the last day of the Interest Period for
such Advance as a result of any payment pursuant to SECTION 2.7, the
acceleration of the maturity of the Note pursuant to ARTICLE 7, or for any other
reason, (b) the Borrower fails to prepay any amount as set forth in SECTION
2.7(c) on the date such payment was to be due, (c) the Borrower fails to make a
principal or interest payment with respect to any LIBOR Rate Advance on the date
such payment is due and payable, or (d) after the Borrower requests a LIBOR Rate
Advance, the Borrower fails to take such LIBOR Rate Advance or any part thereof,
the Borrower shall, within ten (10) days of any written demand sent by any Bank
to the Borrower through the Agent, pay to the Agent for the account of such Bank
any amounts required to compensate such Bank for any additional losses,
out-of-pocket costs or expenses which it may reasonably incur as a result of
such payment or nonpayment, including, without limitation, any loss (including
loss of anticipated profits) and reasonable cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired or
hedging arrangements entered into by any Bank to fund or maintain such Advance.
A certificate as to such amounts submitted to the Borrower by such Bank shall be
conclusive and binding for all purposes, absent error.
Section 2.9. INCREASED COSTS.
(a) LIBOR RATE ADVANCES. If, due to either (i) the introduction of or
any change (other than any change by way of imposition or increase of reserve
requirements included in the LIBOR Reserve Percentage or any changes relating to
taxes) in, or in the interpretation of, any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Bank of agreeing to make or making, funding or
maintaining LIBOR Rate Advances, then the Borrower shall from time to time, upon
demand by such Bank (with a copy of such demand to the Agent), immediately pay
to the Agent for the account of such Bank additional amounts sufficient to
compensate such Bank for such increased cost; provided, however, that before
making any such demand, each Bank agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) if such Bank in
its sole discretion, does not deem it disadvantageous to designate or use
reasonable efforts to assign to a different Applicable Lending Office if the
making of such a designation or assignment would avoid the need for, or reduce
the amount of, such increased cost and would not, in the reasonable judgment of
such Bank, be otherwise disadvantageous to such Bank. A certificate as to the
amount of such increased cost submitted to the Borrower and the Agent by such
Bank shall be conclusive and binding for all purposes, absent error.
(b) CAPITAL ADEQUACY. If any Bank determines that compliance with any
law or regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such Bank
or any corporation controlling such Bank and that the amount of such capital is
increased by or based upon the existence of such Bank's Commitment and other
commitments of this type, then, upon thirty (30) days prior written notice by
such Bank (with a copy of any such demand to the Agent), the Borrower shall
immediately pay to the Agent for the account of such Bank from time to time as
specified by such Bank additional amounts sufficient to compensate such Bank in
light of such circumstances, to the extent that such Bank reasonably determines
such increase in capital to be allocable to the existence of such Bank's
Commitment. A certificate as to such amounts submitted to the Borrower by such
Bank shall be conclusive and binding for all purposes, absent error.
(c) SUBSTITUTION OF BANKS. If Borrower is required to pay to a Bank any
amounts pursuant to SECTION 2.9(a) and such Bank does not change the
jurisdiction of its Applicable Lending Office or if the Borrower receives a
notice pursuant to SECTION 2.9(b), Borrower may (i) request the relevant Bank to
use reasonable efforts to obtain a replacement bank or financial institution
satisfactory to the Agent to acquire and assume all or a ratable part of all of
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such Bank's Advances and Commitments (a "REPLACEMENT BANK"); (ii) request one or
more of the other Banks to acquire and assume all or part of such Bank's
Advances and Commitments, but none of the Banks shall have any obligation to do
so, or (iii) designate a Replacement Bank reasonably satisfactory to the Agent.
Any such designation of a Replacement Bank under CLAUSE (i) OR (iii) shall be
subject to the prior written consent of the Agent, which consent shall not be
unreasonably withheld or delayed.
Section 2.10. PAYMENTS AND COMPUTATIONS.
(a) PAYMENT PROCEDURES. The Borrower shall make each payment under this
Agreement and under the Notes not later than 12:00 noon (New York, New York
time) on the day when due in Dollars to the Agent at the location referred to in
the Notes (or such other location in the United States of America as the Agent
shall designate in writing to the Borrower) in same day funds. The Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal, interest or fees ratably (other than amounts payable solely to the
Agent or a specific Bank pursuant to SECTIONS 2.3(a), 2.6(d), 2.8, 2.9, OR 2.11,
but after taking into account payments effected pursuant to SECTION 9.4) to the
Banks for the account of their respective Applicable Lending Offices, and like
funds relating to the payment of any other amount payable to any Bank to such
Bank for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement.
(b) AUTHORITY TO CHARGE ACCOUNTS. The Borrower hereby irrevocably
directs and authorizes (i) the Agent to charge the Collateral Account (as
defined in the Security Agreement) for all payments as they become due under
this Agreement or the other Credit Documents and (ii) each Bank, if and to the
extent payment owed to such Bank is not made when due, to charge from time to
time against any of the Borrower's accounts with such Bank any amount so due.
(c) COMPUTATIONS. All computations of interest and of fees shall be
made by the Agent on the basis of actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
fees are payable but computed as if each calendar year consisted of (i) three
hundred sixty (360) days in the case of a LIBOR Rate Advance (unless such
calculation would result in the interest on the Advances exceeding the Maximum
Rate in which event such interest shall be calculated on the basis of a 365 or
366 day year, as the case may be) and (ii) 365 or 366 days, as the case may be,
in the case of an ABR Advance. Each determination by the Agent of an interest
rate shall be conclusive and binding for all purposes, absent error.
(d) NON-BUSINESS DAY PAYMENTS. Whenever any payment shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, if such extension would cause payment of interest on or
principal of LIBOR Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(e) AGENT RELIANCE. Unless the Agent shall have received written notice
from the Borrower prior to the date on which any payment is due to the Banks
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such date an amount equal to the amount then due such Bank. If and to
the extent the Borrower shall not have so made such payment in full to the
Agent, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank, together with interest, for each day from the date
such amount is distributed to such Bank until the date such Bank repays such
amount to the Agent, at the Federal Funds Rate for such day.
(f) PAYMENT BY BORROWER. Any payment made by the Borrower pursuant to
this SECTION 2.10 shall be applied to the amounts then due and owing by the
Borrower to each of the Banks in the manner specified in this
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Agreement. The actual receipt by the Agent of payments from the Borrower shall
release the Borrower of any further obligations to the Banks with regard to each
Bank's respective share of such payments regardless of the actual receipt by the
Banks of their respective amounts.
Section 2.11. TAXES.
(a) NO DEDUCTION FOR CERTAIN TAXES. Any and all payments by the
Borrower shall be made, in accordance with SECTION 2.10, 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 each Bank and the Agent, taxes imposed on or measured
by its income, and franchise taxes imposed on it, by the jurisdiction under the
laws of which such Bank or the Agent (as the case may be) is organized or has
its principal place of business or any political subdivision of any such
jurisdiction and, in the case of each Bank, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision of such jurisdiction (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable to any
Bank or the Agent, (i) the sum 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 2.11), such Bank or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made; provided, however, that if the Borrower's obligation
to deduct or withhold Taxes would not have arisen but for such Bank's or the
Agent's failure to provide the forms described in paragraph (e) of this SECTION
2.11 and such Bank or the Agent could have provided such forms, no such increase
shall be required; (ii) the Borrower shall make such deductions; and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) OTHER TAXES. In addition, the Borrower 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 or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Notes, or the other Credit Documents (hereinafter referred to as "OTHER TAXES").
(c) INDEMNIFICATION. The Borrower indemnifies each Bank and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
SECTION 2.11) paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. Each payment required to be made by the Borrower in respect of
this indemnification shall be made to the Agent for the benefit of any party
claiming such indemnification within thirty (30) days from the date the Borrower
receives written demand therefor from the Agent on behalf of itself as Agent or
any such Bank explaining in reasonable detail the basis for such claim of
indemnification.
(d) EVIDENCE OF TAX PAYMENTS. The Borrower will pay when due all Taxes
payable in respect of any payment. Within thirty (30) days after the date of any
payment of Taxes, the Borrower will furnish to the Agent, at its address
referred to in SECTION 9.2, the original or a certified copy of a receipt
evidencing payment of such Taxes or if receipt is not available, such other
evidence of payment as may reasonably be acceptable to the Agent.
(e) FOREIGN BANK WITHHOLDING EXEMPTION. Each Bank that is not
incorporated under the laws of the United States of America or a state thereof
(a "NON-U.S. LENDER") agrees that it will deliver to the Borrower and the Agent
on or before the Effective Date (or, in the case of an Eligible Assignee which
becomes a Bank hereunder, the date on which such Eligible Assignee becomes a
Bank hereunder) (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form or, in the case of a
Non-U.S. Lender claiming exemption from U.S. federal tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", Form W-8 or
successor applicable form (and, if such Non-U.S. Lender delivers copies of Form
W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code,
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is not a ten percent (10%) shareholder of the Borrower within the meaning of
Section 871(h)(3)(b) of the Code and is not a controlled foreign corporation
related to the Borrower within the meaning of Section 864(d)(4) of the Code),
certifying in each case that such Bank is entitled to receive payments under
this Agreement and the Notes payable to it without deduction or withholding of
any United States federal income taxes, (ii) if applicable, an Internal Revenue
Service Form W-8 or successor applicable form, to establish an exemption from
United States backup withholding tax, and (iii) if requested by the Borrower or
the Agent, any other governmental forms which are necessary, required or
appropriate under an applicable tax treaty or otherwise by law to reduce or
eliminate any withholding tax. Each Bank which delivers to the Borrower and the
Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the next preceding
sentence further undertakes to deliver to the Borrower and the Agent two further
copies of the said letter and Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms, or other manner of certification, as the case may
be, on or before the date that any such letter or form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent letter and form previously delivered by it to the Borrower and the Agent,
and such extensions or renewals thereof as may be requested by the Borrower or
the Agent certifying in the case of a Form 1001 or 4224 that such Bank is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes. If any change in treaty,
law or regulation has occurred after the Effective Date (or, in the case of an
Eligible Assignee which becomes a Bank hereunder, the date on which such
Eligible Assignee becomes a Bank hereunder) and prior to the date on which any
delivery required by the preceding sentence would otherwise be required which
renders all such forms inapplicable or that prevents any Bank from duly
completing and delivering any such letter or form with respect to it and such
Bank advises the Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax, and in the case of a Form W-8, establishing an exemption from United States
backup withholding tax, such Bank shall not be required to deliver such letter
or forms.
(f) FAILURE TO DELIVER REQUIRED FORMS. The Borrower shall not be
required to indemnify or pay any additional amounts to any Non-U.S. Lender in
respect of U.S. federal income tax pursuant to this SECTION 2.11 to the extent
that the obligation to pay U.S. federal income tax would not have occurred but
for the failure of such Non-U.S. Lender to deliver the forms or other
certifications required pursuant to SECTION 2.11(e).
Section 2.12. SHARING OF PAYMENTS ETC.. If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) on account of the Advances made by it in excess of its Pro
Rata Share of payments on account of the Advances obtained by all the Banks,
such Bank shall notify the Agent and forthwith purchase from the other Banks
such participations in the Advances made by them as shall be necessary to cause
such purchasing Bank to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Bank, such purchase from each Bank
shall be rescinded and such Bank shall repay to the purchasing Bank the purchase
price to the extent of such Bank's ratable share (according to the proportion of
(a) the amount of the participation sold by such Bank to the purchasing Bank as
a result of such excess payment to (b) the total amount of such excess payment)
of such recovery, together with an amount equal to such Bank's ratable share
(according to the proportion of (i) the amount of such Bank's required repayment
to the purchasing Bank to (ii) the total amount of all such required repayments
to the purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower agrees
that any Bank so purchasing a participation from another Bank pursuant to this
SECTION 2.12 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation.
ARTICLE 3
CONDITIONS OF LENDING
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Section 3.1. CONDITIONS PRECEDENT TO INITIAL BORROWING. The obligation
of each Bank to make its "ADVANCE" as part of the initial Borrowing is subject
to the conditions precedent that:
(a) DOCUMENTATION.
(i) On the execution date of this Agreement, the Agent shall
have received the following, duly executed by all the parties thereto,
in form and substance reasonably satisfactory to the Agent and the
Banks, and (except for the Notes) in sufficient copies for each Bank:
(1) this Agreement and all attached Exhibits and
Schedules and the Notes payable to the order of each of the
Banks, respectively;
(2) the Guaranty and the Residual Guaranty;
(3) counterpart no. 1 of the Ground Lease, the
Facilities Lease, the Agreement for Ground Lease and the
Agreement for Facilities Lease;
(4) the Guarantor Consent and the Lessee Consent;
(5) a certificate from the President of the General
Partner on behalf of the Borrower dated as of the Effective
Date stating that (a) all representations and warranties of
the Borrower set forth in this Agreement are true and correct
in all material respects; (B) no Default has occurred and is
continuing; and (C) the conditions in this SECTION 3.1 have
been met;
(6) copies, certified as of the execution date of
this Agreement, of (A) the resolutions of the Board of
Directors of the General Partner on behalf of the Borrower,
the Lessee, and the Guarantor approving, in the case of the
General Partner on behalf of the Borrower, this Agreement, the
Notes, and the other Credit Documents to which the Borrower is
a party, and, in the case of the Lessee and the Guarantor, the
Credit Documents to which each such Person is a party and (B)
the partnership agreement and all amendments thereto of the
Borrower, the articles or certificate of incorporation and
bylaws of the General Partner, the Lessee, and the Guarantor
and all documents evidencing other necessary corporate or
partnership action and governmental approvals, if any, with
respect to this Agreement, the Notes, and the other Credit
Documents to which they are a party;
(7) a certificate of the Secretary or an Assistant
Secretary of the General Partner, the Lessee, and the
Guarantor certifying as of the execution date of this
Agreement the names and true signatures of officers of the
General Partner, the Lessee, and the Guarantor authorized to
sign this Agreement, the Notes, Notices of Borrowing and the
other Credit Documents to which they are a party;
(8) an opinion of Robert R. Veach, Jr., counsel to
the Borrower, dated as of the execution date of this Agreement
and substantially in the form of the attached EXHIBIT "L";
(9) an opinion of Schulte Roth & Zabel LLP, special
counsel to the Lessee and the Guarantor, dated as of the
execution date of this Agreement and substantially in the form
of the attached EXHIBIT "M"; and
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(10) an opinion of Gardere Wynne Sewell & Riggs,
L.L.P., counsel to the Agent, dated as of the execution date
of this Agreement and substantially in the form of the
attached EXHIBIT "N".
(ii) On the date of the Initial Advance under this Agreement
and pursuant to the Agreement for Ground Lease, the Agent received the
following, duly executed by all the parties thereto, in form and
substance satisfactory to the Agent and the Banks, and in sufficient
copies for each Bank:
(1) INITIAL ADVANCE CERTIFICATE. A certification by
Borrower that the proposed cost of such Property contained in
such certificate is true, complete, correct, and accurately
represents all expected costs of the Property, and that the
Property is not encumbered by any Liens except for Permitted
Encumbrances.
(2) WARRANTY DEED. A photocopy of the special
warranty deed to be executed and delivered at the closing of
the acquisition of the Property, conveying indefeasible title
to Borrower, subject to no Liens except for Permitted
Encumbrances.
(3) TITLE INSURANCE POLICY. A mortgagee's title
policy ("TITLE POLICY") in the amount of the vendor's contract
price plus the estimated amount of construction for such
Property, insuring Borrowers' title to be good and
indefeasible subject only to Permitted Encumbrances, shortages
in area, taxes for the current year not yet due and payable
and subsequent tax assessments for prior years due to a change
in land usage or ownership, and containing such available
endorsements and affirmative coverages as Borrower and Agent
may reasonably require.
(4) SURVEY. A survey of the Property ("SURVEY")
certified to Borrower and Agent, dated within ninety (90) days
prior to closing (or such shorter period as any title issuer
may require), by an independent, licensed registered public
land surveyor, which survey shall be made in such form
sufficient for the Title Company to delete the "survey
exception" from the Title Policy.
(5) LESSEE CERTIFICATE. A certificate executed by
Lessee certifying that (i) the Property is served with utility
services and facilities in a manner acceptable to Lessee, and
(ii) the Property is not subject to any zoning requirements
other than any zoning requirements which are acceptable to
Lessee.
(6) FLOOD INSURANCE. Either (i) a policy of flood
insurance in an amount equal to the acquisition cost of the
Property, or (ii) a certification by the surveyor or another
Person reasonably acceptable to the Agent that the Property is
not located in a flood plain. If the Property is presently
located in or is later determined to be in a "special flood
hazard area" as set out in the Flood Disaster Protection Act
of 1973, as amended by the National Flood Insurance Reform Act
of 1994 (the "ACT"), Borrower agrees to purchase a flood
insurance policy in an amount equal to the outstanding
principal balance of the Note or the maximum amount available
under the Act, whichever is less, in form complying with the
"insurance purchase requirements" of the Act, and provide
Agent evidence of such coverage. Such policy shall provide
that all proceeds will be payable to Agent as Agent's
interests may appear, all amounts recoverable under such
policy being hereby assigned to Agent.
(7) CERTIFICATES OF INSURANCE. Certificates of
insurance or other evidence reasonably acceptable to Borrower
and Agent certifying that the insurance then carried or
maintained on the Property complies with the terms of the
Agreement for Ground Lease.
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(8) APPRAISAL. An Appraisal of the Property in form
and substance acceptable to Agent.
(9) ENVIRONMENTAL ASSESSMENT. An environmental
assessment prepared by a third party environmental assessment
firm of some of the Property and a letter from Underberg &
Kessler LLP relating to the environmental condition of all of
the Property, both of which must be delivered to Agent in form
and substance acceptable to Agent and its counsel on the
Effective Date. No report delivered pursuant to this SECTION
3.1(a)(ii)(9) shall disclose, in the reasonable judgment of
Agent, a violation of Environmental Law, the existence of an
Environmental Claim (as defined in the Agreement for Ground
Lease) or Lien relating to an Environmental Claim against the
Property, or the existence of any material Environmental (as
defined in the Agreement for Ground Lease) contamination of
such Property, except where such violation, claim, Lien or
contamination could not reasonably be expected to cause a
Material Adverse Change.
(10) MEMORANDUM OF LEASE; SUBORDINATION AGREEMENT.
The Borrower and the Lessee shall have executed in recordable
form and delivered to the Agent a memorandum of lease covering
the Property reciting therein that the Property is subject to
the terms and conditions of the Ground Lease or Facilities
Lease, as applicable, and summarizing the pertinent terms
thereof and the Lessee shall have executed and delivered to
the Agent a Subordination Agreement. The memorandum of lease
and Subordination Agreement shall be filed after the recording
of the Mortgage covering the Property.
(11) MORTGAGE AND ASSIGNMENT OF LEASES. The Borrower
shall have executed and delivered to the Agent a Mortgage
granting the Agent an Acceptable Security Interest in the
Property and an Assignment of Leases granting the Agent an
Acceptable Security Interest in the rents and leases of the
Property and the Mortgage and Assignment of Leases shall have
been recorded in the appropriate records of the applicable
jurisdiction.
(12) OTHER DOCUMENTS. All other documents or
certificates reasonably requested by Agent.
(b) NO MATERIAL ADVERSE CHANGE. No event or events which, individually
or in the aggregate could cause a Material Adverse Change shall have occurred.
(c) PAYMENT OF FEES. On the date of the execution of this Agreement,
the Borrower shall have paid (i) the fees required by SECTION 2.3 to be paid on
such date and (ii) all costs and expenses which have been invoiced and are
payable pursuant to SECTION 9.4.
(d) NO DEFAULT. No Default shall have occurred and be continuing or
would result from such Borrowing or from the application of the proceeds
therefrom.
(e) REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in ARTICLE 4 of this Agreement, Article II of the Facilities Lease,
Article II of the Ground Lease, Section 6 of the Guaranty, Section 6 of the
Residual Guaranty and in each other Credit Document shall be correct in all
material respects on and as of the Effective Date before and after giving effect
to the initial Borrowing and to the application of the proceeds from such
Borrowing, as though made on and as of such date.
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Section 3.2. CONDITIONS PRECEDENT TO EACH BORROWING. The obligation of
each Bank to make an Advance on the occasion of each Borrowing shall be subject
to the further conditions precedent that on the date of such Borrowing, Borrower
must satisfy the following requirements and, if required by Agent, have
delivered to the Agent evidence of such satisfaction:
(a) BRINGDOWN. The following statements shall be true (and each of the
giving of the applicable Notice of Borrowing and the acceptance by the Borrower
of the proceeds of such Borrowing shall constitute a representation and warranty
by the Borrower that on the date of such Borrowing such statements are correct):
(i) the representations and warranties contained in ARTICLE 4
of this Agreement, Section 6 of the Guaranty, Section 6 of the Residual
Guaranty, and in each other Credit Document are correct in all material
respects on and as of the date of such Borrowing, before and after
giving effect to such Borrowing and to the application of the proceeds
from such Borrowing, as though made on and as of such date; and
(ii) no Default has occurred and is continuing or would result
from such Borrowing or from the application of the proceeds therefrom.
(b) OTHER APPROVALS. The Agent shall have received such other
approvals, opinions or documents deemed necessary by the Agent as a result of
circumstances occurring after the date of this Agreement, as the Agent may
reasonably request.
(c) CERTAIN LAWS. Such Borrowing and the use of the proceeds of such
Borrowing will not contravene any law or contractual restriction affecting the
Guarantor or the Lessee except where same, individually or collectively, would
not substantially impair the ability of Guarantor or Lessee to perform their
obligations under the Credit Documents.
(d) LEASE DOCUMENT REQUIREMENTS. (i) The Agent shall have received on
or before the fifth (5th) Business Day before the date of such Borrowing duly
executed copies of each document required by Article VI or Article VII of the
Agreement for Facilities Lease or Article VI or VII of the Agreement for Ground
Lease, as applicable, for the advance of the proceeds of such Borrowing to the
Lessee pursuant to the Agreement for Facilities Lease or the Agreement for
Ground Lease, as applicable, and (ii) each of the conditions precedent for the
advance of the proceeds of such Borrowing to the Lessee pursuant to the
Agreement for Facilities Lease or the Agreement for Ground Lease, as applicable,
shall have been met in a manner reasonably satisfactory to the Agent and the
Banks.
(e) LOCAL COUNSEL OPINION; OTHER STATES. If a Borrowing is in respect
of a Facility located in a location for which the Agent and the Banks have not
previously received a local counsel opinion and for which the Agent or the Banks
have not financed any Property, (i) the Agent and the Banks shall have received
a local counsel opinion satisfactory to the Agent covering the matters in the
attached EXHIBIT "O" and (ii) the Agent and such local counsel shall be
satisfied in their sole discretion that the Lease Documents and Security
Documents are enforceable and acceptable under such state's laws.
(f) CERTAIN LAWS. Such Borrowing and the use of the proceeds of such
Borrowing will not contravene any law or contractual restriction affecting the
Guarantor or Lessee except where such contravention, individually or
collectively, would not materially impair the ability of the Guarantor or Lessee
to perform their respective obligations under any Credit Documents.
(g) CAPITAL CONTRIBUTION. Evidence satisfactory to Agent that the
capital contribution from the limited partner of the Borrower to the Borrower
pursuant to the terms of the Borrower's Partnership Agreement for such Property
has or will be funded to the appropriate entity in order to close the
transaction relating to such Property.
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Section 3.3. CONDITIONS PRECEDENT FOR THE BENEFIT OF THE AGENT. All
conditions precedent to the obligation of the Agent to make any Advance are
imposed hereby solely for the benefit of the Agent, and no other party may
require satisfaction of any such condition precedent or be entitled to assume
that the Agent will refuse to make any Advance in the absence of strict
compliance with such conditions precedent. All requirements of this Section with
respect to conditions precedent and compliance may be waived by the Agent, in
whole or in part, at any time.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.1. PARTNERSHIP EXISTENCE; SUBSIDIARIES. The Borrower is a
limited partnership duly formed and validly existing under the laws of the State
of Delaware and is in good standing and qualified to do business in each
jurisdiction where its ownership or lease of property or conduct of its business
requires such qualification and where a failure to be qualified could reasonably
be expected to cause a Material Adverse Change. The General Partner is a
corporation duly organized, in good standing, and validly existing under the
laws of Delaware and in good standing and qualified to do business in each
jurisdiction where its ownership or lease of property or conduct of its business
requires such qualification and where a failure to be qualified could reasonably
be expected to cause a Material Adverse Change. The Borrower has no
Subsidiaries. The General Partner is, and so long as any Obligations are
outstanding under the Credit Documents, will remain, a wholly-owned Subsidiary
of Brazos River Leasing L.P.
Section 4.2. PARTNERSHIP POWER. The execution, delivery, and
performance by the Borrower of this Agreement, the Note, and the other Credit
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby (a) are within the Borrower's partnership
powers, (b) have been duly authorized by all necessary partnership action, (c)
do not contravene (i) the Borrower's agreement of limited partnership or (ii)
any law or any contractual restriction binding on or affecting the Borrower
except where such contravention could not reasonably be expected to cause a
Material Adverse Change, and (d) will not result in or require the creation or
imposition of any Lien prohibited by this Agreement. At the time of each
Borrowing, such Borrowing and the use of the proceeds of such Borrowing (w) will
be within the Borrower's partnership powers, (x) will have been duly authorized
by all necessary partnership action, (y) will not contravene (i) the Borrower's
agreement of limited partnership or (ii) any law or any contractual restriction
binding on or affecting the Borrower except where such contravention could not
reasonably be expected to cause a Material Adverse Change, and (z) will not
result in or require the creation or imposition of any Lien prohibited by this
Agreement.
Section 4.3. AUTHORIZATION AND APPROVALS. No authorization or approval
or other action by, and no notice to or filing with, any Governmental Authority
is required for the due execution, delivery and performance by the Borrower of
this Agreement, the Notes, or the other Credit Documents to which the Borrower
is a party or the consummation of the transactions contemplated by this
Agreement except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change. At the time of each Borrowing, no authorization
or approval or other action by, and no notice to or filing with, any
Governmental Authority will be required for such Borrowing or the use of the
proceeds by the Borrower of such Borrowing except where the failure to do so
could not reasonably be expected to cause a Material Adverse Change.
Section 4.4. ENFORCEABLE OBLIGATIONS. The Borrower has duly executed
and delivered this Agreement, the Notes, and the other Credit Documents to which
the Borrower is a party. Each Credit Document to which the Borrower is a party
is the legal, valid, and binding obligation of the Borrower enforceable against
the Borrower in
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accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors' rights generally.
Section 4.5. FINANCIALS. The balance sheet at August 31, 1998 of the
Borrower prepared by the Borrower correctly reflects the financial condition of
the Borrower as at the date thereof.
Section 4.6. TRUE AND COMPLETE DISCLOSURE. All factual information
(excluding estimates) heretofore or contemporaneously furnished by or on behalf
of the Borrower in writing to any Bank or the Agent for purposes of or in
connection with this Agreement, any other Credit Document or any transaction
contemplated hereby or thereby is, and all other such factual information
(excluding estimates) (taken as a whole) hereafter furnished by or on behalf of
the Borrower in writing to any Bank or the Agent, will be true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time. All estimates furnished by the Borrower were prepared on the basis
of assumptions, data, information, tests, or conditions believed to be valid or
accurate or to exist at the time such estimates were furnished.
Section 4.7. LITIGATION. There is no pending or, to the best knowledge
of the Borrower, threatened action or proceeding affecting the Borrower before
any court, Governmental Authority or arbitrator, which could reasonably be
expected to cause a Material Adverse Change or which purports to affect the
legality, validity, binding effect or enforceability of this Agreement, any
Note, or any other Credit Document.
Section 4.8. USE OF PROCEEDS. The proceeds of Advances will be used by
the Borrower solely for the purpose of making Advances for the acquisition of
the Property and the construction of the Facilities in accordance with the
Ground Lease and the Facilities Lease. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U). No proceeds of any Advance will be
used to purchase or carry any margin stock in violation of Regulation T, U or X.
Section 4.9. INVESTMENT COMPANY ACT. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
Section 4.10. PUBLIC UTILITY HOLDING COMPANY ACT. The Borrower is not a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 4.11. TAXES. All federal, state, local and foreign tax returns,
reports and statements required to be filed (after giving effect to any
extension granted in the time for filing) by the Borrower or any member of the
Controlled Group (hereafter collectively called the "TAX GROUP") have been filed
with the appropriate governmental agencies in all jurisdictions in which such
returns, reports and statements are required to be filed, and all taxes (which
are material in amount) and other impositions due and payable have been timely
paid prior to the date on which any fine, penalty, interest, late charge or loss
may be added thereto for non-payment thereof except where contested in good
faith and by appropriate proceeding and after providing adequate reserves
therefor. Neither the Borrower nor any member of the Tax Group has given, or
been requested to give, a waiver of the statute of limitations relating to the
payment of any federal, state, local or foreign taxes or other impositions. None
of the Property owned by the Borrower or any other member of the Tax Group is
Property which the Borrower or any member of the Tax Group is required to treat
as being owned by any other Person pursuant to the provisions of Section 168(f)
(8) of the Code. Proper and accurate amounts have been withheld by the Borrower
and all other members of the Tax Group from their employees for all periods to
comply in all material respects with the income tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law. Timely payment of all material sales and use taxes required by
applicable law have been made by the Borrower and all other members of the
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Tax Group. Proper and accurate (in all material respects) federal, state, local
and foreign returns have been filed by the Borrower and all other members of the
Tax Group for all periods for which returns were due with respect to employee
income tax withholding, social security and unemployment taxes, and the amounts
shown thereon to be due and payable have been paid in full or adequate provision
therefor is included on the books of the appropriate member of the Tax Group.
Section 4.12. PENSION PLANS. The Borrower has never maintained or
contributed to any Plan or Multi-employer Plan.
Section 4.13. CONDITION OF PROPERTY: CASUALTIES. The Property to be
used in the continuing operations of the Borrower is, and will continue to be,
in good repair, working order and condition.
Section 4.14. INSURANCE. The Borrower carries the insurance required to
be carried by the Borrower under the Lease Documents and the Lessee will carry
the insurance required to be carried by the Lessee under the Lease Documents.
Section 4.15. NO BURDENSOME RESTRICTIONS; NO DEFAULTS. The Borrower is
not a party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate restriction or
provision of applicable law or governmental regulation which could reasonably be
expected to cause a Material Adverse Change. The Borrower is not in default
under or with respect to any contract, agreement, lease or other instrument to
which the Borrower is a party and which could reasonably be expected to cause a
Material Adverse Change. The Borrower has not received any notice of default
under any material contract, agreement, lease or other instrument to which the
Borrower is a party. No Default has occurred and is continuing.
Section 4.16. ENVIRONMENTAL CONDITION.
(a) PERMITS, ETC. The Borrower (i) has obtained or caused to be
obtained all Environmental Permits necessary for the ownership and operation of
the Properties and the conduct of its businesses related to the Properties
unless the absence of any such Environmental Permits would not result in a
Material Adverse Change; (ii) has not received notice of any material violation
or alleged material violation of any Environmental Law or Environmental Permit
related to the Properties; and (iii) is not subject to any actual or contingent
Environmental Claim that could reasonably be expected to cause a Material
Adverse Change.
(b) CERTAIN LIABILITIES. The Property to be acquired (i) has not been
placed on or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System
list, or their state or local analogs, or have been otherwise investigated,
designated, listed, or identified as a potential site for removal, remediation,
cleanup, closure, restoration, reclamation, or other response activity under any
Environmental Laws; (ii) is not subject to a Lien, arising under or in
connection with any Environmental Laws, that attaches to any revenues or to any
Properties owned or operated by the Borrower wherever located; or (iii) has not
been the site of any Release of Hazardous Substances or Hazardous Wastes from
present or past operations which has caused at the site or at any third-party
site any condition, that in each case, has resulted in or could reasonably be
expected to result in the need for Response that would cause a Material Adverse
Change.
(c) CERTAIN ACTIONS. Without limiting the foregoing, (i) all necessary
notices have been properly filed, and no further action is appropriate or
required under current Environmental Law as to each Response or other
restoration or remedial project undertaken by the Borrower on any of its
presently or formerly owned or operated Properties if a failure to file or to
take further action could be expected to result in a Material Adverse Change and
(ii) the present and future liability, if any, of the Borrower which could
reasonably be expected to arise in connection with requirements under
Environmental Laws will not result in a Material Adverse Change.
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Section 4.17. PERMITS, LICENSES, ETC. The Borrower possesses all
permits, licenses, patents, patent rights or licenses, trademarks, trademark
rights, trade names rights and copyrights which are material to the conduct of
its business. The Borrower manages and operates its business in accordance with
all applicable Legal Requirements and good industry practices, the failure to
comply with which could reasonably be expected to result in a Material Adverse
Change.
Section 4.18. PRINCIPAL PLACE OF BUSINESS. The chief executive office
and principal place of business of the Borrower is in Dallas County, Texas, and
presently is located at 2911 Turtle Creek Blvd., Suite 1240, Dallas, Texas
75219.
Section 4.19. GOVERNMENT REQUIREMENTS. The Borrower has examined, or
has caused to be examined, and is in compliance with all laws relating to each
of the Properties, the failure to comply with which could reasonably be expected
to cause a Material Adverse Change. The Borrower has obtained, or has caused to
be obtained, and is complying with the conditions of, all licenses, exemptions,
approvals and other authorizations of Governmental Authority required in
connection with each of the Properties the failure to obtain or comply with
which could reasonably be expected to cause a Material Adverse Change, including
each of the following as applicable:
(a) zoning, land use and planning requirements, including requirements
arising from, or relating to the adoption or amendment of, any applicable
general plans;
(b) subdivision and parcel map requirements;
(c) requirements in connection with use, occupancy and building
permits; and
(d) requirements of public utilities.
Section 4.20. YEAR 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) the Borrower's
computer systems and (b) equipment containing embedded microchips (including
systems and equipment supplied by others or with which Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed by January 1, 1999. The cost to the Borrower of
such reprogramming and testing and of the reasonably foreseeable consequences of
year 2000 to the Borrower (including, without limitation, reprogramming errors
and the failure of others' systems or equipment) will not result in a Default or
a Material Adverse Change.
ARTICLE 5
AFFIRMATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall
remain unpaid or any Bank shall have any Commitment hereunder, the Borrower
agrees, unless the Majority Banks shall otherwise consent in writing, to comply
with the following covenants.
Section 5.1. COMPLIANCE WITH LAWS, ETC.. The Borrower will comply with
all Legal Requirements if the failure to so comply could reasonably be expected
to cause a Material Adverse Change. Without limiting the generality and coverage
of the foregoing, the Borrower shall comply with all Environmental Laws, and all
laws, regulations, or directives with respect to equal employment opportunity
and employee safety in all jurisdictions in which the Borrower does business,
the failure to so comply with which could reasonably be expected to cause a
Material Adverse Change; provided, however, that this SECTION 5.1 shall not
prevent the Borrower from, in good faith
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and with reasonable diligence, contesting the validity or application of any
such laws or regulations by appropriate legal proceedings.
Section 5.2. MAINTENANCE OF INSURANCE.
(a) The Borrower shall procure and maintain, or shall cause the Lessee
to procure and maintain, continuously in effect the policies of insurance
required to be carried by the Borrower and the Lessee under the Lease Documents.
In addition, all policies of insurance shall either have attached thereto an
agent's loss payable endorsement for the benefit of the Agent on behalf of the
Banks as loss payee, in form satisfactory to the Agent or shall name the Agent
as an additional insured, as applicable. The Borrower shall furnish the Agent
with a certified copy of an original or a certificate of insurance of all
policies of insurance required. All policies or certificates, as the case may
be, of insurance shall set forth the coverage, the limits of liability, the name
of the carrier, the policy number and the period of coverage. At least thirty
(30) days prior to the expiration of each required policy, the Borrower shall
deliver to the Agent evidence of the renewal or replacement of such policy,
continuing such insurance in the form as required by this Agreement.
(b) In the event that, notwithstanding the "agent's loss payable
endorsements" requirement of SECTION 5.2(a), the proceeds of any insurance
policy described therein are paid to the Borrower, the Borrower shall deliver
such proceeds to the Agent immediately upon receipt as required by the Lease
Documents.
(c) Any proceeds collected under any fire or other physical damage
insurance policy required hereunder shall be disbursed to the Borrower or the
Agent as required by the Lease Documents.
Section 5.3. PRESERVATION OF PARTNERSHIP EXISTENCE. The Borrower will
preserve and maintain its partnership existence, rights, franchises and
privileges in the jurisdiction of its formation, and qualify and remain
qualified as a foreign partnership in each jurisdiction in which qualification
is necessary or desirable in view of its business and operations or the
ownership of its properties and where failure to qualify could reasonably be
expected to cause a Material Adverse Change.
Section 5.4. PAYMENT OF TAXES, ETC.. The Borrower will pay and
discharge, or cause Lessee to pay or discharge, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges or levies
imposed upon Borrower or upon its income or profits or Properties that are
material in amount, prior to the date on which penalties attach thereto and (b)
all lawful claims that are material in amount which, if unpaid, might by law
become a Lien upon any Properties; provided, however, that the Borrower shall
not be required to pay or discharge any such tax, assessment, charge, levy, or
claim which is being contested in good faith and by appropriate proceedings, and
with respect to which reserves in conformity with GAAP have been provided.
Section 5.5. VISITATION RIGHTS. At any reasonable time and from time to
time during regular business hours, upon reasonable notice, the Borrower will
(a) permit the Agent and any Bank or any of its agents or representatives
thereof, to examine and make copies of and abstracts from the records and books
of account of, and visit and inspect at its reasonable discretion and upon
reasonable notice to Lessee the Properties of, the Borrower to discuss the
affairs, finances and accounts of the Borrower with any of its respective
General Partner, officers, or directors and (b) furnish the Agent or any of the
Banks, or any agents or representatives thereof, a report prepared by a
qualified independent consultant, at the expense of the Borrower, concerning the
condition and status of a Property in respect to requirements of Environmental
Laws, if the Majority Banks have requested such a report and have demonstrable
evidence that the Property may be adversely affected by a Hazardous Substance, a
Hazardous Waste, or an Environmental Claim not adequately addressed in any
environmental assessments previously delivered to the Banks and the Agent in
connection with the Property.
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Section 5.6. REPORTING REQUIREMENTS. The Borrower will furnish or cause
to be furnished to the Agent and each Bank:
(a) DEFAULTS. As soon as possible and in any event within five (5) days
after the occurrence of each Default known to the Borrower which is continuing
on the date of such statement, a statement of an authorized officer of the
Borrower setting forth the details of such Default and the actions which the
Borrower has taken and proposes to take with respect thereto;
(b) QUARTERLY FINANCIALS. As soon as available and in any event not
later than forty-five (45) days after the end of each of the first three
quarters of each fiscal year of the Borrower, the balance sheet of Borrower as
of the end of such quarter in reasonable detail and duly certified with respect
to such statements (subject to year-end audit adjustments) by an authorized
financial officer of the Borrower as having been prepared in accordance with
GAAP;
(c) ANNUAL FINANCIALS. As soon as available and in any event not later
than ninety (90) days after the end of each fiscal year of the Borrower, a copy
of the annual report for such year for the Borrower, including therein a balance
sheet as of the end of such fiscal year which, upon request by the Agent, shall
be certified by independent certified public accountants of recognized standing
acceptable to the Agent and including any management letters delivered by such
accountants to the Borrower in connection with such audit together with a
certificate of such accounting firm to the Banks stating that, in the course of
the regular audit of the business of the Borrower, which audit was conducted by
such accounting firm in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge that a Default has occurred and
is continuing, or if, in the opinion of such accounting firm, a Default has
occurred and is continuing, a statement as to the nature thereof;
(d) ENVIRONMENTAL NOTICES. Promptly upon the receipt thereof by the
Borrower, a copy of any form of notice, summons or citation received from any
agency responsible for enforcement of Environmental Law, or any other United
States, state, local, or foreign governmental agency or instrumentality,
concerning (i) violations or alleged violations of Environmental Laws, which
seeks to impose liability therefor, (ii) any action or omission on the part of
the Borrower in connection with Hazardous Waste or Hazardous Substances which
could reasonably result in the imposition of liability therefor, including
without limitation any notice of potential responsibility under CERCLA, or (iii)
the filing of a Lien for an Environmental Claim upon, against or in connection
with the Borrower or any Property;
(e) MATERIAL CHANGES. Prompt written notice of any condition or event
of which the Borrower has knowledge, which condition or event has resulted or
may reasonably be expected to result in (i) a Material Adverse Change or (ii) a
breach of or noncompliance with any material term, condition, or covenant of any
material contract to which the Borrower is a party or by which the Properties
may be bound;
(f) DISPUTES, ETC.. Prompt written notice of any claims, proceedings,
or disputes pending, or to the knowledge of the Borrower threatened or affecting
the Borrower or the Properties which, if adversely determined, could reasonably
be expected to cause a Material Adverse Change;
(g) GUARANTOR'S INFORMATION AND COMPLIANCE CERTIFICATE. (i) At the
execution date of this Agreement Borrower shall cause the Guarantor to provide
to the Borrower, and the Borrower shall thereupon promptly provide to the Agent,
a certificate as to the current pricing level, and at the same time financial
reports are provided by the Guarantor to the Borrower in accordance with the
Lease Documents, Borrower shall cause the Guarantor to provide to the Borrower,
and the Borrower shall thereupon promptly provide to the Agent, a Compliance
Certificate in the form of the attached EXHIBIT "P", and after any change in the
pricing level, Borrower shall cause the Guarantor to provide to the Borrower,
and the Borrower shall thereupon promptly provide to the Agent, a certificate
showing the new pricing level of the Guarantor and the effective date thereof;
and (ii) the Borrower shall cause the Guarantor to
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maintain, for itself and each Subsidiary, a system of accounting established and
administered in accordance with GAAP and to deliver to the Borrower, with
sufficient copies for each Bank:
(1) As soon as available, but no later than one hundred (100)
days after the close of each fiscal year, for the Guarantor and its
Subsidiaries (A) a copy of the audited consolidated statement of
financial position as at the end of such fiscal year and the related
consolidated statement of operations, statement of cash flows, and
statement of stockholders' equity for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, and
accompanied by the opinion of independent nationally recognized
certified public accountants (the "INDEPENDENT AUDITOR"), which report
shall state that such consolidated financial statements present fairly
the financial position for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years; such opinion shall
not be qualified or limited because of a restricted or limited
examination by the Independent Auditor of any material portion of the
Guarantor's or any Subsidiary's records; and (B) a consolidated
statement of financial position and consolidated statement of
operations for the Guarantor and its Subsidiaries;
(2) As soon as available, but no later than fifty (50) days
after the close of each of the first three (3) quarterly periods of
each fiscal year, for the Guarantor and its Subsidiaries for the
quarterly period then ended (A) an unaudited consolidated statement of
financial position and related consolidated statement of operations,
statement of cash flow and statement of stockholders equity, and (B) an
unaudited consolidated statement of financial position and related
consolidated statement of operations for the Guarantor and its
Subsidiaries, all such statements to be certified by a Responsible
Officer of the Guarantor as fairly presenting, in accordance with GAAP
(subject to year-end audit adjustments), the financial position and the
results of operations of the Guarantor and its Subsidiaries; and
(3) As soon as possible after the delivery thereof to the
Guarantor, a copy of any annual management letter prepared by the
Independent Auditor in connection with the annual audit of the
Guarantor and its Subsidiaries.
(h) OTHER INFORMATION. Such other information respecting the business
or Properties, or the condition or operations, financial or otherwise, of the
Borrower as any Bank through the Agent may from time to time reasonably request.
Section 5.7. MAINTENANCE OF PROPERTY. The Borrower shall maintain, or
cause Lessee to maintain, (a) its Property in the manner required by the Lease
Documents, and (b) an environmental compliance program to identify, rectify or
remediate any environmental problems identified thereby.
Section 5.8. PERFORMANCE OF LEASE DOCUMENTS. The Borrower:
(a) (i) shall perform and observe all of its covenants and agreements
contained in any of the Lease Documents, (ii) shall enforce each covenant or
obligation of the Lease Documents in accordance with their terms (unless the
failure to enforce any such covenant or obligation would not reasonably be
expected to cause a Material Adverse Change), (iii) if any obligor under any
Lease Document (other than the Borrower) asserts in writing its belief that any
material provision of such Lease Document is not valid or binding upon such
obligor, promptly notify the Agent and the Banks thereof and permit the Agent
and the Banks to participate in any proceeding relating thereto, and (iv) shall
take all such action to that end as from time to time may be reasonably
requested by the Agent. The Borrower shall not take any action which could
result in any rescission, amendment, termination, modification or suspension of
any Lease Document without the prior written consent of the Agent;
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(b) shall provide the Agent and the Banks with prior written notice of
each proposed amendment, supplement, modification or waiver in respect of each
Lease Document and, promptly upon receipt thereof, duplicates or copies of all
notices, requests and other instruments received by the Borrower under or
pursuant to the Lease Documents; and
(c) to the extent it has a claim for excess wear and tear under Section
11.4(a)(iii) of the Facilities Lease, shall enforce such claim against the
Lessee.
Section 5.9. PROTECTION OF LIENS. The Borrower shall (a) maintain the
Lien of the Mortgage and the Security Agreement as a first priority Lien subject
only to Permitted Encumbrances on the Collateral and take all actions, and
execute and deliver to the Banks and the Agent all documents reasonably required
by the Banks from time to time in connection therewith and (b) take all actions,
and execute and deliver to the Banks all documents, reasonably required by the
Banks from time to time in connection therewith, including supplemental security
agreements, form UCC-1 financing statements and other documents extending or
perfecting the Banks' security interest in the personal property covered thereby
as it exists from time to time.
Section 5.10. [INTENTIONALLY OMITTED].
Section 5.11. RELIEF FROM AUTOMATIC STAY. The Borrower hereby agrees,
to the extent permitted by applicable law, that the Borrower will not oppose or
object to, and hereby irrevocably and expressly consents to, a grant to the
Banks of relief from any automatic stay imposed by Section 362 of the Bankruptcy
Code, or otherwise, on or against the exercise of the rights and remedies
otherwise available to Banks as provided in the Loan Documents, and as otherwise
provided by law, in the event the Borrower or any general partner of the
Borrower shall (a) file with any bankruptcy court of competent jurisdiction or
be the subject of any petition under the Bankruptcy Code, (b) be the subject of
any order for relief issued under the Bankruptcy Code, and (c) become the
subject of any Debtor Relief Law. In the event that (a) any Lease Document is
rejected by a trustee or debtor-in-possession in any bankruptcy or insolvency
proceeding involving the Lessee or (b) any Lease Document is terminated as a
result of any bankruptcy or insolvency proceeding involving the Lessee and, if
within sixty (60) days after such rejection or termination, the Agent or its
designee shall so request and certify in writing to the Borrower to accept and
ratify the Lease Documents, the Borrower or the General Partner of the Borrower
will, unless prohibited by bankruptcy law, execute and deliver to the Agent or
such designee a new Lease Document which shall be for the balance of the
remaining term under such original Lease Document before giving effect to such
rejection or termination and shall contain the same conditions, agreements,
terms, provisions and limitations as such original Lease Document (except for
any requirements which have been fulfilled by the Lessee and the Borrower prior
to such rejection or termination). References in this Agreement to such "LEASE
DOCUMENT" shall be deemed also to refer to such new Lease Document.
ARTICLE 6
NEGATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall
remain unpaid or any Bank shall have any Commitment, the Borrower agrees, unless
the Majority Banks and, if specifically indicated, the Agent otherwise consent
in writing, to comply with the following covenants.
Section 6.1. LIENS, ETC.. The Borrower will not create, assume, incur
or suffer to exist any Lien on or in respect of the Collateral, including the
Property, whether now owned or hereafter acquired, or assign any right to
receive income, except that the Borrower may create, incur, assume or suffer to
exist:
(a) Liens securing the Obligations, and;
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(b) Permitted Encumbrances; provided that each Permitted Encumbrance
that is a Lien of Record or a mechanics and materialmen's Lien is junior to the
Lien of a Mortgage.
Section 6.2. DEBTS, GUARANTIES AND OTHER OBLIGATIONS. The Borrower will
not create, assume, suffer to exist or in any manner become or be liable, in
respect of any Debt except (a) Debt of the Borrower under the Credit Documents;
and (b) Debt, not to exceed $5,000 in aggregate principal amount outstanding at
any time.
Section 6.3. MERGER OR CONSOLIDATION; ASSET SALES. The Borrower will
not (a) merge or consolidate with or into any other Person or (b) sell, lease,
transfer, or otherwise dispose of any of its Property, except for sales of
assets pursuant to the Lease Documents; provided in the case of (b), that the
Borrower prepays the Advances with net cash proceeds of any such disposition of
the Property pursuant to the terms of the Ground Lease and the Facilities Lease
on the date of the receipt of such proceeds.
Section 6.4. INVESTMENTS. The Borrower will not make or permit to exist
any loans, advances or capital contributions to, or make any investment in, or
purchase or commit to purchase any stock or other securities or evidences of
indebtedness of or interests in any Person, except (a) the advances contemplated
by the Lease Documents; and (b) investments of the Borrower's paid in capital in
or to the Property.
Section 6.5. AFFILIATE TRANSACTIONS. Except as expressly permitted
elsewhere in this Agreement or in connection with this transaction, the Borrower
will not make, directly or indirectly: (a) any investment in any Affiliate; (b)
any transfer, sale, lease, assignment or other disposal of any assets to any
Affiliate or any purchase or acquisition of assets from an Affiliate; or (c) any
arrangement or other transaction directly or indirectly with or for the benefit
of an Affiliate (including without limitation, guaranties and assumptions of
obligations of an Affiliate); provided that the Borrower may (i) enter into any
arrangement or other transaction with an Affiliate providing for the leasing of
property, the rendering or receipt of services or the purchase or sale of
property in the ordinary course of business if the monetary or business
consideration arising therefrom would be substantially as advantageous to the
Borrower as the monetary or business consideration which it would obtain in a
comparable arm's length transaction with a Person not an Affiliate and (ii)
enter into the Lease Documents and the transactions contemplated thereby.
Section 6.6. [INTENTIONALLY OMITTED].
Section 6.7. COMPLIANCE WITH ERISA. The Borrower will not maintain or
contribute to any Plan or Multiemployer Plan.
Section 6.8. [INTENTIONALLY OMITTED].
Section 6.9. LEASE DOCUMENTS.
(a) The Borrower shall not, without the prior written consent of the
Agent and the Banks:
(i) cancel, amend, supplement, modify or terminate any Lease
Document (except as provided in such Lease Documents) or the Guaranty
or release the Guarantor or the Lessee;
(ii) sell, assign, transfer or encumber (other than pursuant
to the Security Documents), or otherwise dispose of (by operation of
law or otherwise) any part of its interest in the Lease Documents or
the Guaranty;
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(iii) waive any default under or breach of any Lease Document
or the Guaranty or waive, fail to enforce, forgive or release any
right, interest or entitlement, howsoever arising, under or in respect
of any Lease Document or the Guaranty or vary or agree to the variation
in any way of any provision of any Lease Document or the Guaranty or of
the performance of any obligation by any other Person under any Lease
Document or the Guaranty, including without limitation, any default or
breach under Section 5.1 of the Agreement for Facilities Lease;
(iv) petition, request or take any other legal or
administrative action that seeks, or may reasonably be expected, to
rescind, terminate or suspend any Lease Document or the Guaranty or
amend, supplement, or modify all or any part thereof;
(v) (1) exercise any rights under Section 13.2 or 13.4 of the
Ground Lease and the Facilities Lease or Section 8.2 of the Agreement
for Facilities Lease or the Agreement for Ground Lease, (2) waive any
condition precedent under the Ground Lease, the Facilities Lease, the
Agreement for Ground Lease or the Agreement for Facilities Lease, (3)
give any consent under Section 11.8 of the Agreement for Facilities
Lease or the Agreement for Ground Lease, under Section 11.2 or 19.14 of
the Facilities Lease, or under Section 11.2 or 18.14 of the Ground
Lease, or (4) take any action under Sections 11.3, 11.5 or 19.13 of the
Facilities Lease or Section 18.13 of the Ground Lease.
Section 6.10. LINES OF BUSINESS. The Borrower shall not engage in any
business other than (a) the business contemplated by the Lease Documents, (b)
the management and investment of any investments permitted hereby, or (c) any
business related to the management of real property.
ARTICLE 7
REMEDIES
Section 7.1. EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "EVENT OF DEFAULT" under this Agreement:
(a) PAYMENT. The Borrower shall fail to pay any part of the Obligation
within five (5) Business Days after it becomes due and payable under the Credit
Documents;
(b) REPRESENTATION AND WARRANTIES. Any representation or warranty made
or deemed to be made (i) by the Borrower (or its General Partner) in this
Agreement or in any other Credit Document or (ii) by the Lessee or the Guarantor
in any Credit Document shall prove to have been incorrect in any material
respect when made or deemed to be made;
(c) COVENANT BREACHES. (i) The Borrower shall fail to perform or
observe (A) any covenant contained in SECTION 5.3, 6.1, 6.3, 6.7, 6.9, OR 6.10 ,
(B) any covenant contained in SECTIONS 5.2 or 6.2 if such failure should remain
unremedied for fifteen (15) days after the earlier of written notice of such
default shall have been given to the Borrower by the Agent or any Bank or the
Borrower's actual knowledge of such default, or (C) any other term or covenant
set forth in this Agreement or in any other Credit Document which is not covered
by clauses (i) (A) and (B) above or any other provision of this SECTION 7.1 if
such failure shall remain unremedied for thirty (30) days after the earlier of
written notice of such default shall have been given to the Borrower by the
Agent or any Bank or the Borrower's actual knowledge of such default; (ii) the
Guarantor shall fail to perform or observe any covenant contained in the
Residual Guaranty or the Guarantor Consent after any applicable grace period; or
(iii) the Lessee shall fail to perform or observe any covenant contained in any
of the Lease Documents or the Lessee Consent after any applicable grace period;
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(d) CROSS-DEFAULTS.
(i) The Borrower shall fail to pay any principal of or premium
or interest on its Debt which is outstanding in a principal amount of
at least $50,000 individually or when aggregated with all such Debt of
the Borrower so in default (but excluding Debt evidenced by the Notes)
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt;
(ii) any other event shall occur or condition shall exist
under any agreement or instrument relating to Debt (but excluding Debt
evidenced by the Notes) of the Borrower which is outstanding in a
principal amount of at least $50,000 individually or when aggregated
with all such Debt of the Borrower so in default, and shall continue
after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
Debt;
(iii) an Event of Default (as defined in any of the Lease
Documents, Credit Documents or Security Documents) or a Default (as
defined in the Residual Guaranty) shall occur and be continuing; or
(iv) any event shall occur which causes a limited partner of
the Borrower to be deemed a general partner of the Borrower.
(e) INSOLVENCY. (i) The Borrower, the Lessee, or the Guarantor, shall
generally not pay or be unable to pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; (ii) any proceeding shall be
instituted by or against the Borrower, the Lessee, or the Guarantor, seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding
instituted against the Borrower, the Lessee, or the Guarantor, either such
proceeding shall remain undismissed for a period of sixty (60) days or any of
the actions sought in such proceeding shall occur; or (iii) the Borrower, the
Lessee, or the Guarantor, shall take any corporate action to authorize any of
the actions set forth above in this SECTION 7.1(e);
(f) JUDGMENTS. Any judgment or order for the payment of money in excess
of $50,000 shall be rendered against the Borrower and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of ten (10) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(g) GUARANTY OR RESIDUAL GUARANTY. Any provision of the Guaranty or
Residual Guaranty shall for any reason cease to be in full force and effect and
a valid and binding obligation of the Guarantor or the Guarantor shall repudiate
in writing its liability thereunder;
(h) SECURITY DOCUMENTS. (i) Any Security Document shall for any reason,
except to the extent permitted by the terms thereof or caused by the Agent's
failure to file any UCC-3 continuation statement or other filing required to
continue the perfection of such Liens, cease to create a valid and perfected
first priority Lien, other than Permitted Encumbrances, in any of the Collateral
purported to be covered thereby or (ii) an Event of Default (as defined in any
Mortgage) shall occur;
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(i) LEASE DOCUMENTS. Except in connection with the sale of any Property
pursuant to SECTION 6.3(b), any Lease Document shall be terminated or shall
cease to be in full force and effect;
(j) [INTENTIONALLY OMITTED]
(k) CHANGE OF CONTROL. The shareholder of the General Partner on the
date of this Agreement shall cease to own a Control Percentage of the General
Partner's shares of common stock; or
(l) CORPORATE CREDIT DOCUMENTS. An Event of Default occurs under the
Corporate Credit Documents.
Section 7.2. OPTIONAL ACCELERATION OF MATURITY. If any Event of Default
(other than an Event of Default pursuant to SECTION 7.1(e)) shall have occurred
and be continuing, then, and in any such event,
(a) the Agent (i) shall at the request of, or may with the consent of,
the Majority Banks by notice to the Borrower, declare the obligation of each
Bank to make Advances to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Majority Banks, by notice to the Borrower, declare the Notes, all interest on
the Notes, and all other amounts payable under this Agreement to be forthwith
due and payable, whereupon the Notes, all such interest, and all such amounts
shall become and be forthwith due and payable in full, without presentment,
demand, protest or further notice of any kind (including, without limitation,
any notice of intent to accelerate or notice of acceleration), all of which are
hereby expressly waived by the Borrower, and;
(b) the Agent shall at the request of, or may with the consent of, the
Majority Banks proceed to enforce its rights under the Security Documents for
the ratable benefit of the Banks by appropriate proceedings.
Section 7.3. AUTOMATIC ACCELERATION OF MATURITY. If any Event of
Default pursuant to SECTION 7.1(e) shall occur,
(a) the obligation of each Bank to make Advances shall immediately and
automatically be terminated and the Notes, all interest on the Notes, and all
other amounts payable under this Agreement shall immediately and automatically
become and be due and payable in full, without presentment, demand, protest or
any notice of any kind (including, without limitation, any notice of intent to
accelerate or notice of acceleration), all of which are hereby expressly waived
by the Borrower, and;
(b) the Agent shall at the request of, or may with the consent of, the
Majority Banks proceed to enforce its rights under the Security Documents for
the ratable benefit of the Banks by appropriate proceedings.
Section 7.4. NON-EXCLUSIVITY OF REMEDIES. No remedy conferred upon the
Agent is intended to be exclusive of any other remedy, and each remedy shall be
cumulative of all other remedies existing by contract, at law, in equity, by
statute or otherwise.
Section 7.5. RIGHT OF SET-OFF.Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent, if any, specified by SECTION 7.2 to authorize the Agent
upon the consent of the Majority Banks to declare the Notes and any other amount
payable hereunder due and payable pursuant to the provisions of SECTION 7.2 or
the automatic acceleration of the Notes and all amounts payable under this
Agreement pursuant to SECTION 7.3, each Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Bank to
or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing
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<PAGE> 45
under this Agreement, the Note held by such Bank and the other Credit Documents,
irrespective of whether or not such Bank shall have made any demand under this
Agreement, such Note, or such other Credit Documents, and although such
obligations may be unmatured. Each Bank agrees to promptly notify the Borrower
after any such set-off and application made by such Bank; provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this SECTION 7.5 are in addition to
any other rights and remedies (including, without limitation, other rights of
set-off) which such Bank may have.
Section 7.6. MANAGEMENT OF COLLATERAL. After the acquisition of any of
the Collateral by the Agent upon foreclosure, sale pursuant to power of sale, or
deed in lieu of foreclosure, any decisions materially affecting the operations
or value of such Collateral or the sale thereof shall be made by the Agent and
the Majority Banks.
ARTICLE 8
THE AGENT
Section 8.1. AUTHORIZATION AND ACTION. Each Bank hereby appoints and
authorizes the Agent to take such action as Agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof and of the other Credit Documents, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement or any other Credit Document (including, without limitation,
enforcement or collection of the Notes), 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 Banks and such instructions
shall be binding upon all Banks and the holders of Notes; 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, any other Credit
Document, or applicable law.
Section 8.2. AGENT'S RELIANCE, ETC.. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
the other Credit Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, the
Agent: (a) may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent; (b) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Bank and
shall not be responsible to any Bank for any statements, warranties or
representations made in or in connection with this Agreement or the other Credit
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or any other Credit Document on the part of the Borrower, the Lessee,
or the Guarantor to inspect the property (including the books and records) of
the Borrower; (e) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Credit Document; and (f) shall incur no liability under
or in respect of this Agreement or any other Credit Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopier, telegram, cable or telex) reasonably believed by it to be genuine
and signed or sent by the proper party or parties.
Section 8.3. THE AGENT AND ITS AFFILIATES. With respect to its
Commitment, the Advances made by it and the Note issued to it, the Agent shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent. The term "BANK" or "BANKS"
shall, unless otherwise expressly indicated, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, the Borrower
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<PAGE> 46
or any of its Affiliates, and any Person who may do business with or own
securities of the Borrower or any such Affiliate, all as if the Agent were not
an Agent hereunder and without any duty to account therefor to the Banks.
Section 8.4. BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the Financial Statements and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank 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.
Section 8.5. INDEMNIFICATION. Each of the Banks severally agrees to
indemnify based on its pro rata share of the Commitments the Agent from 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 in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under this Agreement or any other Credit Document;
provided that no Bank 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. Without limitation of the foregoing, each Bank agrees to reimburse
the Agent promptly upon demand for its out-of-pocket expenses (including counsel
fees) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement or any other Credit
Document, to the extent that the Agent is not reimbursed for such expenses by
the Borrower.
Section 8.6. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Borrower and may be removed
at any time with or without cause by the Majority Banks upon receipt of written
notice from the Majority Banks to such effect. Upon any such resignation or
removal, the Majority Banks with the consent of the Borrower, which consent
shall not be unreasonably withheld or delayed, shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Banks within thirty (30) days after the retiring Agent's giving of
notice of resignation or the Majority Banks' removal of the retiring Agent, then
the retiring Agent may, on behalf of the Banks and the Borrower, appoint a
successor Agent which shall be an Eligible Assignee, except for the requirement
in the definition of Eligible Assignee of the Agent's consent. Upon the
acceptance of any appointment as Agent by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement and the other
Credit Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this ARTICLE 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Credit Documents. The Borrower shall be entitled to rely
upon the authority of the Agent unless notified otherwise by the Agent or the
Majority Banks.
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<PAGE> 47
ARTICLE 9
MISCELLANEOUS
Section 9.1. AMENDMENTS, ETC.. No amendment or waiver of any provision
of this Agreement, the Notes, or any other Credit Document, nor consent to any
departure by the Borrower, the Lessee, or the Guarantor therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Borrower, the Agent, and the Majority Banks, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall
be effective, unless in writing and signed (a) by each Bank directly affected
thereby to, (i) increase the Commitments of the Banks or any Bank, (ii) reduce
the principal of, or interest on, the Notes or any fees or other amounts payable
hereunder or under any other Credit Document, (iii) postpone any date fixed for
any payment of principal of, or interest on, the Note or any fees or other
amounts payable hereunder, (iv) extend the Termination Date, (v) waive or amend
or consent to any variance in the performance of any provision specifically
requiring the Majority Banks' and the Agent's consent in this Agreement, any
Lease Document, the Residual Guaranty, the Guaranty, the Lessee Consent, or the
Guarantor Consent or of any other provision in the Loan Documents, or (vi) amend
SECTION 7.6; (b) by all the Banks to (i) change the number of Banks which shall
be required for the Banks or any of them to take any action hereunder or under
any other Credit Document, (ii) amend SECTION 2.12 or this SECTION 9.1, (iii)
release the Guarantor from its obligations under the Guaranty, the Residual
Guaranty or the Guarantor's Consent; (iv) release any Collateral; (v) amend the
definition of "Majority Banks"; or (vi) release the Lessee under any Lease
Document or the Lessee Consent (except in accordance with the terms of the Lease
Documents); and (c) by the Agent in addition to the Banks required above to take
such action, to affect the rights or duties of the Agent, as the case may be,
under this Agreement or any other Credit Document.
Section 9.2. NOTICES, ETC.. All notices and other communications shall
be in writing (including telecopy or telex) and mailed, telecopied, telexed,
hand delivered or delivered by a nationally recognized overnight courier, if to
the Borrower, at its address at
Brazos Automotive Properties, L.P.
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Mr. Gregory C. Greene
Telecopy: (214) 520-2009
Telephone: (214) 522-7296
if to any Bank at its Domestic Lending Office specified opposite its name on
Schedule 1 or pursuant to SECTION 2.9(b); and if to the Agent, at its address at
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
Attention: Mr. Philip M. Hendrix, Vice President
Telecopy: (716) 258-7604
Telephone: (716) 258-5437
with a copy to
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay, Suite 700
<PAGE> 48
with a copy to
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay, Suite 700
Houston, Texas 77002
Attention: Ms. Carol M. Burke
Telecopy: (713) 308-5555
Telephone: (713) 308-5561
or, as to each party, at such other address or teletransmission or telex number
as shall be designated by such party in a written notice to the other parties.
All such notices and communications shall, when mailed, telecopied, telexed or
hand delivered or delivered, be effective three (3) days after deposited in the
mails, when telecopy transmission is completed, when confirmed by telex
answer-back or when delivered, respectively, except that notices and
communications to the Agent pursuant to ARTICLE 2 or 8 shall not be effective
until received by the Agent.
Section 9.3. NO WAIVER; REMEDIES. No failure on the part of any Bank or
the Agent to exercise, and no delay in exercising, any right hereunder or under
any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 9.4. COSTS AND EXPENSES. The Borrower agrees to pay within five
(5) Business Days following the receipt of an invoice in reasonable detail (a)
all reasonable out-of-pocket costs, fees and expenses incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Agreement, the Notes and the other Credit
Documents including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent and with respect to advising the Agent as to
its rights and responsibilities under this Agreement, and all reasonable
out-of-pocket costs, fees and expenses, if any, of Agent (including, without
limitation, reasonable counsel fees and expenses of the Agent) in connection
with the creation, perfection, collection, or enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes and
the other Credit Documents, and all costs and expenses relating thereto,
including without limitation, all consulting fees, filing fees, taxes (other
than income taxes), escrow fees, attorney's fees, and other fees and expenses
incurred in connection with liquidation or sale of the Property and all other
reasonable professional fees and (b) all costs, fees and expenses of a Bank
incurred by a Bank in connection with the enforcement of the Obligations of
Borrower arising under the Credit Documents or the exercise of any Rights
arising under the Credit Documents (including, but not limited to, reasonable
attorney's fees, expenses and costs paid or incurred in connection with any
workout or restructure and any action taken in connection with any Debtor Relief
Laws). Any amount to be paid hereunder by the Borrower to Agent or a Bank to the
extent not prohibited by applicable law, shall bear interest from thirty (30)
days after the date of demand until paid at the applicable Default Rate.
Section 9.5. BINDING EFFECT. This Agreement shall become effective when
it shall have been executed by the Borrower and the Agent, and when the Agent
shall have, as to each Bank, either received a counterpart hereof executed by
such Bank or been notified by such Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent and each Bank and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights or delegate its duties
under this Agreement or any interest in this Agreement without the prior written
consent of each Bank and the Agent may only assign its rights and obligations
hereunder in accordance with SECTION 8.6 and a Bank may only assign its rights
and obligations hereunder in accordance with SECTION 9.6.
<PAGE> 49
Section 9.6. BANK ASSIGNMENTS AND PARTICIPATIONS.
(a) ASSIGNMENTS. Any Bank may assign to one or more banks or other
entities all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Advances
owing to it, and the Note held by it); provided, however, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all of such
Bank's rights and obligations under this Agreement, (ii) the amount of the
Commitments and Advances of such Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be an integral multiple of $100,000, (iii) each such assignment shall be made
with the consent of the Agent and the Borrower (which consent shall not be
unreasonably withheld) and shall be to an Eligible Assignee, (iv) the parties to
each such assignment shall execute and deliver to the Agent, for its acceptance
and recording in the Register, an Assignment and Acceptance, together with the
Note subject to such assignment, and (v) each Eligible Assignee (other than the
Eligible Assignee of the Agent) shall pay to the Agent a $2,500 administrative
fee. Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least three (3) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto for all purposes and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and (B) such Bank thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of such Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
(b) TERM OF ASSIGNMENTS. By executing and delivering an Assignment and
Acceptance, the Bank thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Bank 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 or the
execution, legality, validity, enforceability, genuineness, sufficiency of value
of this Agreement or any other instrument or document furnished pursuant hereto;
(ii) such Bank makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower, the Lessee, or the
Guarantor or the performance or observance by the Borrower, the Lessee, or the
Guarantor of any of their obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in SECTION 4.5 hereof and Section 3.5 of the
Guarantor Consent and delivered pursuant to SECTION 5.6 hereof and Section 4.1
of the Guarantor Consent before the date of such assignment and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such Bank or
any other Bank 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; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and (vi)
such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Bank.
(c) THE REGISTER. The Agent shall maintain at its address referred to
in SECTION 9.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Banks and the Commitments of, and principal amount of the Advances owing to,
each Bank from time to time (the "REGISTER"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent, and the Banks shall treat each Person whose name is
<PAGE> 50
recorded in the Register as a Bank hereunder for all purposes of this Agreement
and as the Person entitled to receive all payments of principal and interest
with respect to Advances recorded under its name in the Register. The Register
shall be available for inspection by the Borrower or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(d) PROCEDURES. Upon its receipt of an Assignment and Acceptance
executed by a Bank and an Eligible Assignee, together with the Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of the attached EXHIBIT "A", (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt notice thereof to the Borrower.
Within five (5) Business Days after its receipt of such notice, the Borrower, at
its own expense, shall execute and deliver to the Agent in exchange for the
surrendered Note a new Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed, or if the Commitments have terminated, the
Advances purchased by it pursuant to such Assignment and Acceptance and, if such
Bank has retained any Commitment hereunder, a new Note to the order of such Bank
in an amount equal to the Commitment, or, if the Commitments have terminated,
the Advances retained by it hereunder. Such new Note shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the attached EXHIBIT "G".
(e) PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitments, the Advances owing to it, and the Notes held by it); provided,
however, that (i) such Bank's obligations under this Agreement (including,
without limitation, its Commitments to the Borrower hereunder) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Bank shall remain the
holder of any Note for all purposes of this Agreement, (iv) the Borrower, the
Agent, and the other Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement,
and (v) such Bank shall not require the participant's consent to any matter
under this Agreement, except for change in the principal amount of the Notes,
reductions in fees or interest, releases of Collateral, the Guaranty or the
Residual Guaranty or extending the Maturity Date. The Borrower hereby agrees
that participants shall have the same rights under SECTIONS 2.8, 2.9, 2.11(c),
7.5 and 9.7 as a Bank to the extent of their respective participations;
provided, however, the Borrower shall not, at any time, be obligated to pay any
participant in any interest of any Bank any sum in excess of the sum which the
Borrower would have been obligated to pay to such Bank in respect of such
interest had such Bank not sold such participation.
(f) CONFIDENTIALITY. Each Bank may furnish any information concerning
the Borrower in the possession of such Bank from time to time to assignees and
participants (including prospective assignees and participants); provided that,
prior to any such disclosure, the assignee or participant or proposed assignee
or participant shall agree in writing to preserve the confidentiality of any
confidential information relating to the Borrower received by it from such Bank
in accordance with the provisions of SECTION 9.15.
(g) FEDERAL RESERVE BANK. Notwithstanding any other provision set forth
in this Agreement, any Bank may at any time assign and pledge all or any portion
of its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Bank from its obligations hereunder.
Section 9.7. INDEMNIFICATION. The Borrower shall indemnify the Agent,
the Banks, and each affiliate thereof and their respective directors, officers,
employees and agents from, and discharge, release, and hold each of them
harmless against, any and all losses, liabilities, claims or damages to which
any of them may become subject, insofar as such losses, liabilities, claims or
damages arise out of or result from (a) any actual or proposed use by the
Borrower or any Affiliate of the Borrower of the proceeds of any Advance, (b)
any breach
<PAGE> 51
by the Borrower of any provision of this Agreement or any other Credit Document,
(c) any investigation, litigation or other proceeding (including any threatened
investigation or proceeding whether or not the Agent or any Bank is joined as a
party therein) relating to the foregoing, or (d) any Environmental Claim or
requirement of Environmental Laws concerning or relating to the present or
previously-owned or operated properties, or the operations or business, of the
Borrower or the Lessee, or demolition, renovation, construction, occupancy,
operation, use and/or maintenance of the Properties, regardless of whether the
act, omission, event or circumstance constitutes a violation of any
Environmental Laws at the time of its existence or occurrence, and the Borrower
shall reimburse the Agent, each Bank, and each affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any
reasonable out-of-pocket expenses (including legal fees) incurred in connection
with any such investigation, litigation or other proceeding; AND EXPRESSLY
INCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY
REASON OF THE PERSON BEING INDEMNIFIED'S OWN NEGLIGENCE, BUT EXCLUDING ANY SUCH
LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES INCURRED BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED.
Notwithstanding anything contained in this SECTION 9.7 to the contrary, the
foregoing indemnities shall survive the payment in full of the Notes, including
without limitation, any violation of any Environmental Law discovered after said
date, but attributable to a violation occurring prior to such date (for purposes
hereof the Borrower has the burden of proof that such violations occurred after
the payment in full of the Notes). Nothing in this SECTION 9.7, elsewhere in
this Agreement, or in any other Credit Document, shall limit or impair any
rights or remedies of the Banks against any third party under any Environmental
Laws, including, without limitation any rights of contribution or
indemnification.
Section 9.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 9.9. SURVIVAL OF REPRESENTATIONS, ETC.. All representations and
warranties contained in this Agreement or made in writing by or on behalf of the
Borrower in connection herewith shall survive the execution and delivery of this
Agreement and the Credit Documents, the making of the Advances and any
investigation made by or on behalf of the Banks, none of which investigations
shall diminish any Bank's right to rely on such representations and warranties.
All obligations of the Borrower provided for in SECTIONS 2.8, 2.9, 2.11(c), 9.4,
AND 9.7 shall survive any termination of this Agreement and repayment in full of
the Obligations.
Section 9.10. SEVERABILITY. In case one or more provisions of this
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
not be affected or impaired thereby.
Section 9.11. BUSINESS LOANS. The Borrower warrants and represents that
the loan evidenced by the Notes are and shall be for business, commercial,
investment or other similar purposes and not primarily for personal, family,
household or agricultural use, as such terms are used in Chapter One ("CHAPTER
ONE") of the New York Credit Code. At all such times, if any, as Chapter One
shall establish a Maximum Rate, the Maximum Rate shall be the "indicated rate
ceiling" (as such term is defined in Chapter One) from time to time in effect.
Section 9.12. USURY NOT INTENDED. It is the intent of the Borrower and
each Bank in the execution and performance of this Agreement and the other
Credit Documents to contract in strict compliance with applicable usury laws,
including conflicts of law concepts, governing the Advances of each Bank
including such applicable laws of the State of New York and the United States of
America from time to time in effect. In furtherance thereof, the Banks and the
Borrower stipulate and agree that none of the terms and provisions
<PAGE> 52
contained in this Agreement or the other Credit Documents shall ever be
construed to create a contract to pay, as consideration for the use, forbearance
or detention of money, interest at a rate in excess of the Maximum Rate and that
for purposes hereof "interest" shall include the aggregate of all charges which
constitute interest under such laws that are contracted for, charged or received
under this Agreement; and in the event that, notwithstanding the foregoing,
under any circumstances the aggregate amounts taken, reserved, charged, received
or paid on the Advances, include amounts which by applicable law are deemed
interest which would exceed the Maximum Rate, then such excess shall be deemed
to be a mistake and each Bank receiving the same shall credit the same on the
principal of its Note (or if such Note shall have been paid in full, refund said
excess to the Borrower). In the event that the maturity of the Notes are
accelerated by reason of any election of the holder thereof resulting from any
Event of Default or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Maximum Rate and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
applicable Notes (or, if the applicable Notes shall have been paid in full,
refunded to the Borrower of such interest). In determining whether or not the
interest paid or payable under any specific contingencies exceeds the Maximum
Rate, the Borrower and the Banks shall to the maximum extent permitted under
applicable law amortize, prorate, allocate and spread in equal parts during the
period of the full stated term of the Notes all amounts considered to be
interest under applicable law at any time contracted for, charged, received or
reserved in connection with the Obligations. The provisions of this SECTION 9.12
shall control over all other provisions of this Agreement or the other Credit
Documents which may be in apparent conflict herewith.
Section 9.13. GOVERNING LAW. This Agreement, the Notes, and the other
Credit Documents shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York. EACH PARTY HERETO EXPRESSLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM RELATING TO
THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY.
Section 9.14. NO RECOURSE. The Borrower's obligations under this
Agreement are intended to be the obligations (as limited by this SECTION 9.14)
of the limited partnership and the General Partner. Notwithstanding any other
provision of this Agreement or the other Credit Documents, the Agent and the
Banks agree that the personal liability of the Borrower shall be strictly and
absolutely limited to the Collateral and no recourse for the payment of any
amount due under this Agreement or any other agreement contemplated hereby, or
for any claim based thereon or otherwise in respect thereof, shall be had
against any other assets of the Borrower, of its general or limited partners or
any incorporator, shareholder, officer, director or Affiliate (past, present or
future) of the General Partner or of any successor corporation to the General
Partner or any Affiliate of either, it being understood that the Borrower is a
limited partnership formed for the purpose of the transactions involved in and
relating to this Agreement on the express understanding aforesaid. It is further
the agreement of the Borrower and the Banks that the sole recourse for the
payment of any amount due under this Agreement or any other agreement
contemplated hereby shall be to the Collateral, including the Property which is
subject to the Ground Lease or the Facilities Lease, the Residual Guaranty, the
Guaranty, the obligations of the Lessee under the Lease Documents and to any
Property which is subject to the Security Documents; provided that the Agent
shall be entitled to (a) take such action against the Borrower as may be
necessary to realize upon all or part of the Collateral in satisfaction of the
Obligations and (b) bring suit against the Borrower for the purpose of obtaining
jurisdiction over the Collateral, the Lessee, or the Guarantor and provided that
no judgment or any action under clauses (a) and (b) above shall seek a
deficiency judgment against the Borrower or hold any incorporator, shareholder,
officer or director of the General Partner of the Borrower or Borrower
personally liable for the Obligations. Nothing contained in this SECTION 9.14
shall be construed to (i) prevent recourse against the Borrower or the General
Partner (A) for the Borrower's intentional breach of its obligations under
SECTION 6.1 of this Agreement, (B) fraud or misappropriation of funds by the
Borrower or the General Partner, (C) failure of the Borrower or the General
Partner to properly apply rent and other proceeds
<PAGE> 53
(which are received directly by the Borrower) for payment of costs incurred with
respect to the Collateral or under this Agreement or the Lease Documents, or
(ii) limit the exercise or enforcement, in accordance with the terms of this
Agreement and any other Loan Document, of rights and remedies against the
Lessee, the Guarantor or the assets of the Lessee or the Guarantor.
Section 9.15. CONFIDENTIALITY. Borrower and Banks agree to keep all
information concerning the structure and documentation of this Agreement and the
Lease Documents confidential, including without limitation all information of a
confidential nature received by them from Lessee and Guarantor pursuant to this
Agreement; provided, however, that such information may be disclosed: (a) to
directors, officers, employees, agents, representatives or outside counsel of
Borrower or of the Agent or any Bank or any Affiliate of any Bank; (b) to any
auditor, government official or examiner; (c) pursuant to any subpoena or other
order of any court or administrative agency or otherwise as may be required by
applicable law, rule or regulation; (d) to any other Person if reasonably
incidental to the administration of the credit facility provided herein; (e) in
connection with any litigation to which such Bank or any of its Affiliates may
be a party; (f) to the extent necessary in connection with the exercise of any
remedy under this Agreement or any other Loan Document; (g) subject to
provisions substantially similar to those contained in this SECTION 9.15, to any
actual or proposed participant or assignee; or (h) to any assignee of or
participant in, or prospective assignee of or participant in, any Bank's
Advances or its Commitment or any part thereof under any credit agreement who,
in each case set forth in CLAUSES (A) through (H), agrees in writing to be bound
by the terms of this Section; and provided further, that no confidentiality
obligation shall attach to any information which (1) is or becomes publicly
known, through no wrongful act on the part of any Person who shall have received
such information, (2) is rightfully received by such Person from a third party,
(3) is independently developed by such Person, or (4) is explicitly approved for
release by Guarantor.
Section 9.16. NO ORAL ACKNOWLEDGMENT. A LOAN TRANSACTION IN WHICH THE
AMOUNT INVOLVED EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT
IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR BY THAT PARTY'S AUTHORIZED
REPRESENTATIVE. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE
DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY
PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND THE OTHER
WRITTEN LOAN DOCUMENTS EXECUTED BY BORROWER, AGENT OR GUARANTOR (OR BY BORROWER
OR GUARANTOR FOR THE BENEFIT OF AGENT REPRESENT THE FINAL AGREEMENT BETWEEN
BORROWER, GUARANTOR, AND AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 54
EXECUTED as of the 15th day of September 1998.
BORROWER:
BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership
By: BRAZOS AUTOMOTIVE PROPERTIES
MANAGEMENT, INC., a Delaware corporation,
General Partner
By: /s/ Daniel D. Boeckman
--------------------------------------------
Daniel D. Boeckman, Executive Vice President
AGENT:
THE CHASE MANHATTAN BANK,
as Agent
By: /s/ Philip M. Hendrix
--------------------------------------------
Philip M. Hendrix, Vice President
SYNDICATION AGENT:
FLEET NATIONAL BANK,
as Syndication Agent
By: /s/ Martin K. Birmingham
----------------------------------------------
Name: Martin K. Birmingham
----------------------------------------------
Title: Vice President
---------------------------------------------
<PAGE> 55
BANKS:
------
THE CHASE MANHATTAN BANK,
By: /s/ Philip M. Hendrix
---------------------------------------
Philip M. Hendrix, Vice President
FLEET NATIONAL BANK,
as a Bank
By: /s/ Martin K. Birmingham
---------------------------------------
Name: Martin K. Birmingham
-------------------------------------
Title: Vice President
-------------------------------------
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ J. Theodore Smith
---------------------------------------
Name: J. Theodore Smith
-------------------------------------
Title: Vice President
-------------------------------------
KEYBANK, NA
By: /s/ Timothy Beers
---------------------------------------
Name: Timothy Beers
-------------------------------------
Title: Vice President
-------------------------------------
MARINE MIDLAND BANK
By: /s/ Richard L. Ford
---------------------------------------
Name: Richard L. Ford
-------------------------------------
Title: Vice President
-------------------------------------
STATE STREET BANK & TRUST CO.
By: /s/ David G. Case
---------------------------------------
Name: David G. Case
-------------------------------------
Title: Vice President
-------------------------------------
<PAGE> 56
NATIONAL CITY BANK
By: /s/ Joseph D. Robison
---------------------------------------
Name: Joseph D. Robison
---------------------------------------
Title: Vice President
-------------------------------------
USTRUST
By: /s/ Daniel G. Eastman
---------------------------------------
Name: Eastman, D. G.
--------------------------------------
Title: Vice President
-------------------------------------
<PAGE> 57
<TABLE>
<CAPTION>
SCHEDULE 1
LIST OF BANKS AND COMMITMENTS
COMMITMENT
<S> <C>
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
Attn: Philip M. Hendrix, Vice President $5,635,656.92
Fleet National Bank
One East Avenue
Rochester, New York 14638
Attn: Martin Birmingham $5,423,728.56
Manufacturers and Traders Trust Company
255 East Avenue, 3rd Floor
Rochester, New York 14604
Attn: Theodore J. Smith $4,402,856.99
KeyBank, NA
1200 Bausch & Lomb Plaza
Rochester, New York 14604
Attn: Timothy Beers $4,402,856.99
Marine Midland Bank
One Marine Midland Plaza, 5th Floor
Rochester, New York 14606
Attn: Gary McLouth $4,402,856.99
State Street Bank & Trust Co.
130 East Main Street
Rochester, New York 14604
Attn: David Case $4,402,856.99
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114-3484
Attn: Andrew J. Walshaw $2,515,918.28
USTrust
40 Court Street
Boston, Massachusetts 02108
Attn: Daniel G. Eastman $2,515,918.28
Total $33,702,650.00
==============
</TABLE>
<PAGE> 1
EXHIBIT 10.3
RESIDUAL GUARANTY
(this "GUARANTY")
As of September 15, 1998
The Chase Manhattan Bank, as Agent for
the Lenders described below (the "AGENT")
One Chase Square, Tower 9
Rochester, New York 14643
Re: Credit Agreement (the "AGREEMENT") dated effective as of
September 15, 1998 (the "CLOSING Date") by and among Brazos
Automotive Properties, L.P. as the Borrower (the "BORROWER"),
the several banks party thereto from time to time (the
"LENDERS"), and the Agent.
Ladies and Gentlemen:
1. GUARANTY.For value received, and in consideration of Borrower entering
into the Agreement, but subject in any event to the immediately
following sentence in this SECTION 1, the undersigned corporation (the
"GUARANTOR"), does hereby irrevocably, absolutely, and unconditionally
guarantee (a) payment, when due, of any and all indebtedness 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 the Lenders or the Agent, by Borrower under the
Note as defined in the Agreement (all such obligations being
hereinafter collectively referred to as the "LIABILITIES") and (b) the
performance by Borrower of its obligations under the Credit Documents
pursuant to the terms thereof; provided that the Liabilities shall be
limited to an amount up to and including the total of (i) the maximum
amount (without deduction for any proceeds of sale) that would be
determined as due and payable if Lessee were to exercise its right of
sale to a third party pursuant to Section 11.3(b) of the Ground Lease;
(ii) the maximum amount (without deduction for any proceeds of sale)
that would be determined as due and payable if Lessee were to exercise
its right of sale to a third party pursuant to Section 11.3(b) of the
Facilities Lease; (iii) all interest due and payable on the Note
pursuant to the terms thereof; (iv) any and all other sums which are or
may become due pursuant to the Agreement (including, without
limitation, indemnities, legal fees, and amounts payable pursuant to
Section 9.4 of the Agreement) and (v) to the extent permitted by
applicable law, all other amounts which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due under the
Agreement (the foregoing obligations and undertakings are collectively
referred to as the "OBLIGATIONS"). Notwithstanding anything contained
herein or elsewhere to the contrary, the maximum amount for which
Guarantor shall be liable or responsible under this Guaranty, including
both with respect to payment of Liabilities and performance of
Obligations, shall in no event exceed an amount (the "MAXIMUM AMOUNT")
equal to eighty-one and one-half percent (81.5%) of the principal
balance outstanding from time to time under the "NOTE" (as said term is
defined in the Agreement), and Guarantor shall in no event have any
liability to pay, or otherwise be responsible for, any amount pursuant
to this Guaranty or by operation of law, in equity or otherwise, in
excess of the Maximum Amount as determined at the relevant time of
determination. The Guarantor has a substantial, direct or indirect,
financial interest in the benefits and advantages which will result
from the Agreement. The Guarantor hereby agrees that, upon any Default,
the Guarantor will forthwith pay the Liabilities as limited by this
paragraph immediately upon written demand or perform the Obligations.
RESIDUAL GUARANTY-Page 1
<PAGE> 2
2. GUARANTY CONTINUING, ABSOLUTE, UNLIMITED. This Guaranty is a
continuing, absolute, and unlimited Guaranty of payment and the
Guarantor is a primary obligor and not a surety. The Liabilities and
Obligations shall be conclusively presumed to have been created in
reliance on this Guaranty. The Agent shall not be required to proceed
first against Borrower or any other person, firm or corporation or
against any property securing any of the Liabilities or Obligations
before resorting to the Guarantor for payment or performance. To the
extent permitted by applicable law, this Guaranty shall be construed as
a guarantee of payment without regard to the enforceability of any of
the Liabilities or Obligations or the rejection of the Agreement in
bankruptcy, and notwithstanding any claim, defense (other than payment
or performance by Borrower or the Guarantor) or right of set-off which
Borrower or the Guarantor may have against any Lender or the Agent,
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 of the Liabilities or Obligations of Borrower
or any other obligor, or to vary any terms of payment thereof, and
without regard to any other circumstances which might otherwise
constitute a legal or equitable discharge of a surety or a guarantor.
The Guarantor agrees that this Guaranty shall continue to be effective
or be reinstated, as the case may be, if at any time payment to the
Lenders or the Agent of the Liabilities or any part thereof is
rescinded or must otherwise be returned by any Lender or the Agent upon
the insolvency, bankruptcy, or reorganization of Borrower, or
otherwise, as though such payment to such Lender or the Agent had not
been made. To the extent permitted by applicable law, the Guarantor's
obligation to fully pay or perform the Liabilities and any remedy for
the enforcement thereof shall not be impaired, modified, released, or
limited in any way by any impairment, modification, release, or
limitation of the liability of Borrower or its bankruptcy estate,
resulting from the operation of any present or future provision of the
Bankruptcy Code or any Debtor Relief Law or from the decision of any
court interpreting the same.
3. GUARANTY NOT AFFECTED BY CHANGE IN SECURITY OR OTHER ACTIONS. The Agent
and the Lenders may, from time to time, without the consent of or
notice to the Guarantor, take any or all of the following actions
without impairing or affecting (except insofar as the Liabilities are
reduced or modified thereby), the Guarantor's obligations under this
Guaranty or releasing or exonerating the Guarantor from any of its
liabilities hereunder:
1. retain or obtain a security interest in any property to secure
any of the Liabilities or any obligation hereunder;
2. retain or obtain the primary or secondary liability of any
party or parties, in addition to the Guarantor, with respect
to any of the Liabilities;
3. extend the time or change the manner, place or terms of
payment of, or renew or amend any note or other instrument
evidencing the Liabilities or any part thereof, or amend in
any manner any agreement relating thereto, in each case in
accordance with the terms of each such agreement;
4. release or compromise, in whole or in part, or accept full or
partial payment for, any of the Liabilities hereby guaranteed,
or any liability of any nature of any other party or parties
with respect to the Liabilities or any security therefor;
5. enforce the Agent's or the Lenders' security interest, if any,
in all or any properties securing any of the Liabilities or
any obligations hereunder in order to obtain full or partial
payment of the Liabilities then outstanding; or
RESIDUAL GUARANTY-Page 2
<PAGE> 3
6. release or fail to perfect, protect, or enforce the Agent's or
the Lenders' security interest, if any, in all or any
properties securing any of the Liabilities or any obligation
hereunder, or permit any substitution or exchange for any such
property.
4. WAIVERS. The Guarantor hereby expressly waives to the extent permitted
by law:
1. notice of acceptance of this Guaranty;
2. notice of the existence or incurrence of any or all of the
Liabilities in accordance with the Credit Documents;
3. presentment, demand, notice of dishonor, protest, and all
other notices whatsoever (except the written demand referred
to in SECTION 1 hereinabove);
4. any requirement that proceedings first be instituted by the
Agent or any Lender against the Borrower;
5. all diligence in collection or protection of or realization
upon the Liabilities or any part thereof, or any obligation
hereunder, or any collateral for any of the foregoing;
6. any rights or defenses based on the Agent's or a Lender's
election of remedies, including any defense to the Agent's or
Lender's action to recover any deficiency after a non-judicial
sale; and
7. the occurrence of every other condition precedent to which the
Guarantor might otherwise be entitled.
5. DEFINITIONS. As used in this Guaranty, the following terms will have
the following meanings, unless the context otherwise requires:
ACCOUNTANTS mean Pricewaterhouse Coopers, LLP or other firm of
independent public accountants of nationally recognized standing retained by
Guarantor or any other firm acceptable to the Lenders.
ADJUSTED DEBT means Funded Debt, plus the product of eight (8) times
Rental Payments.
AFFILIATE means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether as
general partner, through ownership of a Control Percentage of such Person or the
general partner of such Person, by contract or otherwise.
AGENT means The Chase Manhattan Bank, a national banking association,
and its successor or successors as administrative agent for Lenders under the
Credit Agreement.
BUSINESS DAY means for all purposes, any day other than Saturday,
Sunday, and any other day that commercial banks are authorized by Law to be
closed in New York, New York.
CAPEX means, for any Four Quarter Period, capital expenditures for
fixed or capital assets that are required to be capitalized on a balance sheet
prepared in accordance with GAAP minus any net proceeds of allowable
sale/leasebacks permitted by SECTION 8N.
RESIDUAL GUARANTY-Page 3
<PAGE> 4
CAPITALIZED LEASE means any lease the obligation for Rental Payments
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.
CASH EQUIVALENTS means (a)securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government of any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers acceptances and repurchase
agreements of any commercial bank which has capital and surplus in excess of
$100,000,000 having maturities of one year or less from the date of acquisition,
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Group or P-2 by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments, (d) money market
accounts or funds with or issued by "Qualified Issuers", (e) repurchase
obligations with a term of not more than 90 days for underlying securities of
the types described in clause (a) above entered into with any bank meeting the
qualifications specified in clause (b) above, (f) demand deposit accounts
maintained in the ordinary course of business with any bank, or with any bank
that is not a bank, not in excess of $100,000 in the aggregate on deposit with
any such bank, and (g) marketable securities of the same or similar type as
owned by the Guarantor as of July 31, 1998, the aggregate actual purchase price
of which shall not exceed $100,000 at any one time.
CHANGE OF CONTROL shall mean the occurrence of one or more of the
following: (a) until Guarantor hires a Chief Executive Officer, members of the
Ownership Group ceasing to own in the aggregate, directly or indirectly,
beneficially or of record, at least (i) sixty percent (60%) of the Preferred
Stock, issued and outstanding at any time or (ii) fifteen percent (15%) of the
Common Stock, issued and outstanding at any time, or (b) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any person or
group, other than the Ownership Group, of (i) shares representing more than
thirty-five percent (35%) of the Common Stock, issued and outstanding at any
time or (ii) more than sixty percent (60%) of the Preferred Stock, issued and
outstanding at any time, or (c) the occupation of a majority of the seats (other
than vacant seats) on the board of directors of Guarantor or any Subsidiary of
the Guarantor by Persons who were neither (i) nominated by the board of
directors of Guarantor nor (ii) appointed by directors so nominated. As used in
this definition of "Change of Control," terms defined in the Securities Exchange
Act of 1934 or the rules of the Securities and Exchange Commission thereunder as
in effect on the date hereof, shall have the respective meanings ascribed to
them therein.
CHASE means The Chase Manhattan Bank.
CLOSING DATE has the meaning given to that term in the Credit
Agreement.
CODE means the Internal Revenue Code of 1986, as amended from time to
time, and related rules and regulations promulgated thereunder by the Internal
Revenue Service.
COMPANY OR COMPANIES means, at any time, Guarantor and each of its
Subsidiaries.
COMMON STOCK means the common stock of the Guarantor, $.01 par value
per share.
COMPLIANCE CERTIFICATE means a certificate substantially in the form of
the attached EXHIBIT A and signed by a Responsible Officer.
CONTROL PERCENTAGE means, with respect to any Person (a) in the case of
a corporation, the percentage of the outstanding capital stock of such Person
having ordinary voting power which gives the direct or indirect holder of such
stock the power to elect a majority of the Board of Directors of such Person and
(b) in the case of a limited partnership, the percentage of the outstanding
limited partnership interests of such Person which gives the direct or indirect
holder of such limited partnership interests the power to remove the general
partner or partners of such Person or to take actions reserved for the limited
partners under the applicable limited partnership act.
RESIDUAL GUARANTY-Page 4
<PAGE> 5
CREDIT AGREEMENT means the Senior Secured Credit Agreement among the
Guarantor, the Agent, the Syndication Agent named therein and the Lenders named
therein, as amended, supplemented or restated from time to time.
CURRENT FINANCIALS means, at any time, the consolidated Financial
Statements of Guarantor and its Subsidiaries most recently delivered to Agent
under SECTIONS 7a.(i) or 7a.(ii), as the case may be.
DEBT means (without duplication), for any Person, (a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of property or services; (d)
obligations of such Person as lessee under Capitalized Leases required to be
capitalized under GAAP; (e) reimbursement obligations in respect of bonds or
letters of credit; (f) obligations of such Person under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) of such
Person to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness of others of the kinds referred to in
clauses (a) through (e) above; and (g) indebtedness of others of the kinds
referred to in clauses (a) through (f) secured by any Lien on or in respect of
any property of such Person whether or not assumed by such Person; provided,
however, that all trade accounts payable and accrued expenses incurred in the
ordinary course of business of such Person and not overdue shall be excluded
from the foregoing.
DEBTOR RELIEF LAWS means Title 11 of the United States Code and all
other applicable state or federal liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments or similar Laws affecting creditors' Rights in effect from time to
time.
DEFAULT is defined in SECTION 10.
DISTRIBUTION means, with respect to any shares of any capital stock or
other equity securities or other interests issued by a Person, (a) the
retirement, redemption, purchase or other acquisition for value of those
securities by such Person, (b) the declaration or payment of any dividend on or
with respect to those securities by such Person (except distributions in the
form of such securities, (c) any loan or advance by that Person to, or other
investment by that Person in, the holder of any of those securities, and (d) any
other payment by that Person with respect to those securities.
DOLLARS and $ means lawful money of the United States of America.
EBITDAR means, as determined, on a rolling twelve month basis and in
respect of any Person the sum of (i) the Net Income of such Person, plus (ii)
the Interest Expense of such Person for such period as determined in accordance
with GAAP and as such item is reported on such Person's financial statements,
(iii) the income tax expense of such Person for such period, (iv) the amount
reported as the depreciation of the assets of such Person for such period,
computed in accordance with GAAP, and as such item is used in the computation of
such Person's Net Income for such period, (v) the amount reported as the
amortization of intangibles for such Person for such period, computed in
accordance with GAAP, and as such item is used in the computation of such
Person's Net Income for such period, and (vi) Rental Payments.
EMPLOYEE PLAN means an employee pension benefit plan covered by Title
IV of ERISA and established or maintained by any Company.
ENVIRONMENTAL LAW means any Law that relates to the pollution or
protection of the environment or to Hazardous Substances.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and related rules and regulations.
FACILITIES LEASE has the meaning given that term in the Agreement.
RESIDUAL GUARANTY-Page 5
<PAGE> 6
FINANCIAL STATEMENTS of a Person means balance sheets, profit and loss
statements, reconciliations of capital and surplus, and statements of cash flow
prepared (a) according to GAAP, (b) in comparative form to prior year-end
figures or corresponding periods of the preceding fiscal year, as applicable,
and (c) on a consolidated basis if that Person had any consolidated Subsidiaries
during the applicable period.
FIXED COVERAGE RATIO means, as determined, on a rolling twelve month
basis the ratio of (a) EBITDAR minus CAPEX for such period, to (b) (i) Rental
Payments, plus (ii) Interest Expense due in respect of Debt for such period of
Guarantor and its Subsidiaries on a consolidated basis determined in accordance
with GAAP.
FOUR QUARTER PERIOD means a period of four full consecutive fiscal
quarter-annual periods, taken together as one accounting period; provided,
however, for the (a) first fiscal quarter period following the Closing Date and
ending on December 31, 1998, the income statement times four (4) annualized
shall be utilized; (b) second fiscal quarter period following the Closing Date
and ending March 31, 1999, the six (6) months income statement times two (2)
annualized shall be utilized; and (c) third fiscal quarter period following the
Closing Date and ending June 30, 1999, the nine (9) months income statement
divided by three (3) then multiplied times four (4) annualized shall be
utilized.
FUNDED DEBT means, when determined, on a rolling twelve (12) month
basis, calculated using the month-end balance for each month on a consolidated
basis for the Companies in accordance with GAAP: (a) indebtedness of such Person
for borrowed money; (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, and (c) obligations of such
Person as lessee under Capitalized Leases; excluding notes generated in the
ordinary course of payable within one year not to exceed $1,000,000 and trade
payables and accrued expenses PROVIDED HOWEVER, the calculation for the period
commencing with the Closing Date and ending twelve months thereafter, shall be
based on the average of the month-end balance for the months elapsed since the
Closing Date.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time,
applied on a basis consistent with those used in preparation of the audited
consolidated financial statements referred to in SECTION 7a.(i) (except for
changes concurred in by Guarantor's Accountants).
GROUND LEASE has the meaning given that term in the Agreement.
HAZARDOUS SUBSTANCE means any substance (a) the presence of which
requires removal, remediation, or investigation under any Environmental Law, or
(b) that is defined or classified as a hazardous waste, hazardous material,
pollutant, contaminant or toxic or hazardous substance under any Environmental
Law.
INTEREST EXPENSE means, in respect of a Person, for any Four Quarter
Period, all interest paid or accrued and amortization of debt discount with
respect to all Funded Debt of such Person for such period (after giving effect
to the net cost associated with all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements, or other financial arrangements
designed to protect such Person against fluctuations in interest rates) and
after giving credit for interest income and construction period interest income.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions and
interpretations of any Tribunal, as in effect from time to time.
LENDER LIENS means Liens in favor of Lenders, or Agent on behalf of
Lenders, securing any of the Obligations (as that term is defined in the Credit
Agreement).
LESSEE means Monro Muffler Realty LLC, a Delaware limited liability
company.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds prior
to the claims of other creditors or the owners.
RESIDUAL GUARANTY-Page 6
<PAGE> 7
LITIGATION means any action by or before any Tribunal.
MATERIAL ADVERSE EVENT means any circumstance or event that,
individually or collectively with other circumstances or events, reasonably is
expected to result in any (a) impairment of the ability of Borrower to perform
any of its payment or other material obligations under any Credit Document or of
the Guarantor to perform any of its payment or other material obligations under
this Guaranty, (b) impairment of the ability of Agent or Lenders to enforce (i)
any of the material obligations of the Guarantor under this Guaranty or (ii) any
of their respective Rights under the Credit Documents, or (c) material and
adverse effect on the business, assets, property or condition (financial or
otherwise) of the Companies as a whole as represented to Lenders in the Current
Financials.
MATERIAL AGREEMENT means, for any Person, any agreement (excluding
purchase orders for material or inventory in the ordinary course of business) to
which that Person is a party, by which that Person is bound, or to which any
assets of that Person may be subject, and that is not cancelable by that Person
upon thirty (30) or fewer days' notice without liability for further payment
other than nominal penalty, and that requires that Person to pay more than
$1,000,000 during any 12-month period.
MINORITY INTERESTS means any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that are
not owned by the Guarantor and/or one or more of its Wholly-Owned Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests constituting
preferred stock at the voluntary or involuntary liquidating value of such
preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in Preferred Stock.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which any Company
(or any Person that, for purposes of Title IV of ERISA, is a member of
Guarantor's controlled group or is under common control with Guarantor within
the meaning of Section 414 of the Code) is making, or has made, or is accruing,
or has accrued, an obligation to make contributions.
NET INCOME means, in respect of a Person, the net income of such Person
computed in accordance with GAAP and as such item is reported from time to time
on such Person's statement of income and retained earnings (or similar
statement) (after deduction for payment of all taxes).
OWNERSHIP GROUP means Peter J. Solomon, Donald Glickman, Richard
Solomon and their spouses or lineal descendants, or any estate of such parties
or any trust of which any of the foregoing are the exclusive beneficiaries.
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established under ERISA.
PERMITTED DEBT means Debt described on the attached SCHEDULE 6n.
PERMITTED LIENS means Liens described on the attached SCHEDULE 6j.
PERSON means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof, or any trustee, receiver, custodian or similar official.
POTENTIAL DEFAULT means the occurrence of any event or the existence of
any circumstance that would, upon notice or lapse of time or both, become a
Default.
PREFERRED STOCK means the Guarantor's Class C Convertible Preferred
Stock, $1.50 par value per share.
QUALIFIED ISSUER means any commercial bank (a) which has capital and
surplus in excess of $100,000,000 and (b) the outstanding long term debt
securities of which are rates at least A-2 by Standard & Poors Ratings Group or
at
RESIDUAL GUARANTY-Page 7
<PAGE> 8
least P-2 by Moody's Investors Service, Inc., or carry an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.
RENTAL PAYMENTS means, as determined, on a rolling twelve (12) month
basis ending on the last day of the accounting period covered by the
consolidated financial statements of Guarantor and its Subsidiaries, and
delivered pursuant to this Guaranty, the dollar amount of the fixed payments
which Guarantor or its Subsidiaries are required to make by the terms of any
lease to its landlords during such period; (a) excluding, however (i) rentals
under Capitalized Leases, (ii) maintenance, repairs, taxes and other similar
changes included in such payments, and (iii) amounts constituting step rent in
accordance with GAAP, and (b) less (x) rental income and (y) amortization of
deferred gains on sale-leasebacks; PROVIDED, HOWEVER, the calculation for the
period commencing with the Closing Date and ending twelve months thereafter,
shall be based on (1) the Four Quarter Period for all lease or ground lease
payments which Guarantor or its Subsidiaries are required to make to Brazos
Automotive Properties, L.P., as lessor under an operating lease with Monro
Leasing, LLC, and (2) the average of all lease or ground lease payments which
Guarantor or its Subsidiaries are required to make in connection with properties
acquired under the APA.
REPORTABLE EVENT means an event described in Section 4043 of ERISA
excluding any such event for which the notice requirement is waived under
applicable regulations of the PBGC.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys and agents.
RESPONSIBLE OFFICER means the chairman, president, senior
vice-president, executive vice-president, chief executive officer or chief
financial officer of Guarantor.
RIGHTS means rights, remedies, powers, privileges and benefits.
SOLVENT means, as to a Person, that (a) the aggregate fair market value
of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable
it to pay its Debts as they mature, and (c) it does not have unreasonably small
capital to conduct its businesses.
SUBSIDIARY of any Person means any entity of which at least 50% (in
number of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person.
TANGIBLE ASSETS of any Person means, as of the date of any
determination thereof, the total amount of all assets of such Person (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting the following: good will, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets (other than prepaid insurance and
deferred taxes), any write up in the book value of any asset resulting from a
revaluation thereof subsequent to December 31, 1998, and such other assets as
are properly classified as "intangible assets" in accordance with GAAP.
TANGIBLE NET WORTH means as of the date of any determination thereof,
the sum of the capital stock of all classes, paid-in-capital and surplus
accounts (net of treasury shares) plus (or minus in the case of a deficit) the
retained earnings of the Guarantor and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, after elimination of Minority
Interests, less all assets which are not Tangible Assets.
TAXES means, for any Person, taxes, assessments or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises or assets.
TRIBUNAL means any (a) local, state, or federal judicial, executive, or
legislative instrumentality, (b) private arbitration board or panel having
binding authority with respect to any party to be bound thereby pursuant to a
written agreement entered into by such party, or (c) central bank.
UCP means the Uniform Customs and Practices for Documentary Credit
(1993 version), International Chamber of Commerce Publication No. 500 (as
amended or modified from time to time).
RESIDUAL GUARANTY-Page 8
<PAGE> 9
WHOLLY-OWNED SUBSIDIARY means a Subsidiary owned 100% by Guarantor.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF GUARANTOR. The Guarantor
represents and warrants to the Agent and the Lenders that:
1. CORPORATE EXISTENCE, GOOD STANDING, AUTHORITY AND COMPLIANCE.
Each of the Companies is duly organized, validly existing and
in good standing under the Laws of the jurisdiction in which
it is incorporated or organized as identified on the attached
SCHEDULE 6a. or on the most recently amended SCHEDULE 6a.
Except where failure is not a Material Adverse Event, each of
the Companies (a) is duly qualified to transact business and
is in good standing as a foreign corporation or other entity
in each jurisdiction where the nature and extent of its
business and properties require due qualification and good
standing (those jurisdictions being identified on the attached
SCHEDULE 6a. or on the most recently amended SCHEDULE 6a., (b)
possesses all requisite authority, permits and power to
conduct its business as is now being, or is contemplated by
this Guaranty to be, conducted, and (c) is in compliance with
all applicable Laws, except in each case where the failure to
so qualify, to possess such authority, permits or power or to
comply with such Law would not cause a Material Adverse Event.
2. SUBSIDIARIES. As of the date of this Guaranty, Guarantor has
no Subsidiaries except as disclosed on the attached SCHEDULE
6b. or on the most recently amended SCHEDULE 6b. reflecting
changes to the schedule as a result of transactions permitted
by this Guaranty. All of the outstanding shares of capital
stock (or similar voting interests) of those Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable
and are owned of record and beneficially as set forth thereon,
free and clear of any Liens, restrictions, claims or Rights of
another Person, other than Permitted Liens, and are not
subject to any warrant, option or other acquisition Right of
any Person or subject to any transfer restriction except for
restrictions imposed by securities Laws and general corporate
Laws.
3. AUTHORIZATION AND CONTRAVENTION. The execution and delivery by
the Guarantor of this Guaranty or related document to which it
is a party and the performance by it of its obligations
thereunder (a) are within its corporate or limited liability
company power, as the case may be, (b) have been duly
authorized by all necessary corporate or limited liability
company action, as the case may be, (c) require no action by
or filing with any Tribunal (other than any action or filing
that has been taken or made on or before the date of this
Guaranty or which would not cause a Material Adverse Event),
(d) do not violate any provision of its charter or bylaws, (e)
do not violate any provision of Law or order of any Tribunal
applicable to it, other than violations that individually or
collectively are not a Material Adverse Event, (f) do not
violate any Material Agreements to which it is a party, other
than a violation which would not cause a Material Adverse
Event, (g) do not result in the creation or imposition of any
Lien (other than the Lender Liens) on any asset of the
Companies, (h) are in furtherance of the corporate purposes of
the Guarantor and (i) do not require the consent or approval
of the shareholders of the Guarantor.
4. BINDING EFFECT. Upon execution and delivery by all parties
thereto, this Guaranty will constitute a legal and binding
obligation of the Guarantor, enforceable against it in
accordance with its terms, except as enforceability may be
limited by applicable Debtor Relief Laws and general
principles of equity.
5. FINANCIAL STATEMENTS; FISCAL YEAR. The Current Financials were
prepared in accordance with GAAP and present fairly, in all
material respects, the consolidated financial condition,
results of operations,
RESIDUAL GUARANTY-Page 9
<PAGE> 10
and cash flows of the Companies as of, and for the portion of
the fiscal year ending on the date or dates thereof (subject
only to normal year-end adjustments). All material liabilities
of the Companies as of the date or dates of the Current
Financials are reflected therein or in the notes thereto.
Except for transactions directly related to, or specifically
contemplated by, the Credit Documents or disclosed to the
Agent, no subsequent material adverse changes have occurred in
the consolidated financial condition of the Companies from
that shown in the Current Financials, nor has any Company
incurred any subsequent material liability.
6. LITIGATION. Except as disclosed on the attached SCHEDULE 6F.
or the most recently amended SCHEDULE 6f., no Company is
subject to, or aware of the threat of, any Litigation that is
reasonably likely to be determined adversely to any Company
or, if so adversely determined, is a Material Adverse Event.
Except as permitted under SECTION 10d., no outstanding and
unpaid judgments against any Company exist.
7. TAXES. All Tax returns of the Companies required to be filed
have been filed (or extensions have been granted) before
delinquency, except for returns for which the failure to file
is not a Material Adverse Event, and all Taxes imposed upon
the Companies that are due and payable have been paid before
delinquency, other than Taxes for which the criteria for
Permitted Liens have been satisfied or for which nonpayment is
not a Material Adverse Event.
8. ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 6h. or
on the most recently amended SCHEDULE 6h., (a) no Company
knows of any environmental condition or circumstance
materially adversely affecting any Company's properties taken
as a whole or operations, (b) no Company has received any
report of any Company's material violation of any
Environmental Law, (c) no Company knows that any Company is
under any obligation to remedy any material violation of any
Environmental Law, or (d) no facility of any Company is used
for, or to the knowledge of any Company has been used for,
storage, treatment or disposal of any Hazardous Substance,
excluding the storage of Hazardous Substances in amounts
commonly and lawfully used in automotive repair shops which
have been handled in compliance with applicable Environmental
Law. Except as disclosed in SCHEDULE 6h., each Company has
taken prudent steps to determine that its properties and
operations do not violate any Environmental Law, other than
violations that are not, individually or in the aggregate, a
Material Adverse Event, except where such condition,
circumstance, violation or non-compliance would not reasonably
be expected to have a monetary impact or cost to the Guarantor
equal to or in excess of five percent (5%) of the Guarantor's
pre-tax income during the preceding Four Quarter Period, such
amount not to exceed $1,000,000.
9. EMPLOYEE PLANS. Except where occurrence or existence is not a
Material Adverse Event, (a) no Employee Plan has incurred an
"accumulated funding deficiency" (as defined in section 302 of
ERISA or section 412 of the Code), (b) no Company has incurred
liability under ERISA to the PBGC in connection with any
Employee Plan (other than required insurance premiums, all of
which have been paid), (c) no Company has withdrawn in whole
or in part from participation in a Multiemployer Plan, (d) no
Company has engaged in any "prohibited transaction" (as
defined in section 406 of ERISA or section 4975 of the Code),
and (e) no "Reportable Event" has occurred, excluding events
for which the notice requirement is waived under applicable
PBGC regulations.
10. PROPERTIES; LIENS. Each of the Companies has good and
marketable title to all its property reflected on the Current
Financials (except for property that is obsolete or that has
been disposed in the ordinary course of business or, after the
date of this Guaranty, as otherwise permitted by SECTION
RESIDUAL GUARANTY-Page 10
<PAGE> 11
8h. or SECTION 8i.). Except for Permitted Liens, no Lien
exists on any property of the Companies, and the execution,
delivery, performance or observance of the Credit Documents
will not require or result in the creation of any Lien (other
than Lender Liens) on the Companies property.
11. GOVERNMENT REGULATIONS. No Company is subject to regulation
under the Investment Company Act of 1940, as amended, or the
Public Utility Holding Company Act of 1935, as amended.
12. TRANSACTIONS WITH AFFILIATES. Except as disclosed on the
attached SCHEDULE 6l. other than the most recently amended
SCHEDULE 6l. (if the disclosures are approved by the Majority
Lenders), no Company is a party to a material transaction with
any of its Affiliates (excluding other Companies), other than
transactions in the ordinary course of business and upon fair
and reasonable terms not materially less favorable than it
could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate. For
purposes of this SECTION 6l., a transaction is "material" if
it requires a Company to pay more than $1,000,000 during the
term of the governing agreement.
13. DEBT. No Company is an obligor on any Funded Debt, other than
Permitted Debt.
14. MATERIAL AGREEMENTS. No default or potential default exists on
the part of any Company under any Material Agreement that is a
Material Adverse Event.
15. INSURANCE. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations
(or, as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the
jurisdictions in which it operates) insurance concerning its
properties and businesses against casualties and contingencies
and of types and in amounts (and with co-insurance and
deductibles) as is customary in the case of similar
businesses.
16. LABOR MATTERS. No actual or threatened strikes, labor
disputes, slow downs, walkouts, or other concerted
interruptions of operations by the employees of the Company
that are a Material Adverse Event exist. Hours worked by and
payment made to employees of the Companies have not been in
violation of the Fair Labor Standards Act or any other
applicable Law dealing with labor matters, other than any
violations, individually or collectively, that are not a
Material Adverse Event. All payments due from the Companies
for employee health and welfare insurance have been paid or
accrued as a liability on its books, other than any
nonpayments that are not, individually or collectively, a
Material Adverse Event.
17. SOLVENCY. As of the date of this Guaranty, the Guarantor is,
and after giving effect to this Guaranty, will be, Solvent.
18. TRADE NAMES. The Guarantor has not used or transacted business
under any other corporate or trade name in the five-year
period preceding the date of this Guaranty, except as
disclosed on the attached SCHEDULE 6r..
19. INTELLECTUAL PROPERTY. Each Company owns or has the right to
use all material licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications
and trade names necessary to continue to conduct its
businesses as presently conducted by it and proposed to be
conducted by it immediately after the date of this Guaranty.
Each Company is conducting its business without infringement
or claim of infringement of any license, patent, copyright,
service
RESIDUAL GUARANTY-Page 11
<PAGE> 12
mark, trademark, trade name, trade secret or other
intellectual property right of others, other than any
infringements or claims that, if successfully asserted against
or determined adversely to a Company, would not, individually
or collectively, constitute a Material Adverse Event. To the
knowledge of the Guarantor, no infringement or claim of
infringement by others of any material license, patent,
copyright, service mark, trademark, trade name, trade secret
or other intellectual property of any Company exists.
20. FULL DISCLOSURE. All information previously furnished,
furnished on the date of this Guaranty, and furnished in the
future, by the Guarantor to Agent and the Lenders in
connection with the Credit Documents (a) was, is, and will be,
true and accurate in all material respects or based on
reasonable estimates on the date the information is stated or
certified, and (b) did not, does not, and will not, fail to
state any fact the omission of which would otherwise make any
such information materially misleading.
21. YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the
Guarantor's and its Subsidiaries' computer systems and (b)
equipment containing embedded microchips (including systems
and equipment supplied by others or with which Guarantor's or
its Subsidiaries' systems interface) and the testing of all
such systems and equipment, as so reprogrammed, will be
completed by October 1, 1999; provided, however, that
Guarantor shall provide to Agent a status report on the
efforts of Guarantor and its Subsidiaries to complete the
foregoing programming by July 1, 1999. The cost to the
Guarantor and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year
2000 to the Guarantor and its Subsidiaries (including, without
limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in a Default or a
Material Adverse Event.
7. AFFIRMATIVE COVENANTS. So long as any Credit Document remains in
effect:
1. ITEMS TO BE FURNISHED. Guarantor shall cause the following to
be furnished to Agent for the benefit of the Lenders:
1. Promptly after preparation, and no later than one
hundred (100) days after the last day of each fiscal
year of Guarantor, Financial Statements showing the
consolidated financial condition and results of
operations of the Companies as of, and for the year
ended on, that last day, accompanied by:
(i) the unqualified opinion of Guarantor's
Accountants, based on an audit using generally accepted auditing
standards, that the Financial Statements were prepared in accordance
with GAAP and present fairly, in all material respects, the
consolidated financial condition and results of operations of the
Companies,
(ii) a certificate from the accounting firm to the
Lenders indicating that during its audit it obtained no knowledge of
any Default or Potential Default or, if it obtained knowledge, the
nature and period of existence thereof, and
(iii) a Compliance Certificate with respect to the
Financial Statements.
2. Promptly after preparation, and no later than fifty (50) days
after the last day of the first three fiscal quarters of
Guarantor, Financial Statements showing the consolidated
financial condition and results of operations of the Companies
for the fiscal quarter and for the period from the beginning
of the current fiscal year to the last day of the
fiscal quarter,
RESIDUAL GUARANTY-Page 12
<PAGE> 13
subject to ordinary year-end adjustments, accompanied by a Compliance
Certificate with respect to the Financial Statements.
3. Within thirty (30) days after the end of each fiscal year of
Guarantor (commencing with the fiscal year ending March 31,
1999, in the case of financial projections, and commencing
with the fiscal year ending March 31, 1999, in the case of
financial budgets), financial projections for the succeeding
three (3) fiscal years and the financial budget for the next
succeeding fiscal year, accompanied by a certificate executed
by a Responsible Officer certifying that the projections and
budget were prepared by Guarantor based on assumptions that,
in light of the historical performance of the Companies and
their prospects for the future, are reasonable as of the date
prepared.
4. Promptly after receipt, a copy of each interim or special
audit report and management letter issued by Guarantor's
Accountants with respect to any Company or its financial
records.
5. Notice, promptly after Guarantor knows or has reason to know,
of (i) the existence and status of any Litigation that, if
determined adversely to any Company, would be a Material
Adverse Event, (ii) any change in any material fact or
circumstance represented or warranted by the Guarantor or the
Lessee in any Credit Document, (iii) the receipt by any
Company of notice of any violation or alleged violation of
ERISA or any Environmental Law (which individually or
collectively with other violations or allegations could
constitute a Material Adverse Event), or (iv) a Default or
Potential Default, specifying the nature thereof and what
action the Companies have taken, are taking, or propose to
take.
6. Promptly after filing, copies of all material reports or
filings filed by or on behalf of any Company with any
Tribunal.
7. Promptly upon reasonable request by Agent information (not
otherwise required to be furnished under the Credit Documents)
respecting the business affairs, assets and liabilities of the
Companies and opinions, projections, certifications and
documents in addition to those mentioned in this Guaranty.
2. BOOKS AND RECORDS. Guarantor will, and will cause the Lessee to
maintain books, records and accounts necessary to prepare financial
statements in accordance with GAAP.
3. INSPECTIONS. Upon reasonable request and reasonable prior notice,
Guarantor will, and will cause each Company to, allow Agent and Lenders
(or their Representatives) to inspect any of its properties, to review
reports, files and other records and to make and take away copies, to
conduct tests or investigations, and to discuss any of its affairs,
conditions and finances with its other creditors, directors, officers,
employees or representatives from time to time, during reasonable
business hours.
4. TAXES. Guarantor will, and will cause each Company to, promptly pay
when due any and all Taxes, other than Taxes which are being contested
in good faith by lawful proceedings diligently conducted, against which
reserve or other provision required by GAAP has been made, and in
respect of which levy and execution of any Lien have been and continue
to be stayed.
RESIDUAL GUARANTY-Page 13
<PAGE> 14
5. PAYMENT OF OBLIGATIONS. Guarantor will, and will cause each
Company to, promptly pay (or renew and extend) all of its
material obligations as they become due (unless the
obligations are being contested in good faith by appropriate
proceedings).
6. EXPENSES. Guarantor shall, or shall cause Lessee to, promptly
pay, within five (5) days following the receipt of an invoice
therefor setting forth the amount thereof (a) all costs, fees
and expenses paid or incurred by Agent and Lenders in
connection with the arrangement, syndication and negotiation
of the Agreement and the negotiation, preparation, delivery
and execution of the Credit Documents and any related
amendment, waiver or consent (including in each case, without
limitation, the reasonable fees and expenses of Agent's and
Lenders' counsel ) and (b) all costs, fees and expenses of
Agent, Lenders and Arranger incurred by Agent, Lenders or
Arranger in connection with the enforcement of the obligations
of the Borrower arising under the Credit Documents or of the
Guarantor arising hereunder or the exercise of any Rights
arising under this Guaranty or the Credit Documents
(including, but not limited to, reasonable attorneys' fees,
expenses and costs paid or incurred in connection with any
workout or restructure and any action taken in connection with
any Debtor Relief Laws), all of which shall be a part of the
Obligation and shall bear interest, if not paid upon demand,
at the Default Rate (as defined in the Agreement) until
repaid.
7. MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as
otherwise permitted by SECTION 8i., Guarantor will, and will
cause each Company to, (a) maintain its corporate or limited
liability company, as the case may be, existence and good
standing in its state of organization and its authority to
transact business in all other states where failure to
maintain its authority to transact business is a Material
Adverse Event; (b) maintain all licenses, permits and
franchises necessary for its business where failure to do so
is a Material Adverse Event; (c) keep all of its assets that
are useful in and necessary to its business in good working
order and condition (ordinary wear and tear excepted) and make
all necessary repairs and replacements.
8. INSURANCE. Guarantor will, and will cause each Company to,
maintain with financially sound, responsible and reputable
insurance companies or associations (or, as to workers'
compensation or similar insurance, with an insurance fund or
by self-insurance authorized by the jurisdictions in which it
operates) insurance concerning its properties and businesses
against casualties and contingencies and of types and in
amounts (and with co-insurance and deductibles) as is
customary in the case of similar businesses similarly
situated, which insurance may provide for reasonable
deductibility from coverage thereof, Guarantor shall, and
shall cause each Company to, deliver to Agent certificates of
insurance for each policy of insurance and evidence of payment
of all premiums which certificates of insurance shall name
Agent as an additional insured, secured party, mortgagee and
loss payee and which provide Agent with at least thirty (30)
days notice of cancellation or reduction in coverage. If any
insurance policy covered by an insurance certificate
previously delivered to Agent is altered or canceled, then
Guarantor shall cause to be promptly delivered to Agent a
replacement certificate (in form and substance satisfactory to
the Majority Lenders).
9. PRESERVATION AND PROTECTION OF RIGHTS. Guarantor will, and
will cause each Company to, perform the acts and duly
authorize, execute, acknowledge, deliver, file and record any
additional writings as Agent may reasonably deem necessary or
appropriate to protect the Rights of Agent or Lenders under
this Guaranty or any Credit Document.
10. ENVIRONMENTAL LAWS. Guarantor will, and will cause each
Company to, (a) conduct its business so as to comply with all
applicable Environmental Laws and shall promptly take
corrective action to remedy any non-compliance with any
Environmental Law, except where failure to comply or take
RESIDUAL GUARANTY-Page 14
<PAGE> 15
action would not have a monetary impact or cost to the
Guarantor equal to or in excess of five percent (5%) of the
Guarantor's pre-tax income during the preceding Four Quarter
Period, or would otherwise be a Material Adverse Event, such
amount in no event to exceed $1,000,000, and (b) establish and
maintain a management system designed to ensure compliance
with applicable Environmental Laws and minimize financial and
other risks to the Companies arising under applicable
Environmental Laws or as the result of environmentally related
injuries to Persons or property. Guarantor shall deliver
reasonable evidence of compliance with the foregoing covenant
to Lenders within thirty (30) days after any request from
Agent.
11. INDEMNIFICATION. GUARANTOR WILL, AND WILL CAUSE EACH COMPANY
TO, JOINTLY AND SEVERALLY, INDEMNIFY, PROTECT AND HOLD AGENT,
LENDERS AND ARRANGER AND ITS PARENTS, SUBSIDIARIES,
REPRESENTATIVES, SUCCESSORS AND ASSIGNS (INCLUDING ALL
OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS)(COLLECTIVELY, THE
"INDEMNIFIED PARTIES") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS AND PROCEEDINGS AND ALL COSTS,
EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL ATTORNEYS' FEES
AND LEGAL EXPENSES WHETHER OR NOT SUIT IS BROUGHT) AND
DISBURSEMENTS OF ANY KIND OR NATURE (THE "INDEMNIFIED
LIABILITIES") THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED BY
OR ASSERTED AGAINST THE INDEMNIFIED PARTIES, IN ANY WAY
RELATING TO OR ARISING OUT OF (A) THE DIRECT OR INDIRECT
RESULT OF THE VIOLATION BY ANY COMPANY OF ANY ENVIRONMENTAL
LAW, (B) ANY COMPANY'S GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR
PRESENCE IN CONNECTION WITH ITS PROPERTIES OF A HAZARDOUS
SUBSTANCE (INCLUDING, WITHOUT LIMITATION, (I) ALL DAMAGES OF
ANY USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE,
RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR PRESENCE,
OR (II) THE COSTS OF ANY ENVIRONMENTAL INVESTIGATION,
MONITORING, REPAIR, CLEANUP OR DETOXIFICATION AND THE
PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL OR
OTHER PLANS), OR (C) THE CREDIT DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN. HOWEVER, ALTHOUGH EACH
INDEMNIFIED PARTY HAS THE RIGHT TO BE INDEMNIFIED UNDER THE
CREDIT DOCUMENTS FOR ITS OWN ORDINARY NEGLIGENCE, NO
INDEMNIFIED PARTY HAS THE RIGHT TO BE INDEMNIFIED UNDER THE
CREDIT DOCUMENTS FOR ITS OWN FRAUD, GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. THE PROVISIONS OF AND UNDERTAKINGS AND
INDEMNIFICATION SET FORTH IN THIS PARAGRAPH SHALL SURVIVE THE
SATISFACTION AND PAYMENT OF THE LIABILITIES AND TERMINATION OF
THIS GUARANTY. GUARANTOR'S INDEMNITY OBLIGATIONS SHALL BE
JOINT AND SEVERAL WITH ANY SIMILAR SUCH INDEMNITY PROVIDED BY
ANY AFFILIATE OF GUARANTOR TO AGENT AND LENDERS.
12. FURTHER ASSURANCES. The Guarantor shall, and shall cause each
Guarantor to, do such further things and execute such
additional documents (including, without limitation, the
perfection of security interest, in after-acquired property)
as are reasonably requested by Agent or Lenders.
13. CHANGE OF CONTROL. Guarantor shall promptly, but in any event
within five (5) Business Days, give written notice to Agent
upon obtaining knowledge of the occurrence of a Change of
Control.
8. NEGATIVE COVENANTS. So long as any of the Credit Documents remains in
effect:
RESIDUAL GUARANTY-Page 15
<PAGE> 16
1. EMPLOYEE PLANS. Except where a Material Adverse Event would
not result, Guarantor may not and may not permit any Company
to permit any of the events or circumstances described in
SECTION 6i. to exist or occur.
2. DEBT AND DEBT INSTRUMENTS. Guarantor may not and may not
permit any Company to create, incur or suffer to exist any
Funded Debt, other than Permitted Debt.
3. LIENS. Guarantor may not and may not permit any Company to (a)
create, incur or suffer or permit to be created or incurred or
to exist any Lien upon any of its assets other than Permitted
Liens or (b) enter into or permit to exist any arrangement or
agreement that directly or indirectly prohibits any Company
from creating or incurring any Lien on any of its assets,
other than the Credit Documents and leases that place a Lien
prohibition on only the leased property.
4. TRANSACTIONS WITH AFFILIATES. Except as disclosed on the
attached SCHEDULE 6l., or on the most recently amended
SCHEDULE 6l., (if the disclosures are approved by the Majority
Lenders), Guarantor may not and may not permit any Company to
enter into any material transaction with any of its Affiliates
(excluding other Companies), other than transactions in the
ordinary course of business and upon fair and reasonable terms
not materially less favorable than it could obtain or could
become entitled to in an arm's-length transaction with a
Person that was not its Affiliate. For purposes of this
SECTION 8d., a transaction is "material" if it requires any
Company to pay more than $1,000,000 during the term of the
agreement governing such transaction.
5. COMPLIANCE WITH LAWS AND DOCUMENTS. Guarantor may not and may
not permit any Company to (a) violate the provisions of any
Laws applicable to it or of any Material Agreement to which it
is a party if that violation alone, or when aggregated with
all other violations, would be a Material Adverse Event, (b)
violate the provisions of its charter or bylaws, or (c)
repeal, replace or amend any provision of its charter or
bylaws if that action would be a Material Adverse Event.
6. LOANS, ADVANCES AND INVESTMENTS. Except for investments
permitted by SECTION 8g. or SECTION 8i., Guarantor may not and
may not permit any Company to make any loan, advance,
extension of credit or capital contribution to, make any
investment in, or purchase or commit to purchase any stock or
other securities or evidences of Debt of, or interests in, any
other Person; provided, however, that any Company may make an
advance to, investment in or purchase from another Person if
(1) (a) such action results in the acquisition of such Person
by such Company, (b) such action results in the Guarantor's
direct or indirect ownership of new stores, (c) the Person
being acquired is in a line of business which is substantially
the same as or complimentary to the Guarantor's principal line
of business, and (d) immediately after giving effect to such
acquisition, the Companies shall be in compliance with all
covenants under ARTICLE 9 and shall not be in Default or
Potential Default under this Guaranty; provided, further, that
if any acquisition is in excess of an aggregate cost to any
Company of more than $5,000,000, the Guarantor shall provide
to the Agent evidence of compliance with all covenants in this
Guaranty prior to the consummation of such acquisition, or (2)
such action is for investments in Cash Equivalents.
7. DIVIDENDS AND DISTRIBUTIONS. Guarantor may not and may not
permit any Company to declare, make or pay any Distribution
other than Distributions declared, made or paid by (a)
Guarantor wholly in the form of its capital stock, (b) such
Company to Guarantor, or (c) Guarantor on its planned issuance
of $25,000,000 in convertible preferred shares; provided that
such shares are issued at the market rate for similar such
securities, Guarantor may not and may not permit any Company
to enter into or permit to exist any arrangement or agreement
(other than this Guaranty or the Credit Agreement) that
prohibits it from paying dividends or other distributions to
its shareholders.
RESIDUAL GUARANTY-Page 16
<PAGE> 17
8. SALE OF ASSETS. Guarantor may not and may not permit any
Company to sell, assign, lease, transfer or otherwise dispose
of any of its assets, other than (a) sales of inventory in the
ordinary course of business, (b) the sale, discount or
transfer of delinquent accounts receivable in the ordinary
course of business for purposes of collection, (c) occasional
sales, leases or other dispositions of immaterial assets for
consideration not less than fair market value, (d) sales,
leases or other dispositions of assets that are obsolete or
have negligible fair market value, (e) sales of equipment for
a fair and adequate consideration (but if replacement
equipment is necessary for the proper operation of the
business of the seller, the seller must promptly replace the
sold equipment), (f) sale and leasebacks of real property
which do not in the aggregate exceed forty percent (40%) of
the Guarantor's capital expenditures in the applicable fiscal
year, (g) sale, lease or other disposition by any Company of
its assets to the Guarantor (subject to the terms of the
Credit Documents), or (h) sales of assets having an aggregate
fair market value not exceeding $2,000,000 during any fiscal
year of Guarantor and sold for a price which is within a fair
market value for such assets, or (i) as disclosed on the
attached Schedule 8.h.
9. MERGERS AND DISSOLUTIONS. Guarantor may not and may not permit
any Company to merge or consolidate with any other Person or
liquidate, wind up or dissolve (or suffer any liquidation or
dissolution); provided, however, if after giving effect
thereto, no Default shall have occurred and be continuing (a)
any Person (other than Lessee) may merge into the Guarantor in
a transaction in which the Guarantor is the surviving
corporation, (b) any Person other than the Guarantor may merge
into any Subsidiary of the Guarantor (other than Lessee) in a
transaction in which the surviving entity is such Subsidiary
and (c) any Subsidiary of the Guarantor (other than Lessee)
may liquidate or dissolve so long as the Guarantor determines
in good faith that such liquidation or dissolution is in the
best interests of the Guarantor.
10. ASSIGNMENT. Guarantor may not and may not permit any Company
to assign or transfer any of its Rights, duties, or
obligations under any of the Credit Documents.
11. FISCAL YEAR AND ACCOUNTING METHODS. Guarantor may not and may
not permit any Company to change its fiscal year or its method
of accounting (other than immaterial changes in methods or as
required or permitted by GAAP).
12. NEW BUSINESSES. Guarantor may not and may not permit any
Company to engage in any business except the businesses in
which they are presently engaged and any other reasonably
related business.
13. GOVERNMENT REGULATIONS. Guarantor may not and may not permit
any Company to conduct its business in a way that it becomes
regulated under the Investment Company Act of 1940, as
amended, or the Public Utility Holding Company Act of 1935, as
amended.
14. LEASES; SALE-LEASEBACKS. Except as otherwise provided herein
the Guarantor will not, and will not permit any Company to,
enter into any arrangement whereby the Guarantor or such
Company shall sell or transfer property owned by the Guarantor
or such Company and then or thereafter as Lessee rent or lease
such property (any such arrangement being herein referred to
as a "sale-leaseback") other than (i) a sale-leaseback solely
with the Guarantor or a Wholly-Owned Subsidiary, (ii)
sale-leasebacks of equipment pursuant to an off-balance sheet
transaction with Fleet National Bank existing on the date
hereof (and extensions and renewals thereof), or (iii) a lease
for temporary period, not in excess of three (3) months, to
permit the orderly relocation of operations carried on
RESIDUAL GUARANTY-Page 17
<PAGE> 18
in or at a facility subsequent to the sale thereof and prior
to the surrender of possession thereof, unless (x) such
sale-leaseback transaction is completed within one hundred
eighty (180) days of the date of acquisition of the property
involved, and (y) such sale-leaseback is entered into in
compliance with any applicable limitations hereof and (z) at
the time of consummation thereof and after giving effect
thereto no Default or Potential Default exists.
15. SUBSIDIARIES. Permit any Person other than a Company to
acquire, directly or indirectly, beneficially or of record,
shares representing more than twenty percent (20%) of the
aggregate ordinary voting power represented by the issued and
outstanding capital stock of any Subsidiary of the Guarantor.
9. FINANCIAL COVENANTS. So long as any Credit Document is on force and
effect, Guarantor covenants and agrees to comply with the following
financial covenants as calculated on the last day of each fiscal
quarter period and certified by Guarantor in the most recent Compliance
Certificate delivered to Agent, on behalf of the Lenders, from time to
time in accordance with the terms of this Guaranty:
<TABLE>
<CAPTION>
Maximum Minimum EBITDAR less
Adjusted Debt/EBITDAR CAPEX to Interest Minimum Tangible
Expense plus Rental Net Worth
Payments
========================= ======================== ========================== =======================
<S> <C> <C> <C>
At 12/31/98 Not greater than 5.30 Not less than .85 to 1.0 $70,000,000 at
to 1.0 12/31/98
- ------------------------- ------------------------ -------------------------- -----------------------
At 3/31/99 thru 06/30/99 Not greater than 5.30 Not less than .85 to 1.0 $70,000,000 at 3/31/99
to 1.0
- ------------------------- ------------------------ -------------------------- -----------------------
At 9/30/99 thru Not greater than 4.70 Not less than .85 to 1.0 $70,000,000 at 9/30/99
12/31/99 to 1.0
- ------------------------- ------------------------ -------------------------- -----------------------
At 3/31/00 thru 12/31/00 Not greater than 4.25 Not less than 1.30 to 1.0 $80,000,000 at 3/31/00
to 1.0
- ------------------------- ------------------------ -------------------------- -----------------------
At 3/31/01 thru 12/31/01 Not greater than 3.85 Not less than 1.50 to 1.0 $92,600,000 at 3/31/01
to 1.0
- ------------------------- ------------------------ -------------------------- -----------------------
At 3/31/02 and Not greater than 3.55 Not less than 1.70 to 1.0 $110,000,000 at
thereafter to 1.0 3/31/02
========================= ======================== ========================== =======================
</TABLE>
Notwithstanding the foregoing covenants, upon receipt of the proceeds
from the issuance of at least $25,000,000 of equity or equity related securities
to the Guarantor, the following covenants shall apply:
<TABLE>
<CAPTION>
========================= ======================== ============================ =======================
Maximum Minimum EBITDAR less
Adjusted Debt/EBITDAR CAPEX to Interest Minimum Tangible
Expense plus Rental Payments Net Worth
========================= ======================== ============================ =======================
<S> <C> <C> <C>
At 12/31/98 Not greater than 4.60 to Not less than 1.00 to 1.0 $95,000,000 at
1.0 12/31//98
- ------------------------- ------------------------ ----------------------------- -----------------------
At 3/31/99 thru 06/30/99 Not greater than 4.60 Not less than 1.00 to 1.0 $95,000,000 at 3/31/99
to 1.0
- ------------------------- ------------------------ ----------------------------- -----------------------
At 9/30/99 thru 12/31/99 Not greater than 4.10 Not less than 1.00 to 1.0 $95,000,000 at 9/30/99
to 1.0
- ------------------------- ------------------------ ----------------------------- -----------------------
At 3/31/00 thru 12/31/00 Not greater than 3.70 Not less than 1.40 to 1.0 $105,000,000 at
to 1.0 3/31/00
- ------------------------- ------------------------ ----------------------------- -----------------------
</TABLE>
RESIDUAL GUARANTY-Page 18
<PAGE> 19
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
At 3/31/01 thru 12/31/01 Not greater than 3.35 Not less than 1.70 to 1.0 $117,600,000 at
to 1.0 3/31/01
- ------------------------- ------------------------ ----------------------------- -----------------------
At 3/31/02 and Not greater than 3.05 Not less than 1.90 to 1.0 $135,000,000 at
thereafter to 1.0 3/31/02
========================= ======================== ============================ =======================
</TABLE>
10. EVENTS OF DEFAULT.
1. CREDIT DOCUMENTS. The failure of Borrower to pay any part of
the Liabilities within five (5) Business Days after it becomes
due and payable under the Credit Documents or the occurrence
and continuation of a Default under any Credit Document.
2. COVENANTS. The failure of Guarantor (and, if applicable, any
other Company) to punctually and properly perform, observe and
comply with:
1. Any covenant or agreement contained in SECTIONS 8g.,
8h., 8i., 8j., OR 8n.;
2. Any covenant or agreement contained in SECTION 7a.(i)
AND (ii), 7b., 7c., 7g., 8a., 8b., 8f., 8k., 8l.,
8m., OR 8o., and failure continues for ten (10) days
after the first to occur of (i) Guarantor knows of or
(ii) Guarantor receives notice from Agent of, such
failure; or
3. Any other covenant or agreement contained in any
Credit Document (other than the covenants to pay the
Liabilities and the covenants in CLAUSES (a) AND (b)
preceding), and failure continues for thirty (30)
days after the first to occur of (i) Guarantor knows
of or (ii) Guarantor receives notice from Agent of,
such failure.
3. DEBTOR RELIEF. A Company (a) is not Solvent, (b) fails to pay
its Debts generally as they become due, (c) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Relief
Law, or (d) becomes a party to or is made the subject of any
proceeding provided for by any Debtor Relief Law, other than
as a creditor or claimant, that could suspend or otherwise
adversely affect the Rights of Agent or Lenders granted in the
Credit Documents (unless, if the proceeding is involuntary,
the applicable petition is dismissed within sixty (60) days
after its filing).
4. JUDGMENTS AND ATTACHMENTS. A Company fails, within sixty (60)
days after entry, to pay, bond or otherwise discharge any
judgment or order for the payment of money in excess of
$1,000,000 (individually or collectively) or any warrant of
attachment, sequestration or similar proceeding against any
Company's assets having a value (individually or collectively)
of $1,000,000, which is neither (a) stayed on appeal nor (b)
diligently contested in good faith by appropriate proceedings
and adequate reserves have been set aside on its books in
accordance with GAAP.
5. GOVERNMENT ACTION. (a) A final non-appealable order is issued
by any Tribunal (including, but not limited to, the United
States Justice Department) seeking to cause a Company to
divest a significant portion of its assets under any
antitrust, restraint of trade, unfair competition, industry
regulation or similar Laws, or (b) any Tribunal condemns,
seizes or otherwise appropriates, or takes custody or control
of all or any substantial portion of the assets of a Company.
6. MISREPRESENTATION. Any material representation or warranty
made by Guarantor contained herein or in any Credit Document
at any time proves to have been materially incorrect when
made.
RESIDUAL GUARANTY-Page 19
<PAGE> 20
7. CHANGE OF CONTROL. A Change of Control occurs and the
Guarantor's obligations under the Senior Secured Credit
Facility dated as of September 15, 1998 among Guarantor as
Borrower, the lenders named therein and Chase as Agent for the
lenders, shall have been accelerated as a result of such
Change of Control.
8. MATERIAL ADVERSE EVENT. A Material Adverse Event occurs.
9. DEFAULT UNDER OTHER AGREEMENTS. (a) a Company fails to pay
when due (after lapse of any applicable grace period) any Debt
in excess (individually or collectively) of $1,000,000; (b)
any default exists under any agreement to which a Company is a
party, the effect of which is to cause, or to permit any
Person (other than a Company) to cause, an amount in excess
(individually or collectively) of $1,000,000 to become due and
payable by a Company before its stated maturity; or (c) any
Debt in excess (individually or collectively) of $1,000,000 is
declared to be due and payable or required to be prepaid by a
Company before its stated maturity.
10. VALIDITY AND ENFORCEABILITY OF CREDIT DOCUMENTS. Except in
accordance with its terms or as otherwise expressly permitted
by this Guaranty, any Credit Document at any time after its
execution and delivery ceases to be in full force and effect
in any material respect or is declared by a Tribunal to be
null and void or its validity or enforceability is contested
in writing by Guarantor or Guarantor denies in writing that it
has any further liability or obligations under any Credit
Document.
11. EMPLOYEE BENEFIT PLANS. Any of the following exists with
respect to any Employee Plan of any Company: (a) a Reportable
Event; (b) disqualification or involuntary termination
proceedings; (c) voluntary termination proceedings are
initiated while a funding deficiency (as determined under
section 412 of the Code) exists; (d) withdrawal liability
exists with respect to a Multiemployer Plan; (e) a trustee is
appointed by any federal district court or the PBGC to
administer an Employee Plan; (f) termination proceedings are
initiated by the PBGC; (g) failure by any Company to promptly
notify Agent upon its receipt of notice of any proceeding or
other actions that may result in termination of an Employee
Plan if the proceeding or termination would constitute a
Material Adverse Event.
11. REMEDIES UPON DEFAULT. Without limiting any other rights or remedies of
the Agent or the Lenders provided for elsewhere in this Guaranty or the
Credit Documents, or by any requirement of Law, or in equity, or
otherwise:
1. Upon the occurrence of any Default, the Lenders may without
any notice to (except as expressly provided herein or in and
during the continuance of any Credit Document) or demand upon
Guarantor, which are expressly waived by Guarantor (except as
to notices expressly provided for herein or in any Credit
Document), proceed to protect, exercise and enforce the rights
and remedies of the Lenders against Guarantor hereunder or
under the Credit Documents and such other rights and remedies
as are provided by requirement of Law or equity.
2. The rights provided for in this Guaranty and the Credit
Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in
equity, or under any other instrument, document or agreement
now existing or hereafter arising.
RESIDUAL GUARANTY-Page 20
<PAGE> 21
3. The order and manner in which the Lenders' rights and remedies
upon the occurrence and during the continuance of a Default
are to be exercised shall be determined by the Agent or the
Lenders, as the case may be, in its sole discretion, and all
payments received by the Agent shall be applied first to the
costs and expenses (including reasonable attorney's fees
incurred by the Agent, Lenders and Arranger) of the Agent,
Lenders and Arranger, then to the payment of all accrued and
unpaid amounts due under any Credit Documents to and including
the date of such application. To the extent permitted by
applicable law, no application of payments will cure any
Default, or prevent acceleration, or continued acceleration,
of amounts payable under the Credit Documents, or prevent the
exercise, or continued exercise, of rights or remedies of the
Agent and Lenders hereunder or thereunder or under any
requirement of Law or in equity.
12. PAYMENTS.Each payment by the Guarantor to the Agent under this Guaranty
shall be made by transferring the amount thereof in immediately
available funds without set-off or counterclaim.
13. COSTS, EXPENSES AND TAXES. The Guarantor agrees to pay on demand
(except to the extent paid by Lessee): (i) all reasonable out-of-pocket
costs and expenses of the Agent in connection with the preparation,
execution and delivery of this Guaranty and any other documents to be
delivered hereunder, including the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect thereto and with respect
to advising the Agent as to its rights and responsibilities under this
Guaranty, and any modification, supplement or waiver of any of the
terms of this Guaranty, (ii) all reasonable costs and expenses of the
Agent hereunder, including reasonable legal fees and expenses of
counsel to the Agent, in connection with a default or the enforcement
of this Guaranty and (iii) reasonable costs and expenses incurred in
connection with third party professional services reasonably required
by the Agent pursuant to the Credit Documents such as appraisers,
environmental consultants, accountants or similar Persons; provided
that except during the continuance of any Default hereunder, the Agent
will first obtain the consent of the Guarantor to such expense, which
consent shall not be unreasonably withheld. Without prejudice to the
survival of any other obligations of the Guarantor hereunder, the
obligations of the Guarantor under this Section shall survive the
termination of this Guaranty.
14. SUBROGATION. The Guarantor shall not be subrogated to, in whole or in
part, and agrees not to exercise any rights of subrogation with respect
to, the rights of the Agent or any Lender or those of any subsequent
assignee or transferee of any of the Liabilities until all the
Liabilities to the Agent and the Lenders and every such subsequent
assignee or transferee shall have been paid in full. The provisions of
this SECTION 14 shall survive the termination of this Guaranty and any
satisfaction and discharge of Borrower by virtue of any payment, court
order, or law.
15. NO WAIVER; REMEDIES. No failure on the part of the Agent to exercise,
and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such
right, or any abandonment or discontinuance of any steps to enforce
such right, preclude any other or further exercise thereof or the
exercise of any other right. No notice to or demand on the Guarantor in
any case shall entitle the Guarantor to any other or further notice or
demand in similar or other circumstances. The remedies herein are
cumulative and not exclusive of any other remedies provided by law, at
equity or in any other agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants contained herein or made in writing by the
Guarantor in connection herewith shall survive the execution and
delivery of this Guaranty, and the termination of the Credit Documents
and will bind and inure to the benefit of the respective successors and
assigns of the parties hereto, whether so expressed or not.
RESIDUAL GUARANTY-Page 21
<PAGE> 22
17. CONFIDENTIALITY. The Agent and each Lender agree to keep any
information delivered or made available by the Guarantor to it which is
clearly indicated to be confidential information, confidential from
anyone other than Persons employed or retained by the Agent who are or
are expected to become engaged in evaluating, approving, structuring or
administering the Credit Documents; provided that nothing herein shall
prevent the Agent or any Lender from disclosing such information (a) to
any Lender, (b) pursuant to subpoena or upon the order of any court or
administrative agency, (c) upon the request or demand of any regulatory
agency or authority having jurisdiction over Agent or any Lender, (d)
which has been publicly disclosed, (e) to the extent reasonably
required in connection with any litigation to which the Agent, any
Lender, the Borrower, the Guarantor or their respective Affiliates may
be a party, (f) to the extent reasonably required in connection with
the exercise of any remedy hereunder, (g) to any Lender's legal counsel
and independent auditors. The Agent will promptly notify the Guarantor
of any information that it is required or requested to deliver pursuant
to clause (b) or (c) of this SECTION 17 and, if the Guarantor is a
party to any such litigation, clause (e) of this SECTION 17.
18. SEPARABILITY. Should any clause, sentence, paragraph or Section of this
Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the
remainder of this Guaranty, and the parties hereto agree that the part
or parts of this Guaranty so held to be invalid, unenforceable or void
will be deemed to have been stricken herefrom and the remainder will
have the same force and effectiveness as if such part or parts had
never been included herein.
19. EXECUTION IN COUNTERPARTS. This Guaranty may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
20. INTERPRETATION.
1. In this Guaranty, unless a clear contrary intention appears:
1. the singular number includes the plural number and
vice versa;
2. reference to any gender includes each other gender;
3. the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Guaranty
as a whole and not to any particular Article, Section
or other subdivision;
4. reference to any Person includes such Person's
successors and assigns but, if applicable, only if
such successors and assigns are not prohibited by
this Guaranty, and reference to a Person in a
particular capacity excludes such Person in any other
capacity or individually; provided that nothing in
this clause is intended to authorize any assignment
not otherwise permitted by this Guaranty;
5. except as expressly provided to the contrary herein,
reference to any agreement, document or instrument
(including this Guaranty) means such agreement,
document or instrument as amended, supplemented or
modified and in effect from time to time in
accordance with the terms thereof and, if applicable,
the terms hereof;
RESIDUAL GUARANTY-Page 22
<PAGE> 23
6. unless the context indicates otherwise, reference to
any Article, Section, Schedule or Exhibit means such
Article or Section hereof or such Schedule or Exhibit
hereto;
7. the word "including" (and with correlative meaning
"include") means including, without limiting the
generality of any description preceding such term;
8. with respect to the determination of any period of
time, except as expressly provided to the contrary,
the word "from" means "from and including" and the
word "to" means "to but excluding"; and
9. reference to any law, rule or regulation means such
as amended, modified, codified or reenacted, in whole
or in part, and in effect from time to time.
2. The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.
3. No provision of this Guaranty shall be interpreted or
construed against any Person solely because that Person or its
legal representative drafted such provision.
21. SUBMISSION TO JURISDICTION. The Guarantor, to the extent permitted by
applicable law, hereby agrees as follows:
1. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
MAY BE BROUGHT IN THE DISTRICT COURTS OF NEW YORK, NEW YORK OR
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY,
THE GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR
PROCEEDING. THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS
ADDRESS PROVIDED IN SECTION 24, SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR
IN ANY OTHER JURISDICTION.
2. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS GUARANTY BROUGHT IN THE COURTS REFERRED
TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
RESIDUAL GUARANTY-Page 23
<PAGE> 24
22. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND
AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
23. PARTIES. This Guaranty shall inure to the benefit of the Agent and the
Lenders and their respective successors, assigns or transferees, and
shall be binding upon the Guarantor and its successors and assigns. The
Guarantor may not assign any of its duties under this Guaranty without
the prior written consent of the Agent. The Agent and the Lenders may
assign their respective rights and benefits under this Guaranty to any
Eligible Assignee.
24. NOTICES. All notices, consents, requests, approvals, demands and other
communications provided for herein shall be in writing (including
telecopy communications) and mailed, telecopied, sent by overnight
courier or delivered:
1. If to the Guarantor:
Monro Muffler Brake, Inc.
200 Holleder Parkway
Rochester, New York 14615
Attention: Catherine D'Amico, Senior Vice President
and Chief Financial officer
telephone: (716) 647-6400
telecopy: (716) 627-0941
2. If to the Agent:
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
Attention: Philip M. Hendrix
telecopy: (716) 258-7604
telephone: (716) 258-5437
with a copy to
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Street, Suite 800
Houston, Texas 77002
Attention: Carol M. Burke
telecopy: (713) 308-5555
telephone: (713) 308-5561
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other parties
given in accordance with the provisions of this SECTION 24.
RESIDUAL GUARANTY-Page 24
<PAGE> 25
Other than the service of process set forth in SECTION 21(a) above, all
communications shall be effective three (3) Business Days after the
date when mailed by certified mail, return receipt requested postage
prepaid to any party at its address specified above, or upon receipt if
telecopied to any party to the telecopy number set forth above, or upon
receipt if delivered personally to any party at its address specified
above.
25. TERM. This Guaranty is not limited to any particular period of time,
but shall continue in full force and effect until all of the
Liabilities have been fully and finally paid or have been otherwise
discharged by the Agent and the Lenders, and the Guarantor shall not be
released from any obligation or liability hereunder until such full
payment or discharge shall have occurred.
26. GOVERNING LAW. This Guaranty and all other documents executed in
connection herewith shall be deemed to be contracts and agreements
executed by the Guarantor and Agent under the laws of the State of New
York and of the United States of America and for all purposes shall be
construed in accordance with, and governed by, the laws of said state
and of the United States of America.
27. INDEMNITY.
1. The Guarantor shall indemnify the Agent, each Lender and each
Affiliate thereof and their respective directors, officers,
employees and agents (each, an "INDEMNIFIED PERSON") from, and
hold each of them harmless against, any and all losses,
liabilities, claims or damages (including reasonable legal
fees and expenses) to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise
out of or result from any actual or proposed use by the
Borrower of the proceeds of any extension of credit or any
investigation, litigation or other proceeding (including any
threatened investigation or proceeding) relating to the
foregoing or any of the Credit Documents, and the Guarantor
shall assume the defense thereof, including the employment of
counsel at Guarantor's expense; provided that Guarantor shall
not have such right, to the extent that such Indemnified
Person shall deliver to Guarantor a written notice waiving the
benefits of the indemnification of such Indemnified Person
provided by this SECTION 27(a) in connection with such claim,
action, proceeding or suit. Notwithstanding the foregoing, if
independent counsel to such Indemnified Person shall conclude
that there may be defenses available to such Indemnified
Person which may conflict with those available to Guarantor,
Guarantor shall not have the right to assume the defense of
any such claim, action, proceeding or suit on behalf of such
Indemnified Person if such Indemnified Person chooses to
defend such claim, action, proceeding or suit (with counsel
reasonably acceptable to Guarantor), and all reasonable costs,
expenses and attorneys' fees incurred by the Indemnified
Person in defending such claim, action, proceeding or suit
shall be borne by Guarantor; provided however, if there is
more than one (1) Indemnified Person having a right to defend
such claim, action, proceeding or suit as aforesaid, the
obligation of Guarantor to pay the fees and expenses of such
Indemnified Person shall be limited to one (1) firm of
attorneys. Any Indemnified Person shall also have the right to
employ separate counsel and to participate in its defense, but
the fees and expenses of such counsel shall be borne by such
Indemnified Person. Any decision by an Indemnified Person to
employ its own counsel (whether or not at Guarantor's expense)
shall in no way affect any rights of such Indemnified Person
otherwise arising under this SECTION 27(a). In addition,
Guarantor will not be liable for any settlement of any claim,
action, proceeding or suit unless Guarantor has consented
thereto in writing. The foregoing indemnity and agreement to
hold harmless shall not in any event apply to any losses,
liabilities, claims, damages or expenses incurred by reason of
(i) the gross negligence or willful misconduct of the Person
to be
RESIDUAL GUARANTY-Page 25
<PAGE> 26
indemnified, or (ii) any Material default by the Agent or any
Lender that is not cured within any applicable cure period, if
any, under any of the Credit Documents.
2. WITHOUT LIMITING ANY PROVISION OF THIS GUARANTY, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE
INDEMNIFIED HEREUNDER OR THEREUNDER SHALL BE INDEMNIFIED AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS
OR DAMAGES: (i) ARISING OUT OF OR RESULTING FROM THE ORDINARY
SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON OR (ii) IMPOSED
UPON SAID PARTY UNDER ANY THEORY OR STRICT LIABILITY. Without
prejudice to the survival of any other obligations of the
Guarantor hereunder and under the Credit Documents, the
obligations of the Guarantor under this Section shall survive
the termination of this Guaranty and the Credit Documents and
the payment of the Liabilities.
28. NEW GUARANTY. In the event that (i) any Credit Document is rejected by
a trustee or debtor-in-possession in any bankruptcy or insolvency
proceeding involving the Borrower or the Lessee or (ii) any Credit
Document or this Guaranty is terminated as a result of any bankruptcy
or insolvency proceeding involving the Borrower or the Lessee and, if
within sixty (60) days after such rejection or termination, the Agent
or its designee shall so request and shall certify in writing to the
Guarantor that it intends to perform the obligations of the Borrower as
and to the extent required under such Credit Document or this Guaranty,
as applicable, the Guarantor will, unless prohibited by bankruptcy or
other applicable law, execute and deliver to the Agent or such
designee, concurrently with the delivery by the Lessor or such designee
of a new Lease Document that contains the same conditions, agreements,
terms, provisions and limitations as such original Lease Document, a
new Guaranty that shall contain the same conditions, agreements, terms,
provisions and limitations as such original Guaranty (except for any
requirements which have been fulfilled by the Borrower and the
Guarantor prior to such rejection or termination).
29. CERTAIN AMENDMENTS TO THIS GUARANTY.
1. If at any time on or after the date hereof, (i) Guarantor
(either acting alone or together with any one or more
Subsidiaries or affiliates) enters into any Loan or other
credit agreement in replacement of the Agreement (a
"REPLACEMENT CREDIT AGREEMENT") and (ii) Chase (A) is, or at
any time, becomes, a party to such Replacement Credit
Agreement or (B) has, or at any time acquires, a participation
in any of the facilities governed thereby, then, upon written
notice by Guarantor to Agent, Agent agrees to enter into an
amendment or an amendment and restatement of this Guaranty so
that, to the extent elected by Guarantor, the provisions
hereof will be the same (to the extent permitted by accounting
rules for operating leases) as the provisions applicable to
Guarantor and set forth in the Replacement Credit Agreement or
any guarantee agreement executed by Guarantor pursuant
thereto, such amendment or amendment and restatement of this
Guaranty to be effective on the earlier to occur of (x) the
effective date of the Replacement Credit Agreement (without
regard to when such amendment or amendment or restatement is
actually executed), and (y) the acquisition of a participation
in such Replacement Credit Agreement by Chase, and Agent
hereby agrees to cooperate fully with Guarantor in the
preparation and execution of the appropriate amendment or
amendment and restatement, as the case may be, and all other
appropriate documentation, as Guarantor may request and at
Guarantor's expense to effect the foregoing; and
RESIDUAL GUARANTY-Page 26
<PAGE> 27
2. if at any time on or after the date hereof, (i) any waiver of
any provision under the Agreement or any Replacement Credit
Agreement, which provision or the substantial equivalent
thereof (the "CORRESPONDING PROVISION") is also included in
this Guaranty, is granted, and (ii) at such time or at any
time thereafter, Chase (A) is or becomes a party to the
Agreement or any Replacement Credit Facility, or (B) has or
acquires a participation in any of the facilities governed by
the Agreement or any Replacement Credit Agreement, as the case
may be, then such Corresponding Provision, ipso facto upon the
granting of the waiver referred to in the immediately
foregoing CLAUSE (I) and without the necessity of any further
action of any kind by Guarantor or any other Person, shall be
deemed, for all purposes, to have been immediately thereupon
waived by Agent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
RESIDUAL GUARANTY-Page 27
<PAGE> 28
Sincerely yours,
MONRO MUFFLER BRAKE, INC.,
a New York corporation
By: /s/ Catherine D'Amico
----------------------------------------------
Catherine D'Amico, Senior Vice President
and Chief Financial Officer
ACCEPTED AND AGREED as of the date first above written:
THE CHASE MANHATTAN BANK,
as Agent
By: /s/ Philip M. Hendrix
---------------------------------------------
Name: Philip M. Hendrix
Title: Vice President
RESIDUAL GUARANTY-Page 28
<PAGE> 29
EXHIBIT A TO RESIDUAL GUARANTY
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date:_____________ ,____
To: The Chase Manhattan Bank, as Agent
Ladies and Gentlemen:
Reference is made to that certain Residual Guaranty dated as of
September *, 1998 (as amended or restated from time to time, with terms herein
as therein defined, the "GUARANTY") by Monro Muffler Brake, Inc., a New York
corporation (the "GUARANTOR") in favor of The Chase Manhattan Bank, as Agent
(the "AGENT").
The undersigned Responsible Officer hereby certifies as of the date
hereof that he/she is the ____________________ of Guarantor, and that, as such,
he/she is authorized to execute and deliver this Certificate to the Agent on
behalf of the Lenders, and that:
The financial covenant analysis and information set forth on SCHEDULE 1
attached hereto are true and accurate on and as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
_______________________,_______.
MONRO MUFFLER BRAKE, INC.,
a New York corporation
By:_______________________________
Name:_____________________________
Title:____________________________
RESIDUAL GUARANTY-Page 29
<PAGE> 30
ANNEX I
FINANCIAL COVENANTS CALCULATION WORKSHEET
RESIDUAL GUARANTY-Page 30
<PAGE> 31
Date:____________________,__
For the Fiscal Quarter/Year
ended __________,___
SCHEDULE 1
to the Compliance Certificate
($ in 000's)
(all calculations are for Guarantor and its Subsidiaries
on a consolidated basis)
RESIDUAL GUARANTY-Page 31
<PAGE> 32
<TABLE>
<CAPTION>
SCHEDULE 6(a)
JURISDICTIONS OF INCORPORATION AND BUSINESS
INCORPORATED
COMPANY OR ORGANIZED IN: DOES BUSINESS IN:
- ------- ---------------- -----------------
<S> <C> <C>
Monro Muffler Brake, Inc. NY CT
DE
District of Columbia*
IN
MA
MD
MI
NH
NJ
NY** ***
NC
OH
PA
RI
SC
VA
VT
WV
Monro Service Corporation DE
NY** ***
Speedy Holding Corp. DE
NY** ***
Monro Leasing, LLC DE
NY** ***
<FN>
- ----------------------------
* The Company is qualified to do business in the District of Columbia but
does not presently conduct business in that jurisdiction. The Company
may choose to withdraw its qualification in that jurisdiction at a
future date.
** Indicates state in which principal place of business is located.
*** Indicates state in which chief executive office is located.
**** Speedy Holding Corp. will be merged into the Guarantor on or prior to
the Closing Date.
</TABLE>
RESIDUAL GUARANTY-Page 32
<PAGE> 33
<TABLE>
<CAPTION>
SCHEDULE 6(b)
CORPORATE STRUCTURE
PARENT SUBSIDIARY % OWNERSHIP
- --------------------------------------------------------------------------------
<S> <C> <C>
Monro Muffler Brake, Inc. Monro Service Corporation 100%
Monro Leasing, LLC 100%
</TABLE>
RESIDUAL GUARANTY-Page 33
<PAGE> 34
SCHEDULE 6(f)
LITIGATION
[NONE]
RESIDUAL GUARANTY-Page 34
<PAGE> 35
SCHEDULE 6(h)
ENVIRONMENTAL MATTERS
[NONE]
RESIDUAL GUARANTY-Page 35
<PAGE> 36
SCHEDULE 6(j)
PERMITTED LIENS
1. Liens now or hereafter securing the Obligation.
2. Any Lien securing Debt permitted in ITEMS 3 OR 5 of SCHEDULE 6(n)
incurred for the purchase or capital lease of one or more fixed or
capital assets if such Lien encumbers only the assets so purchased or
leased.
3. Pledges or deposits made to secure payment of workers' compensation,
unemployment insurance, or other forms of governmental insurance or
benefits or to participate in any fund in connection with workers'
compensation, unemployment insurance, pensions, or other social
security programs.
4. Good-faith pledges or deposits made to secure performance of bids,
tenders, contracts (other than for the repayment of borrowed money), or
leases, or to secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds in the ordinary course
of business.
5. The following, if (a) no amounts are due and payable and no Lien has
been filed (or agreed to), (b) (i) the validity or amount secured
thereby is being contested in good faith by lawful proceedings
diligently conducted, (ii) reserve or other provision required by GAAP
has been made, and (iii) levy and execution thereon have been (and
continue to be) stayed or payment thereof is covered in full (subject
to the customary deductible) by insurance, or (c) with respect to
CLAUSES a., b. AND c. below, such Liens secure amounts which, in the
aggregate, do not exceed $1,000,000 at any time, and neither the value
nor use of the property in the Company's business in question are
materially affected:
a. Liens for Taxes;
b. Liens upon property, including any attachment of property or
other legal process prior to adjudication of a dispute on the
merits; and
c. Liens imposed by operation of law (including, without
limitation, Liens of mechanics, materialmen, warehousemen,
carriers and landlords and similar Liens).
6. Any interest or title of a lessor in assets being leased to a Company.
7. Liens arising from UCC-1 financing statements in respect of leases
permitted under this Agreement.
8. Easements, zoning restrictions and rights-of-way on real property that
do not secure any obligations for borrowed money.
9. The Financing Statements listed on attached EXHIBIT A.
10. Liens in favor of Brazos Automotive Properties, L.P. ("Lessor")
securing obligations under the Guaranty dated as of September 15, 1998
of Borrower in favor of Lessor.
RESIDUAL GUARANTY-Page 36
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT A
MONRO MUFFLER BRAKE, INC.
UCC FILINGS
=================== ================== ============================ ==================================
STATE FILING DATE FILE NUMBER SECURED PARTY
<S> <C> <C> <C>
New York 10/6/93 211239 Central Trust Company
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 1/29/93 020976 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 3/30/93 066592 Chase Equipment Leasing, Inc.
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/8/93 075797 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/9/93 076671 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/13/93 079233 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/12/94 070847 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/2/95 198583 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/17/98 177075 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/17/98 177080 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/28/98 186037 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/28/98 186043 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 1/3/84 1559 Central Trust Company
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 1/29/93 020976 The Chase Manhattan
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 3/30/93 066592 Chase Equipment Leasing Inc.
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/8/93 075797 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/9/93 076671 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/13/93 079233 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/12/94 070847 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/2/95 198583 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/17/98 177075 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/17/98 177080 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
</TABLE>
RESIDUAL GUARANTY-Page 37
<PAGE> 38
<TABLE>
<S> <C> <C> <C>
Rhode Island 8/28/98 186037 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/28/98 186043 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/14/87 15670762 Chase Lincoln First Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/14/87 1567066 Chase Lincoln First Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/14/87 1567066 Chase Lincoln First Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 8/31/92 21150244 Chase Lincoln First Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 3/24/93 21771365 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 3/24/93 21771369 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 3/24/93 21771373 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/23/95 24790120 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 3/24/93 1002886 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/12/94 1053129 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/2/95 1648425 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/10/95 1653901 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/23/95 1653394 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 10/23/95 1653399 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 1/29/93 139360 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
New York 4/14/93 139360 The Chase Manhattan Bank
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/21/98 518658 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/21/98 518659 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
Rhode Island 8/21/98 518660 Fleet Capital Corporation
- ------------------- ------------------ ---------------------------- ----------------------------------
</TABLE>
RESIDUAL GUARANTY-Page 38
<PAGE> 39
SCHEDULE 6(l)
TRANSACTIONS WITH AFFILIATES
Certain (a) principal shareholders/directors of the Guarantor, (b) partnerships
in which such persons have interests or (c) trusts of which members of their
facilities are beneficiaries are lessors of certain facilities to the Guarantor.
Payments under such operating and capital leases amounted to $1,786,000,
$1,828,000 and $1,688,000 for the years ended March 31, 1998, 1997 and 1996,
respectively. Amounts payable under these lease agreements totaled $82,000 and
$88,000, respectively, at March 31, 1998 and 1997.
No related party leases, other than renewals or modifications of leases on
existing stores, have been entered into since May 1989 and no new leases are
contemplated.
In June 1991, the Guarantor entered into a management agreement effective July
1, 1991, with Peter J. Solomon Company Limited ("PJSC") pursuant to which PJSC
provides to the Guarantor strategic and financial advice relating to financing,
capital structure, mergers and acquisitions and offensive/defensive positioning
for a fee of $160,000 per year (plus reimbursement of out-of-pocket expenses).
Pursuant to such agreement, the Guarantor has agreed to indemnify PJSC against
certain liabilities. In addition, PJSC, from time to time, provides additional
investment banking services to the Guarantor for customary fees. The firm is
providing financial advisory services to the Guarantor in connection with the
acquisition of and financing for the Speedy Stores. Peter J. Solomon, Chairman
of the Board and principal shareholder of the Guarantor, is Chairman of PJSC.
RESIDUAL GUARANTY-Page 39
<PAGE> 40
SCHEDULE 6(n)
PERMITTED DEBT
30. The Obligation under the Chase Credit Agreement.
31. Debt arising from endorsing negotiable instruments for collection in
the ordinary course of business.
32. Capital Leases.
33. Current liabilities incurred in the ordinary course of business.
34. Purchase money Debt limited to fixed or capital assets.
35. Trade payables that are for goods furnished or services rendered in the
ordinary course of business and that are payable in accordance with
customary trade terms.
36. Debt of the Guarantor issued after the Closing Date and made
subordinate to the Obligation in terms reasonably satisfactory to the
Agent; provided however, that at the time of and after giving effect to
the issuance thereof, no Default or Potential Default shall have
occurred and be continuing and the proceeds will be applied to the
Facilities to the extent required under SECTION 3.2.
37. Debt listed below:
<TABLE>
<CAPTION>
- -------------------------------------- ------------------------- ------------------------ --------------------------
AMOUNT INTEREST
Q/3 % MATURITY
- -------------------------------------- ------------------------- ------------------------ --------------------------
<S> <C> <C> <C>
CHASE MTG-STORE 120 154,282 LIBOR+100BP Sep-98
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 124 154,733 LIBOR+100BP Sep-98
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 126 160,125 LIBOR+100BP Sep-98
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 137 229,547 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 140 200,380 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 143 273,797 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 146 246,116 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 160 531,563 LIBOR+100BP Apr-01
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 162 278,593 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 164 287,969 LIBOR+100BP Feb-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 168 237,890 LIBOR+100BP Feb-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 168 240,906 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
</TABLE>
RESIDUAL GUARANTY-Page 40
<PAGE> 41
<TABLE>
- -------------------------------------- ------------------------ ------------------------ ---------------------------
AMOUNT INTEREST
Q/3 % MATURITY
- -------------------------------------- ------------------------ ------------------------ ---------------------------
<S> <C> <C> <C>
CHASE MTG-STORE 172 243,375 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 177 234,140 LIBOR+100BP Feb-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 179 251,582 LIBOR+100BP Feb-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 183 339,809 LIBOR+100BP Apr-01
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 184 314,453 LIBOR+100BP Feb-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 185 318,047 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 186 221,250 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 190 253,969 LIBOR+100BP Apr-01
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 191 198,125 LIBOR+100BP Apr-00
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 192 285,313 LIBOR+100BP Apr-01
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 193 313,031 LIBOR+100BP Apr-01
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 205 310,500 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 207 352,547 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 210 323,438 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 212 371,053 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 216 316,080 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 226 404,297 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 229 388,125 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 230 462,808 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG-STORE 236 323,438 LIBOR+100BP Sep-02
- -------------------------------------- ------------------------- ------------------------ --------------------------
TERM NOTE R MORTLAND 138,107 0 Mar-08
- -------------------------------------- ------------------------- ------------------------ --------------------------
D'ANDREA TIRE 228,376 8.00 FIXED Feb-03
- -------------------------------------- ------------------------- ------------------------ --------------------------
MASS MUTUAL 1,833,334 10.55 FIXED Apr-99
- -------------------------------------- ------------------------- ------------------------ --------------------------
CITY OF ROCHESTER 660,000 0 Oct-14
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE MTG HQ 2,557,312 LIBOR+100BP Sep-05
- -------------------------------------- ------------------------- ------------------------ --------------------------
CHASE TERM LOAN-HQ 486,281 LIBOR+100BP Sep-03
- -------------------------------------- ------------------------- ------------------------ --------------------------
</TABLE>
RESIDUAL GUARANTY-Page 41
<PAGE> 42
SCHEDULE 8(h)
EXISTING SALE\LEASEBACK PROPERTIES
<TABLE>
<CAPTION>
SHOP ADDRESS CITY COUNTY STATE ZIP
<S> <C> <C> <C> <C> <C>
173 2196 W. Union Blvd. Bethlehem Northhampton PA 18018
208 3702 Franklin Road SW South Roanoke Botetourt VA 24014
214 2055 Queen Street York York PA 17403
238 1014 Coshocton Avenue Mount Vernon Knox OH 43050
244 5200 Library Road (Route 88) Bethel Park Allegheny PA 15102
249 190 Milan Avenue Norwalk Huron OH 44857
259 3010 Easton Avenue Bethlehem Northhampton PA 18017
108 4248 Sunset Blvd. Steubenville Jefferson OH 43052
278 3411 Milan Road Sandusky Erie OH 44870
283 5021 Scatterfield Road Anderson Madison IN 46013
107 512 Columbia Turnpike East Greenbush Rensselaer NY 12144
109 174 Market Street Potsdam St. Lawrence NY 13676
112 923 7th Avenue/corner 10th St. Beaver Falls Beaver PA 15010
113 16032 State Route 170 E. Liverpool Columbiana OH 43920
114 730 Canton Street Ogdensburg St. Lawrence NY 12901
116 37 Smithfield Blvd. Plattsburgh Clinton NY 12901
117 9435 Lincoln Highway, Route 30 Irwin Westmoreland PA 15642
</TABLE>
RESIDUAL GUARANTY-Page 42
<PAGE> 1
EXHIBIT 10.4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT FOR FACILITIES LEASE
between
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
and
MONRO LEASING, LLC
Dated as of September 15, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS AGREEMENT FOR FACILITIES LEASE HAS BEEN ASSIGNED
AS SECURITY FOR INDEBTEDNESS
OF BRAZOS AUTOMOTIVE PROPERTIES. L.P.
SEE SECTION 11.12.
This Agreement for Facilities Lease has been manually executed in 10
counterparts, numbered consecutively from 1 through 10, of which this is No. .
To the extent, if any, that this Agreement for Facilities Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any jurisdiction), no security interest
<PAGE> 2
in this Agreement for Facilities Lease may be created or perfected through the
transfer or possession of any counterpart other than the original counterpart
which shall be the counterpart identified as counterpart No. 1.
<PAGE> 3
TABLE OF CONTENTS
AGREEMENT FOR FACILITIES LEASE
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS..........................................................................................1
Section 1.1. Defined Terms..............................................................................1
Section 1.2. Forms......................................................................................6
Section 1.3. Recitals, Table of Contents, Titles, and Headings..........................................6
Section 1.4. Interpretation.............................................................................6
ARTICLE II APPOINTMENT OF LESSEE.................................................................................7
Section 2.1. Appointment and Duties.....................................................................7
Section 2.2. Termination of Appointment and Duties......................................................7
Section 2.3. Lease of Facilities........................................................................7
Section 2.4. Powers of Lessee...........................................................................8
ARTICLE III ADVANCES.............................................................................................9
Section 3.1. Agreement to Make Advances.................................................................9
Section 3.2. Procedure for Advances.....................................................................9
Section 3.3. Determination of Amounts of Advances.......................................................9
Section 3.4. Partial Advances..........................................................................10
Section 3.5. Use of Proceeds...........................................................................10
Section 3.6. No Obligation to Advance..................................................................10
Section 3.7. Brazos Equity.............................................................................10
Section 3.8. Brazos Covenants..........................................................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF LESSEE.............................................................10
Section 4.1. Corporate Matters.........................................................................11
Section 4.2. Authorization; Binding Agreement..........................................................11
Section 4.3. Power and Authority.......................................................................11
Section 4.4. Consents, Approvals and Authorizations....................................................11
Section 4.5. Financial Statements......................................................................11
Section 4.6. Changes...................................................................................11
Section 4.7. Litigation................................................................................12
Section 4.8. No Default................................................................................12
Section 4.9. Facility and FF&E Liens...................................................................12
Section 4.10. Availability of Utilities................................................................12
Section 4.11. Brokerage................................................................................12
Section 4.12. Suitability of Facility and FF&E.........................................................12
Section 4.13. Acquired Facilities Lease................................................................12
Section 4.14. Accuracy of Value........................................................................12
</TABLE>
(i)
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE V AFFIRMATIVE COVENANTS.................................................................................13
Section 5.1. Construction..............................................................................13
Section 5.2. Performance under Other Agreements........................................................13
Section 5.3. Expenses..................................................................................13
Section 5.4. Certificates; Other Information...........................................................14
Section 5.5. Conduct of Business and Maintenance of Existence..........................................14
Section 5.6. Notices...................................................................................14
Section 5.7. Legal Requirements. ......................................................................15
Section 5.8. Leasing of Facilities.....................................................................15
Section 5.9. Filings...................................................................................15
Section 5.10. Changes in Plans.........................................................................15
Section 5.11. Notification of Development of Facilities................................................15
ARTICLE VI CONDITIONS PRECEDENT TO THE INITIAL ADVANCE OR
ADDITIONAL ADVANCE WITH RESPECT TO A
FACILITY OR FF&E OR ADDITIONAL IMPROVEMENTS.................................................16
Section 6.1. Acquisition Documents.....................................................................16
Section 6.2. No Event of Default.......................................................................17
Section 6.3. Continuing Representations................................................................17
Section 6.4. Additional Matters........................................................................18
Section 6.5. Facilities Acquired in Brazos' Name.......................................................18
ARTICLE VII CONDITIONS PRECEDENT TO THE RECONCILIATION ADVANCE
WITH RESPECT TO A FACILITY OR FF&E.............................................................18
Section 7.1. Reconciliation Advance....................................................................18
ARTICLE VIII EVENTS OF DEFAULT..................................................................................18
Section 8.1. Events of Default.........................................................................18
Section 8.2. Rights Upon Default.......................................................................20
ARTICLE IX INDEMNITIES..........................................................................................21
Section 9.1. Indemnified Persons.......................................................................21
Section 9.2. Payments..................................................................................21
Section 9.3. Continuing Indemnification................................................................21
Section 9.4. Limitations...............................................................................22
Section 9.5. Litigation................................................................................22
ARTICLE X PERMITTED CONTESTS....................................................................................22
</TABLE>
(ii)
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE XI MISCELLANEOUS........................................................................................23
Section 11.1. Survival.................................................................................23
Section 11.2. Entire Agreement.........................................................................23
Section 11.3. Modifications............................................................................23
Section 11.4. GOVERNING LAW............................................................................23
Section 11.5. No Offsets...............................................................................23
Section 11.6. Non-Recourse.............................................................................25
Section 11.7. Notices..................................................................................25
Section 11.8. Fundamental Changes......................................................................26
Section 11.9. Usury....................................................................................26
Section 11.10. No Waivers..............................................................................27
Section 11.11. Brazos and Assignee Sole Beneficiaries..................................................27
Section 11.12. Sale or Assignment by Brazos............................................................27
Section 11.13. Rights Cumulative.......................................................................28
Section 11.14. Reassignment............................................................................28
Section 11.15. Severability............................................................................28
Section 11.16. Execution in Counterparts...............................................................28
Section 11.17. Confidentiality.........................................................................28
Section 11.18. Execution by Lessee.....................................................................28
</TABLE>
(iii)
<PAGE> 6
(iv)
<PAGE> 7
<TABLE>
<S> <C>
Signature Page...................................................................................................29
</TABLE>
LIST OF EXHIBITS
Exhibit A Form of Facilities Lease Agreement
Exhibit B Form of Initial Advance Certificate
Exhibit C Form of Reconciliation Certificate
Exhibit D Form of Additional Advance Certificate
Exhibit E Form of Local Counsel Opinion
Exhibit F Form of Request for Initial Advance
Schedule 4.13 List of Acquired Facilities Leases
(v)
<PAGE> 8
AGREEMENT FOR FACILITIES LEASE
THIS AGREEMENT FOR FACILITIES LEASE (this "AGREEMENT") is made and
entered into as of September 15, 1998, by and between BRAZOS AUTOMOTIVE
PROPERTIES, L.P., a Delaware Limited Partnership ("Brazos"), and MONRO LEASING,
LLC, a Delaware limited liability company ("LESSEE").
W I T N E S S E T H:
WHEREAS, Brazos may hereafter purchase or lease certain equipment and
construct or acquire fee or leasehold interests in certain equipment and/or
facilities; and
WHEREAS, on or after the date of this Agreement Brazos and Lessee
propose to enter into a Facilities Lease Agreement, providing for the lease or
sublease by Lessee of such equipment and facilities as may be acquired by Brazos
for lease or sublease to Lessee; and
WHEREAS, Brazos desires to appoint Lessee to act as agent for Brazos in
connection with the acquisition of equipment and with the acquisition and
construction of such facilities and in connection with all matters related to
such acquisition and construction, and Lessee wishes to accept such appointment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Brazos and Lessee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINED TERMS. For the purposes of this Agreement each of
the following terms shall have the meaning specified with respect thereto:
"ACQUIRED FACILITY LEASE" means each lease entered into by Brazos under
which a leasehold interest in a Facility or FF&E is being leased to Brazos by
the owner of such Facility or FF&E, including, without limitation, the leases
set forth on SCHEDULE 4.13 hereto.
"ACQUISITION COST" means, for any Facility or FF&E, the sum of (a) the
Initial Advance, (b) the Reconciliation Advance, if any, and (c) the Additional
Advance, if any, made pursuant to this Agreement with respect to such Facility
or FF&E.
"ADDITIONAL ADVANCE" means, with respect to any Additional
Improvements, the advance made by Brazos upon satisfaction of the applicable
conditions of ARTICLE VI hereof.
"ADDITIONAL ADVANCE CERTIFICATE" means the written certification of
Lessee to be delivered to Brazos and Agent which contains the information and
representations of Lessee as required by SECTION 6.1, and which is substantially
in the form of EXHIBIT "D" attached hereto.
"ADDITIONAL IMPROVEMENTS" means each capital improvement or other
addition or alteration to a Facility which is described in an Additional Advance
Certificate and each improvement, replacement or addition to FF&E, for the
purpose of making such improvement, addition, replacement or alteration part of
the Facility or FF&E which is approved by Agent.
<PAGE> 9
"AFFILIATE" means any other Person controlling, controlled by or under
direct or indirect common control with any Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGENT" means The Chase Manhattan Bank, a national banking association.
"AGREEMENT" means this Agreement for Facilities Lease, as the same may
be amended, restated, supplemented or otherwise modified in accordance with the
terms hereof from time to time.
"AGREEMENT FOR GROUND LEASE" means the Agreement for Ground Lease,
dated of even date herewith, between Brazos and Lessee, as the same may be
amended, restated, supplemented or otherwise modified in accordance with the
terms thereof.
"ASSIGNEE" means any lender or agent for a lender under the Credit
Agreement and each person, firm, corporation or other entity to which any part
of Brazos' interest under this Agreement or the Facilities Lease shall at the
time have been assigned, conditionally or otherwise, by Brazos, in accordance
with SECTION 11.12 of this Agreement.
"AVAILABLE COMMITMENT" means at any particular time, an amount equal to
the aggregate available commitment for the benefit of Brazos under the Credit
Agreement for the acquisition of equipment and for the construction and
acquisition of all Facilities and FF&E pursuant to this Agreement and for the
acquisition of Property pursuant to the Agreement for Ground Lease.
"BANKS" means a "Bank", as defined in the Credit Agreement.
"BASIC PLAN" means the architectural plans for the construction of a
Facility that are submitted by Lessee to Brazos and Agent in connection with the
development of a Facility and which are approved by Agent.
"BRAZOS" means Brazos Automotive Properties, L.P. or any successor or
successors to all of its rights and obligations hereunder.
"BUDGET" means the budget submitted by Lessee to Brazos and Agent in
connection with advances to be made under this Agreement and which is approved
by Agent.
"BUSINESS DAY" means a day other than a Saturday, Sunday, or other day
on which commercial banks in New York, New York, are authorized or required by
law to close.
"CHASE CREDIT AGREEMENT" means that certain Credit Agreement dated as
of September 15, 1998 executed among Guarantor, Agent, and the other financial
institutions from time to time party thereto, as the same may have been amended
and in effect on the date hereof.
"CONSTRUCTION AGREEMENT" means the Construction Agreement(s), if any,
to be entered into from time to time, between Lessee, acting on behalf of
Brazos, and General Contractor, providing for the construction or renovation of
the Facilities, as the same may be amended, supplemented, or modified from time
to time.
"CONSTRUCTION DOCUMENTS" means the collective reference to the
Construction Agreement(s), the Facility Plans, the lists of FF&E, the Permits
and all other agreements entered into by Lessee with respect to the
construction, equipping, furnishing and decorating of each of the Facilities.
<PAGE> 10
"CONSULTING PROFESSIONAL" means such architectural or engineering
consultant, if any, as Brazos or Agent may engage, at Lessee's reasonable
expense, to examine the FF&E, Facility Plans, changes in the Facility Plans and
cost breakdowns and estimates, and to make inspections of the substantially
completed construction.
"CONTRACTUAL OBLIGATIONS" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"CORPORATE CREDIT AGREEMENT" means the Chase Credit Agreement as the
same may hereafter be amended, amended and restated, renewed, extended or
otherwise modified or supplemented from time to time, together with any credit
agreement or similar instrument, agreement or document executed from time to
time in respect of any financing arrangement entered into to replace, or which
is in substitution for, the financing arrangement evidenced by the Chase Credit
Agreement.
"CREDIT AGREEMENT" means the Credit Agreement, dated of even date
herewith, by and among Brazos, the Agent and the Banks named therein for the
financing of the acquisition of Facilities and FF&E by Brazos in connection with
this Agreement as it may be amended, restated, modified or supplemented, from
time to time.
"CORPORATE CREDIT DOCUMENTS" means any and all notes, guarantees and
other loan documents executed pursuant to the Corporate Credit Agreement and any
document, instrument or other agreement entered in replacement or substitution
of such document or instrument.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.1 hereof.
"FACILITIES LEASE" means the Facilities Lease Agreement, dated of even
date herewith, by and between Brazos, as lessor, and Lessee, as lessee, as it
may be further amended, restated, modified or supplemented from time to time, in
accordance with the terms thereof, originally in the form of EXHIBIT "A"
attached hereto.
"FACILITY" means all improvements of whatever kind or character now or
hereafter located on, in or under or affixed to an individual Property, with the
prior approval of Agent, including, without limitation, any utilities, paving,
signage or lighting and all additions, replacements and subsequent replacements
thereof (including any Additional Improvements), together with the FF&E
installed in such Facility or other building, in which a fee or leasehold
interest has been or will be acquired by Brazos for the purpose of entering into
the Facilities Lease, but excluding all parcels of land on which such Facility
sits. Any reference to a particular Facility shall refer collectively to such
Facility and the Additional Improvements, if any, made to such Facility.
"FF&E" means the equipment and list of specific items to be acquired or
leased by Brazos with the prior approval of Agent with the proceeds of an
Initial Advance or an Additional Advance hereunder which will be installed in a
particular Facility or, with the prior written approval of the Agent, which may
be acquired for lease to Lessee without regard to its use in connection with a
specific Facility or Property, to be itemized and described in the respective
Initial Advance Certificate or Additional Advance Certificate and including all
additions, replacements and subsequent replacements of such items (including any
Additional Improvements).
"FACILITY COMPLETION DATE" means, with respect to any Facility, a date
no later than twenty four (24) months after Lessee leases the Property on which
such Facility is to be built.
"FACILITY LEASING RECORD" means an instrument evidencing the lease or
sublease of a Facility or FF&E under the Facilities Lease, as prepared and
executed by Brazos, as lessor or sublessor, and accepted and executed by Lessee,
as lessee or sublessee, substantially in the form of Exhibit B to the Facilities
Lease.
"FACILITY PLANS" means the particular Basic Plan selected by Lessee and
approved by Agent as the plans and specifications for the construction of a
particular Facility adapted to the particular Property so as to include plans
and
<PAGE> 11
specifications for the configuration and installation of driveways, curbs,
sidewalks, landscaping, signs, utility connections (whether on or off the
Property) and all fixtures and equipment necessary for construction, operation
and occupancy of that Facility, including such amendments, modifications and
supplements thereto as may from time to time be made by Lessee; provided that
any material deviation from the Basic Plan selected for that Facility shall be
made only with Agent's prior written consent, which consent shall not be
unreasonably withheld or delayed.
"FORCE MAJEURE DELAY" means any delay caused by conditions beyond the
reasonable control of Lessee, including, without limitation, acts of God or the
elements, fire, strikes, labor disputes, delays in delivery of or unavailability
of material and disruption of shipping; provided that no such delay shall have
the effect of extending the respective Facility Completion Date beyond one
hundred eighty (180) days.
"GENERAL CONTRACTOR" means Lessee, or, if other than Lessee, such other
contractor or contractors as may be engaged by Lessee from time to time, with
notice to Brazos.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government having jurisdiction over Agent, Brazos, Guarantor or Lessee, or
any of their respective properties.
"GUARANTOR" means Monro Muffler Brake, Inc., a New York corporation.
"GUARANTY" means the Guaranty, dated of even date herewith, by and
between Guarantor and Brazos, as it may be further amended, restated, modified
or supplemented, from time to time, in accordance with the terms thereof.
"INDEBTEDNESS" means, with respect to any Person, (a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of property or services; (d)
obligations of such Person as lessee under Capitalized Leases; (e) reimbursement
obligations in respect of bonds or letters of credit; (f) obligations of such
Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) of such Person to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness of
others of the kinds referred to in clauses (a) through (e) above; and (g)
indebtedness of others of the kinds referred to in clauses (a) through (f)
secured by any Lien on or in respect of any Property of such Person whether or
not assumed by such Person; provided, however, that all trade accounts payable
and accrued expenses incurred in the ordinary course of business of such Person
and not overdue shall be excluded from the foregoing.
"INDEMNIFIED PERSON" means any Person as defined in SECTION 9.1.
"INITIAL ADVANCE" means, with respect to any Facility or FF&E, the
advance made by Brazos upon satisfaction of the applicable conditions set forth
in ARTICLE VI hereof.
"INITIAL ADVANCE CERTIFICATE" means the written certification of Lessee
to be delivered to Brazos and Agent in connection with each purchase of a fee
interest, reimbursement of the advance of funds by Lessee for a fee interest or
each acquisition of a leasehold interest in a Facility or FF&E by Brazos through
Lessee, which contains the information and representations of Lessee as required
by SECTION 6.1, and which is substantially in the form of EXHIBIT "B" attached
hereto.
"LEGAL REQUIREMENTS" means all laws, judgments, decrees, ordinances and
regulations and any other governmental rules, orders and determinations and all
requirements having the force of law, now or hereafter enacted, made or issued,
whether or not presently contemplated, and all agreements, covenants, conditions
and restrictions, applicable to each Facility and FF&E and/or the ownership,
operation, or use thereof, including, without limitation, all requirements of
the Americans With Disabilities Act (P.L. 101-335) and environmental statutes,
compliance with which is required at any time from the date hereof until the
date such Facility and FF&E becomes subject to the terms and provisions of the
Facilities Lease, whether or not such compliance shall require structural,
unforeseen or extraordinary changes to any Facility and FF&E, or the operation,
occupancy or use thereof.
<PAGE> 12
"LESSEE" means Monro Leasing, LLC, a Delaware limited liability
company.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"LIEN OF RECORD" means, with the exception of the Lien of a lender or a
lender's agent under a Credit Agreement and Permitted Exceptions, (i) any
mechanics' or materialmen's lien for which Lessee does not hold retainage or
trapped funds in amounts required by applicable law, (ii) any lien securing the
payment of taxes, assessments, or governmental charges and levies which are due,
payable and delinquent, (iii) any judgment lien, or (iv) any other filed,
recorded, or docketed matter (whether or not the same shall constitute a
Permitted Exception or be the subject of a Permitted Contest) which in the case
of any of the foregoing (a) is reasonably likely to result in a sale for
satisfaction of same, a loss, forfeiture, reversion of title, or right of
reentry with respect to any Facility, or (b) whether or not valid, is reasonably
likely to interfere with the due and timely payment of any sum payable or the
exercise of any rights or the performance of any of the duties or
responsibilities of Lessee under this Agreement.
"MAXIMUM RATE" means the rate specified in SECTION 11.9 hereof.
"MORTGAGEABLE FACILITIES LEASE" means a facilities lease presented by
Lessee for Brazos' execution which shall include the terms set forth herein or
if lacking any of the terms set forth below, shall have such terms and
characteristics as shall be required by Brazos and Agent, which terms and
characteristics shall include, without limitation, the following: (a) the
lessee's interest therein must be freely assignable, (b) have a remaining term
of at least twenty (20) years, (c) contain no provisions for percentage or
variable rent, (d) permit any lawful use, (e) have no provision for a security
deposit, (f) provide for the delivery to Brazos and Agent of copies of all
notices delivered under or pursuant to such facilities lease, (g) provide Brazos
and Agent written notice and the right to cure any defaults (whether monetary or
non-monetary in nature) within thirty (30) days after receipt of such notice
under such facilities lease, (h) prohibit any mortgages or other Liens on the
underlying fee unless an appropriate Subordination, Non-Disturbance Agreement is
obtained, (i) permit Brazos or Agent the right to invalidate any termination of
such facilities lease within thirty (30) days of the effective date of such
termination by notice given to the lessor thereunder of intention to cure, or to
foreclose and cure, all curable defects, and, in the event of any termination of
such facilities lease, the right to receive a new lease on the same provisions
and with the same expiration date of the original facilities lease, (j) provide
that insurance proceeds for damage to improvements and condemnation proceeds for
damage to leasehold interests or improvements shall be within the control of the
lessee under such facilities lease, and (k) be delivered with such estoppel
certificates from the lessor, recognition and attornment agreements, or
confirmation of customary mortgagee protection as are acceptable to Brazos and
Agent.
"PERMITS" means all consents, licenses and building permits required
for construction, completion, and operation of an individual Facility in
accordance with all Legal Requirements affecting the particular Facility,
including without limitation all Environmental Permits.
"PERMITTED CONTEST" means any good-faith contest permitted by and in
accordance with the terms of ARTICLE X.
<PAGE> 13
"PERMITTED EXCEPTIONS" means the following Liens and other matters
affecting the title of any Facility or FF&E, (a) Liens securing the payment of
taxes, assessments and governmental charges or levies, either not delinquent or
being contested by Lessee as a Permitted Contest; (b) zoning and planning
restrictions, subdivision and platting restrictions, easements, rights-of-way,
licenses, reservations, covenants, conditions, waivers, restrictions on the use
of the Facilities, minor encroachments or minor irregularities of title none of
which materially impairs or may materially impair the intended use of the
Facilities or FF&E by Lessee; (c) the lien created pursuant to the Credit
Agreement contemporaneously with each Initial Advance; (d) any mechanics' or
materialmen's lien for which Lessee holds retainage or trapped funds in amounts
required by and in accordance with applicable law; (e) outstanding mineral
interests; (f) Liens constituting Permitted Encumbrances under the Facilities
Lease; and (g) any other matters; provided that such other or additional matters
shall be approved in writing by Brazos and Agent, whose approvals shall not be
unreasonably withheld or delayed.
"PERSON" means an individual, partnership, corporation, business trust,
joint venture, joint stock company, trust, unincorporated association,
Governmental Authority or other entity of whatever nature.
"POTENTIAL DEFAULT" means any event which, but for the lapse of time,
or giving of notice, or both, would constitute an Event of Default.
"PROPERTY" means each individual parcel of land in which either a fee
interest has been or will be acquired by Brazos or a leasehold interest has been
or will be acquired by Brazos pursuant to a ground lease, in each case for the
operation of a Facility thereon, and the respective easements, rights and
appurtenances relating to such parcel of land, but excluding all improvements
thereon and all structures, equipment and materials affixed thereon or located
thereon, therein or thereunder.
"RECONCILIATION ADVANCE" means, with respect to any Facility or FF&E,
the advance made by Brazos pursuant to SECTION 7.1 upon reconciliation of the
Initial Advance or the Additional Advance made with respect to such Facility or
FF&E.
"RECONCILIATION CERTIFICATE" means the written certification of Lessee
to be delivered to Brazos and Agent which contains the information and
representations of Lessee as required by SECTION 7.1, and which is substantially
in the form of EXHIBIT "C" attached hereto.
"REQUEST FOR ADVANCE" means the document referred to in SECTIONS 6.1(B)
and 7.1(E) which shall be substantially in the form of attached EXHIBIT F.
"RESPONSIBLE OFFICER" means any President, Treasurer, Executive Vice
President or Senior Vice President of Guarantor or Lessee.
"REVISED FACILITY LEASING RECORD" means a Facility Leasing Record
delivered in connection with a Reconciliation Advance or Additional Advance.
"SPECIAL FLOOD HAZARD AREA" has the meaning given such term in the
Flood Disaster Protection Act of 1973, as amended by the National Flood
Insurance Reform Act of 1994.
"SUBSIDIARY" means with respect to any Person, any corporation of which
voting control or more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at such time capital stock of any
other class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency) is at the time directly or indirectly owned
by such Person.
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"SUBSTANTIAL COMPLETION" means, with respect to a Facility, when such
Facility (including all interior finish work, but exclusive of punch list items)
shall have been completed in all material respects and FF&E for that Facility
shall have been installed in all material respects in accordance with the
Facility Plans.
"VALUE" means with respect to a Facility or FF&E, the value as
determined by Lessee as set forth in a certificate or as set forth in a
statement of cost and benefit by Lessee.
Section 1.2. FORMS. All forms specified by the text hereof or by
reference to exhibits attached hereto shall be substantially as set forth
herein, subject to such changes by Brazos and Lessee by mutual consent that do
not alter the substantive rights of the parties hereto or of the Assignees or as
may be required by applicable laws hereafter enacted.
Section 1.3. RECITALS, TABLE OF CONTENTS, TITLES, AND HEADINGS. The
terms and phrases used in the recitals of this Agreement have been included for
convenience of reference only and the meaning, construction, and interpretation
of such words and phrases for purposes of this Agreement shall be determined
solely by reference to SECTION 1.1 hereof. The table of contents, titles, and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference only and are not to be considered a part hereof and
shall not in any way modify or restrict any of the terms or provisions hereof
and shall not be considered or given any effect in construing this Agreement or
any provision hereof or in ascertaining intent, if any question of intent should
arise.
Section 1.4. INTERPRETATION. Unless the context requires otherwise,
words of the masculine gender shall be construed to include correlative words of
the feminine and neuter genders and vice versa, and words of the singular number
shall be construed to include correlative words of the plural number and vice
versa. This Agreement, and all the terms and provisions hereof, shall be
liberally construed to effect the purposes set forth herein and to sustain the
validity of this Agreement.
ARTICLE II
----------
APPOINTMENT OF LESSEE
Section 2.1. APPOINTMENT AND DUTIES. Brazos hereby appoints and
empowers Lessee as its agent, subject to approval by the Agent of the Basic Plan
for a Facility and to approval by the Agent of the Budget, for the designing,
furnishing, constructing, installing and equipping of the Facilities on each
Property and, with respect to existing Facilities, to negotiate and contract for
the acquisition and purchase of fee interests in such Facilities or leasehold
estates under Acquired Facilities Leases, and to purchase Facilities and FF&E in
the name of Brazos to the extent provided in SECTION 2.4(C) hereof.
Notwithstanding the foregoing, Brazos and Agent reserve the right to accept or
reject any Facility, FF&E or Additional Improvements proposed by Lessee in their
sole discretion. Lessee agrees that each Facility shall be built in accordance
with the Facility Plans developed therefor and that any material deviations from
the Facility Plans after the Initial Advance shall require the prior approval of
Brazos whose approval shall not be unreasonably withheld or delayed. Lessee
agrees to exercise its best business judgment to contract for the good and
workmanlike completion of each Facility, suitable for its intended use. Each
Facility shall be of substantially equal quality with respect to design,
materials, and workmanship as currently existing, newly constructed Facilities
built by Lessee for its own use and actually owned by Lessee. Lessee will also
enter into all other contracts, including replacement construction contracts and
subcontracts, as will become necessary for the completion of the Facilities.
Section 2.2. TERMINATION OF APPOINTMENT AND DUTIES. Lessee may
terminate its appointment and duties under this Agreement at any time, upon
thirty (30) days advance written notice to Brazos. Any such termination by
Lessee shall be deemed a termination of this Agreement, however such termination
shall not affect any outstanding request for an advance under ARTICLE III
hereof.
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Section 2.3. LEASE OF FACILITIES.
(a) Upon delivery to Brazos and Agent of the Initial Advance
Certificate with respect to a Facility or FF&E, Lessee shall request the Initial
Advance with respect to such Facility or FF&E which shall be within the
Available Commitment and within the Budget submitted by Lessee and approved by
Agent, and which, subject to SECTION 3.3(A), shall be sufficient to provide for
payment of all or any portion of identified costs of all FF&E and of designing,
furnishing, constructing, installing and equipping the Facility, and may include
Lessee overhead costs comprising not more than five (5%) percent of the Initial
Advance. By delivery of the Initial Advance Certificate and acceptance of the
Initial Advance with respect to a Facility or FF&E, Lessee (i) evidences its
acceptance of such Facility or FF&E for lease under the Facilities Lease, (ii)
acknowledges that such Facility or FF&E has been delivered to Lessee in good
condition and has been accepted for lease by Lessee as of the date of the
Initial Advance, (iii) acknowledges that such Facility or FF&E is subject to all
of the covenants, terms and conditions of the Facilities Lease, and (iv)
certifies that the representations and warranties contained in Article II of the
Facilities Lease are true and correct in all material respects on and as of the
date of the Initial Advance as though made on and as of such date and that there
exists on such date no (1) Event of Default under this Agreement or Event of
Default (as defined in the Facilities Lease) or (2) Potential Default under this
Agreement or Potential Default (as defined in the Facilities Lease). Upon making
the Initial Advance with respect to such Facility or FF&E, Brazos shall prepare
and deliver to Lessee a Facility Leasing Record for such Facility or FF&E and
Lessee shall promptly execute the Facility Leasing Record and return it to
Brazos. Each Facility Leasing Record shall give a full description of the
Facility or FF&E covered thereby, the Acquisition Cost of such Facility or FF&E,
the Lease Term (as such term is defined in the Facilities Lease) for such
Facility or FF&E, its location, the specific items of FF&E, if any, actually
installed in such Facility, and such other details as Brazos, as lessor, and
Lessee, as lessee, may from time to time agree.
(b) Upon delivery to Brazos and Agent of the Reconciliation Certificate
with respect to a Facility or FF&E, Lessee shall request the Reconciliation
Advance with respect to such Facility or FF&E which shall be within the
Available Commitment and within the Budget submitted by Lessee and approved by
Agent, and which, subject to SECTION 3.3(B), shall be sufficient to pay in full
the amount by which the costs of designing, furnishing, constructing, installing
and equipping the Facility or acquisition and installation of the FF&E exceeds
the Acquisition Cost of such Facility or FF&E as reflected in the Facility
Leasing Record, and may include Lessee overhead costs comprising not more than
five (5%) percent of the Reconciliation Advance. By delivery of the
Reconciliation Certificate and acceptance of the Reconciliation Advance, Lessee
(i) acknowledges that such Facility or FF&E is subject to all of the covenants,
terms and conditions of the Facilities Lease, and (ii) certifies that the
representations and warranties contained in Article II of the Facilities Lease
are true and correct in all material respects on and as of the date of the
Reconciliation Advance as though made on and as of such date and that there
exists on such date no (1) Event of Default under this Agreement or Event of
Default (as defined in the Facilities Lease) or (2) Potential Default under this
Agreement or Potential Default (as defined in the Facilities Lease). Upon making
the Reconciliation Advance with respect to such Facility or FF&E, Brazos shall
prepare and deliver to Lessee a Revised Facility Leasing Record for such
Facility or FF&E and Lessee shall promptly execute the Revised Facility Leasing
Record and return it to Brazos.
(c) Upon delivery to Brazos and Agent of the Additional Advance
Certificate with respect to Additional Improvements, Lessee shall request the
Additional Advance with respect to such Additional Improvements which shall be
within the Available Commitment and within the Budget submitted by Lessee and
approved by Agent, and which, subject to SECTION 3.3(C) hereof, shall be
sufficient to provide for payment of all costs of designing, furnishing,
constructing, installing and equipping the Additional Improvements, and may
include Lessee overhead costs comprising not more than five (5%) percent of the
Additional Advance. By delivery of the Additional Advance Certificate and
acceptance of the Additional Advance with respect to Additional Improvements,
Lessee (i) evidences its acceptance of such Additional Improvements for lease
under the Facilities Lease, (ii) acknowledges that such Additional Improvements
have been delivered to Lessee in good condition and have been accepted for lease
by Lessee as of the date of the Additional Advance, (iii) acknowledges that such
Additional Improvements are subject to all of the covenants, terms and
conditions of the Facilities Lease, and (iv) certifies that the representations
and warranties contained in Article II of the Facilities Lease are true and
correct in all material respects on and as of the date of the Additional Advance
as though made on and as of such date and that there exists on such date no (1)
Event of Default under this Agreement or Event of Default (as defined in the
Facilities
8
<PAGE> 16
Lease) or (2) Potential Default under this Agreement or Potential Default (as
defined in the Facilities Lease). Upon making the Additional Advance with
respect to such Additional Improvements, Brazos shall prepare and deliver to
Lessee a Revised Facility Leasing Record for the Facility or FF&E to which such
Additional Improvements were made and Lessee shall promptly execute the Revised
Facility Leasing Record and return it to Brazos. Each Revised Facility Leasing
Record shall give a full description of the Additional Improvements covered
thereby, the Acquisition Cost of such Additional Improvements, the Lease Term
(as such term is defined in the Facilities Lease) for such Additional
Improvements, and such other details as Brazos, as lessor, and Lessee, as
lessee, may from time to time agree.
Section 2.4. POWERS OF LESSEE.
(a) Subject to SECTION 8.2(B) and the right retained by Brazos and the
Agent to accept or reject any Facility, FF&E or Additional Improvements, Lessee
in its capacity as agent for Brazos shall have the right and obligation to act
for Brazos and on Brazos' behalf with full and complete authority to select
potential facilities and equipment for purchase or future lease pursuant to a
Mortgageable Facilities Lease, negotiate and contract for purchase or lease of
such facilities or equipment as Facilities or FF&E, appear before each
applicable Governmental Authority on behalf of Brazos for the purpose of
resolving issues related to the platting, zoning, installation of utilities, and
use of the Facility and for the purpose of obtaining all Permits, to appoint,
employ and deal with the architects, engineers, consultants and contractors, to
purchase existing Facilities and to purchase and arrange for delivery of all
materials, supplies, fixtures, and equipment, and to approve all related
vouchers, invoices and statements. Brazos agrees to cooperate with Lessee in
connection with any such activities and to sign any agreements, documents, plats
or other instruments necessary to carry out the intent of this Agreement and
Brazos will use its best efforts to obtain any necessary approvals or consents
under the Credit Agreement. No payment shall be made for any property or
services of such architects, engineers, consultants, or contractors relating to
the designing, furnishing, constructing, installing and equipping of a Facility
without the prior approval of Lessee, and each amount so approved and paid shall
be part of the Acquisition Cost of that Facility and must be in compliance with
the Budget for such Facility. If Lessee has unreasonably delayed or withheld
giving the approvals required to make such payments in violation of any
contract, Brazos may make payments to any architects, engineers, consultants,
contractors, vendors or suppliers which are properly due and payable in
accordance with the contracts with said parties and the Budget approved by the
Agent, and any such payment so made shall be and become a part of the
Acquisition Cost of that Facility; provided, however, that Brazos shall not make
any such payment if it is subject to a Permitted Contest and, in any event,
Brazos shall give two (2) Business Days notice to Lessee prior to making any
such payment.
(b) Notwithstanding anything herein contained, Lessee shall have no
authority to, and shall not attempt to, enter into any Acquired Facility Lease
on behalf of and in the name of Brazos or to acquire any Facility or FF&E in the
name of Brazos without the advance written consent of Brazos.
(c) Lessee may, with the advance written consent of Brazos and Agent,
acquire a Facility or FF&E in the name of Brazos by advancing Lessee's own funds
at the closing of such Facility or FF&E for the purchase price of the Facility
or FF&E and any closing costs. In the event Lessee advances its own funds for
such purpose, Lessee shall submit an Initial Advance Certificate to Brazos
within thirty (30) days, or such other period of time as may be agreed upon by
Brazos and Lessee, of the closing of such purchase pursuant to SECTION 2.3(A)
above. The funding of such Initial Advance to reimburse Lessee shall be subject
to the terms and conditions hereof to the same extent as an Initial Advance in
connection with the acquisition of a Facility or FF&E by Brazos with its own
funds from an Initial Advance. Lessee acknowledges that any Facility or FF&E so
acquired is still subject to approval by Brazos and Agent in their sole
discretion. Any Facility or FF&E which is acquired by Lessee in the name of
Brazos and which is not the subject of an Initial Advance, Reconciliation
Advance or Additional Advance under this Agreement shall be reassigned by Brazos
to Lessee pursuant to SECTION 11.14 hereof.
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<PAGE> 17
ARTICLE III
-----------
ADVANCES
Section 3.1. AGREEMENT TO MAKE ADVANCES. Subject to the conditions and
upon the terms herein provided, including, without limitation, that the
Available Commitment not be exceeded and that all advances be within the Budget
for a Facility, Brazos agrees to make available to Lessee advances for each
Facility or FF&E up to an aggregate principal amount determined with respect to
that Facility or FF&E in accordance with SECTION 3.3 hereof. Subject to the
terms of this Agreement, Brazos agrees to make (a) an Initial Advance in
accordance with the Initial Advance Certificate at the time (i) Brazos' fee
interest in a Facility or FF&E is acquired or Brazos approves and executes a
Mortgageable Facilities Lease or an Acquired Facilities Lease included in
SCHEDULE 4.13 attached hereto or as otherwise approved by Brazos for a Facility
or FF&E, or within thirty (30) days, or such other period of time as may be
agreed upon by Brazos and Lessee, of the advance of funds by Lessee for the
purchase of a Facility or FF&E in the name of Brazos to the extent permitted by
SECTION 2.4(C) and (ii) the conditions in ARTICLE VI are satisfied, (b) a
Reconciliation Advance in accordance with the Reconciliation Certificate at the
time the conditions in ARTICLE VII are satisfied and (c) an Additional Advance
in accordance with the Additional Advance Certificate at the time (i) Brazos'
fee interest in Additional Improvements is acquired or Brazos approves and
executes a Mortgageable Facilities Lease for Additional Improvements and (ii)
the conditions in ARTICLE VI are satisfied.
Section 3.2. PROCEDURE FOR ADVANCES. Lessee shall give Brazos and Agent
at least five (5) Business Days' notice of its irrevocable request for an
advance pursuant to this Agreement, specifying a Business Day on which such
advance is to be made and the amount of the advance. Not later than 11:00 a.m.
Dallas, Texas time on the date for the advance specified in such notice;
provided the conditions set forth in SECTION 2.3 and ARTICLE VI, with respect to
the Initial Advance or Additional Advance, or ARTICLE VII, with respect to a
Reconciliation Advance, have been satisfied, and subject to SECTION 3.6, Brazos
shall provide to Lessee, in immediately available funds, the amount of the
advance then requested.
Section 3.3. DETERMINATION OF AMOUNTS OF ADVANCES.
(a) INITIAL ADVANCE. With respect to any Facility or FF&E, the amount
of the Initial Advance shall be made in accordance with the Initial Advance
Certificate, and shall be sufficient to pay in full all costs of designing,
furnishing, constructing, installing and equipping the Facility, free of all
Liens, or if purchased, the Value thereof, and shall not duplicate any amounts
advanced under the Agreement for Ground Lease. All such costs for which the
Initial Advance is requested shall be specifically set forth in the Initial
Advance Certificate and the request for the Initial Advance, and Brazos shall
have no obligation to advance any funds in the Initial Advance which are not for
costs so specifically set forth in such documents and actually incurred, or in
the case of punch list items, to be incurred, in the Lien-free (except for
Permitted Exceptions) construction and equipping of such Facility. Lessee shall
submit to Brazos and Agent at least two weeks before the delivery of an Initial
Advance Certificate with respect to a Facility, the Facility Plans and the
Budget for the development and construction of the Facility which must be
approved (such approval not to be unreasonably withheld) by Agent and which will
govern all advances made with respect to that Facility.
(b) RECONCILIATION ADVANCE. With respect to any reconciliation of an
Initial Advance or Additional Advance, the amount of the Reconciliation Advance
shall be made in accordance with the Reconciliation Certificate, and shall be
sufficient to pay in full the amount by which the costs of acquiring the FF&E or
acquiring, designing, furnishing, constructing, installing and equipping the
Facility exceeds the Acquisition Cost of such Facility as reflected in the
Facility Leasing Record subject to the Budget. All such costs for which the
Reconciliation Advance is requested shall be specifically set forth in the
Reconciliation Certificate and the request for the Reconciliation Advance, and
Brazos shall have no obligation to advance any funds in the Reconciliation
Advance which are not so specifically set forth in such documents.
(c) ADDITIONAL ADVANCE. With respect to any Additional Improvements,
the amount of the Additional Advance shall be made in accordance with the
Additional Advance Certificate, and shall be sufficient to pay in full all costs
of acquiring, designing, furnishing, constructing, installing and equipping the
Additional Improvements, free of all Liens
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<PAGE> 18
subject to the Budget. All such costs for which the Additional Advance is
requested shall be specifically set forth in the Additional Advance Certificate
and the request for the Additional Advance, and Brazos shall have no obligation
to advance any funds in the Additional Advance which are not for costs so
specifically set forth in such documents and actually incurred, or in the case
of punch list items, to be incurred, in the Lien-free (except for Permitted
Exceptions) construction and equipping of such Additional Improvements.
Section 3.4. PARTIAL ADVANCES. If any or all conditions precedent to
either an Initial Advance, a Reconciliation Advance or an Additional Advance
have not been satisfied on the applicable date for a requested advance, Brazos,
in its sole discretion, may, but shall have no obligation to, disburse a part of
the requested advance.
Section 3.5. USE OF PROCEEDS. The proceeds of each advance with respect
to a Facility or FF&E shall be used by Lessee for payment or reimbursement of
costs specified in the applicable request for the advance.
Section 3.6. NO OBLIGATION TO ADVANCE. Notwithstanding anything
contained herein to the contrary, Brazos shall have no obligation (a) to make
any advance hereunder which would exceed the Available Commitment, or (b) to
make any advance hereunder if the funds therefor are not made available to
Brazos under the Credit Agreement for any reason; provided, however, this
SECTION 3.6 shall not be interpreted to relieve any Bank under the Credit
Agreement from the obligation to provide funds to Brazos in accordance with the
terms of the Credit Agreement.
Section 3.7. BRAZOS EQUITY. Brazos agrees that it will advance its
equity from its own funds in connection with each advance made hereunder upon
approval by Agent so that the maximum amount of debt advanced under the Credit
Agreement for any Facility or FF&E will not exceed ninety-seven percent (97%) of
the Acquisition Cost of such Facility or FF&E; provided that the equity advanced
by Brazos shall not exceed 3% of such Acquisition Cost without the prior written
approval of Agent. Brazos agrees that it will not withdraw its equity advanced
hereunder for a Facility or FF&E except upon approval by Agent or the
termination of the Facilities Lease for such Facility or FF&E.
Section 3.8. BRAZOS COVENANTS. In the absence of an Event of Default
which is continuing, Brazos agrees that it will not engage any broker in
connection with the purchase or sale of any Facility or FF&E without Lessee's
prior written consent. Within one hundred and twenty (120) days after the end of
Brazos' fiscal year, Brazos will provide to Lessee Brazos' unaudited balance
sheet dated as of the end of its fiscal year prepared in accordance with GAAP,
certified by an officer of the General Partner of Brazos.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF LESSEE
In order to induce Brazos to enter into this Agreement and the Credit
Agreement and to agree to make advances, Lessee hereby represents and warrants
to Brazos on the date of each advance (it being understood that all
representations and warranties in this ARTICLE IV with respect to any Facility
or FF&E shall refer to the Facility or FF&E for which each such advance is
requested) that:
Section 4.1. CORPORATE MATTERS. Lessee (a) has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
state of its organization, (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 the Facilities Lease, this Agreement and the Construction
Documents and (c) is duly qualified to do business as a foreign corporation in
good standing in each jurisdiction, including, without limitation each state or
other jurisdiction in which a Facility or FF&E is located, in which its
ownership or leasing of properties or the conduct of its business requires such
qualification and where nonqualification, singly or in the aggregate, would
materially adversely affect the financial condition or creditworthiness of
Lessee, or would impair the ability of Lessee to perform its obligations under
the Facilities Lease, this Agreement or any of the Construction Documents.
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<PAGE> 19
Section 4.2. AUTHORIZATION; BINDING AGREEMENT. This Agreement has been,
and each of the Construction Documents, when executed and delivered, will be,
duly authorized, executed and delivered by Lessee, and, assuming the due
authorization, execution and delivery of this Agreement by Brazos and the
Construction Documents by the parties thereto other than Lessee, this Agreement
is, and each of the Construction Documents when executed and delivered will be,
a legal, valid and binding obligation of Lessee, enforceable according to its
terms, subject, as to enforceability, to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
Section 4.3. POWER AND AUTHORITY. The consummation of the transactions
herein contemplated and the performance and observance of Lessee's obligations
under this Agreement have been, and the Construction Documents have been or will
be, duly authorized by all necessary corporate action on the part of Lessee. The
execution, delivery and performance by Lessee of this Agreement and the
Construction Documents will not result in any violation of any term of the
certificate of incorporation or the by-laws of Lessee, do not require approval
of the board of directors or shareholders of Lessee or the approval or consent
of any trustee or holders of Indebtedness 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 (other than a Lien on any Facility or
FF&E as may be contemplated herein) 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 where breach or default,
singly or in the aggregate, could materially adversely affect the financial
condition or creditworthiness of Lessee, or any existing applicable law, rule,
regulation, license, judgment, order or decree of any Governmental Authority or
court having jurisdiction over Lessee or any of its activities or properties.
Section 4.4. CONSENTS, APPROVALS AND AUTHORIZATIONS. There are no
consents, licenses, orders, authorizations or approvals of, or notices to or
registrations with, any Governmental Authority which are required in connection
with the valid execution, delivery and performance of this Agreement and the
Construction Documents that have not been obtained or made, except (i) such
permits and licenses as Lessee will be required to obtain for the construction,
installation, occupancy, use or operation of a Facility or FF&E and which, in
the ordinary course of business, are not obtained until just prior to the
commencement of such construction, installation, occupancy, use or operation,
and (ii) any such consents, licenses, orders, authorizations, approvals, notices
and registrations, the failure of which to obtain would not reasonably be
expected to cause a Material Adverse Change. Any such consents, licenses,
orders, authorizations, approvals, notices and registrations that have been
obtained or made are in full force and effect.
Section 4.5. FINANCIAL STATEMENTS. Lessee has caused to be furnished to
Brazos and Agent copies of the most recent financial information and
certificates required to be furnished pursuant to the Corporate Credit
Documents, since March 31, 1998, which fairly present the financial position,
results of operations and cash flows with respect to Guarantor and its
consolidated subsidiaries, as of the dates and for the periods indicated therein
and comply with all applicable requirements.
Section 4.6. CHANGES. Since the date of the most recent financial
statements delivered pursuant to SECTION 4.5, there has been no adverse change
in the financial condition or business of any Guarantor or Lessee which would
materially impair the ability of such Guarantor or Lessee to perform their
respective obligations under this Agreement or the Facilities Lease or which
would materially impair the ability of Guarantor to perform its obligations
under the Guaranty.
Section 4.7. LITIGATION. Except as disclosed to Brazos, 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 in writing
or affecting Lessee or Guarantor or any property or rights of Lessee or
Guarantor, or, to the best of Lessee's knowledge, which affects any Facility or
FF&E, as to which there is a significant possibility of an adverse
determination, and which if adversely determined, could reasonably be expected
to have a material adverse impact on the financial condition or business of
Lessee or Guarantor or which, if adversely determined, could reasonably be
expected to materially impair the ability of Lessee or Guarantor to perform its
obligations hereunder or of Guarantor to perform its obligations under the
Guaranty, or which, if adversely determined,
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<PAGE> 20
could reasonably be expected to have a material adverse impact on the Value or
intended use of a Facility or FF&E (it being agreed that a potential adverse
impact reasonably likely to be less than $500,000 in the aggregate with respect
to all Facilities or FF&E shall be deemed not to be material), 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 or Guarantor after due inquiry, threatened which
questions or would question the validity of this Agreement.
Section 4.8. NO DEFAULT. Neither Lessee nor Guarantor is in default,
after the expiration of all applicable grace periods, under or with respect to
any Contractual Obligation in any respect which could be materially adverse to
the business, operations, property or financial or other condition of Lessee or
Guarantor, or which could materially adversely affect the ability of Lessee or
Guarantor to perform its obligations under this Agreement, the Facilities Lease
or any of the Construction Documents.
Section 4.9. FACILITY AND FF&E LIENS. Except as specifically disclosed
by Lessee in writing to Brazos, to Lessee's actual knowledge no Facility or FF&E
is subject to a Lien of Record, and, to the best of Lessee's actual knowledge,
no Facility or FF&E is subject to any other Lien, except for Permitted
Exceptions previously disclosed in writing to Brazos.
Section 4.10. AVAILABILITY OF UTILITIES. To the best of Lessee's actual
knowledge all utility services and facilities (including, without limitation,
gas, electrical, water and sewage services and facilities) that are necessary
for the intended use of the Facility under the Facilities Lease without
impediment or unreasonable delay are or will be on a timely basis available at
the Facility.
Section 4.11. BROKERAGE. Except as may be contemplated by the
Facilities Lease, no brokerage or other fee, commission or compensation is to be
paid by Brazos in connection with this Agreement, and Lessee hereby indemnifies
Brazos against any claims for brokerage fees or commissions and agrees to pay
all reasonable expenses incurred by Brazos in connection with the defense of any
action or proceeding brought to collect any such brokerage fees or commissions;
provided such claim is made through or under Lessee.
Section 4.12. SUITABILITY OF FACILITY AND FF&E. Each Facility or FF&E
is suitable in material respects (including, without limitation, ground
conditions, utilities, and condition of title) for the intended use of the
Facility or FF&E under the Facilities Lease.
Section 4.13. ACQUIRED FACILITIES LEASE. Each Acquired Facilities Lease
is a Mortgageable Facilities Lease except to the extent agreed to in writing by
Brazos and Agent, and to the best of Lessee's actual knowledge is in full force
and effect and has not been amended, restated, modified or changed in any manner
that has not been disclosed in writing to Brazos and Agent, nor to the best of
Lessee's actual knowledge is there any material default under any Acquired
Facilities Lease nor the occurrence of any event which, with the giving of
notice or the passage of time or both, would constitute a default under such
Acquired Facilities Lease, nor to the best of Lessee's actual knowledge has any
party under any Acquired Facilities Lease commenced any action or given or
received any notice for the purpose of terminating any Acquired Facilities
Lease, and to the best of Lessee's actual knowledge all rents, additional rents
and other sums due and payable under the Acquired Facilities Lease have been
paid in full.
Section 4.14. ACCURACY OF VALUE. Lessee has no knowledge or reason to
believe that the Value contained in any certificate or statement furnished to
Brazos or Agent by Lessee with respect to any Facility or FF&E is not accurate
and complete in all material respects.
ARTICLE V
---------
AFFIRMATIVE COVENANTS
Lessee hereby agrees that, so long as this Agreement remains in effect,
Lessee shall keep and perform fully each and all of the following covenants:
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Section 5.1. CONSTRUCTION. With respect to each Facility which is to be
constructed, Lessee, on behalf of Brazos, shall commence construction of such
Facility no later than fifteen (15) months after Brazos' acquisition of an
interest in the respective Property, or as soon as practicable if weather
conditions do not reasonably permit commencement of construction within such
fifteen (15) month period (which commencement obligation shall be satisfied by
site clearance and preparation work), and shall achieve Substantial Completion
of the Facility with due diligence on or before the Facility Completion Date,
subject to Force Majeure Delay and in accordance with the Facility Plans and
this Agreement. Each Facility shall be constructed, equipped and furnished in
material compliance with any Legal Requirements affecting the Facility;
provided, that Lessee shall not be required to comply with any Legal
Requirements if, (a) in the case of Legal Requirements with respect to laws
affecting the environment, Lessee acts diligently to cure such non-compliance
upon becoming aware of it, and (b) in every case such non-compliance,
individually or in the aggregate, (i) shall not involve any material danger that
any Facility or FF&E would be subject to sale, forfeiture or loss, as a result
of failure to comply therewith, (ii) could not reasonably be expected to cause
either Brazos or any Assignee to incur (x) civil liability which, in the sole
judgment of Brazos or any Assignee, is not adequately indemnified (Lessee's
obligations under ARTICLE IX of this Agreement shall be deemed to be adequate
indemnification if no Event of Default or Potential Default exists and if such
civil liability is reasonably likely to be less than $100,000 per Facility and
$1,000,000 in the aggregate) or (y) any criminal liability as a result of
failure to comply therewith, (iii) is permitted under the provisions of the
Acquired Facility Lease, if any, on such Facility or FF&E, and (iv) is
consistent with business practices normal within the industry of Lessee, or the
practices of Lessee with respect to properties or equipment owned by Lessee.
Section 5.2. PERFORMANCE UNDER OTHER AGREEMENTS. Lessee shall duly
perform and observe all of the covenants, agreements and conditions on its part
to be performed and observed hereunder and shall duly perform and observe all of
the covenants, agreements and conditions on its part which it is obligated to
perform or observe under the Facilities Lease, Construction Documents and all
other agreements related to any Facility or FF&E.
Section 5.3. EXPENSES. Lessee shall pay upon demand all obligations,
reasonable costs and expenses incurred by Brazos (or its limited partners, if
payable to any such limited partner as Additional Rent under the Facilities
Lease or if incurred in connection with the closing (as opposed to on-going
administrative expenses)) with respect to any and all transactions contemplated
herein and the preparation of any document reasonably required hereunder,
including (without limiting the generality of the foregoing) and without
duplication all amounts required to reimburse Brazos or its Affiliate for its
interest costs, obligations, costs, fees and expenses arising in connection with
any Credit Agreement or the termination thereof (whether as a result of a
default thereunder or otherwise), title and conveyancing charges, rent under
each Acquired Facilities Lease, mortgage taxes, intangible personal property
taxes, escrow fees, filing fees, revenue and tax stamp expenses, insurance
premiums (including title insurance premiums), brokerage commissions, finders'
fees, placement fees, court costs, surveyors', photographers', appraisers',
architects', engineers', Consulting Professionals', rating agencies',
accountants' and reasonable attorneys' fees and disbursements (including,
without limitation, the preparation of any tax return or report relating to a
Facility or FF&E), and will reimburse to Brazos all expenses paid by Brazos of
the nature described in this SECTION 5.3 which have been or may be incurred by
Brazos with respect to any and all of the transactions contemplated herein. If
Lessee or Guarantor shall fail to reimburse Brazos within twenty (20) days after
presentation of a bill and demand for payment therefor, Brazos may pay or
deduct, from the advances to be made under the Credit Agreement, any of such
expenses; provided the same are within the Budget, and any proceeds so applied
shall be deemed advances under this Agreement, and deducted from the total funds
available for the Facility or FF&E. Notwithstanding anything to the contrary
contained in the foregoing, neither Lessee nor the Guarantor shall be required
to reimburse Brazos for any of the foregoing obligations, costs and expenses
which constitute properly capitalized costs and which Brazos has agreed to
capitalize and to include as an element of the Acquisition Cost of a particular
Facility or FF&E or which are included in the calculation of Basic Rent (as
defined in the Facilities Lease). Expenses incurred by Brazos in financing
obligations, costs and expenses pending allocation as a capitalized cost to a
Facility or FF&E shall be payable by Lessee or the Guarantor hereunder, if not
capitalized by Brazos.
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Section 5.4. CERTIFICATES; OTHER INFORMATION. Lessee shall furnish to
Brazos:
(a) concurrently with the delivery of the annual financial
statements referred to in SECTION 5.4(B), the Compliance Certificate
(as defined in the Guaranty) required to be provided by Guarantor
pursuant to Section 7(b) of the Guaranty, and a certificate of a
Responsible Officer stating that, to the best of such Responsible
Officer's knowledge, Lessee during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition contained in this Agreement and in the Construction
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Event of Default
or Potential Default, except as specified in such certificate; and
(b) from time to time, (i) promptly upon request, copies of the
quarterly financial statements required to be delivered under Section
8.1(b) of the Corporate Credit Documents, together with each
certificate required to be delivered under Section 8.1 of the Corporate
Credit Documents, and within one hundred (100) days after the end of
Guarantor's fiscal year, copies of the annual financial statements
required to be delivered under Section 8.1(a) of the Corporate Credit
Documents, together with each certificate required to be delivered
under Section 8.1 of the Corporate Credit Documents, (ii) promptly upon
request, such other information with respect to Guarantor or Lessee or
Guarantor's or Lessee's operations, business, property, assets or
financial condition as Brazos or Agent shall reasonably request, (iii)
promptly after a Responsible Officer obtains knowledge of any Event of
Default or Potential Default, a certificate of a Responsible Officer
specifying the nature and period of existence of such Event of Default
or Potential Default, and what action, if any, Lessee has taken, is
taking, or proposes to take with respect thereto, (iv) promptly after a
Responsible Officer obtains knowledge of any material adverse change in
the financial condition or business of Guarantor or Lessee or of any
litigation of the type described in SECTION 4.7, a certificate of a
Responsible Officer describing such change or litigation as the case
may be, and (v) promptly after Lessee obtains knowledge of any and all
Liens other than Permitted Exceptions on any Facility or FF&E or other
matter which may materially adversely affect the value or intended use
of a Facility or FF&E, a detailed statement describing each such Lien
or other matter.
Section 5.5. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Lessee
shall preserve, renew and keep in full force and effect its corporate existence
(except as otherwise permitted herein), and take all reasonable action to
maintain all rights, privileges and franchises material to the conduct of its
business; and comply with all of its material Contractual Obligations; provided,
however, that nothing contained in this SECTION 5.5 shall prevent Lessee from
ceasing or omitting to exercise any rights, privileges or franchises which in
the reasonable judgment of Lessee can no longer be profitably exercised or
prevent Lessee from selling, abandoning or otherwise disposing of any property,
the retention of which in the reasonable judgment of Lessee is inadvisable to
the business of Lessee, or prevent any liquidation of any subsidiary of Lessee,
or any merger, consolidation or sale, permitted by the provisions of SECTION
11.8.
Section 5.6. NOTICES. Each party hereto shall give notice or copies, as
applicable, to the other party promptly upon the occurrence (or becoming aware
of or receiving notice) of:
(a) any litigation or proceedings affecting any Facility or
FF&E in which the amount involved (individually or collectively) is
$100,000 or more and not covered by insurance or in which injunctive or
similar relief is sought;
(b) any notices given to or received from the lessor under any
Acquired Facilities Lease;
(c) any notice given pursuant to any of the Construction
Documents that a default has occurred thereunder;
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<PAGE> 23
(d) any condition which results or is reasonably likely to
result in a Force Majeure Delay in completion of any Improvements; and
(e) the imposition of any Lien, other than Permitted
Exceptions, or Lien of Record of which Lessee has knowledge.
Each notice given by Lessee pursuant to this Section shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action Lessee proposes to take with respect
thereto.
Section 5.7. LEGAL REQUIREMENTS. Lessee shall comply in all material
respects with all Legal Requirements affecting the execution, delivery and
performance of this Agreement and the Construction Documents, and Lessee will
not do or permit any act or thing which is contrary in any material respect to
any Legal Requirements, or which might impair in any material respect, other
than in the normal use thereof, the value or usefulness of any Facility or FF&E;
provided, in each case, that Lessee shall not be required to comply with any
Legal Requirements if (a) in the case of any Legal Requirements with respect to
laws affecting the environment, Lessee acts diligently to cure such
non-compliance upon becoming aware of it and (b) in every case, such
non-compliance, individually or in the aggregate, (i) shall not involve any
material danger that any Facility would be subject to sale, forfeiture, or loss
as a result of failure to comply therewith; (ii) could not reasonably be
expected to cause either Brazos or any Assignee to incur (x) civil liability
which, in the sole judgment of Brazos or any Assignee, is not adequately
indemnified (Lessee's obligations under ARTICLE IX of this Agreement shall be
deemed to be adequate indemnification if no Event of Default or Potential
Default exists and if such civil liability is reasonably likely to be less than
$100,000 per Property and $500,000 in the aggregate) or (y) any criminal
liability as a result of failure to comply therewith; (iii) is permitted under
the provision of the Acquired Facilities Lease, if any, on such Facility, and
(iv) is consistent with business practices normal within the industry of Lessee
or the practices of Lessee with respect to properties owned by Lessee.
Section 5.8. LEASING OF FACILITIES. Lessee shall lease (or in the case
of a Facility or FF&E under an Acquired Facilities Lease, shall sublease) such
Facility or FF&E from Brazos pursuant to the Facilities Lease in accordance with
the procedures of SECTION 2.3 hereof. Upon acquisition of a Facility or FF&E by
purchase or lease, such Facility or FF&E shall cease to be governed by the
terms, provisions, and conditions of this Agreement, and shall be governed by
the terms, provisions, and conditions of the Facilities Lease; provided that
nothing contained herein shall be deemed to relieve Brazos from its obligation
to make the Reconciliation Advance or Additional Advance if the conditions
hereof for such Reconciliation Advance or Additional Advance shall be satisfied
by Lessee or to relieve Lessee from the obligation of satisfaction of all Liens
with respect to any Facility or FF&E, it being expressly agreed that such
obligation shall survive the making of the Initial Advance and the date of the
Facility Leasing Record.
Section 5.9. FILINGS. Lessee shall promptly and duly execute, deliver,
file, and record, at Lessee's expense, all such documents, statements, filings,
and registrations, and take such further action as Brazos or Assignee shall from
time to time reasonably request in order to establish, perfect and maintain
Brazos' title to and interest in the Facilities or FF&E and any Assignee's
interest in this Agreement or any Facility or FF&E as against Lessee or any
third party in any applicable jurisdiction.
Section 5.10. CHANGES IN PLANS. Lessee will submit any material changes
in the Facility Plans to Brazos and Agent and Lessee must receive the approval
of Agent prior to implementing them, such approval not to be unreasonably
withheld or delayed.
Section 5.11. NOTIFICATION OF DEVELOPMENT OF FACILITIES. Lessee shall
not commence the development and construction of any Facility prior to the
delivery to Brazos and Agent of the Basic Plan for such Facility and approval of
such Basic Plan by Agent, such approval not to be unreasonably withheld or
delayed.
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ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE INITIAL ADVANCE OR ADDITIONAL ADVANCE
WITH RESPECT TO A FACILITY OR FF&E OR ADDITIONAL IMPROVEMENTS
Brazos shall not be obligated to make the Initial Advance with respect
to a Facility or FF&E or n Additional Advance with respect to Additional
Improvements, or if no advance is being made pursuant to Brazos acquiring a
leasehold estate in a Mortgageable Facilities Lease Brazos shall not be required
to acquire such leasehold estate, until all of the conditions set forth in this
ARTICLE VI shall have been satisfied.
Section 6.1. ACQUISITION DOCUMENTS. In connection with the acquisition
of any Facility or FF&E with the proceeds of an Initial Advance, except as may
otherwise be agreed by Brazos and Agent, Brazos and Agent shall have received at
least five (5) Business Days prior to any advance, in each case in form and
substance satisfactory to Brazos and Agent, the following:
(a) FACILITIES LEASE. A fully executed copy of the Facilities
Lease. The delivery of the Facilities Lease to satisfy this condition
precedent with respect to the first Facility or FF&E shall serve to
satisfy this condition precedent for each subsequent Facility or FF&E.
(b) REQUEST FOR ADVANCE. A Request for Advance, executed by
Lessee, which shall set out the total amount of the Initial Advance or
Additional Advance requested, the date on which the advance is to be
paid, the name and address of the escrow or closing agent to which the
Initial Advance or Additional Advance is to be tendered, and an
itemization of the various costs constituting the amount of the Initial
Advance or Additional Advance in such detail as will be necessary to
provide disbursement instructions to the escrow or closing agent.
(c) INITIAL ADVANCE CERTIFICATE OR ADDITIONAL ADVANCE
CERTIFICATE. The Initial Advance Certificate or the Additional Advance
Certificate, as applicable, containing, among other things, a
certification by Lessee that the proposed cost of such Facility or FF&E
contained in such certificate is within the Budget approved by Agent
and is true, complete, correct, and accurately represents all expected
costs of the Facility or FF&E, and that the Facility or FF&E is not
encumbered by any Liens of Record created by Lessee or, to the best
knowledge of Lessee, by any other Liens of Record.
(d) SPECIAL WARRANTY DEED AND BILL OF SALE. Where fee title is
to be acquired by Brazos, a photocopy of the Special Warranty Deed and
Bill of Sale to be executed and delivered at the closing of the
acquisition of each Facility or FF&E, conveying indefeasible title to
Brazos, subject only to Permitted Exceptions, but not subject to any
Liens of Record. For purposes of the Initial Advance and Additional
Advance, Permitted Exceptions shall not include any Liens of Record
(whether or not the subject of a Permitted Contest).
(e) ACQUIRED FACILITY LEASE. Where Brazos is acquiring an
Acquired Facility Lease listed on SCHEDULE 4.13 attached hereto or
otherwise approved by Brazos, an assignment of such Acquired Facility
Lease. Where Brazos is acquiring a leasehold estate in a Facility or
FF&E pursuant to a Mortgageable Facility Lease, an original or
certified copy of the Mortgageable Facilities Lease to be executed and
delivered at the closing of the acquisition of Brazos' leasehold
estate, certified by Lessee as complying in all respects with this
Agreement and with Article XVI of the Facilities Lease, and subject
only to Permitted Exceptions but not subject to any Liens of Record
which are not Permitted Exceptions (other than a lien of a lender to a
landlord which is subordinate to the Acquired Facility Lease or for
which a nondisturbance agreement has been obtained), along with any
estoppel certificates deemed necessary by Brazos or Agent (as, for
example, when Lessee's interest in an existing Acquired Facilities
Lease is being assigned to Brazos), recognition and attornment
agreements deemed necessary by Brazos or Agent, and other confirmations
required by legal counsel to Brazos and Agent that such Acquired
Facilities Lease is a Mortgageable Facilities Lease. For purposes of
the Initial Advance and Additional Advance, Permitted Exceptions shall
NOT include any Liens of Record (whether or not the subject of a
Permitted Contest).
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(f) TAXES. Evidence that all past and current taxes and
assessments (excluding those which are due and payable but not yet
delinquent) applicable to the Facility or FF&E for which the Initial
Advance or Additional Advance, respectively, is requested have been
paid in full.
(g) AVAILABILITY OF UTILITIES. With respect to each Facility,
evidence satisfactory to Brazos and Agent that all utility services and
facilities (including, without limitation, gas, electrical, water and
sewage services and facilities) that are necessary for the intended use
of the Facility under the Facilities Lease without impediment or delay
are available to the Facility.
(h) FLOOD INSURANCE. Either (i) a policy of flood insurance in
an amount equal to the Acquisition Cost for such Facility, or (ii) a
certification by the surveyor that the Facility is not located in a
Special Flood Hazard Area.
(i) PERMITS. Evidence reasonably satisfactory to Brazos and
Agent that all Permits for the operation and construction of the
Facility have been issued.
(j) OPINION OF LOCAL COUNSEL. With respect to (i) any proposed
acquisition by Brazos of a fee interest in a Facility or FF&E in a
state or jurisdiction in which no Facility or FF&E has previously been
acquired under this Agreement and (ii) any proposed acquisition by
Brazos of a Facility or FF&E under an Acquired Facilities Lease, an
opinion of local counsel, in each case in form and substance reasonably
satisfactory to Brazos and Agent and generally to the same effect as
EXHIBIT "E" attached hereto.
(k) CERTIFICATES OF INSURANCE. Certificates of insurance or
other evidence reasonably acceptable to Brazos and Agent certifying
that the insurance then carried or maintained on each Facility or FF&E
complies with the terms of the Facilities Lease.
(l) MEMORANDUM OF LEASE. A memorandum of lease for the Facility
or FF&E in recordable form, executed by Lessee and Brazos, reciting
therein that the Facility or FF&E covered thereby is subject to the
terms and conditions of the Facilities Lease.
(m) OTHER DOCUMENTS. All other documents or certificates
reasonably requested by Brazos and Agent including, but not limited to,
financing statements executed by Lessee and any of the items referenced
in Section 6.1 of the Agreement for Ground Lease, including an
appraisal of the Facility or FF&E, all in form and substance acceptable
to Brazos and Agent; provided however, Brazos and Agent reserve the
right to require Lessee to provide, at its sole cost and expense, and
appraisal of the Property if required by any Governmental Authority or
by the auditors of the Agent.
(n) OPINION OF COUNSEL FOR GUARANTOR. With respect to the first
proposed acquisition by Brazos of a fee or leasehold interest in a
Facility or FF&E, an opinion of Schulte Roth & Zabel LLP, counsel for
Guarantor, in form and substance reasonably satisfactory to Brazos and
Agent.
Section 6.2. NO EVENT OF DEFAULT. No Event of Default or Potential
Default shall have occurred and be continuing on the date of the Initial Advance
or Additional Advance or after giving effect to the advance to be made on such
date.
Section 6.3. CONTINUING REPRESENTATIONS. All representations and
warranties made in this Agreement, in the Facilities Lease, and in connection
with the Initial Advance or Additional Advance or which are contained in any
certificate, document or financial or other statement furnished at any time
under or in connection herewith shall be true and correct as of the date they
are made or are deemed to be made.
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<PAGE> 26
Section 6.4. ADDITIONAL MATTERS. All other documents and legal matters
in connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to Brazos and Agent, the Facility
or FF&E must be approved by the Agent and the amount of each advance to be made
in connection with such Facility or FF&E must be within the Budget approved by
the Agent.
Section 6.5. FACILITIES ACQUIRED IN BRAZOS' NAME. In connection with an
Initial Advance for a Facility or FF&E acquired by Lessee in Brazos' name with
Lessee's own funds, except as may otherwise be agreed by Brazos and Agent,
Brazos and Agent shall have received at least five (5) Business Days prior to
any advance, in each case in form and substance satisfactory to Brazos and
Agent, such of the documents and instruments referenced in SECTION 6.1 as may be
required for funding under the Credit Agreement.
ARTICLE VII
-----------
CONDITIONS PRECEDENT TO THE RECONCILIATION ADVANCE
WITH RESPECT TO A FACILITY OR FF&E
Section 7.1. RECONCILIATION ADVANCE. Brazos' obligation to make the
Reconciliation Advance with respect to a Facility or FF&E shall be subject to
the satisfaction of the following conditions:
(a) RECONCILIATION CERTIFICATE. A fully executed copy of the
Reconciliation Certificate shall have been delivered to Brazos and
Agent.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made herein or which are contained in any certificate,
document or financial or other statement furnished at any time under or
in connection herewith, shall be correct on and as of the date for such
advance as if made on and as of such date.
(c) NO EVENT OF DEFAULT. No Event of Default or Potential
Default shall have occurred and be continuing on such date or after
giving effect to the advance to be made on such date.
(d) EVIDENCE OF COMPLIANCE. Brazos and Agent shall have been
furnished with such documents, reports, certificates, affidavits and
other information, in form and substance satisfactory to Brazos or
Agent in their reasonable judgment, as Brazos or Agent may require to
evidence compliance by Lessee with all of the provisions of this
Agreement.
(e) REQUEST FOR ADVANCE. Brazos and Agent shall have received a
Request for Advance, executed by Lessee, and stating the total amount
of the Reconciliation Advance requested, the date on which such
Reconciliation Advance is to be made, and a specific breakdown of items
and costs for which the Reconciliation Advance is being made all of
which must be within the amounts specified for same in the Budget
approved by the Agent.
(f) SATISFACTORY TITLE. There shall have been no changes in the
state of title and no additional survey exceptions or Liens, except for
Permitted Exceptions. Brazos and Agent shall have received a list of
all Liens of Record and of all other Liens known to Lessee against the
Facility or FF&E and the amounts thereof and, in the case of an
Acquired Facilities Lease, an estoppel certificate from the lessor
confirming that there are no defaults under the Acquired Facilities
Lease and such other information satisfactory to Brazos and Agent.
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ARTICLE VIII
------------
EVENTS OF DEFAULT
Section 8.1. EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an Event of Default:
(a) FAILURE TO MAKE PAYMENTS. Failure of Lessee to pay any
amount hereunder within five (5) Business Days from written demand for
such payment.
(b) OTHER DEFAULTS. Lessee shall default in the performance or
observance of any other term, covenant, condition or obligation
contained in this Agreement and such default shall (i) continue for
thirty (30) days after written notice shall have been given to Lessee
by Brazos or any Assignee specifying such default and requiring such
default to be remedied or (ii) if such default is of a nature that it
is not capable of being cured within such 30-day period, Lessee shall
not have diligently commenced curing such default, proceeded diligently
and in good faith thereafter to complete curing such default, or cured
such default within sixty (60) days from the date of written notice.
(c) BANKRUPTCY. (i) The entry of a decree or order for relief
in respect of Lessee or Guarantor by a court having jurisdiction in the
premises in an involuntary case under the Federal bankruptcy laws, as
now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Lessee or Guarantor or of any substantial part of Lessee's
or Guarantor's property, or ordering the winding up or liquidation of
Lessee's or Guarantor's affairs, and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60) consecutive
days; or (ii) the general suspension or discontinuance of Lessee's or
Guarantor's business operations, its insolvency (however evidenced) or
its admission of insolvency or bankruptcy, or the commencement by
Lessee or Guarantor of a voluntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal
or state bankruptcy, insolvency or other similar law, or the consent by
it to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of Lessee or Guarantor of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the failure of Lessee or Guarantor generally to pay its
debts as such debts become due, or the taking of corporate action by
Lessee or Guarantor in furtherance of any such action.
(d) PAYMENT OF OBLIGATIONS. A default or event of default,
which results in the holder or holders of any Indebtedness of Lessee or
of Guarantor, or a trustee or agent on behalf of such holder or
holders, accelerating such Indebtedness prior to its stated maturity
under the provisions of any instrument evidencing Indebtedness in
excess of $1,000,000 of Lessee or Guarantor (or under the provisions of
any agreement pursuant to which such instrument was issued) or the
occurrence of a default as specified in Section 7.1(d)(iii) of the
Credit Agreement.
(e) MISREPRESENTATIONS. Any representation or warranty made by
Lessee herein or which is contained in any certificate, document or
financial or other statement furnished under or in connection with this
Agreement proves to be false or misleading in any material respect when
made or deemed made.
(f) DEFAULT UNDER LEASE DOCUMENTS. An Event of Default (as
defined in the Facilities Lease, the Agreement for Ground Lease or the
Ground Lease) shall occur and be continuing under the Facilities Lease,
the Agreement for Ground Lease or the Ground Lease, respectively.
(g) GUARANTY. An Event of Default under the Guaranty shall
occur and be continuing or any representation or warranty made by
Guarantor in the Guaranty, any Consent (as defined in the Facilities
Lease) or any document contemplated hereby or thereby proves to be
false or misleading in any material respect when made or deemed made or
the Guarantor defaults in the performance of any term, covenant,
condition or
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<PAGE> 28
obligation contained in the Guaranty or any Consent, and such default
shall not have been cured within any applicable grace or cure period
and such default shall be continuing or any provision of the Guaranty
shall for any reason be terminated or cease to be in full force and
effect and a valid and binding obligation of the Guarantor, or the
Guarantor shall challenge or repudiate in writing its liability
thereunder.
(h) OTHER AGREEMENTS. Any Lessee or the Guarantor shall default
in any material respect in the performance or observance of any term,
covenant, condition or obligation contained in any other written
agreement between Lessee and Brazos or any Consent to which any Lessee
or Guarantor is a party and such default shall not have been cured
within any applicable grace or cure period.
(i) UNAUTHORIZED ASSIGNMENTS. Any assignment by Lessee of any
interest in this Agreement or any advance to be made hereunder other
than in accordance with the terms of this Agreement.
(j) CONSTRUCTION DOCUMENTS. Lessee shall default in any
material respects in the performance or observance of any term,
covenant, condition or obligation contained in any other written
agreement between Lessee and Brazos or any of the Construction
Documents, and such default shall not have been cured within any
applicable grace or cure period and such default shall be continuing.
(k) DEFAULT UNDER CORPORATE CREDIT DOCUMENTS. The occurrence
of any Default under any of the Corporate Credit Documents.
Section 8.2. RIGHTS UPON DEFAULT. Upon the occurrence and continuation
of any Event of Default, Brazos may in its discretion declare, in a writing
delivered to Lessee, this Agreement to be in default and do any one or more of
the following:
(a) Terminate this Agreement and/or Brazos' obligations to
make Initial Advances, Reconciliation Advances and Additional Advances
hereunder by giving written notice to that effect to Lessee;
(b) Terminate or suspend Lessee's right to act as agent of
Brazos under SECTION 2.4 by giving written notice to that effect to
Lessee;
(c) Recover from Lessee any sums due hereunder; and
(d) Exercise any other right or remedy which may be available
under applicable law and in general proceed by appropriate judicial
proceedings, either at law or in equity, to enforce the terms hereof or
to recover damages for the breach hereof.
Suit or suits for the recovery of any default in the payment of any sum
due hereunder or for damages may be brought by Brazos from time to time at
Brazos' election, and nothing herein contained shall be deemed to require Brazos
to await the date whereon this Agreement or the term hereof would have expired
by limitation had there been no such default by Lessee or no such termination or
cancellation.
The receipt of any payments under this Agreement by Brazos with
knowledge of any breach of this Agreement by Lessee or of any default by Lessee
in the performance of any of the terms, covenants or conditions of this
Agreement, shall not be deemed to be a waiver of any provision of this
Agreement.
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No receipt of moneys by Brazos from Lessee after the termination or
cancellation hereof in any lawful manner shall reinstate or continue this
Agreement or operate as a waiver of the right to receive any and all amounts
owing by Lessee to or on behalf of Brazos hereunder; it being agreed that, after
the service of notice to terminate or cancel this Agreement, and the expiration
of the time therein specified, if the default has not been cured in the
meantime, or after the commencement of suit, action or summary proceedings or of
any other remedy, or after a final order, warrant or judgment for the possession
of the Facility or FF&E, Brazos may demand, receive and collect any moneys
payable hereunder, without in any manner affecting such notice, proceedings,
suit, action, order, warrant or judgment; and any and all such moneys so
collected shall be deemed to be payments on account of Lessee's liability
hereunder.
Lessee shall be liable to Brazos for Brazos' obligations, costs, and
expenses reasonably incurred in connection with its obligations hereunder,
including, without limitation, all losses, damages and expenses (including,
without limitation, attorneys' fees and expenses) sustained by Brazos by reason
of such Event of Default and the exercise of Brazos' remedies with respect
thereto.
No remedy referred to in this SECTION 8.2 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to Brazos at law or in equity, and the exercise in
whole or in part by Brazos of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Brazos of any or all such other
remedies. No waiver by Brazos of any Event of Default hereunder shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default.
Lessee hereby waives any and all rights to reinstate this Agreement as
permitted or provided by or under any statute, law or decision now or hereafter
in force and effect.
ARTICLE IX
----------
INDEMNITIES
Section 9.1. INDEMNIFIED PERSONS. Lessee shall indemnify and hold
harmless Brazos, each general and limited partner of Brazos, any Assignee, any
successor or successors and any Affiliate of each of them, and their respective
officers, directors, incorporators, shareholders, partners (general and limited,
including, without limitation, the general and limited partners of Brazos),
employees, agents and servants (each of the foregoing an "INDEMNIFIED PERSON")
from and against all liabilities, taxes, losses, obligations, claims, damages,
penalties, causes of action, suits, costs and expenses (including, without
limitation, reasonable attorneys' and accountants' fees and expenses) or
judgments of any nature, except to the extent resulting from gross negligence or
willful misconduct of such Indemnified Person, relating to or in any way arising
out of:
(a) The ordering, delivery, acquisition, construction, title on
acquisition, rejection, installation, possession, titling, retitling,
registration, reregistration, custody by Lessee of title and registration
documents, ownership, use, non-use, misuse, lease, operation, transportation,
repair, control or disposition of any Facility or FF&E;
(b) The assertion of any claim or demand based upon any infringement or
alleged infringement of any patent or other right, by or in respect of any
Facility or FF&E; provided, however, that upon request of Lessee, Brazos will
make available to Lessee Brazos' rights under any similar indemnification
arising from any manufacturer's or vendor's warranties or undertakings with
respect to any Facility or FF&E; or
(c) Any violation or alleged violation (other than an alleged violation
by Brazos) by Lessee of this Agreement or of any contracts or agreements to
which Lessee is a party or by which it is bound, or any laws, rules,
regulations, orders, writs, injunctions, decrees, consents, approvals,
exemptions, authorizations, licenses and withholdings of objection, of any
governmental or public body or authority and any other Legal Requirements,
including, without limitation, any Legal Requirements with respect to the
environment or the regulation of hazardous materials or substances, or any
breach of a representation or warranty by Lessee under this Agreement.
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Section 9.2. PAYMENTS. Lessee shall forthwith upon demand reimburse any
Indemnified Person for any sum or sums expended with respect to any of the items
set forth in SECTION 9.1 or, upon request from any Indemnified Person, shall pay
such amounts directly. Any payment made to or on behalf of any Indemnified
Person pursuant to this ARTICLE IX shall be increased to such amount as will,
after taking into account all taxes imposed with respect to the accrual or
receipt of such payment (as the same may be increased pursuant to this
sentence), equal the amount of the payment, reduced by the amount of any savings
in such taxes actually realized by the Indemnified Person as a result of the
payment or accrual of the amounts in respect of which the payment to or on
behalf of the Indemnified Person hereunder is made. Any Indemnified Person
seeking indemnification under this ARTICLE IX shall give Lessee written evidence
supporting the amount demanded, and such written evidence shall be deemed to be
conclusive, absent manifest error. To the extent that Lessee in fact indemnifies
any Indemnified Person under the indemnity provisions of this Agreement, Lessee
shall be subrogated to such Indemnified Person's rights in the affected
transaction and shall have a right to determine the settlement of claims
therein.
Section 9.3. CONTINUING INDEMNIFICATION. The indemnities contained in
this ARTICLE IX shall not be affected by and shall survive any termination of
this Agreement as a whole or in respect of any Facility or FF&E, or any failure
or refusal of Lessee to accept any Facility or FF&E constructed, acquired or
ordered pursuant to the terms hereof.
Section 9.4. LIMITATIONS.
(a) Brazos and Lessee agree that the activities of Lessee under the
Agreement for Facilities Lease relating to the preparation or approval of any
maps, drawings, opinions, reports, surveys, change orders, designs, or
specifications relating to any Facility is being done by Lessee in its capacity
as the prospective lessee of the Facility and not as the agent or employee of
Brazos. Lessee and Brazos agree that to the greatest extent possible without
causing any indemnification provision of the Agreement for Facilities Lease to
be void and unenforceable under the laws of any state, it is the intention of
the parties to the Agreement for Facilities Lease for Lessee to bear all
responsibility for and to indemnify Brazos against, except to the extent
resulting from the gross negligence or willful misconduct of Brazos, any
liability, claims, damages, losses or expenses, including attorneys fees,
arising out of the preparation or approval of any maps, drawings, opinions,
reports, surveys, change orders, designs, or specifications relating to the
Facility.
(b) Brazos and Lessee agree that the terms of any state law or the laws
of other jurisdictions which may affect the rights of any Indemnified Person or
Lessee under this ARTICLE IX may be set forth in the Memorandum of Facilities
Lease for the affected Facility or FF&E and shall apply as though set forth in
this Agreement.
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Section 9.5. LITIGATION. If any claim, action, proceeding or suit is
brought against an Indemnified Person with respect to which Lessee would be
required to indemnify such Indemnified Person, Lessee shall have the right to
assume the defense thereof, including the employment at its expense of counsel;
provided that Lessee shall not have such right, to the extent that such
Indemnified Person shall deliver to Lessee a written notice waiving the benefits
of the indemnification of such Indemnified Person provided by this ARTICLE IX in
connection with such claim, action, proceeding or suit. Notwithstanding the
foregoing, if (i) any claim, action, proceeding or suit is brought against an
Indemnified Person who is an individual, (ii) the action threatens to restrain
or adversely affect the conduct of the business of the Indemnified Person, but
not the business of Brazos' ownership of the Facilities or FF&E under this
Agreement, (iii) the claim, action, proceeding or suit seeks damages of more
than $1,000,000, or (iv) independent counsel to an Indemnified Person shall
conclude that there may be defenses available to the Indemnified Person which
may conflict with those available to Lessee, Lessee shall not have the right to
assume the defense of any such action on behalf of the Indemnified Person if
such Indemnified Person chooses to defend such action (with counsel reasonably
acceptable to Lessee), and all reasonable costs, expenses and attorneys' fees
incurred by the Indemnified Person in defending such action shall be borne by
Lessee. Notwithstanding the assumption of its defense by Lessee pursuant to this
paragraph, any Indemnified Person shall have the right to employ separate
counsel and to participate in its defense, but the fees and expenses of such
counsel shall be borne by the Indemnified Person. In addition, Lessee will not
be liable for any settlement of any claim, action, proceeding or suit unless
Lessee has consented thereto in writing. Any decision by an Indemnified Person
to employ its own counsel rather than counsel selected by Lessee (whether or not
at Lessee's expense) shall in no way affect any rights of such Indemnified
Person otherwise arising under this ARTICLE IX.
ARTICLE X
---------
PERMITTED CONTESTS
(a) Lessee shall not be required, nor shall Brazos have the right, to
pay, discharge or remove any tax, assessment, levy, fee, rent, charge, Lien or
encumbrance, or to comply or cause any Facility or FF&E to comply with any Legal
Requirements applicable to any Facility or FF&E or the occupancy, use or
operation thereof, so long as no Event of Default exists under this Agreement or
the Facilities Lease, and, in the opinion of Lessee's counsel, Lessee shall have
reasonable grounds to contest, and shall be diligently contesting, the
existence, amount, applicability or validity thereof by appropriate proceedings,
which proceedings in the reasonable judgment of Brazos, (i) shall not involve
any material danger that any Facility or FF&E would be subject to sale,
forfeiture or loss, as a result of failure to comply therewith, (ii) could not
result in any criminal liability from a failure to comply therewith, and could
not reasonably be expected to cause either Brazos or any Assignee to incur civil
liability which, in the sole judgment of Brazos or any Assignee, is not
adequately indemnified (Lessee's obligations under ARTICLE IX of this Agreement
shall be deemed to be adequate indemnification if no Event of Default or
Potential Default exists and if such civil liability is reasonably likely to be
less than $100,000 per Facility or FF&E and $1,000,000 in the aggregate), (iii)
shall be permitted under the provisions of the Acquired Facilities Lease, if
any, on such Facility or FF&E, (iv) if involving taxes, shall suspend the
collection of such taxes and (v) shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Lessee or the
Facility or FF&E is subject and shall not constitute a default thereunder.
Lessee shall conduct all such contests in good faith and with due diligence and
shall promptly after the final determination (including appeals) of such
contest, pay and discharge all amounts which shall be determined to be payable
therein.
(b) At least ten (10) days prior to the commencement thereof, Lessee
shall notify Brazos in writing of any such proceeding in which the amount in
contest exceeds $100,000, and shall describe such proceeding in reasonable
detail. If a taxing authority or subdivision thereof proposes an additional
assessment or levy of any tax for which Lessee is obligated to reimburse Brazos
under this Agreement, or if Brazos is notified of the commencement of an audit
or similar proceeding which could result in such an additional assessment, then
Brazos shall in a timely manner notify Lessee in writing of such proposed levy
or proceeding.
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ARTICLE XI
----------
MISCELLANEOUS
Section 11.1. SURVIVAL. All agreements, indemnities, representations,
and warranties shall survive the expiration or other termination hereof.
Section 11.2. ENTIRE AGREEMENT. This Agreement and the instruments,
documents or agreements referred to herein constitute the entire agreement
between the parties and no representations, warranties, promises, guarantees or
agreements, oral or written, express or implied, have been made by any party
hereto with respect to this Agreement or the Facilities, except as provided
herein or therein.
Section 11.3. MODIFICATIONS. This Agreement may not be amended,
modified or terminated, nor may any obligation hereunder be waived orally, and
no such amendment, modification, termination or waiver shall be effective for
any purpose unless it is in writing, signed by the party against whom
enforcement thereof is sought. A waiver on one occasion shall not be construed
to be a waiver with respect to any other occasion.
Section 11.4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
ANY PROVISION OF THIS AGREEMENT WHICH IS PROHIBITED BY LAW OR UNENFORCEABLE IN
ANY JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF
SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINING
PROVISIONS HEREOF, AND THE PARTIES HERETO SHALL NEGOTIATE IN GOOD FAITH
APPROPRIATE MODIFICATIONS TO REFLECT SUCH CHANGES AS MAY BE REQUIRED BY LAW,
AND, AS NEARLY AS POSSIBLE, TO PRODUCE THE SAME ECONOMIC EFFECTS AS THE
PROVISION WHICH IS PROHIBITED OR UNENFORCEABLE; AND ANY SUCH PROHIBITION OR
UNENFORCEABILITY IN ANY JURISDICTION SHALL NOT INVALIDATE OR RENDER
UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, BRAZOS AND LESSEE HEREBY WAIVE ANY PROVISION OF LAW WHICH
RENDERS ANY PROVISION HEREOF PROHIBITED OR UNENFORCEABLE IN ANY RESPECT.
Section 11.5. NO OFFSETS. The obligations of Lessee to pay all amounts
payable pursuant to this Agreement shall be absolute and unconditional under any
and all circumstances of any character, and such amounts shall be paid without
notice, demand, defense, setoff, deduction or counterclaim and without
abatement, suspension, deferment, diminution or reduction of any kind
whatsoever, except as herein expressly otherwise provided.
LESSEE HAS SELECTED AND SHALL SELECT ALL FACILITIES AND FF&E
CONSTRUCTED, ACQUIRED OR ORDERED ON THE BASIS OF ITS OWN JUDGMENT. NEITHER
BRAZOS NOR ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER, NOR ANYONE ACTING ON BEHALF
OF ANY OF THEM, MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, AS TO THE SAFETY, TITLE,
CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY, CONFORMITY TO
SPECIFICATION, ENVIRONMENTAL CONDITION (INCLUDING THE PRESENCE OR ABSENCE OF
HAZARDOUS MATERIALS), OR ANY OTHER CHARACTERISTIC, OF ANY FACILITY OR FF&E, OR
AS TO WHETHER ANY FACILITY OR FF&E OR THE OWNERSHIP, USE, OCCUPANCY OR
POSSESSION THEREOF COMPLIES WITH ANY LAWS, RULES, REGULATIONS OR REQUIREMENTS OF
ANY KIND.
AS BETWEEN BRAZOS AND LESSEE, ANY ASSIGNEE OR ANY INDEMNIFIED PERSON,
AND TO THE EXTENT ALLOWED BY LAW AND EXCEPT AS OTHERWISE PROVIDED HEREIN, LESSEE
ASSUMES ALL RISKS AND WAIVES ANY AND ALL DEFENSES, SET-OFFS, DEDUCTIONS,
COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR FUTURE, TO ITS OBLIGATION TO PAY
ALL AMOUNTS PAYABLE HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY RELATING TO:
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(a) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE,
MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF ANY FACILITY OR FF&E, LATENT OR NOT;
(b) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR OTHER
RIGHT WHICH LESSEE MAY HAVE AGAINST BRAZOS, ANY ASSIGNEE, OR ANY INDEMNIFIED
PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER TRANSACTION OR
MATTER;
(c) ANY DEFECT IN TITLE OR OWNERSHIP OF ANY FACILITY OR FF&E OR ANY
TITLE ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE FACILITIES OR
FF&E;
(d) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR DESTRUCTION
OF, OR DAMAGE TO, ANY FACILITY OR FF&E IN WHOLE OR IN PART, OR CESSATION OF THE
USE OR POSSESSION OF ANY FACILITY OR FF&E BY LESSEE FOR ANY REASON WHATSOEVER
AND OF WHATEVER DURATION, OR ANY CONDEMNATION, CONFISCATION, REQUISITION,
SEIZURE, PURCHASE, TAKING OR FORFEITURE OF ANY FACILITY OR FF&E, IN WHOLE OR IN
PART;
(e) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE, OWNERSHIP,
OCCUPANCY OR POSSESSION OF THE FACILITIES OR FF&E BY LESSEE;
(f) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING BY
OR AGAINST LESSEE, GUARANTOR OR BRAZOS;
(g) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER
TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(h) THE INVALIDITY OR UNENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER
INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF BRAZOS OR LESSEE TO ENTER
INTO THIS AGREEMENT; OR
(i) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER, WHETHER OR NOT
SIMILAR TO ANY OF THE FOREGOING.
LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY BE
CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT, RESCIND
OR SURRENDER THIS AGREEMENT EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS HEREOF.
NOTHING CONTAINED IN THIS SECTION 11.5 SHALL BE DEEMED TO BENEFIT ANY THIRD
PARTY OR TO CONSTITUTE A WAIVER OR LIMITATION OF ANY RIGHT THAT LESSEE MAY HAVE
AGAINST ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY LESSOR OF AN
ACQUIRED FACILITIES LEASE (OTHER THAN BRAZOS) OR ANY PRIOR OWNER OF ANY
FACILITY.
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Section 11.6. NON-RECOURSE. Brazos' obligations hereunder are intended
to be the limited obligations of the limited partnership and of the corporation
which is the general partner thereof. Notwithstanding any other provision of
this Agreement, Lessee agrees that, except for a breach by Brazos of SECTION
11.12 or SECTION 11.14, the personal liability of Brazos and the limited
partners of Brazos shall be strictly and absolutely limited to the Facilities
and FF&E and no recourse for the payment of any amount due under this Agreement
or the Construction Documents, or for any claim based thereon or otherwise in
respect thereof, shall be had against any other assets of the limited
partnership or of the general or of any limited partner of Brazos or of any
incorporator, shareholder, officer, director or Affiliate (past, present or
future) of such general partner or limited partner of Brazos or of any Affiliate
of either, or of any successor corporation to any corporate general partner or
any corporate limited partner of Brazos, it being understood that Brazos is a
limited partnership entering into the transactions involved in and relating to
this Agreement, the Facilities Lease and the Construction Documents on the
express understanding aforesaid.
Section 11.7. NOTICES.
(a) Any notice or request which by any provision of this Agreement is
required or permitted to be given by either party to the other shall be deemed
to have been given when delivered by hand (including, delivery by courier),
three (3) Business Days after being deposited in the mail, postage prepaid, by
certified or registered mail or, if promptly confirmed by mail or by
hand-delivery, as provided above, when sent by telex, or other written
telecommunication, addressed to the following specified addresses or to such
other addresses as Brazos or Lessee may specify by written notice to the other
party:
If to Brazos:
Brazos Automotive Properties, L.P.
c/o Brazos Automotive Properties Management, Inc.
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Gregory C. Greene
Telephone: (214) 522-7296
Telecopy: (214) 520-2009
with a copy to:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Commercial Equipment Finance Division,
Portfolio Manager
If to Agent or Assignee:
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
Attention: Philip M. Hendrix, Vice President
Telephone: (716) 258-5437
Telecopy: (716) 258-7604
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with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002-4086
Attention: Carol M. Burke
Telephone: (713) 308-5561
Telecopy: (713) 308-5555
If to Lessee:
Monro Leasing, LLC
200 Holleder Parkway
Rochester, New York 14615
Attention: Catherine D'Amico, Senior Vice-President
Telephone: (716) 647-6400 X 335
Telecopy: (716) 627-0941
With a copy to any Assignee at such other address as such Assignee may specify
by written notice to Brazos and Lessee.
(b) Brazos shall within five (5) Business Days give to Lessee a copy of
all notices received by Brazos pursuant to any Credit Agreement or any Acquired
Facility Lease and any other notices received with respect to any Property.
Section 11.8. FUNDAMENTAL CHANGES. Lessee shall not consolidate with or
merge into any other corporation which is not a Subsidiary or sell all or
substantially all of its assets to any Person which is not a Subsidiary, except
that Lessee may consolidate with or merge into any other corporation, or sell
all or substantially all of its assets to any Person; provided that, (i) no
default or event of default occurs under the Corporate Credit Documents and (ii)
the surviving corporation or transferee Person shall assume, by execution and
delivery of instruments satisfactory to Brazos and Agent, the obligations of
Lessee hereunder and become successor to Lessee, but Lessee, if it is a
surviving corporation, shall not thereby be released, without the consent of
Brazos, such consent not to be unreasonably withheld or delayed, from its
obligations hereunder and, provided further, that such surviving corporation or
transferee Person will, on a pro forma basis, immediately after such
consolidation, merger or sale, possess a consolidated net worth greater than or
equal to that of Lessee immediately prior to such consolidation, merger or sale
and provided further that each Guarantor shall reaffirm its obligations under
the Guaranty by execution and delivery of instruments satisfactory to Brazos and
Agent and no Event of Default shall have occurred or result therefrom. Lessee
may assign its rights and obligations under this Agreement with respect to any
Facility or FF&E to a Subsidiary of Lessee; provided that Lessee shall, in
connection with any such assignment, continue to be liable hereunder without
regard to such assignment and Lessee shall guaranty the performance of all
obligations of such assignee.
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Section 11.9. USURY. No provision of this Agreement or any other
instrument relating to this Agreement, shall require the payment or permit the
collection of interest in excess of the maximum nonusurious interest rate under
applicable law (the "MAXIMUM RATE"). If any excess interest in such respect is
so provided for, or shall be adjudicated to be so provided for, the provisions
of this SECTION 11.9 shall govern, and neither Lessee nor its successors or
assigns shall be obligated to pay the amount of such interest to the extent it
is in excess of the Maximum Rate. In determining the Maximum Rate, any interest
shall be spread over the term of this Agreement to the extent permitted by
applicable U.S. Federal or state law, notwithstanding the actual time for the
payment of any rent or other amounts hereunder. It is expressly stipulated and
agreed to be the intent of Brazos and Lessee at all times to comply with
applicable state law governing the Maximum Rate or the amount of interest
payable pursuant to this Agreement (or applicable U.S. Federal law to the extent
that it permits Brazos to contract for, charge, take, reserve or receive a
greater amount of interest than under state law). If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Agreement, the Agreement or any of the other documents relating to this
Agreement or any amount contracted for, charged, taken, reserved or received
with respect to this Agreement, or if Brazos' exercise of any option herein or
in any other document contained to accelerate the payment of amounts required
hereunder results in Lessee having paid any interest in excess of that permitted
by applicable law, then it is Brazos' and Lessee's intent that all excess
amounts theretofore collected by Brazos be credited on the remaining balance of
payments due hereunder (or, if all amounts due hereunder have been or would
thereby be paid in full, refunded to Lessee) and the provisions of this
Agreement shall immediately be deemed reformed in the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and under any
other document relating hereto. If at any time the amount of any interest for a
year, would, but for this SECTION 11.9 exceed the amount of interest that would
have been accrued during such year if the Maximum Rate had from time to time
been in effect, the total interest payable for such year shall be limited to the
amount that would have been accrued if the Maximum Rate had from time to time
been in effect, and to the fullest extent permitted by applicable law, such
excess shall be (i) spread and allocated to the preceding periods in which the
interest paid was less than the interest that would have been accrued at the
Maximum Rate or (ii) spread and allocated to subsequent periods in which the
total payments on account of interest are less than the interest that would have
accrued at the Maximum Rate.
Section 11.10. NO WAIVERS. No advance hereunder shall constitute a
waiver of any of the conditions of Brazos' obligation to make further advances
nor, if Lessee is unable to satisfy any such condition, shall any waiver of such
condition have the effect of precluding Brazos from thereafter declaring such
inability to be an Event of Default as herein provided. Any advance made by
Brazos and any sums expended by Brazos pursuant to this Agreement shall be
deemed to have been made pursuant to this Agreement, notwithstanding the
existence of an uncured Event of Default. No advance at a time when an Event of
Default exists shall constitute a waiver of any right or remedy of Brazos
existing by reason of such Event of Default, including, without limitation, the
right to refuse to make further advances.
Section 11.11. BRAZOS AND ASSIGNEE SOLE BENEFICIARIES. All conditions
of the obligation of Brazos to make advances hereunder are imposed solely and
exclusively for the benefit of Brazos and Assignee and their assigns and no
other person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Brazos will refuse to
make advances in the absence of strict compliance with any or all thereof and no
other person shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any or all of which may be freely waived in whole or in part by
Brazos, with the consent of Agent, at any time if in its sole discretion it
deems it advisable to do so. Inspections and approvals of Facility Plans,
Facilities and FF&E and the workmanship and materials used therein impose no
responsibility or liability of any nature whatsoever on Brazos or Assignee, and
no person shall, under any circumstances, be entitled to rely upon such
inspections and approvals by Brazos or Agent for any reason. Brazos' sole
obligation hereunder is to make the advances if and to the extent required by
this Agreement.
Section 11.12. SALE OR ASSIGNMENT BY BRAZOS.
(a) Brazos shall not sell mortgage or encumber or assign its right,
title, interest or obligations in a Facility or FF&E or under this Agreement,
except that Brazos shall have the right to finance the acquisition and ownership
of the
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Facilities by selling, assigning or granting a security interest in its right,
title and interest in this Agreement as provided in the Credit Agreement and any
or all amounts due from Lessee or any third party under this Agreement as
provided in the Credit Agreement; provided that any such sale, assignment or
grant of a security interest shall be subject to the rights and interests of
Lessee under this Agreement and the Facilities Lease.
(b) Upon the occurrence of an event of default under the Credit
Agreement, any Assignee shall, except as otherwise agreed by Brazos and
Assignee, have all the rights, powers, privileges and remedies of Brazos
hereunder, and Lessee's obligations as between itself and such Assignee
hereunder shall not be subject to any claims or defense that Lessee may have
against Brazos. Upon written notice to Lessee of any such assignment, Lessee
shall attorn to any Assignee, and Lessee shall thereafter make payments of any
and all sums due hereunder to Assignee, to the extent specified in such notice,
and such payments shall discharge the obligation of Lessee to Brazos hereunder
to the extent of such payments. Anything contained herein to the contrary
notwithstanding, no Assignee shall be obligated to perform any duty, covenant or
condition required to be performed by Brazos hereunder, and any such duty,
covenant or condition shall be and remain the sole obligation of Brazos except
as set forth in the Subordination, Non-Disturbance and Attornment Agreement (as
defined in the Credit Agreement) for each Facility or FF&E.
Section 11.13. RIGHTS CUMULATIVE. All rights, powers and remedies
herein given to Brazos are cumulative and not alternative, and are in addition
to all statutes or rules of law; any forbearance or delay by Brazos in
exercising the same shall not be deemed to be a waiver thereof, and the exercise
of any right or partial exercise thereof shall not preclude the further exercise
thereof, and the same shall continue in full force and effect until specifically
waived by an instrument in writing executed by Brazos. All representations and
covenants by Lessee shall survive the making of the advances, and the provisions
hereof shall be binding upon and inure to the benefit of the respective
successors and permitted assigns, if any, of the parties hereto. Lessee may not,
however, assign its rights or obligations as agent hereunder other than in
accordance with the terms of this Agreement.
Section 11.14. REASSIGNMENT. In the event that Lessee advances its own
funds for the acquisition of any Facility or FF&E in the name of Brazos and an
Initial Advance for such Facility or FF&E is not made under this Agreement for
any reason, including a default on the part of Lessee, Brazos hereby agrees to
execute all instruments of assignment and transfer with respect to such Facility
or FF&E, without warranty (except for special warranties against the actions of
Brazos), or recourse to Brazos except to the extent of any applicable title
insurance, which may be necessary to transfer all of Brazos' right, title and
interest in and to such Facility or FF&E to Lessee. Any Facility or FF&E which
is assigned and transferred by Brazos to Lessee pursuant to this Section shall
not thereafter be acquired by Brazos or by Lessee on behalf of Brazos under this
Agreement. All agreements, indemnities, warranties and representations of Lessee
pertaining to such Facility or FF&E shall survive any transfer by Brazos to
Lessee pursuant to this SECTION 11.14. The obligations of Brazos under this
SECTION 11.14 shall survive any termination of this Agreement.
Section 11.15. SEVERABILITY. In case one or more provisions of this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired thereby.
Section 11.16. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 11.17. CONFIDENTIALITY. Brazos shall keep confidential all
information of a confidential nature received by it from Lessee pursuant to this
Agreement; provided, however, that such information may be disclosed where
necessary: (i) to directors, officers, employees, agents, representatives or
outside counsel of Brazos or of the Agent or any Bank or any Affiliate of any
Bank under any Credit Agreement; (ii) to any auditor, government official or
examiner; (iii) pursuant to any subpoena or other court order or otherwise as
may be required by applicable law; or (iv) to any assignee of or participant in,
or prospective assignee of or participant in, any Bank's Advances or its
Commitment or any part thereof under any Credit Agreement who, in each case,
agrees in writing to be bound by the terms of this Section; and provided
30
<PAGE> 38
further, that no confidentiality obligation shall attach to any information
which (1) is or becomes publicly known, through no wrongful act on the part of
any Person who shall have received such information, (2) is rightfully received
by such Person from a third party, (3) is independently developed by such
Person, or (4) is explicitly approved for release by Lessee.
Section 11.18. EXECUTION BY LESSEE. By execution of the Memorandum of
Lease for a Facility or FF&E, Lessee agrees to all of the terms and conditions
of this Agreement and is deemed to have executed this Agreement as of the date
of the request for advance with respect to such Facility or FF&E.
31
<PAGE> 39
IN WITNESS WHEREOF, Brazos and Lessee have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
<TABLE>
<S> <C>
BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership
By: BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT,
INC., a Delaware corporation, its General Partner
By: /s/ Daniel D. Boeckman
--------------------------------------------------
Daniel D. Boeckman, President
MONRO LEASING, LLC,
a Delaware limited liability company
By: MONRO MUFFLER BRAKE, INC., its Sole Member
By: /s/ Catherine D'Amico
--------------------------------------------------
Catherine D'Amico, Senior Vice President
and Chief Financial Officer
</TABLE>
32
<PAGE> 40
THE STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
On the 15th day of September 1998, before me personally came Daniel D.
Boeckman, who, being by me duly sworn, did depose and say that he is the
Executive Vice President of BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT, INC., a
Delaware corporation, the General Partner of BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership, and as said officer executed the foregoing
instrument.
--------------------------------------------
NOTARY PUBLIC IN AND FOR THE
STATE OF NEW YORK
[SEAL]
THE STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
On the 15th day of September 1998, before me personally came Catherine
D'Amico who, being by me duly sworn, did depose and say that she is the Senior
Vice President and Chief Financial Officer of MONRO MUFFLER BRAKE, INC., a New
York corporation, the Sole Member of MONRO LEASING, LLC, a Delaware limited
liability company, and as said officer executed the foregoing instrument.
--------------------------------------------
NOTARY PUBLIC IN AND FOR THE
STATE OF NEW YORK
[SEAL]
33
<PAGE> 41
EXHIBIT A
FORM OF FACILITIES LEASE AGREEMENT
34
<PAGE> 42
Facility or FF&E No.______________
EXHIBIT "B"
INITIAL ADVANCE CERTIFICATE
MONRO LEASING, LLC ("LESSEE"), the Lessee under a certain Agreement for
Facilities Lease (the "AGREEMENT FOR FACILITIES LEASE") dated as of September
15, 1998, between BRAZOS AUTOMOTIVE PROPERTIES, L.P. ("OWNER") and Lessee,
delivers this Initial Advance Certificate as a part of Lessee's Request for
Initial Advance made with respect to the above noted Facility or FF&E. All
capitalized terms used in this Certificate shall have the meanings given to such
terms in the Agreement for Facilities Lease. Lessee hereby certifies, warrants
and represents to Owner as follows:
1. LEGAL DESCRIPTION. Accompanying this Certificate is a copy of
the form of Bill of Sale by which the Facility or FF&E will be
conveyed to Owner.
2. ITEMIZATION OF COSTS. Accompanying this Certificate is a true,
complete, and correct Statement of Expenditures incurred to
date or to be incurred in connection with the closing of the
acquisition of Owner's interest in the Facility or FF&E. Each
item in the Statement of Expenditures is for the Facility or
FF&E described herein and is within the Budget approved by
Agent.
3. TITLE. To the best of Lessee's knowledge, after due inquiry, no
mechanics' or materialmen's liens have been filed in connection
with the Facility or FF&E, and, with respect to a Facility,
with the exception of the Deed of Trust, Security Agreement,
Assignment of Rents and Fixture Filing granted by Owner in
connection with the acquisition of the Property, there are no
recorded mechanics' or materialmen's liens or other Liens of
Record affecting the title to the Facility or FF&E.
All matters affecting title to the Facility or FF&E as to which
Lessee has any knowledge, recorded or unrecorded, are disclosed
to Owner in writing as reflected in the documents constituting
this Request for Initial Advance with respect to such Facility
or FF&E, and all such matters are Permitted Exceptions.
4. TAXES. Taxes have not yet been levied on the subject Facility
or FF&E. When taxes are levied they will be paid by Lessee.
5. REPRESENTATIONS. Lessee represents to Owner that (a) all costs
and expenses which are the subject of the Initial Advance
requested hereby have been or will be paid in full out of the
proceeds of this Initial Advance; (b) all representations,
covenants, and warranties of Lessee contained in the Agreement
for Facilities Lease and in the Facilities Lease are true and
correct in all material respects as of the date hereof; (c) all
additional matters required by Section 6.1 of the Agreement for
Facilities Lease are enclosed herewith; and (d) no Event of
Default exists under the Agreement for Facilities Lease, and
none will arise after giving effect to the Initial Advance to
be made hereunder.
6. INSURANCE. Lessee maintains the insurance coverage required by
the Facilities Lease as indicated by the certificates of
insurance previously delivered to Owner or to be delivered on
or after closing to Owner. Such insurance will be effective as
to the subject Facility or FF&E upon acquisition thereof by
Owner.
Dated as of ______________.
<TABLE>
<S> <C>
MONRO LEASING, LLC
By: MONRO MUFFLER BRAKE, INC., its Sole Member
By:________________________________
Name:______________________________
Title:_____________________________
</TABLE>
35
<PAGE> 43
Facility or FF&E No.______________
EXHIBIT "C"
RECONCILIATION CERTIFICATE
MONRO LEASING, LLC ("LESSEE"), the Lessee under a certain Agreement for
Facilities Lease (the "AGREEMENT FOR FACILITIES LEASE") dated as of September
15, 1998, between BRAZOS AUTOMOTIVE PROPERTIES, L.P. ("OWNER") and Lessee,
delivers this Reconciliation Certificate as part of Lessee's Request for
Reconciliation Advance made with respect to the above noted Facility or FF&E.
All capitalized terms used in this Certificate shall have the meanings given to
such terms in the Agreement for Facilities Lease. Lessee hereby certifies,
warrants and represents to Owner as follows:
1. COMPLETION OF ACQUISITION. The completion of the acquisition
or construction of the Facility or FF&E has occurred.
2. STATEMENT OF EXPENDITURES. Attached hereto is a true,
complete, and correct Statement of Expenditures actually
incurred in connection with the acquisition or construction of
the Facility or FF&E and for which the Reconciliation Advance
is being made. The Initial Advance was $________. With the
Reconciliation Advance, the total expenditures will be
$_________. Each item in the Statement of Expenditures is for
the Facility or FF&E described herein and is within the Budget
approved by Agent.
3. TITLE. After matters affecting title to the Facility or FF&E
as to which Lessee has any knowledge, recorded or unrecorded,
are described in an Exhibit attached hereto or were disclosed
to Owner in writing as reflected in the documents constituting
the Request for Initial Advance with respect to such Facility
or FF&E, and all such matters are Permitted Exceptions. To the
best of Lessee's knowledge, since the Initial Advance there
has been no change in the state of title of the Facility or
FF&E.
4. REPRESENTATIONS. Lessee represents to Owner that (a) all costs
and expenses which are the subject of the Reconciliation
Advance requested hereby are amounts which have been paid by
Lessee and all such amounts have been paid in connection with
the acquisition or construction of the Facility or FF&E, (b)
all representations, covenants and warranties of Lessee
contained in the Agreement for Facilities Lease and in the
Facilities Lease are true and correct in all material respects
as of the date hereof, (c) all additional matters required by
Section 7.1 of the Agreement for Facilities Lease are enclosed
herewith, and (d) no Event of Default exists under the
Agreement for Facilities Lease, and none will arise after
giving effect to the Reconciliation Advance to be made
hereunder.
5. INSURANCE. Lessee maintains the insurance coverage required by
the Facilities Lease as indicated by the certificate of
insurance delivered to Owner or to be delivered on or after
closing to Owner. Such insurance is effective with respect to
the Facility or FF&E and complies with the terms of the
Facilities Lease.
Dated as of ______________.
<TABLE>
<S> <C>
MONRO LEASING, LLC
By: MONRO MUFFLER BRAKE, INC., its Sole Member
By:________________________________
Name:______________________________
Title:_____________________________
</TABLE>
36
<PAGE> 44
Facility or FF&E No.______________
EXHIBIT "D"
ADDITIONAL ADVANCE CERTIFICATE
MONRO LEASING, LLC ("LESSEE"), the Lessee under a certain Agreement for
Facilities Lease (the "AGREEMENT FOR FACILITIES LEASE") dated as of September
15, 1998, between BRAZOS AUTOMOTIVE PROPERTIES, L. P. ("OWNER") and Lessee,
delivers this Additional Advance Certificate as part of Lessee's Request for
Additional Advance made with respect to Additional Improvements to the above
noted Facility or FF&E. All capitalized terms used in this Certificate shall
have the meanings given to such terms in the Agreement for Facilities Lease.
Lessee hereby certifies, warrants and represents to Owner as follows:
1. LEGAL DESCRIPTION. Accompanying this Certificate is a copy of
the form of Deed and Bill of Sale by which the Additional
Improvements will be conveyed to Owner, which sets forth a
true and complete legal description for the Additional
Improvements.
2. ITEMIZATION OF COSTS. Accompanying this Certificate is a true,
complete, and correct Statement of Expenditures incurred to
date or to be incurred in connection with the closing of the
acquisition of Owner's interest in the Additional
Improvements. Each item in the Statement of Expenditures is
for the Facility or FF&E described herein and is within the
Budget approved by Agent.
3. TITLE. To the best of Lessee's knowledge, after due inquiry,
no mechanics' or materialmen's liens have been filed in
connection with the Additional Improvements, and with the
exception of the Deed of Trust, Security Agreement, Assignment
of Rents and Fixture Filing granted by Owner in connection
with the acquisition of the Additional Improvements, there are
no recorded mechanics' or materialmen's liens or other Liens
of Record affecting the title to the Additional Improvements.
All matters affecting title to the Additional Improvements as
to which Lessee has any knowledge, recorded or unrecorded, are
disclosed to Owner in writing as reflected in the documents
constituting this Request for Additional Advance with respect
to such Additional Improvements, and all such matters are
Permitted Exceptions.
4. TAXES. Taxes levied on the subject Additional Improvements for
years prior to ___________ have been paid in full.
5. REPRESENTATIONS. Lessee represents to Owner that (a) all costs
and expenses which are the subject of the Additional Advance
requested hereby have been or will be paid in full out of the
proceeds of this Additional Advance, (b) all representations,
covenants, and warranties of Lessee contained in the Agreement
for Facilities Lease and in the Facilities Lease are true and
correct in all material respects as of the date hereof, (c)
all additional matters required by Section 6.1 of the
Agreement for Facilities Lease are enclosed herewith, and (d)
no Event of Default exists under the Agreement for Facilities
Lease or Facilities Lease Agreement, and none will arise after
giving effect to the Additional Advance to be made hereunder.
6 . INSURANCE. Lessee maintains the insurance coverage required by
the Facilities Lease as indicated by the certificates of
insurance previously delivered to Owner or to be delivered on
or after closing to Owner. Such insurance will be effective as
to the Additional Improvements upon acquisition thereof by
Owner.
<TABLE>
<S> <C>
Dated as of __________________. MONRO LEASING, LLC
By: MONRO MUFFLER BRAKE, INC., its Sole Member
By:______________________________________________
Name:____________________________________________
</TABLE>
37
<PAGE> 45
<TABLE>
<S> <C>
Title:___________________________________________
</TABLE>
38
<PAGE> 46
EXHIBIT "E"
FORM OF LOCAL COUNSEL OPINION
1. The form of the Deed of Trust and Assignment of Leases and Rents to
be filed in _____________ is in proper form under applicable law to (a) be
accepted for recording in the office of the [Recorder of Deeds] in and for any
county in ________________; (b) create and constitute a valid mortgage lien on
or security interest in the [Trust Estate (as defined in such Deed of Trust and
Assignment of Leases and Rents)]; and (c) be enforceable against the Borrower,
in accordance with its terms.
2. The recording of the Deed of Trust to be filed in ________________
with the office of the [Recorder of Deeds] in the county where the real property
to be encumbered is located is the only recording or filing necessary to publish
notice to perfect the liens and security interests created by the Deed of Trust
and Assignment of Leases and Rents to the extent such liens and security
interests may be perfected under the laws of _________________.
3. Except for the payment of recording or filing fees with respect to
UCC-1 Financing Statements and any Deed of Trust to be filed in
___________________ no other taxes and governmental fees and charges are
required by any applicable Governmental Authority in connection with (a) the
creation, perfection, or the recording of the liens purported to be created by
the Security Documents, (b) the execution and delivery of the Credit Documents,
or (c) the obtaining of credit under the Credit Agreement.
4. Upon the filing of appropriate UCC-1 Financing Statements with the
_____________ Secretary of State, the security interests of the Banks in the
Collateral created by the Security Agreement will constitute perfected security
interests under the Uniform Commercial Code as in effect to the extent that a
security interest in the Collateral may be perfected by filing with the
_______________
5. The Lease Documents are in acceptable legal form and constitute
legal, valid, and binding obligations of the respective parties thereto
enforceable against them under __________________ law in accordance with the
terms of such documents.
39
<PAGE> 47
EXHIBIT "F"
FORM OF REQUEST FOR INITIAL ADVANCE
September 15, 1998
Brazos Automotive Properties, L.P.
2911 Turtle Creek Blvd., Suite 1240
Dallas, TX 75219
Attention: Mr. Gregory Greene
Re: Request for Initial Advance for Facility No. ___________,
located at ________________________________
Dear Mr. Greene:
This Request for Initial Advance is delivered pursuant to the Lease
Documents dated as of September 15, 1998, between Brazos Automotive Properties,
L.P. ("BRAZOS") and Monro Leasing, LLC ("MONRO"). The complete Request for
Initial Advance consists of this statement and the various documents provided
herewith, and the complete Request for Initial Advance is being provided to
legal counsel for Brazos and The Chase Manhattan Bank, respectively. All
documents provided herewith, including the Initial Advance Certificate, are true
and correct. All capitalized terms used herein shall have the meanings given to
such terms in either the Agreement for Ground Lease or the Agreement for
Facilities Lease, whichever is applicable.
It is contemplated that the Effective Date of the Facility, as will be
evidenced by a Facility Leasing Record, will be September 15, 1998 and you are
requested to pay on that date the sum of $____________ (comprised of a ground
advance of $________________ and a facility advance of $_____________) by wire
transfer of immediately available funds to CHICAGO TITLE INSURANCE COMPANY. The
representative of MONRO to contact with regard to the wire transfer is Catherine
D'Amico at (716) 647-6400.
MONRO LEASING, LLC,
a Delaware limited liability company
By: MONRO MUFFLER BRAKE, INC.,
a New York corporation, its Sole Member
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Enclosures
cc: Philip M. Hendrix
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
40
<PAGE> 48
Carol M. Burke
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 700
Houston, Texas 77002
41
<PAGE> 49
SCHEDULE 4.13
LIST OF ACQUIRED FACILITIES LEASES
-NONE-
42
<PAGE> 1
EXHIBIT 10.5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACILITIES LEASE AGREEMENT
between
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
and
MONRO LEASING, LLC
Dated as of September 15, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS FACILITIES LEASE AGREEMENT HAS BEEN ASSIGNED
AS SECURITY FOR INDEBTEDNESS OF
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
SEE SECTION 19.10
This Facilities Lease Agreement has been manually executed in 10 counterparts,
numbered consecutively from 1 through 10, of which this is No. . To the extent,
if any, that this Facilities Lease Agreement 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 Facilities Lease Agreement may be
created or perfected through the transfer or possession of any counterpart other
than the original executed counterpart which shall be the counterpart identified
as counterpart No. 1.
<PAGE> 2
TABLE OF CONTENTS
FACILITIES LEASE AGREEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I DEFINITIONS.................................................................1
Section 1.1. Defined Terms...............................................................1
Section 1.2. Forms.......................................................................6
Section 1.3. Recitals, Table of Contents, Titles, and Headings...........................6
Section 1.4. Interpretation..............................................................7
ARTICLE II REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE........................7
Section 2.1. Corporate Matters...........................................................7
Section 2.2. Authorization; Binding Agreement............................................7
Section 2.3. Power and Authority.........................................................7
Section 2.4. Consents, Approvals, Authorizations.........................................7
Section 2.5. Financial Statements........................................................8
Section 2.6. Changes.....................................................................8
Section 2.7. Litigation..................................................................8
Section 2.8. Delivery of Information.....................................................8
Section 2.9. Compliance with Legal Requirements and Insurance Requirements...............9
Section 2.10. Agreement for Facilities Lease.............................................9
Section 2.11. Correction of Work.........................................................9
Section 2.12. No Encroachments...........................................................9
Section 2.13. Facility and FF&E Liens....................................................9
Section 2.14. Brokerage..................................................................9
Section 2.15. Suitability of Facility and FF&E...........................................9
ARTICLE III LEASE OF FACILITY..........................................................10
Section 3.1. Lease......................................................................10
Section 3.2. Facility Leasing Record....................................................10
Section 3.3. Ownership of the Facility and FF&E.........................................10
Section 3.4. Brazos Covenants...........................................................11
Section 3.5. Security...................................................................11
ARTICLE IV DELIVERY AND ACCEPTANCE....................................................12
Section 4.1. Acceptance.................................................................12
Section 4.2. Payments Final.............................................................12
Section 4.3. No Warranties or Representations...........................................12
Section 4.4. Quiet Enjoyment............................................................12
Section 4.5. Indemnity to Title Insurance...............................................12
Section 4.6. Other Financing Requirements...............................................12
ARTICLE V LEASE TERM.................................................................13
Section 5.1. Lease Term.................................................................13
Section 5.2. Insurable Interest.........................................................13
Section 5.3. Termination................................................................13
</TABLE>
(1)
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VI RENT AND OTHER PAYMENTS....................................................13
Section 6.1. Basic Rent.................................................................13
Section 6.2. Other Amounts..............................................................13
Section 6.3. Additional Rent............................................................13
Section 6.4. Payment in Advance.........................................................14
Section 6.5. Credit Agreement Losses....................................................14
ARTICLE VII RESTRICTED USE; COMPLIANCE WITH LAWS.......................................14
Section 7.1. Insurance Requirement and Legal Requirement................................14
Section 7.2. Filings....................................................................14
Section 7.3. Compliance with Other Requirements.........................................14
Section 7.4. Inspection.................................................................15
Section 7.5. No Liens...................................................................15
Section 7.6. Interference...............................................................15
Section 7.7. Delivery of Information....................................................15
ARTICLE VIII MAINTENANCE, IMPROVEMENT AND REPAIR OF FACILITIES .........................16
Section 8.1. Warranties.................................................................16
Section 8.2. Costs and Expenses.........................................................16
Section 8.3. Payment of Taxes...........................................................16
Section 8.4. No Material Alterations....................................................17
Section 8.5. Maintenance................................................................17
Section 8.6. Additions and Alterations..................................................17
Section 8.7. Environmental Reports......................................................18
ARTICLE IX INSURANCE..................................................................18
Section 9.1. Liability and Property Damage..............................................18
Section 9.2. Additional Insureds; Notice................................................18
Section 9.3. Application of Proceeds of Loss or Substantial Taking......................18
Section 9.4. Application of Proceeds of other than Loss or Substantial Taking...........18
Section 9.5. Investment.................................................................19
Section 9.6. Application in Default.....................................................19
Section 9.7. Certificates...............................................................19
Section 9.8. Covenant to Keep Insurance in Force........................................19
ARTICLE X INDEMNITIES...............................................................19
Section 10.1. Indemnified Persons.......................................................19
Section 10.2. Payments..................................................................20
Section 10.3. Continuing Indemnification................................................21
Section 10.4. Limitations...............................................................21
Section 10.5. Litigation................................................................21
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE XI RENEWAL AND TERMINATION...................................................21
Section 11.1. Lessee's Right to Terminate...............................................21
Section 11.2. Brazos' Right to Terminate................................................22
Section 11.3. Renewal...................................................................22
Section 11.4. Sales to Third Parties....................................................23
Section 11.5. Advisement................................................................24
Section 11.6. Additional Payments.......................................................24
Section 11.7. Termination of Facilities Lease...........................................24
Section 11.8. Surrender of Facility.....................................................24
ARTICLE XII ECONOMIC DISCONTINUANCE...................................................24
Section 12.1. Uneconomic Facility.......................................................24
Section 12.2. Payment...................................................................25
Section 12.3. No Right to Use...........................................................25
ARTICLE XIII EVENTS OF DEFAULT.........................................................25
Section 13.1. Events of Default.........................................................25
Section 13.2. Rights Upon Default.......................................................26
Section 13.3. Events of Facility Termination............................................30
Section 13.4. Brazos' Right Upon Event of Facility Termination..........................30
ARTICLE XIV LOSS OF OR DAMAGE TO FACILITIES...........................................31
Section 14.1. Lessee's Risk.............................................................31
Section 14.2. Repair....................................................................31
Section 14.3. Facility Damaged Beyond Repair............................................31
ARTICLE XV CONDEMNATION OF FACILITY..................................................31
Section 15.1. Taking of Substantially all of a Facility.................................31
Section 15.2. Taking of Less than Substantially all of a Facility.......................32
Section 15.3. Grant of Minor Easements..................................................32
ARTICLE XVI LEASEHOLD INTERESTS.........................................................32
ARTICLE XVII FF&E TO BE PERSONAL PROPERTY................................................33
ARTICLE XVIII PERMITTED CONTESTS..........................................................33
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE XIX MISCELLANEOUS..............................................................34
Section 19.1. Survival..................................................................34
Section 19.2. Entire Agreement..........................................................34
Section 19.3. Modifications.............................................................34
Section 19.4. Governing Law.............................................................34
Section 19.5. No Offsets................................................................35
Section 19.6. Non-Recourse..............................................................36
Section 19.7. Notices...................................................................36
Section 19.8. Usury.....................................................................37
Section 19.9. No Merger.................................................................38
Section 19.10. Sale or Assignment by Brazos.............................................38
Section 19.11. Income Taxes. ..........................................................39
Section 19.12. Transfer on As-Is Basis..................................................39
Section 19.13. Right to Perform for Lessee. ............................................39
Section 19.14. Merger, Consolidation or Sale of Assets..................................39
Section 19.15. Expenses.................................................................39
Section 19.16. Payment of Taxes.........................................................40
Section 19.17. Rule Against Perpetuities................................................40
Section 19.18. Reexecution..............................................................40
Section 19.19. Purchase or Sale of Property.............................................40
Section 19.20. Severability.............................................................40
Section 19.21. Independent Obligations..................................................40
Section 19.22. Execution in Counterparts................................................40
Section 19.23. Confidentiality..........................................................40
Section 19.24. Execution by Lessee......................................................40
</TABLE>
(iv)
<PAGE> 6
<TABLE>
<S> <C>
Signature Page....................................................................................41
LIST OF EXHIBITS
- ----------------
Exhibit A Schedule of Insurance
</TABLE>
(v)
<PAGE> 7
FACILITIES LEASE AGREEMENT
THIS FACILITIES LEASE AGREEMENT (this "FACILITIES LEASE") is made and
entered into as of September 15, 1998, by and between BRAZOS AUTOMOTIVE
PROPERTIES, L.P., a Delaware limited partnership ("BRAZOS"), and MONRO LEASING,
LLC, a Delaware limited liability company ("LESSEE").
W I T N E S S E T H:
WHEREAS, Brazos may hereafter purchase or lease certain equipment and
acquire fee or leasehold interests in certain buildings and other facilities;
and
WHEREAS, on or about the date of this Facilities Lease, Brazos and
Lessee entered into an Agreement for Facilities Lease, providing for the
purchase or lease of equipment and buildings and other facilities from time to
time; and
WHEREAS, Lessee wishes to lease or sublease such equipment, buildings
and other facilities under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Brazos and Lessee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINED TERMS. For the purposes of this Facilities Lease
each of the following terms shall have the meaning specified with respect
thereto:
"ACQUIRED FACILITIES LEASE" means each lease entered into by Brazos
under which a leasehold interest in a Facility or FF&E is being leased to Brazos
by the owner of such Facility.
"ACQUISITION COST" means, without duplication, for any Facility or
FF&E, the sum of (a) the outstanding amount of the advances under the Credit
Agreement and Article III of the Agreement for Facilities Lease with respect to
such Facility or FF&E, and (b) the outstanding advances of all capital
contributions made by the limited partners of Brazos to Brazos under Article III
of the Agreement for Facilities Lease with respect to such Facility or FF&E.
"ADDITIONAL IMPROVEMENTS" means each capital improvement or other
addition or alteration to a Facility which is described in an Additional Advance
Certificate and each improvement, replacement or addition to FF&E, for the
purpose of making such improvement, addition, replacement or alteration part of
the Facility or FF&E which is approved by Agent.
"ADDITIONAL RENT" has the meaning set forth in SECTION 6.3 hereof.
"AFFILIATE" means any other person controlling, controlled by or under
direct or indirect common control with any Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGENT" means The Chase Manhattan Bank, a national banking association.
"AGREEMENT FOR FACILITIES LEASE" means the Agreement for Facilities
Lease, dated of even date herewith, between Brazos and Lessee providing for the
construction, acquisition or lease of each Facility and the acquisition or lease
of FF&E, as it may be further amended, restated, modified or supplemented, from
time to time, in accordance with the terms thereof.
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"ASSIGNEE" means any lender or agent for a lender under the Credit
Agreement and each person, firm, corporation or other entity to which any part
of Brazos' interest under this Facilities Lease or in any Facility or FF&E shall
at the time have been assigned, conditionally or otherwise, by Brazos in
accordance with SECTION 19.10 of this Facilities Lease.
"ASSIGNMENT" means each assignment or security agreement referred to in
SECTION 19.10 hereof between Brazos and a third party, pursuant to which Brazos
assigns or grants a security interest in any of its rights under this Facilities
Lease to such third party, as from time to time amended.
"BANK" means a "Bank" as defined in the Credit Agreement.
"BASIC RENT" means, so long as any borrowings are outstanding under the
Credit Agreement, with respect to any Facility or FF&E, for each calendar month
the amount computed by multiplying the following:
(i) the Acquisition Cost of such Facility or FF&E as of the
Effective Date with respect to the initial Basic Rent Payment
Date and thereafter, the Acquisition Cost of such Facility or
FF&E outstanding on the preceding Basic Rent Payment Date plus
(calculated on a daily basis from the date of any advance
since that date), any advances added to the Acquisition Cost
since said preceding Basic Rent Payment Date, by
(ii) the sum of (1) the Brazos Margin (calculated as a monthly
factor and with respect to advances during a month, a daily
factor) for the period plus (2) the interest rate factor for
interest accrued under the Credit Agreement during such period
with respect to outstanding advances made in previous months
and advances made during such month under (without
duplication) the Agreement for Facilities Lease and the Credit
Agreement towards such Acquisition Cost;
and adding to such amount the Preferred Return times the capital contribution of
the limited partners of Brazos (described under SUBPARAGRAPH (b) in the
definition of "ACQUISITION COST").
In the event no borrowings are outstanding under the Credit Agreement, the Basic
Rent shall be computed on a monthly basis and shall equal the Acquisition Cost
multiplied by a factor specified by Agent which shall equal the interest rate
factor which would be applicable if the Credit Agreement was still in effect.
"BASIC RENT PAYMENT DATE" means the first day of any calendar month
during the Lease Term or Renewal Term of any Facility or FF&E or, in the case of
a Facility under construction, such day following substantial completion of such
Facility, or, if such day is not a Business Day, the next succeeding Business
Day.
"BRAZOS" means Brazos Automotive Properties, L.P. or any successor or
successors to all of its rights and obligations hereunder and, for purposes of
SECTION 10.1(c), shall include any corporation, trust, individual, partnership
or other person or entity which computes its liability for income or other taxes
on a consolidated basis with Brazos or the income of which for purposes of such
taxes is determined or affected directly or indirectly by the income of Brazos
or its successor or successors.
"BRAZOS MARGIN" means the margin specified and calculated in accordance
with item 1 of the letter agreement between Brazos and Lessee dated as of
September 15, 1998.
"BRAZOS PARTNERSHIP AGREEMENT" means that certain First Amended and
Restated Limited Partnership Agreement of Brazos dated as of September 15, 1998.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"CHARGE" has the meaning set forth in SECTION 8.3.
"CHASE CREDIT AGREEMENT" means that certain Credit Agreement dated as
of September 15, 1998 executed among Guarantor, Agent, and the other financial
institutions from time to time party thereto, as the same may have been amended
and in effect on the date hereof.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSENT" means each consent of Lessee or Guarantor to an Assignment,
pursuant to which, among other things, Lessee or Guarantor, as the case may be,
consents to the terms of such Assignment insofar as they relate to this
Facilities Lease, as from time to time amended.
"CORPORATE CREDIT AGREEMENT" means the Chase Credit Agreement as the
same may hereafter be amended, amended and restated, renewed, extended or
otherwise modified or supplemented from time to time, together with any credit
agreement or similar instrument, agreement or document executed from time to
time in respect of any financing arrangement entered into to replace, or which
is in substitution for, the financing arrangement evidenced by the Chase Credit
Agreement.
"CORPORATE CREDIT DOCUMENTS" means any and all notes, guarantees and
other loan documents executed pursuant to the Corporate Credit Agreement and any
document, instrument or other agreement entered in replacement or substitution
of such document or instrument.
"CREDIT AGREEMENT" means the Credit Agreement, dated of even date
herewith, by and among Brazos, the Agent and the banks named therein for the
financing of the acquisition of Facilities and FF&E by Brazos in connection with
the Agreement for Facilities Lease, as it may be amended, restated, modified or
supplemented, from time to time.
"EFFECTIVE DATE" means with respect to any Facility, the date on which
such Facility is leased hereunder by Brazos to Lessee, pursuant to SECTION 3.1,
which date shall be set forth in the Facility Leasing Record.
"ENVIRONMENTAL CLAIM" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including material claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law relating to any Facility or Property.
"ENVIRONMENTAL LAW" means all Legal Requirements arising from, relating
to, or in connection with the Environment (as defined in 43 U.S.C. ? 9601(8)
(1988)), health, or safety, including without limitation (i) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, and
(ii) Legal Requirements relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or restoration of the air,
surface water, groundwater, land surface or subsurface strata, or other natural
resources; (b) solid, gaseous or liquid waste generation, treatment, processing,
recycling, reclamation, cleanup, storage, disposal or transportation; (c)
exposure to pollutants, contaminants, hazardous materials or wastes; (d) the
safety or health of employees; or (e) the manufacture, processing, handling,
transportation, distribution in commerce, use, storage or disposal of hazardous,
medical, infectious, or toxic substances, materials or waste.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 13.1.
"EVENT OF FACILITY TERMINATION" means any of the events specified in
SECTION 13.3.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and all regulations promulgated by the Securities and Exchange Commission
thereunder.
"FACILITY" means all improvements of whatever kind or character now or
hereafter located on, in or under or affixed to an individual Property
including, without limitation, any utilities, paving, signage or lighting and
all additions, replacements and subsequent replacements thereof (including any
Additional Improvements), together with the FF&E installed in such Facility or
other building, in which a fee or leasehold interest has been or will be
acquired by Brazos for the purpose of entering into the Facilities Lease, but
excluding all parcels of land on which such Facility sits. Any reference to a
particular Facility shall refer collectively to such Facility and the Additional
Improvements, if any, made to such Facility.
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"FF&E" means purchased or leased equipment and other specific items
which are acquired or leased by Brazos with the prior approval of Agent and with
the proceeds of an advance under the Agreement for Facilities Lease and
including all additions, replacements and subsequent replacements of such items
(including any Additional Improvements) which are installed in a particular
Facility or, with the prior written approval of the Agent, may be acquired for
lease to Lessee without regard to its use in connection with a specific Property
or Facility.
"FACILITIES LEASE" means this Facilities Lease Agreement and each
Facility Leasing Record.
"FACILITY LEASING RECORD" means an instrument evidencing the lease or
sublease of a Facility or FF&E under this Facilities Lease, as prepared and
executed by Brazos, as lessor or sublessor, and accepted and executed by Lessee,
as lessee or sublessee.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government having jurisdiction over Brazos, Agent, any Assignee or Lessee, or
any of their respective properties.
"GROUND LEASE" means, with respect to any Property, the ground lease by
and between Brazos, as lessor, and Lessee, as lessee.
"GUARANTOR" means Monro Muffler Brake, Inc., a New York corporation.
"GUARANTY" means the Guaranty, dated of even date herewith, by and
between Guarantor and Brazos, as it may be further amended, restated, modified
or supplemented, from time to time, in accordance with the terms thereof.
"INDEBTEDNESS" means, with respect to any Person,(a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of property or services; (d)
obligations of such Person as lessee under Capitalized Leases; (e) reimbursement
obligations in respect of bonds or letters of credit; (f) obligations of such
Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) of such Person to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e) above;
and (g) indebtedness or obligations of others of the kinds referred to in
clauses (a) through (f) secured by any Lien on or in respect of any property of
such Person whether or not assumed by such Person; provided, however, that all
trade accounts payable and accrued expenses incurred in the ordinary course of
business of such Person and not overdue shall be excluded from the foregoing.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 10.1.
"INSURANCE REQUIREMENTS" means all requirements of this Facilities
Lease with respect to insurance, all terms of any insurance policy covering or
applicable to any Facility, all requirements of the issuer of any such policy,
all statutory requirements and all orders, rules, regulations and other
requirements of any governmental body related to insurance applicable to any
Facility.
"LEASE TERM" has the meaning set forth in SECTION 5.1.
"LEGAL REQUIREMENTS" means all laws, judgments, decrees, ordinances and
regulations and any other governmental rules, orders and determinations and all
requirements having the force of law, now or hereinafter enacted, made or
issued, whether or not presently contemplated, and all agreements, covenants,
conditions and restrictions, applicable to each Facility and FF&E and/or the
ownership, operation or use thereof, including, without limitation, all
requirements of the Americans With Disabilities Act (P.L. 101-335) and
environmental statutes, compliance with which is required at any time during the
Lease Term and any Renewal Term, whether or not such compliance shall require
structural, unforeseen or extraordinary changes to any Facility and FF&E or the
operation, occupancy or use thereof.
"LESSEE" means Monro Leasing, LLC, a Delaware limited liability
company.
"LESSOR PERSON" has the meaning set forth in SECTION 8.3.
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"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"LIEN OF RECORD" means, with the exception of the Lien of a lender or
lender's agent under a Credit Agreement, (i) any mechanics' or materialmen's
lien for which Lessee does not hold retainage or trapped funds in amounts
required by applicable law, (ii) any lien securing the payment of taxes,
assessments or governmental charges and levies which are due, payable and
delinquent, (iii) any judgment lien or (iv) any other filed, recorded, or
docketed matter (whether or not the same shall constitute a Permitted
Encumbrance or be the subject of a Permitted Contest) which in the case of any
of the foregoing (a) is reasonably likely to result in a sale for satisfaction
of same, a loss, forfeiture, reversion of title, or right of reentry with
respect to any Facility or (b) whether or not valid, is reasonably likely to
interfere with the due and timely payment of any sum payable or the exercise of
any of the rights or the performance of any of the duties or responsibilities of
Lessee under this Facilities Lease.
"MAXIMUM RATE" has the meaning set forth in SECTION 19.8 hereof.
"PERMITS" means all consents, licenses and building permits required
for construction, completion, and operation of an individual Facility in
accordance with all Legal Requirements of Law affecting the particular Facility,
including, without limitation, all environmental permits.
"PERMITTED CONTEST" means any good-faith contest permitted by and in
accordance with the terms of ARTICLE XVIII.
"PERMITTED ENCUMBRANCES" means the following Liens and other matters
affecting the title or leasehold interest of any Facility or FF&E: (a) subject
to the terms of SECTION 7.5, mechanics' and materialmen's liens incurred in good
faith in the ordinary course of business and securing obligations that are
junior to any Liens of Assignee not exceeding $100,000 for any particular
Facility or FF&E and $1,000,000 in the aggregate which are not yet due or which
are subject to a Permitted Contest; (b) Liens securing the payment of taxes,
assessments and governmental charges or levies, either not delinquent or subject
to a Permitted Contest; (c) zoning and planning restrictions, subdivision and
platting restrictions, easements, rights-of-way, licenses, reservations,
covenants, conditions, waivers, restrictions on the use of property, minor
encroachments or minor irregularities of title which do not materially impair
(i) the intended use of the Facility or FF&E by Lessee or (ii) the value of any
Facility or FF&E; (d) the lien created contemporaneously with the acquisition of
such Facility or FF&E pursuant to, and securing the obligations under, the
Credit Agreement; (e) any mechanics' or materialmen's lien for which Lessee
holds retainage or trapped funds in amounts required by and in accordance with
applicable law; (f) outstanding mineral interests; and (g) any other matters;
provided that such other or additional matters shall be approved in writing by
Brazos and Agent, whose approval shall not be unreasonably withheld or delayed.
"PERSON" means an individual, partnership, corporation, business trust,
joint venture, joint stock company, trust, unincorporated association or
Governmental Authority or other entity of whatever nature.
"POTENTIAL DEFAULT" means any event which, but for the lapse of time,
or giving of notice, or both, would constitute an Event of Default.
"POTENTIAL FACILITY TERMINATION" means any event which, but for the
lapse of time, or giving of notice, or both, would constitute an Event of
Facility Termination.
"PREFERRED RETURN" means the preferred return on the capital
contribution of the limited partners calculated in accordance with the terms of
the Brazos Partnership Agreement and payable to the limited partners of Brazos
which is added to the interest rate factor under the Credit Agreement in
computing the Limited Partner Preferred Return under the Brazos Partnership
Agreement.
"PREPAYMENT PREMIUMS" has the meaning set forth in the Brazos
Partnership Agreement.
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"PROPERTY" means any and all parcels of land in which Brazos has
acquired a fee interest or leasehold interest and leased or subleased under a
Ground Lease to Lessee, in each case for the operation of a Facility thereon,
but excluding FF&E and all improvements thereon and all structures, equipment
and materials affixed thereon or located thereon, therein or thereunder.
"RENEWAL TERM" has the meaning set forth in SECTION 11.3(a) hereof.
"REPORTS" has the meaning set forth in SECTION 8.7 hereof.
"RESPONSIBLE OFFICER" means any President, Treasurer, Executive Vice
President, or Senior Vice President of the Guarantor or Lessee.
"REVISED FACILITY LEASING RECORD" means a Facility Leasing Record
executed under the terms of SECTION 3.2(b) hereof.
"SUBSIDIARY" means with respect to any Person, any corporation of which
voting control or more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at such time capital stock of any
other class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency) is at the time directly or indirectly owned
by such Person.
"TAKING" has the meaning set forth in SECTION 15.1.
"UNECONOMIC NOTICE" has the meaning set forth in SECTION 12.1.
"UNECONOMIC FACILITY" has the meaning set forth in SECTION 12.1.
Section 1.2. FORMS. All forms specified by the text hereof or by
reference to exhibits attached hereto shall be substantially as set forth
herein, subject to such changes by Brazos and Lessee by mutual consent that do
not alter the substantive rights of the parties hereto or of the Assignees or as
may be required by applicable laws hereafter enacted.
SECTION 1.3. RECITALS, TABLE OF CONTENTS, TITLES, AND HEADINGS. The
terms and phrases used in the recitals of this Facilities Lease have been
included for convenience of reference only and the meaning, construction, and
interpretation of such words and phrases for purposes of this Facilities Lease
shall be determined solely by reference to SECTION 1.1 hereof. The table of
contents, titles, and headings of the Articles and Sections of this Facilities
Lease have been inserted for convenience of reference only and are not to be
considered a part hereof and shall not in any way modify or restrict any of the
terms or provisions hereof and shall not be considered or given any effect in
construing this Facilities Lease or any provision hereof or in ascertaining
intent, if any question of intent should arise.
SECTION 1.4. INTERPRETATION. Unless the context requires otherwise,
words of the masculine gender shall be construed to include correlative words of
the feminine and neuter genders and vice versa, and words of the singular number
shall be construed to include correlative words of the plural number and vice
versa. This Facilities Lease, and all the terms and provisions hereof, shall be
liberally construed to effect the purposes set forth herein and to sustain the
validity of this Facilities Lease.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE
Lessee represents and warrants to Brazos and agrees on the date of this
Facilities Lease and as of the date the relevant Facility or FF&E is leased
pursuant to this Facilities Lease (it being understood that all representations
and warranties in this ARTICLE II with respect to a Facility or FF&E shall refer
to the Facility or FF&E then being leased pursuant to the terms of this
Facilities Lease) the following:
Section 2.1. CORPORATE MATTERS. Lessee (a) has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
state of its organization, (b) has full corporate power and authority to own and
operate
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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 Facilities Lease, the Agreement for Facilities Lease and
any Consent, and (c) is duly qualified to do business as a foreign corporation
in good standing in each jurisdiction, including, without limitation, each state
or other jurisdiction in which a Facility or FF&E is located, in which its
ownership or leasing of properties or the conduct of its business requires such
qualification and where non-qualification, singly or in the aggregate, would
materially adversely affect the financial condition or creditworthiness of
Lessee, or would impair the ability of Lessee to perform its obligations under
this Facilities Lease or under the Agreement for Facilities Lease.
Section 2.2. AUTHORIZATION; BINDING AGREEMENT. This Facilities Lease
has been duly authorized, executed and delivered by Lessee and, assuming the due
authorization, execution and delivery of this Facilities Lease by Brazos, this
Facilities Lease is a legal, valid and binding obligation of Lessee, enforceable
against Lessee, subject, as to enforceability, to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 2.3. POWER AND AUTHORITY. The consummation of the transactions
herein contemplated and the performance and observance of Lessee's obligations
under this Facilities Lease and any Consent have been duly authorized by all
necessary corporate action on the part of Lessee. The execution, delivery and
performance by Lessee of this Facilities Lease and any Consent will not result
in any violation of any term of the certificate of incorporation or the by-laws
of Lessee, do not require approval of the board of directors or shareholders of
Lessee or the approval or consent of any trustee or holders of Indebtedness 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 (other than
a Lien on any Facility or FF&E as may be contemplated herein) 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 where breach or default, singly or in the aggregate, would materially
adversely affect (i) the financial condition or creditworthiness of Lessee or
(ii) the ability of Lessee to perform its obligations under the Agreement for
Facilities Lease, this Facilities Lease, the Ground Lease or the Agreement for
Ground Lease referred to in the Ground Lease or the Consent executed by Lessee
of even date herewith, or any existing applicable law, rule, regulation,
license, judgment, order or decree of any Governmental Authority or court having
jurisdiction over Lessee or any of its activities or properties.
Section 2.4. CONSENTS, APPROVALS, Authorizations. There are no
consents, licenses, orders, authorizations or approvals of, or notices to or
registrations with, any Governmental Authority which are required for the valid
execution, delivery and performance by Lessee of this Facilities Lease that have
not been obtained or made, except (i) such permits and licenses as Lessee will
be required to obtain for the construction, installation, occupancy, use or
operation of a specific Facility or FF&E and which, in the ordinary course of
business, are not obtained until just prior to the commencement of such
construction, installation, occupancy, use or operation, and (ii) any such
consents, licenses, orders, authorizations, approvals, notices and
registrations, the failure of which to obtain would not cause a Material Adverse
Change. Any such consents, licenses, orders, authorizations, approvals, notices
and registrations that have been obtained or made are in full force and effect.
Section 2.5. FINANCIAL STATEMENTS. Lessee has caused to be furnished to
Brazos and Agent copies of Guarantor's most recent financial information and
certificates required to be furnished pursuant to the Corporate Credit
Documents, since March 31, 1998, which fairly present the financial position,
results of operations and cash flows with respect to Guarantor and its
consolidated subsidiaries, as of the dates and for the periods indicated therein
and comply with all applicable requirements.
Section 2.6. CHANGES. Since the date of the most recent financial
statements delivered pursuant to SECTION 2.5, there has been no adverse change
in the financial condition or business of any Guarantor or Lessee which would
materially impair the ability of such Guarantor or Lessee to perform their
respective obligations under this Facilities Lease.
Section 2.7. LITIGATION. Except as disclosed to Lessor, 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 or Guarantor after due inquiry, threatened
against in writing or affecting Lessee or any property or rights of Lessee or,
to the best knowledge of Lessee, or Guarantor, which affects any Facility or
FF&E, as to which there is a significant possibility of an adverse
determination, and which if adversely determined, could reasonably be expected
to have a material adverse impact on the financial condition or business of
Lessee or Guarantor or which, if adversely
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determined, could reasonably be expected to materially impair the ability of
Lessee to perform its obligations hereunder or Guarantor under the Guaranty, or
which, if adversely determined, could reasonably be expected to have a material
adverse impact on the value or intended use of a Facility or FF&E (it being
agreed that a potential adverse impact reasonably likely to be less than
$500,000 in the aggregate for all Facilities or FF&E shall be deemed to be not
material) 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 or Guarantor after due
inquiry, threatened which questions or would question the validity of this
Facilities Lease.
Section 2.8. DELIVERY OF INFORMATION. Lessee shall cause to be
delivered to Brazos from time to time, (a) promptly upon request, copies of the
quarterly financial statements required to be delivered under Section 8.1(b) of
the Corporate Credit Documents, together with each certificate required to be
delivered under Section 8.1 of the Corporate Credit Documents, and within one
hundred (100) days after the end of Guarantor's fiscal year, copies of the
annual financial statements required to be delivered under Section 8.1(a) of the
Corporate Credit Documents, together with each certificate required to be
delivered under Section 8.1 of the Corporate Credit Documents, (b) promptly upon
request, such other information with respect to Guarantor or Lessee or
Guarantor's or Lessee's operations, business, property, assets or financial
condition as Brazos or Agent shall reasonably request, (c) promptly after an
officer of Lessee obtains knowledge of any Event of Default or Event of Facility
Termination hereunder or of any Potential Default or Potential Facility
Termination, a certificate of an officer of Lessee specifying the nature and
period of existence of such Event of Default, Event of Facility Termination,
Potential Default or Potential Facility Termination, and what action, if any,
Lessee has taken, is taking, or proposes to take with respect thereto, (d)
promptly after an officer of Lessee obtains knowledge of any material adverse
change in the financial condition or business of Guarantor or Lessee or of any
litigation of the type described in SECTION 2.7, a certificate of an officer of
Lessee describing such change or litigation as the case may be, (e) promptly
after Lessee obtains knowledge of any and all Liens, other than Permitted
Encumbrances, on any Facility or FF&E, or other matters, including any
litigation affecting a Facility which may materially adversely affect the value
or intended use of, any Facility or FF&E, a detailed statement describing each
such Lien or other matter and (f) promptly after Lessee obtains knowledge of any
Environmental Claim, a detailed statement describing such Environmental Claim
and what action, if any, Lessee has taken, is taking, or proposes to take with
respect thereto.
Section 2.9. COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE
REQUIREMENTS. The operation, use and physical condition of the Facilities comply
in all material respects with the Insurance Requirements and Lessee will not do
or knowingly permit any act or thing which is contrary in any material respect
to any Legal Requirements, or which would impair in any material respect, other
than in the normal use thereof, the value or usefulness of any Facility or FF&E;
provided, in each case, that Lessee shall not be required to comply with any
Legal Requirements if (a) in the case of Legal Requirements with respect to laws
affecting the environment, Lessee acts diligently to cure such non-compliance
upon becoming aware of it and (b) in every case such non-compliance,
individually or in the aggregate, (i) shall not involve any material danger that
any Facility or FF&E would be subject to sale, forfeiture or loss, as a result
of failure to comply therewith, (ii) could not reasonably be expected to cause
either Brazos or any Assignee to incur (x) civil liability for which Brazos and
any Assignee are not adequately indemnified (Lessee's obligations under ARTICLE
X of this Facilities Lease shall be deemed to be adequate indemnification if no
Event of Default, Event of Facility Termination, Potential Default or Potential
Facility Termination exists and if such civil liability is reasonably likely to
be less than $100,000 per Facility or FF&E and $1,000,000 in the aggregate), or
(y) any criminal liability as a result of failure to comply therewith, (iii) is
permitted under the provisions of the Acquired Facilities Lease, if any, on such
Facility or FF&E, and (iv) is consistent with business practices normal in the
industry of Lessee or the practices of Lessee with respect to properties owned
by Lessee.
Section 2.10. AGREEMENT FOR FACILITIES LEASE. Each Facility built
pursuant to the Agreement for Facilities Lease was built and leased in
accordance with the terms of the Agreement for Facilities Lease. The
representations and warranties of Lessee in the Agreement for Facilities Lease
are true and correct in all material respects on and as of the date made.
Section 2.11. CORRECTION OF WORK. Upon demand of Brazos, Lessee shall
correct any structural defect in any Facility and shall replace any FF&E which
does not conform to the specifications for same.
Section 2.12. NO ENCROACHMENTS. Except as previously disclosed to
Brazos in writing, each Facility is constructed entirely on its Property and
does not encroach upon or overhang (unless consented to by the affected property
owner) any easement or right-of-way or the land of others, and is wholly within
any building restriction lines, however established, except such non-structural
encroachments or overhanging projections as may be easily removed or corrected
without
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affecting the value or intended use of the Facility and encroachments
affirmatively insured over by title insurance covering such Property.
SECTION 2.13. FACILITY AND FF&E LIENS. Except as specifically disclosed
by Lessee in writing to Brazos, to the best of Lessee's knowledge, no Facility
or FF&E is subject to a Lien of Record, and, to the best of Lessee's knowledge,
after due inquiry, no Facility or FF&E is subject to any other Lien, except for
Permitted Encumbrances previously disclosed in writing to Brazos.
Section 2.14. BROKERAGE. Except as may be contemplated by the
Facilities Lease, no brokerage or other fee, commission or compensation is to be
paid by Brazos in connection with this Facilities Lease, and Lessee hereby
indemnifies Brazos against any claims for brokerage fees or commissions and
agrees to pay all reasonable expenses incurred by Brazos in connection with the
defense of any action or proceeding brought to collect any such brokerage fees
or commissions, provided such claim is made through or under Lessee.
Section 2.15. SUITABILITY OF FACILITY AND FF&E. To the best of Lessee's
knowledge, each Facility and FF&E is suitable in all material respects
(including, without limitation, ground conditions, utilities, and condition of
title) for the intended use of the Facility and FF&E under the Facilities Lease.
ARTICLE III
LEASE OF FACILITY
Section 3.1. LEASE. Subject to the terms and conditions hereof, Brazos
hereby leases to Lessee, and Lessee hereby leases from Brazos pursuant to this
Facilities Lease, or subleases in the case of an Acquired Facilities Lease, any
Facility or FF&E, when Brazos makes an advance under the Agreement for
Facilities Lease with respect to such Facility or FF&E and such Facility or FF&E
is acquired under the Agreement for Facilities Lease, or if no advance is made
with respect to a Facility or FF&E under an Acquired Facilities Lease, when
Brazos enters into or acquires by assignment such Acquired Facilities Lease. The
Effective Date of the lease or sublease of each Facility or FF&E shall be the
date of the initial advance with respect to such Facility or FF&E under the
Agreement for Facilities Lease or the Effective Date of any Acquired Facilities
Lease.
Section 3.2. FACILITY LEASING RECORD.
(a) The lease of each Facility or FF&E shall be evidenced by a Facility
Leasing Record, or if the terms of (b) or (c) below apply, a Revised Facility
Leasing Record. Each Facility Leasing Record shall give a full description of
the Facility or FF&E covered thereby, the Acquisition Cost of such Facility or
FF&E, the Lease Term for such Facility or FF&E, the location of such Facility or
FF&E and such other details as Brazos, Lessee and any Assignee may from time to
time agree. Lessee shall provide to Brazos the information necessary to describe
in the Facility Leasing Record the Facility or FF&E, except that Brazos shall
provide, pursuant to the terms hereof, the Acquisition Cost and the Lease Term.
Execution and delivery by Lessee of a Facility Leasing Record shall constitute
(i) acknowledgment by Lessee that the Facility specified in such Facility
Leasing Record has been delivered to Lessee in good condition and has been
accepted for lease hereunder by Lessee as of the Effective Date of the Facility
Leasing Record, (ii) acknowledgment by Lessee that the Facility or FF&E
specified in such Facility Leasing Record is subject to all of the covenants,
terms and conditions of this Facilities Lease, and (iii) certification by Lessee
that the representations and warranties contained in ARTICLE II of this
Facilities Lease are true and correct in all material respects on and as of the
Effective Date of the Facility Leasing Record as though made on and as of such
date and that there exists on such date no Event of Default, Event of Facility
Termination, Potential Default or Potential Facility Termination.
(b) Upon the making of a Reconciliation Advance or Additional Advance
(as such terms are defined in the Agreement for Facilities Lease) for a Facility
or FF&E, Brazos and Lessee shall execute a Revised Facility Leasing Record to
reflect the change in Acquisition Cost for such Facility or FF&E caused by such
advance.
(c) Upon the release or disposition of a Facility or FF&E or any
portion thereof and the application of proceeds therefrom in accordance with the
Credit Agreement, Brazos and Lessee shall execute a Revised Facility Leasing
Record to reflect the change in Acquisition Cost for such Facility or FF&E
caused by such release or disposition.
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Section 3.3. OWNERSHIP OF THE FACILITY AND FF&E.
(a) It is the intent of the parties hereto that: (i) this Facilities
Lease constitutes an "operating lease" pursuant to Statement of Financial
Accounting Standards No. 13, as amended, for purposes of Lessee's financial
reporting, and (ii) for purposes of federal, state and local income or franchise
taxes and for any other tax imposed on or measured by income, the transaction
contemplated hereby is a financing arrangement and preserves ownership in the
Facility and FF&E to the Lessee. Nevertheless, the Lessee acknowledges and
agrees that neither the Agent, Brazos nor any Assignee has made any
representations or warranties to the Lessee concerning the tax, accounting or
legal characteristics of the Credit Agreement and Lease Documents (as defined in
the Credit Agreement) and that the Lessee has obtained and relied upon such tax,
accounting and legal advice concerning the Credit Agreement and Lease Documents
(as defined in the Credit Agreement) as it deems appropriate.
(b) Anything to the contrary notwithstanding, Brazos and the Lessee
intend and agree that with respect to the nature of the transactions evidenced
by this Facilities Lease in the context of the exercise of remedies under the
Credit Agreement and Lease Documents (as defined in the Credit Agreement),
including, without limitation, in the case of any insolvency or receivership
proceedings or a petition under the United States bankruptcy laws or any other
applicable insolvency laws or statute of the United States of America or any
state or commonwealth thereof affecting the Lessee, Brazos, or any Assignee or
any enforcement or collection actions, (i) the transactions evidenced by this
Facilities Lease and the other Lease Documents are loans made by Brazos and the
Agent as unrelated third party lenders to the Lessee secured by the Facility and
FF&E, (ii) the obligations of the Lessee under this Facilities Lease to pay
Basic Rent and Additional Rent or other amounts in connection with a purchase of
the Facility and FF&E pursuant to this Facilities Lease shall be treated as
payments of interest on and principal of, respectively, loans from Brazos and
the Assignees to the Lessee, and (iii) this Facilities Lease grants a security
interest and mortgage or deed of trust or lien, as the case may be, in the
Facility and FF&E to Brazos and the Assignees to secure the Lessee's performance
under and payment of all amounts under this Facilities Lease and the Credit
Agreement and Lease Documents (as defined in the Credit Agreement).
(c) Specifically, without limiting the generality of SUBSECTION (B) of
this Section, Brazos and the Lessee further intend and agree that, for the
purpose of securing the Lessee's obligations for the repayment of the
above-described loans from Brazos and the Agent to the Lessee, (i) this Lease
shall also be deemed to be a security agreement and financing statement within
the meaning of Article 9 of the Uniform Commercial Code (and specifically, a
construction mortgage, as said term is defined in Section 9-313(1)(c) of the
Uniform Commercial Code) and a real property mortgage or deed of trust; (ii) the
conveyance provided for in ARTICLE III shall be deemed to be a grant by the
Lessee to Brazos and the Assignees of a mortgage lien and security interest in
all of the Lessee's right, title and interest in and to the Facility and FF&E
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, investments, securities or other property (it being understood that
Lessee hereby mortgages and grants a security interest in the Facility and FF&E
to Brazos and the Assignees to secure such loans); (iii) the possession by
Brazos or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(iv) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of the Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under applicable law. Brazos and the Lessee
shall, to the extent consistent with this Facilities Lease, take such actions
and execute, deliver, file and record such other documents, financing
statements, mortgages and deeds of trust as may be necessary to ensure that, if
this Facilities Lease were deemed to create a security interest in the Facility
and FF&E in accordance with this Section, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of this Facilities Lease or any
renewal hereof as provided in SECTION 5.1.
Section 3.4. BRAZOS COVENANTS. In the absence of an Event of Default
which is continuing, Brazos agrees that it will not engage any broker in
connection with the purchase or sale of any Facility or FF&E without Lessee's
prior written consent. Within one hundred and twenty (120) days after the end of
Brazos' fiscal year, Brazos will provide to Lessee its unaudited balance sheet
dated as of the end of its fiscal year, prepared in accordance with GAAP,
certified by an officer of the General Partner of Brazos. Brazos will not take
any position on any tax return, report or form relating to income or franchise
taxes that is inconsistent with SECTION 3.3(c).
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Section 3.5. SECURITY. It is the intent of the parties that, under
applicable state and federal law, (i) the transaction evidenced by the Credit
Agreement constitutes a secured financing transaction between the banks named
therein and Lessor, (ii) the transaction evidenced by this Facilities Lease
constitutes an operating lease transaction between Lessor and Lessee, (iii)
Lessor is the owner of the Facilities and FF&E, and (iv) Lessee?s interest in
the Facilities and FF&E is a leasehold interest pursuant to the terms set forth
herein. If, however, notwithstanding the foregoing and the provisions of such
documents, the transactions contemplated by such documents are determined by a
court of competent jurisdiction to constitute a secured financing between all or
any combination of Agent, such banks and Lessor, on the one hand, and Lessee, on
the other, such that Lessee is determined to be the owner of any Facility and
FF&E, (i) this Facilities Lease shall constitute a mortgage and a security
agreement under applicable state law with respect to such Facility and FF&E, and
(ii) Lessee hereby grants and conveys to Agent, on behalf of the Banks, and
Lessor a lien on and security interest in all of Lessee?s right, title and
interest in and to each such Facility and FF&E, as collateral security for the
obligations, without duplication, with mortgage covenants, upon statutory
conditions and statutory power of sale, of Lessee under this Facilities Lease
and (iii) Lessor hereby grants and conveys to Agent, on behalf of the Banks, a
lien on and security interest in all of Lessor?s right, title and interest in
and to each such Facility and FF&E, as collateral security for the Credit
Agreement. It is the intention of the parties to this Facilities Lease that the
security interest and mortgage or deed of trust or lien, as the case may be, for
each Facility between Lessor and the Agent dated September 15, 1998, and
recorded as of even date herewith, be prior to this Facilities Lease.
ARTICLE IV
DELIVERY AND ACCEPTANCE
Section 4.1. ACCEPTANCE. Lessee shall accept Facilities built or
Facilities or FF&E acquired by purchase or lease pursuant to and in accordance
with the Agreement for Facilities Lease. Brazos shall not be liable to Lessee
for any failure to build or obtain, or delay in building or obtaining, any
Facility or FF&E or any delay in the delivery of title or possession thereof to
Lessee.
Section 4.2. PAYMENTS FINAL. Each payment of Basic Rent, Additional
Rent and any other amount due hereunder made by Lessee shall be final, and
Lessee, without waiving any other remedies it may have, will not seek or have
any right to recover all or any part of such payment from Brazos or any Assignee
for any reason whatsoever. The making of payments under this Facilities Lease by
Lessee (including payments pursuant to ARTICLE X) shall not be deemed to be a
waiver of any claim or claims that Lessee may assert against Brazos or any other
person. Brazos agrees to repay Lessee amounts paid to Brazos to the extent such
payments were in error and are not required by the various terms and provisions
of this Facilities Lease.
Section 4.3. NO WARRANTIES OR REPRESENTATIONS. Notwithstanding any
other provision contained in this Facilities Lease, it is specifically
understood and agreed that neither Brazos nor any Assignee nor any Affiliate of
either, nor anyone acting on behalf of any of them makes any warranties or
representations or has any responsibility to disclose any relevant information,
or has any other responsibility or duty, nor, except as set forth in SECTIONS
3.3 3.4 and 19.11 of this Facilities Lease, has Brazos or any Assignee or any
Affiliate of either, or anyone acting on behalf of any of them made any
covenants or undertakings, as to the accounting treatment to be accorded Lessee
or as to the U.S. Federal or any state income or any other tax consequences, if
any, to Lessee as a result of or by virtue of the transactions contemplated by
this Facilities Lease.
Section 4.4. QUIET ENJOYMENT. During the Lease Term or Renewal Term, if
any, of any Facility or FF&E hereunder and so long as no Event of Default, Event
of Facility Termination, Potential Default or Potential Facility Termination
shall have occurred and be continuing, Brazos covenants that as between Brazos
and Lessee, Lessee shall have the right to quiet enjoyment of the Facility or
FF&E on the terms and conditions provided in this Facilities Lease without any
interference from Brazos or any Person claiming by, through, under or in the
name of Brazos. Lessee agrees to attorn to any Assignee in the event such
Assignee succeeds to Brazos' interest in the Facility or FF&E, and Lessee will
not hold the Assignee responsible for Brazos' obligations incurred in the period
prior to the succession of the Assignee to Brazos' interest.
Section 4.5. INDEMNITY TO TITLE INSURANCE. In the event the title
insurance policy insuring Brazos' and Assignee's interest in any Facility would
not, in the absence of special assurance by Lessee, become effective until the
date of recordation of the deed or assignment of the Acquired Facilities Lease,
as applicable, then Lessee shall furnish such
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indemnity to the title insurance company as it shall require in order to insure
Brazos' interest in such Facility, effective as of the date of the Effective
Date.
Section 4.6. OTHER FINANCING REQUIREMENTS. If Brazos is required by the
Agent pursuant to the terms of the Credit Agreement in effect on the date hereof
or modified hereafter with the prior written consent of Lessee to provide an
appraisal or other evidence of the value of a Facility or FF&E to the Agent
under the Credit Agreement, Lessee agrees to provide such appraisal or other
evidence to Brazos at Lessee's sole cost and expense.
ARTICLE V
LEASE TERM
Section 5.1. LEASE TERM. The "LEASE TERM" with respect to any Facility
or FF&E leased hereunder shall commence on the Effective Date for such Facility
and shall end on September 15, 2003. The lease of any Facility or FF&E may be
renewed for one five (5) year renewal term and thirty (30) renewal terms of one
year each, pursuant to, and in accordance with, SECTION 11.3. The Lease Term or
any Renewal Term may be terminated earlier pursuant to ARTICLES XI, XII, XIII,
XIV or XV hereof or otherwise pursuant to operation of any Legal Requirements.
Section 5.2. INSURABLE INTEREST. Notwithstanding anything contained in
this ARTICLE V and to the extent that Lessee or any additional insureds named
pursuant to SECTION 9.2 of this Facilities Lease have an insurable interest
therein, the provisions of ARTICLES IX and X and SECTION 13.1 hereof shall apply
with respect to any Facility or FF&E from the time such Facility or FF&E is
acquired by Brazos.
Section 5.3. TERMINATION. Notwithstanding anything contained in this
ARTICLE V or ARTICLE XI, this Facilities Lease shall terminate on September 15,
2038, unless earlier terminated.
ARTICLE VI
RENT AND OTHER PAYMENTS
Section 6.1. BASIC RENT. Lessee hereby agrees to pay Brazos on each
Basic Rent Payment Date, Basic Rent for the calendar month in which such Basic
Rent Payment Date falls with respect to each Facility or FF&E leased prior to
the last two (2) Business Days of the preceding calendar month. Brazos shall
notify Lessee in writing at least two Business Days prior to each Basic Rent
Payment Date of the amount of the Basic Rent due with respect to each Facility
or FF&E on such Basic Rent Payment Date.
Section 6.2. OTHER AMOUNTS. Except as otherwise specifically provided
in this Facilities Lease, Lessee hereby agrees to pay within twenty (20) days
after written demand all amounts (other than Basic Rent and amounts which are
payable on demand or pursuant to ARTICLES X-XV) due hereunder, including,
without limitation, all amounts payable to any Indemnified Person pursuant to
ARTICLE X hereof.
Section 6.3. ADDITIONAL RENT. Lessee shall pay to Brazos from time to
time, on demand, as additional rent ("ADDITIONAL RENT") (i) amounts required to
reimburse Brazos for its obligations, costs and expenses (not previously
included in Basic Rent) incurred in acquiring, financing and leasing the
Facility, including, without limitation, reasonable auditor's fees, if any, and
all amounts payable by Brazos under Sections 2.3, 2.6, 2.8, 2.9, 2.11, 5.5, 9.4
and 9.7 of the Credit Agreement in effect on the date hereof or modified with
the prior written consent of Lessee or, at such time as no borrowing is
outstanding under the Credit Agreement, all such amounts which are otherwise
provided for under the Credit Agreement (all such payments to be made at the
times specified in the Credit Agreement), (ii) to the extent legally
enforceable, interest on each overdue amount not paid by Lessee to Brazos as
provided in this Facilities Lease from the date such overdue amount was due
until paid at the per annum rate of interest equal to the most recent rate of
interest calculated pursuant to the Credit Agreement or established by Agent in
the absence of any borrowing under the Credit Agreement, plus two percent (2%),
(iii) the amount of all Prepayment Premiums payable to the limited partner of
Brazos under the Brazos Partnership Agreement, and (iv) all reasonable costs and
expenses incurred by the limited partner of Brazos (1) in connection with the
occurrence and during the continuance of a default under the Lease Documents or
(2) in connection with the review and execution of any amendment requested by
Lessee or Guarantor (whether or not such amendment is executed) to the Lease
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Documents (as defined in the Guaranty), the Guaranty, any security agreement
entered into in connection with the Guaranty, any consent requested by or on
behalf of Lessee in connection with the Lease Documents or the Brazos
Partnership Agreement whether or not said request is granted. Lessee shall also
pay to Brazos on demand an amount equal to any reasonable expenses and
attorneys' fees incurred by Brazos in collecting such unpaid sums and enforcing
the obligations for such unpaid sums.
Section 6.4. PAYMENT IN ADVANCE. Basic Rent and Additional Rent and any
other amount payable by Lessee to Brazos shall be paid sufficiently in advance
of the date due to assure that immediately available funds in the full amount
due are available on the date due, to such account of Brazos at such bank, or to
such account of such other person at such bank, or otherwise as Brazos may from
time to time designate in writing.
Section 6.5. CREDIT AGREEMENT LOSSES. In addition to all other payment
obligations hereunder, if the lease for any Facility is terminated for any
reason prior to the end of the Lease Term or, if applicable, Renewal Term, then
Lessee shall pay to Brazos within three Business Days after receipt of the
billing statement referred to below an additional amount compensating Brazos for
all penalties, costs and expenses (including reasonable out-of-pocket costs and
expenses) as are incurred by Brazos under any Credit Agreement in connection
with such termination and as are set forth in a billing statement sent by Brazos
to Lessee containing the calculation thereof in reasonable detail.
ARTICLE VII
RESTRICTED USE; COMPLIANCE WITH LAWS
Section 7.1. INSURANCE REQUIREMENT AND LEGAL REQUIREMENT. So long as no
Event of Default or Event of Facility Termination shall have occurred and be
continuing, Lessee may use the Facilities in the regular course of its business
for any lawful purpose. Lessee will not do or permit any act or thing which is
contrary in any material respect to any Insurance Requirement or which is
contrary to any Legal Requirement or which would impair, other than in the
normal use thereof, the value or usefulness of any Facility; provided, that
Lessee shall not be required to comply with any Legal Requirements to the extent
provided in SECTION 2.9.
Section 7.2. FILINGS. Lessee shall promptly and duly execute, deliver,
file and record, at Lessee's expense, all such documents, statements, filings
and registrations, and take such further action as Brazos or any Assignee shall
from time to time reasonably request in order to establish, perfect and maintain
Brazos' or such Assignee's title to and interest in the Facilities and any
Assignee's interest in this Facilities Lease or any Facility as against Lessee
or any third party in any applicable jurisdiction. As FF&E or other fixtures,
furniture and equipment are substituted pursuant to SECTION 8.5 hereof for FF&E
subject to this Facilities Lease, title to such substitute FF&E or other
fixtures, furniture and equipment shall automatically be transferred to Brazos
and such FF&E or other fixtures, furniture and equipment shall be subject to
this Facilities Lease and title to the existing FF&E for which such FF&E or
other fixtures, furniture and equipment is being substituted shall be released
by Brazos. Lessee may, after thirty (30) days' written notice in writing to
Brazos and each Assignee and at Lessee's own cost and expense, change the place
of principal location of any FF&E; provided that prior notice shall not be
required in the case of FF&E used for transportation (such as, without
limitation, automobiles and trucks), but in such event Lessee shall notify
Brazos in writing of the change of the principal location of such transportation
FF&E not later than thirty (30) days after such change is made. Notwithstanding
the foregoing, no change of location shall be undertaken unless and until all
Legal Requirements shall have been met; provided, that Lessee shall not be
required to comply with any Legal Requirements to the extent provided in SECTION
2.9.
Section 7.3. COMPLIANCE WITH OTHER REQUIREMENTS. Lessee shall use every
precaution which is commercially reasonable and which is usually employed by
corporations engaged in a business which involves owning or operating similar
property or equipment to prevent loss or damage to Facilities and to prevent
injury to third persons or property of third persons. Lessee and Brazos shall
cooperate fully with each other and with all insurance companies providing
insurance pursuant to ARTICLE IX hereof in the investigation and defense of any
claims or suits arising from the ownership or operation of FF&E or ownership,
use, or occupancy of the Facility, provided that nothing contained in this
SECTION 7.3 shall be construed as imposing on Brazos any duty to investigate or
defend any such claims or suits. Lessee shall comply and shall use commercially
reasonable efforts to cause all persons using or operating FF&E or using or
occupying Facilities to materially comply with all Insurance Requirements and
Legal Requirements regarding acquiring, titling, registering, leasing, insuring,
using, occupying, operating and disposing of Facilities, and, if applicable, the
licensing of operators thereof;
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provided, that Lessee shall not be required to comply with any Legal
Requirements to the extent provided in SECTION 2.9 of this Facilities Lease.
Section 7.4. INSPECTION. Brazos or any Assignee or any authorized
representative of either may, upon five (5) days advance notice, during
reasonable business hours from time to time inspect Facilities and FF&E and
deeds, registration certificates, certificates of title and related documents
covering Facilities and FF&E wherever the same may be located, but neither
Brazos nor any Assignee shall have any duty to make any such inspection.
Section 7.5. NO LIENS. Lessee shall not permit or suffer to exist on
any Facility or FF&E any Lien, other than Liens which are the subject of a
Permitted Contest, Permitted Encumbrances and Liens placed thereon by, or
arising from, Brazos' own actions or omissions or those of any Assignee or
Affiliate of Brazos and in all such cases, approved by Lessee (provided, that
any Liens of Record, other than Liens placed thereon by, or arising from,
Brazos' own actions or those of any Assignee or Affiliate of Brazos and in all
such cases, approved by Lessee, may not exceed an aggregate amount of $1,000,000
with respect to the aggregate of the Properties, Facilities and FF&E, and an
aggregate amount of $100,000 with respect to each Facility and related Property
& FF&E), nor may it assign any right or interest herein or in any Facility or
FF&E except as provided in SECTION 19.14(a) of this Facilities Lease. Lessee
shall not without the prior written consent of Brazos and Assignee sublease or
otherwise relinquish possession of any Facility, except that, Lessee may
sublease any Facility to a Subsidiary or Guarantor, may sublease up to twenty
percent (20%) of the Facilities and FF&E to any party for any legal use and may
otherwise relinquish possession of Facility to any contractor for use in
performing work for Lessee; provided that such relinquishment of possession
shall in no way affect the obligations of Lessee or the rights of Brazos
hereunder and with respect to the Facility. Any sublease by Lessee shall be
expressly subordinate to this Facilities Lease. Brazos and Assignee shall have
the present and continuing right to collect and enjoy all rents and other sums
of money payable under any such sublease, and Lessee hereby irrevocably assigns
such rents and other sums to Brazos and Assignee for the benefit and protection
of Brazos and Assignee for all amounts due to Brazos and Assignee under this
Facilities Lease; provided that unless an Event of Default or Event of Facility
Termination shall have occurred and be continuing hereunder, Lessee shall be
entitled to collect and enjoy such rents and other sums. Lessee shall, within
thirty (30) days after the execution of any such sublease, deliver a conformed
copy thereof to Brazos and Agent. Nothing contained in this Facilities Lease
shall be construed as constituting the consent or request of Brazos, express or
implied, to or for the performance by any contractor, laborer, materialman or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to any Facility
or any part thereof. Notice is hereby given that Brazos and Agent will not be
liable for any labor, services or materials furnished or to be furnished to
Lessee, or to anyone holding any Facility or any part thereof through or under
Lessee, and that no mechanics' or other liens for any such labor, services or
materials shall attach to or affect the interest of Brazos or Assignee in and to
the Facility.
Section 7.6. INTERFERENCE. If any Lien or charge of any kind or any
judgment, decree or order of any court or other governmental authority
(including, without limitation, any state or local tax lien affecting the
Facility or FF&E), whether or not valid, shall be asserted or entered which is
reasonably likely to interfere with the due and timely payment of any sum
payable or the exercise of any of the rights or the performance of any of the
duties or responsibilities under this Facilities Lease, Lessee shall, upon
obtaining knowledge thereof or upon receipt of notice to that effect from Brazos
or Agent, promptly take such action as may be necessary to prevent or terminate
such interference.
Section 7.7. DELIVERY OF INFORMATION. Lessee shall deliver to Brazos
and Agent (i) promptly after a Responsible Officer obtains knowledge of any
Event of Default or Potential Default, a certificate of a Responsible Officer
specifying the nature and period of existence of such Event of Default or
Potential Default, and what action, if any, Lessee has taken, is taking, or
proposes to take with respect thereto, and (ii) promptly after Lessee obtains
knowledge of any and all Liens other than Permitted Encumbrances on any Facility
or FF&E or other matter which may materially adversely affect the value or
intended use of a Facility or FF&E, a detailed statement describing each such
Lien or other matter.
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ARTICLE VIII
MAINTENANCE, IMPROVEMENT AND REPAIR OF FACILITIES
Section 8.1. WARRANTIES. Brazos, so long as no Event of Default or
Event of Facility Termination shall have occurred and be continuing, hereby
assigns and agrees to make available to Lessee any and all rights Brazos may
have under any vendor's or manufacturer's warranties or undertakings with
respect to any Facility. If any Event of Default or Event of Facility
Termination shall have occurred and be continuing, the assignment of such rights
from Brazos to Lessee shall be deemed to be terminated, except to the extent
that such Event of Default or Event of Facility Termination is the result of a
breach of any vendor's warranties or undertakings, in which case the foregoing
assignment will remain in full force and effect and Lessee will be allowed a
reasonable period of time to pursue such vendor and to cure the Event of Default
or Event of Facility Termination.
Section 8.2. COSTS AND EXPENSES. Lessee shall pay all costs, expenses,
fees and charges incurred in connection with the ownership, use or occupancy of
any Facility or ownership, use and operation of any FF&E during the Lease Term
and Renewal Term, if any, thereof, including, without limitation, any rent and
other charges under an Acquired Facilities Lease. Except as otherwise provided
in ARTICLE XII hereof and, in the case of an Acquired Facilities Lease, in no
event less than to the extent required thereunder, Lessee shall at all times, at
its own expense, and subject to reasonable wear and tear, keep the Facility and
FF&E in good operating order, repair, condition and appearance. The foregoing
undertaking to maintain the Facility and FF&E in good repair shall apply
regardless of the cause necessitating repair, regardless of the availability or
adequacy of insurance or condemnation proceeds and regardless of whether Lessee
has possession of the Facility or FF&E, and as between Brazos and Lessee all
risks of damage to the Facility or FF&E are assumed by Lessee. With respect to
any Facility or FF&E, the undertaking to maintain in good repair shall include,
without limitation, all interior and exterior repairs, whether structural or
nonstructural, foreseen or unforeseen, ordinary or extraordinary and all common
area maintenance including, without limitation, removal of dirt, snow, ice,
rubbish and other obstructions and maintenance of sidewalks and landscaping.
Lessee hereby agrees to indemnify and hold Brazos and any Assignee harmless from
and against all costs, expenses, claims, losses, damages, fines or penalties,
including reasonable counsel fees, arising out of or due to Lessee's failure to
fulfill its obligations under this SECTION 8.2.
Section 8.3. PAYMENT OF TAXES. With respect to any Facility, Lessee
shall make all required reports to the appropriate taxing authorities and shall
pay prior to delinquency: (i) all taxes, assessments (which may be amortized
over the maximum period permitted by Law), levies, fees, water and sewer rents
and charges, and all other governmental, quasi-governmental and non-governmental
charges, general and special (which may be amortized over the maximum period
permitted by Law), ordinary and extraordinary, foreseen and unforeseen, which
are, at any time during the Lease Term or any Renewal Term hereof, imposed or
levied upon or assessed against (A) the Facility and FF&E, (B) any Basic Rent,
any Additional Rent or other sum payable hereunder or (C) this Facilities Lease,
the leasehold estate hereby created, or which arises in respect of the
ownership, operation, occupancy, possession or use of the Facility and FF&E,
(ii) all gross receipts or similar taxes (i.e., taxes based upon gross income
which fail to take into account all customary deductions (e.g., depreciation and
interest) relating to any Facility and FF&E) imposed or levied upon, assessed
against or measured by any Basic Rent, or any 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 acquisition, leasing or use
of the Facility and FF&E, and (iv) all charges of utilities and communications
services serving the Facility and FF&E (a "CHARGE"); provided, however, that
Lessee shall not have any obligation to pay (A) any tax on, based on or measured
by the net income or net receipts of Brazos, any Tax on, based on or measured by
the net income or net receipts, capital or net worth of any Assignee or any
Affiliate of Brazos or Assignee (each, a "LESSOR PERSON"), (B) any tax to the
extent the amount of such tax is increased as a result of any lessor Person
engaging in activities in the jurisdiction imposing such tax other than those
contemplated by this Facilities Lease, (C) any tax imposed upon or in connection
with any voluntary or involuntary transfer by a Lessor Person of any interest in
any Facility or the FF&E or any part thereof or interest therein or any interest
arising under this Facilities Lease or any other document contemplated hereby
unless such transfer results from an Event of Default, (D) any tax or Charge
imposed as a result of the gross negligence or wilful misconduct of any Lessor
Person, (E) any tax or Charge arising from any act, event or omission that
occurs after termination of this Facilities Lease, subject to SECTION 13.2
hereof, and (F) any tax to the extent of the excess of such tax over the amount
of such tax that would have been imposed in the absence of a sale, transfer, or
other disposition by a Lessor Person of any interest in any Facility or FF&E or
any part of either thereof, this Facilities Lease or any interest arising under
this Facilities Lease or any document contemplated hereby. Lessee shall not be
required to pay any estate, inheritance, transfer, federal income or similar tax
of Brazos (other than any tax referred to in clause (ii) above)
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unless such tax is imposed, levied or assessed in substitution for any other
tax, assessment, charge or levy which Lessee is required to pay pursuant to this
SECTION 8.3; provided, however, that if at any time during the term of this
Facilities Lease, the method of taxation shall be such that there shall be
levied, assessed or imposed on Brazos a capital levy or other tax directly on
the rents received therefrom, or upon the value of any Facility or FF&E or any
present or any future improvement or improvements on any Facility or FF&E, then
all such taxes, assessments, levies, or charges, or the part thereof so measured
or based, shall be payable by Lessee, but only to the extent that such taxes
would be payable if the Facility or FF&E affected were the only property of
Brazos, and Lessee shall pay and discharge the same as herein provided. Lessee
will furnish to Brazos, promptly after demand therefor, proof of payment of all
items referred to above, the payment of which is the responsibility of Lessee.
If any such assessments may legally be paid in installments, Lessee may pay such
assessment in installments. So long as, in the reasonable opinion of Lessee's
counsel, Lessee shall have reasonable grounds to contest the existence, amount,
applicability or validity of any tax Lessee is required to pay pursuant to this
Facilities Lease, Lessee may contest such tax subject to the provisions of
ARTICLE XVIII of this Facilities Lease so long as adequate reserves therefor are
maintained by Lessee.
Section 8.4. NO MATERIAL ALTERATIONS. Except as provided in SECTION 8.6
below, Lessee shall not make any material alterations to any Facility without
the prior written consent of Brazos, such consent not to be unreasonably
withheld. Any improvements or additions paid for by Brazos in accordance with
the Agreement for Facilities Lease shall become part of the Facility and shall
be evidenced by a Revised Facility Leasing Record. Any improvements or additions
to any Facility not paid for by Brazos shall become and remain the property of
Lessee if it can be removed from such Facility without materially impairing the
functioning of such Facility or its resale value, excluding such addition.
Section 8.5. MAINTENANCE. The FF&E shall be maintained, repaired,
refurbished or replaced by Lessee when necessary in order to ensure that all the
FF&E located at each Facility will include the FF&E listed on the Facility
Leasing Record with respect to such Facility or replacements for such FF&E of
the kind, quality and in the quantities included in the Facility Leasing Record
with respect to such Facility (provided that Lessee may replace FF&E with
equipment of different kind, quality and in different quantities if such
replacement equipment is of equal or greater value in Lessee's and Brazos' good
faith judgment and is included in the FF&E) and will be in such condition and
sufficient to allow such Facility to be operated in accordance with standards at
least substantially equivalent to the operation of facilities owned and operated
by Lessee. As equipment is substituted for FF&E subject to this Facilities
Lease, title to such substitute equipment shall automatically be transferred to
Brazos and such equipment shall be subject to this Facilities Lease and title to
the existing FF&E for which such equipment is being substituted shall be
released by Brazos.
Section 8.6. ADDITIONS AND ALTERATIONS. So long as no Event of Default
or Event of Facility Termination shall have occurred and be continuing, Lessee
may, at its expense, make additions to and alterations to any Facility; provided
that upon completion of such additions or alterations (i) neither the fair
market value of the Facility shall be lessened thereby nor the condition of such
Facility impaired, below the value, utility or condition thereof immediately
prior to such action (assuming such Facility was then of a condition and repair
required to be maintained pursuant to SECTION 8.2), (ii) such additions or
alterations shall not result in a change of use of such Facility, (iii) such
work shall be completed in a good and workmanlike manner and in material
compliance with all applicable Legal Requirements and Insurance Requirements and
upon completion of the work the Facility shall comply in all respects with the
requirements of this Facilities Lease and any Ground Lease and (iv) no exterior
walls of any building or other improvement constituting a part of a Facility
shall be demolished unless Lessee has made adequate provision according to
nationally recognized sound and prudent engineering and architectural standards
to preserve and maintain the structural integrity of the Facility and for the
restoration of such Facility to a structurally sound architectural whole;
provided, that Lessee shall notify Brazos of such costs that are in excess of
$100,000 for a Facility and shall not make such additions or alterations that
cost more than $100,000 for each Facility for more than five (5) such Facilities
at any one time and that such additions or alterations shall not result in any
Lien (except Permitted Encumbrances) upon such Facility. Any and all such
additions and alterations shall be and remain part of the Facility and shall be
subject to this Facilities Lease.
Section 8.7. ENVIRONMENTAL REPORTS. Upon reasonable notice, Lessee
shall furnish Brazos reports (the "REPORTS") prepared by a qualified independent
consultant, at the expense of Lessee, concerning the condition and status of any
Facility in respect of any Environmental Laws; provided that Brazos, Agent, or
Assignee has demonstrable evidence that such Facility may be affected by a
hazardous substance, a hazardous waste or an Environmental Claim not adequately
addressed in any environmental assessment previously delivered to Brazos or any
Assignee in connection with such Facility.
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ARTICLE IX
INSURANCE
Section 9.1. LIABILITY AND PROPERTY DAMAGE. Lessee shall, at its sole
cost and expense, including through self-insurance, maintain such liability and
property damage insurance with respect to all Facilities and FF&E and insurance
against loss or damage to all Facilities and FF&E of the types usually carried
by corporations engaged in the same or a similar business, of similar size as
Lessee, and owning or operating similar equipment and property and which cover
risks of the kind customarily insured against by such corporations and such
other insurance as may be required by law or as may be reasonably requested by
Brazos for purposes of assuring compliance with this ARTICLE IX, including,
without limitation, the insurance described on the Schedule of Insurance
attached hereto as EXHIBIT "A". Such insurance shall be written by financially
sound and reputable companies which are legally qualified to issue such
insurance and which are approved by Agent. Lessee may, at its cost and expense,
prosecute any claim against any insurer or contest any settlement proposed by
any insurer, and Lessee may bring any such prosecution or contest in the name of
Brazos, Lessee, or both, and Brazos will join therein at Lessee's request;
provided that Lessee shall indemnify Brazos against any losses, costs or
expenses (including reasonable attorneys' fees) which Brazos may incur in
connection with such prosecution or contest. Notwithstanding the foregoing,
Lessee at its sole option, may choose to self-insure for any liabilities or
damages which are otherwise to be covered by insurance as described herein.
Section 9.2. ADDITIONAL INSUREDS; NOTICE. Any policies of insurance,
other than Workers' Compensation and Employer's Liability Insurance, carried in
accordance with this ARTICLE IX and any policies taken out in substitution or
replacement for any such policies (i) shall name Brazos and Assignee as
additional insureds, as their respective interests may appear (but without
imposing upon any such person any obligation imposed on the insured, including,
without limitation, the liability to pay the premium for any such policy), (ii)
shall have attached to the All Risk direct physical damage policy a lender's
loss payable endorsement for the benefit of Brazos and Assignee as loss payees
and (iii) shall provide that as against Brazos and Assignee the insurers shall
waive any rights of subrogation. Lessee shall request the insurers to give
thirty (30) days advance written notice to Brazos and its assigns of any
cancellation of any insurance to be maintained under this Article. Lessee shall
give a copy to Brazos and any Assignee of any notice received by Lessee
regarding the cancellation or other termination of the insurance included in the
Schedule of Insurance attached hereto as EXHIBIT "A". Each liability policy (A)
shall be primary without right of contribution from any other insurance which is
carried by Brazos with respect to its interest as such in the Facility and (B)
shall expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured.
Section 9.3. APPLICATION OF PROCEEDS OF LOSS OR SUBSTANTIAL TAKING. Any
insurance or condemnation proceeds received as the result of the occurrence of
(i) any event of loss described in SECTION 14.3 hereof or (ii) any event of
substantial Taking described in SECTION 15.1 shall be paid to Brazos, and
disposed of as contemplated by SECTION 14.3 hereof.
Section 9.4. APPLICATION OF PROCEEDS OF OTHER THAN LOSS OR SUBSTANTIAL
TAKING. As between Lessee and Brazos, if any insurance or condemnation proceeds
received as a result of any loss or Taking, other than a loss described in
SECTION 14.3 or an event of substantial Taking described in SECTION 15.1, is
less than $100,000, it is agreed that such proceeds will be paid to Lessee to be
used for repairs, replacement, reconstruction or restoration in accordance with
the terms of SECTIONS 14.2 and 15.2 hereof. If the proceeds equal or exceed
$100,000, then the proceeds shall be deposited in a special purpose account held
by Assignee, to be used only for the purpose set forth in this paragraph, and
Lessee shall be entitled (i) to receive the amounts so deposited against
certificates, invoices or bills in form reasonably satisfactory to Brazos and
Agent, delivered to Brazos and Assignee from time to time as such work or repair
progresses, and (ii) to direct the investment of the amounts so deposited as
provided in SECTION 9.5. Any moneys remaining in the aforesaid account after
final payment for repairs has been made shall be paid to Lessee.
Section 9.5. INVESTMENT. Agent, at Lessee's instruction, shall invest
the amounts deposited with Agent pursuant to SECTION 9.4 in the following:
(i) direct obligations of the United States Government;
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(ii) interest-bearing time deposits at, or obligations of, any
Assignee;
(iii) commercial paper supported by a letter of credit issued by any
Assignee; or
(iv) money market mutual funds that invest only in government
obligations or repurchase agreements secured by government
obligations.
Such investments shall mature in such amounts and on such dates so as to provide
that amounts shall be available on the draw dates sufficient to pay the amounts
requested by and due to Lessee. Any interest earned on investments of such funds
shall be paid to Lessee. Brazos and Agent shall not be liable for any loss
resulting from the liquidation of each and every such investment and Lessee
shall be liable for such loss, if any.
Section 9.6. APPLICATION IN DEFAULT. Any amount referred to in SECTIONS
9.3 or 9.4 which is payable to Lessee shall not be paid to Lessee or, if it has
been previously paid to Lessee and not applied by Lessee as provided in SECTION
9.3 or 9.4, shall not be retained by Lessee, if an Event of Default or Event of
Facility Termination shall have occurred and be continuing. In such event, all
such amounts shall be paid to and held by Brazos as security for the obligations
of Lessee hereunder or, at Brazos' option, applied by Brazos toward payment of
any of such obligations of Lessee at the time due hereunder as Brazos may elect.
At such time as there shall not be continuing any Event of Default or Event of
Facility Termination, all such amounts at the time held by Brazos in excess of
the amount, if any, which Brazos shall have elected to apply as above provided
shall be applied as provided in SECTIONS 9.3 or 9.4.
Section 9.7. CERTIFICATES. Subject to Lessee's right to self-insure as
set forth hereinabove, on or before the execution of this Facilities Lease, and
annually on or before the anniversary of the date of this Facilities Lease,
Lessee will furnish to Brazos and Agent certificates or other evidence
reasonably acceptable to Brazos and Agent certifying that the insurance then
carried and maintained on each Facility complies with the terms hereof.
Section 9.8. COVENANT TO KEEP INSURANCE IN Force. Lessee covenants that
it will not use, occupy or operate any Facility or FF&E or permit the use,
occupancy or operation of any Facility or FF&E at a time when the insurance
required by this ARTICLE IX is not in force with respect to such Facility or
FF&E.
ARTICLE X
INDEMNITIES
Section 10.1. INDEMNIFIED PERSONS. Lessee shall indemnify and hold
harmless Brazos, each general and limited partner of Brazos, any Assignee, any
successor or successors, and any Affiliate of each of them, and their respective
officers, directors, incorporators, shareholders, partners (general and limited,
including without limitation, the general and limited partners of Brazos),
employees, agents and servants (each of the foregoing, an "INDEMNIFIED PERSON")
from and against all liabilities, taxes (except mortgage taxes), losses,
obligations, claims, damages, penalties, causes of action, suits, costs and
expenses (including, without limitation, reasonable attorneys' and accountants'
fees and expenses) or judgments of any nature relating to or in any way arising
out of:
(a) The ordering, delivery, acquisition, construction, title on
acquisition, rejection, installation, possession, titling, retitling,
registration, reregistration, custody by Lessee of title and registration
documents, ownership, use, non-use, misuse, lease, operation, transportation,
repair, control or disposition of any Facility or FF&E leased or subleased or to
be leased or subleased hereunder, (i) except to the extent that such costs are
included in the Acquisition Cost of such Facility or FF&E and (ii) except for
any general administrative expenses of Brazos;
(b) The assertion of any claim or demand based upon any infringement or
alleged infringement of any patent or other right, by or in respect of any
Facility or FF&E; provided, however, that upon request of Lessee, Brazos will
make available to Lessee Brazos' rights under any similar indemnification
arising from any manufacturer's or vendor's warranties or undertakings with
respect to any Facility or FF&E;
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(c) Subject to SECTION 8.3, all U.S. Federal, state, county, municipal,
foreign or other fees and taxes of whatsoever nature arising from or relating to
ownership of the Facility or FF&E, including but not limited to license,
qualification, franchise, sales, use, gross income, gross receipts, ad valorem,
business, personal property, real estate, value added, excise, motor vehicle,
occupation fees and stamp or other taxes or tolls of any nature whatsoever, and
penalties and interest thereon, whether assessed, levied against or payable by
Brazos or otherwise, with respect to any Facility or FF&E or the acquisition,
purchase, sale, rental, use, operation, control, ownership or disposition of any
Facility or FF&E (including without limitation any claim by any governmental
authority for transfer tax, transfer gains tax, filing or other similar taxes or
fees in connection with the acquisition of any Facility or FF&E by Brazos or
otherwise in connection with this Facilities Lease) or measured in any way by
the value thereof or by the business of, investment in, or ownership by Brazos
with respect thereto; provided that this indemnity shall not apply to (i) net
income taxes imposed by any state or local taxing authority, (ii) U.S. Federal
net income, alternative minimum taxes, or capital gains taxes or (iii) state and
local net income or capital gains taxes which are imposed by a state or locality
because of a relationship between Brazos and such state or locality unrelated to
ownership of the Facility or FF&E or to this Facilities Lease; and provided
further, that to the extent Lessee's obligations hereunder include indemnifying
Brazos for net income taxes imposed by a state or local taxing authority, such
obligations shall be limited to indemnifying Brazos for the inability,
disallowance or other loss of deductions relating to ownership of the Facilities
or FF&E customarily allowed in computing net income (e.g., interest expense,
depreciation, financing, administrative and other fees and expenses);
(d) Any violation or alleged violation (other than an alleged violation
alleged by Brazos) by Lessee of this Facilities Lease or of any contracts or
agreements to which Lessee is a party or by which it is bound or any laws,
rules, regulations, orders, writs, injunctions, decrees, consents, approvals,
exemptions, authorizations, licenses and withholdings of objection, of any
governmental or public body or authority and all other Legal Requirements,
including, without limitation, any Legal Requirements with respect to the
environment or the regulation of hazardous materials or substances, or any
breach of a representation or warranty by Lessee under this Facilities Lease;
(e) Any Environmental Claim or requirement of Environmental Law
concerning or relating to any Facility, or the operations or business in respect
of any Facility; or
(f) Any claim against Brazos' title or Assignee's interest in any
Facility or FF&E to the extent such claim is not fully paid by title insurance.
Section 10.2. PAYMENTS. Lessee shall forthwith upon demand reimburse
any Indemnified Person for any sum or sums expended with respect to any of the
items set forth in SECTION 10.1 or, upon request from any Indemnified Person,
shall pay such amounts directly. Any payment made to or on behalf of any
Indemnified Person pursuant to this ARTICLE X shall be increased to such amount
as will, after taking into account all taxes imposed with respect to the accrual
or receipt of such payment (as the same may be increased pursuant to this
sentence), equal the amount of the payment, reduced by the amount of any savings
in such taxes actually realized by the Indemnified Person as a result of the
payment or accrual of the amounts in respect of which the payment to or on
behalf of the Indemnified Person hereunder is made. Any Indemnified Person
seeking indemnification under this ARTICLE X shall give Lessee written evidence
supporting the amount demanded, and such written evidence shall be deemed to be
conclusive, absent manifest error. To the extent that Lessee in fact indemnifies
any Indemnified Person under the indemnity provisions of this Facilities Lease,
Lessee shall be subrogated to such Indemnified Person's rights in the affected
transaction and shall have a right to determine the settlement of claims
therein.
Section 10.3. CONTINUING INDEMNIFICATION. The indemnities contained in
this ARTICLE X shall not be affected by and shall survive any termination of
this Facilities Lease as a whole or in respect of any Facility or FF&E leased
hereunder or any failure or refusal of Lessee to accept any Facility or FF&E
constructed, acquired or ordered pursuant to the Agreement for Facilities Lease.
Section 10.4. LIMITATIONS. Brazos and Lessee agree that the terms of
any state Law which may affect the rights of Brazos and Lessee under this
ARTICLE X may be set forth in the Memorandum of Facilities Lease for the
affected Facility or FF&E and shall apply as though set forth in full in this
Facilities Lease.
Section 10.5. LITIGATION. If any claim, action, proceeding or suit is
brought against an Indemnified Person with respect to which Lessee would be
required to indemnify such Indemnified Person, Lessee shall have the right to
assume the defense thereof, including the employment at its expense of counsel;
provided that Lessee shall not have such right, to the
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extent that such Indemnified Person shall deliver to Lessee a written notice
waiving the benefits of the indemnification of such Indemnified Person provided
by this ARTICLE X in connection with such claim, action, proceeding or suit.
Notwithstanding the foregoing, if (i) any claim, action, proceeding or suit is
brought against an Indemnified Person who is an individual, (ii) the action
threatens to restrain or adversely affect the conduct of the business of the
Indemnified Person, but not the business of Brazos' ownership of the Facility or
FF&E under this Facilities Lease, (iii) the claim, action, proceeding or suit
seeks damages of more than $500,000, or (iv) independent counsel to an
Indemnified Person shall conclude that there may be defenses available to the
Indemnified Person which may conflict with those available to Lessee, Lessee
shall not have the right to assume the defense of any such action on behalf of
the Indemnified Person if such Indemnified Person chooses to defend such action
(with counsel reasonably acceptable to Lessee), and all reasonable costs,
expenses and attorneys' fees incurred by the Indemnified Person in defending
such action shall be borne by Lessee. Notwithstanding the assumption of its
defense by Lessee pursuant to this paragraph, any Indemnified Person shall have
the right to employ separate counsel and to participate in its defense, but the
fees and expenses of such counsel shall be borne by the Indemnified Person. In
addition, Lessee will not be liable for any settlement of any claim, action,
proceeding or suit unless Lessee has consented thereto in writing. Any decision
by an Indemnified Person to employ its own counsel rather than counsel selected
by Lessee (whether or not at Lessee's expense) shall in no way affect any rights
of such Indemnified Person otherwise arising under this ARTICLE X.
ARTICLE XI
RENEWAL AND TERMINATION
Section 11.1. LESSEE'S RIGHT TO TERMINATE. So long as no Potential
Default, Potential Property Termination, Event of Default or Event of Facility
Termination has occurred and is continuing and, with respect to all Facilities
and all FF&E, Lessee shall have the right, at any time during the Lease Term or
any Renewal Term, upon not less than thirty (30) days' written notice to Brazos
and Assignee, to terminate on the Basic Rent Payment Date specified in such
notice this Facilities Lease with respect to all Facilities and all FF&E, and
either (i) purchase all Facilities and all FF&E, for cash at their respective
Acquisition Cost or (ii) with the consent of Brazos and Agent, arrange, at its
own cost and expense, for all Facilities and all FF&E, to be sold for cash
pursuant to SECTION 11.4 and with the consequences therein provided, except that
such sale must occur on the Basic Rent Payment Date stipulated in the written
notice contemplated by this SECTION 11.1, and Lessee shall have such right only
if (a) indemnity payments to Brazos pursuant to SECTION 10.1(c) shall have been
required and can reasonably be expected to occur subsequently and such payments
are or would be in the aggregate (taking into account the recurring nature of
the payments) sufficient in the reasonable judgment of Lessee to render this
Facilities Lease uneconomic with respect to all Facilities and all FF&E, (b) due
to a change in accounting rules or treatment, this Facilities Lease is no longer
treated as an operating lease for accounting purposes or (c) there exists an
event of default under the Credit Agreement and the payment obligations of
Brazos thereunder are declared to be immediately due and payable.
Section 11.2. BRAZOS' RIGHT TO TERMINATE. Brazos shall have the right
upon thirty (30) days prior written notice to Lessee, to terminate the
Facilities Lease of all Facilities and all FF&E as of a Basic Rent Payment Date
stipulated in such notice if at any time: (1) by reason of a nexus between a
state or local taxing jurisdiction and any Facility or FF&E or the activities of
any user (other than Brazos) of the Facility or FF&E, Brazos incurs, or, in its
reasonable judgment, in the future would incur, a state or local tax which, in
its sole but reasonable judgment, renders the Facilities Lease uneconomic; or
(2) the Agreement for Facilities Lease or any other instrument relating to this
Facilities Lease shall be deemed to require the payment or deemed to permit the
collection of interest in excess of the Maximum Rate and any such interest in
excess of such Maximum Rate cannot be spread and allocated either to the
preceding or subsequent periods in which such excess interest is to be paid or
collected pursuant to SECTION 19.8 of this Facilities Lease. In the event of a
termination of this Facilities Lease with respect to all Facilities and all FF&E
pursuant to this SECTION 11.2, Lessee shall either (i) purchase, on the Basic
Rent Payment Date stipulated in the written notice contemplated by this SECTION
11.2, all Facilities and all FF&E for cash at their respective Acquisition Cost
or (ii) with the consent of Brazos and Agent, arrange, at its own cost and
expense, for all Facilities and all FF&E to be sold for cash pursuant to SECTION
11.4 and with the consequences therein provided, except that such sale must
occur on the Basic Rent Payment Date stipulated in the written notice
contemplated by this SECTION 11.2.
Section 11.3. RENEWAL.
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(a) Not later than twelve months prior to the end of the Lease Term or
any Renewal Term, if any, as applicable, Brazos, with the consent of Agent if it
is electing to renew, shall give notice to Lessee as to whether it desires to
renew the lease with respect to all Facilities and all FF&E and the terms and
conditions (including the rental amounts) of any such renewal. Not later than
nine months prior to the end of the Lease Term or Renewal Term, as applicable,
Lessee shall give notice to Brazos as to whether it will renew or not renew the
lease. Failure of Lessee to give such notice shall be deemed an election not to
renew the lease. If the parties elect to renew the Lease Term as set forth
above, Brazos will use commercially reasonable efforts to obtain financing, on
terms and conditions consistent with the Credit Agreement and partnership
agreement of Brazos or otherwise acceptable to Brazos and Lessee, for the
Renewal Term. So long as (i) no Event of Default or Event of Facility
Termination has occurred and is continuing, and (ii) Brazos shall have received
a commitment for financing through the last day of the Renewal Term (as defined
below) from the Agent under the Credit Agreement, the lease shall be renewed for
a term (the "RENEWAL TERM") equal to five (5) years in the case of the initial
Renewal Term and one year in the case of subsequent Renewal Terms commencing on
the first day of the calendar month following the last day of the Lease Term or
Renewal Term, as applicable, thereof; provided, however, the Lease Term or
Renewal Term, as applicable, shall not be renewed if on the first day of the new
Renewal Term the lender(s) fails to fund under its commitment pursuant to the
terms of such commitment for any reason. Lessee may give advance notice of its
intention to renew this Facilities Lease with respect to all Facilities and all
FF&E for successive Renewal Terms. Upon acceptance by Brazos and Agent of such
successive Renewal Terms, Lessee shall be bound by such renewals for the entire
period of successive Renewal Terms.
(b) If this Facilities Lease is not being renewed, Lessee shall, at its
option, either (i) purchase all Facilities and all FF&E for cash at their
respective Acquisition Cost during the period from one (1) month before the end
of the Lease Term or Renewal Term, as applicable, to five (5) Business Days
before the end of the Lease Term or Renewal Term, as applicable or (ii) arrange,
at its own cost and expense, for all Facilities and all FF&E to be sold for cash
pursuant to SECTION 11.4 and with the consequences therein provided during the
period from six (6) months before the end of the Lease Term or Renewal Term, as
applicable, to one (1) month before the end of the Lease Term or Renewal Term,
as applicable. Not later than eight months prior to the end of the Lease Term or
Renewal Term, as applicable, Lessee shall give notice to Brazos of its election
to either purchase or arrange for the sale of all of the Facilities and FF&E to
a third party. Any notice given by Lessee pursuant to the preceding sentence
shall be irrevocable, except that Lessee may revoke the election to have a
Facility or FF&E sold to a third party if Lessee purchases such Facility or
FF&E.
Section 11.4. SALES TO THIRD PARTIES.
(a) If Lessee exercises its right to arrange for a sale of a Facility
to a third party pursuant to SECTION 11.1, 11.2 or 11.3, Brazos shall receive
the proceeds of sale and:
(i) if the proceeds of sale are greater than the
Acquisition Cost of the Facility sold, Brazos shall
pay to Lessee the amount by which such proceeds
exceed such Acquisition Cost;
(ii) if the proceeds of sale are equal to or less than the
Acquisition Cost of the Facility sold, but greater
than or equal to eighteen and one-half percent
(18.5%) of the Acquisition Cost of such Facility,
Lessee shall pay to Brazos an amount equal to (A)
such Acquisition Cost less (B) the proceeds of such
sale; and
(iii) if the proceeds of sale are less than fifteen percent
(15%) of the Acquisition Cost of the Facility sold,
Lessee shall pay to Brazos an amount equal to the sum
of (A) eighty-one and one-half percent (81.5%) of
such Acquisition Cost and (B) the amount specified to
Lessee in the notice delivered pursuant to SECTION
11.5 by which the residual value of such Facility has
been reduced by wear and tear in excess of that
attributable to normal use, plus the amount by which,
in the good faith judgment of Brazos, the proceeds of
sale for such Facility has been reduced due to Liens
attaching to such Facility at the time of sale.
For purposes of this SECTION 11.4, in connection with the sale of a Facility
"proceeds of sale" shall mean the aggregate proceeds from the sale of such
Facility without reduction for any amounts paid by Lessee.
(b) All payments and credits referred to in paragraph (a) above shall
be made on the date of the sale of such Facility, and the parties shall account
to each other for such payments and credits. In consideration for the receipt by
Brazos
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of the proceeds of sale and all other amounts then due and owing hereunder,
Brazos shall transfer title to such Facility to the purchaser at the sale
designated by Lessee pursuant to a special warranty bill of sale. In the event
of a sale pursuant to this SECTION 11.4, neither Lessee nor any Affiliate of
Lessee shall purchase the Facility. Any Facility sold to a third party pursuant
to this paragraph (b) shall, unless SECTION 11.4 (a)(i) applies, be free of any
Liens at the time of sale, including Liens which would otherwise be Permitted
Encumbrances if such Liens would reduce the Value to the purchaser of such
Facility; provided, however, Lessee shall have the option to obtain affirmative
title insurance, if available, to insure over such Lien or to make other
arrangements acceptable to such purchaser.
(c) If a Facility and the related Property are sold to the same third
party, the proceeds of sale shall be allocated prorata between such Facility and
Property based on the Acquisition Cost of such Facility and the Acquisition Cost
(as defined in the Ground Lease) of such Property unless (a)(iii) above applies,
in which case, Agent may allocate the proceeds in any manner acceptable to
Agent.
(d) In the event Lessee exercises the third party sale option then, as
soon as practicable and in all events not less than sixty (60) days prior to the
end of the Lease Term or Renewal Term, as applicable, Lessee at its expense
shall cause to be delivered to Brazos a Phase I environmental site assessment
for each of the Properties recently prepared (no more than thirty (30) days old
prior to the date of delivery) by an independent recognized professional
reasonably acceptable to Brazos and in form, scope and content reasonably
satisfactory to Brazos. In the event that Brazos shall not have received such
environmental site assessment by the date sixty (60) days prior to the end of
the Lease Term or Renewal Term or in the event that such environmental
assessment shall reveal the existence of any material violation of Environmental
Laws, other material environmental violations or potential material
environmental violation (with materiality determined in each case by Brazos and
Agent in their reasonable discretion), then thirty (30) days prior to the end of
the Lease Term or Renewal Term, as the case may be, Lessee shall pay to Brazos
an amount equal to the Acquisition Cost for all the Properties and any and all
other amounts due and owing hereunder. Upon receipt of such payment and all
other amounts due under the Lease Documents, Brazos shall transfer to Lessee all
of Brazos's right, title and interest in and to all the Properties in accordance
with this Facilities Lease.
Section 11.5. ADVISEMENT. At least thirty (30) days prior to any sale
of a Facility pursuant to SECTION 11.4, Lessee shall deliver to Brazos a copy of
the purchase contract for such Facility. If such sale will result in the
applicability of SECTION 11.4(a)(iii), Brazos may arrange for a sale of such
Facility to be made to a purchaser designated by Brazos, if such purchaser will
pay an amount sufficient to render SECTION 11.4(a)(iii) inapplicable, or Brazos
may send Lessee a bill as described in the paragraph below for the amount by
which the residual value of such Facility has been reduced by wear and tear in
excess of that attributable to normal use and such amount shall be due and
payable within ten (10) days after receipt of such bill. Unless Brazos shall
arrange for the sale of such Facility and shall give Lessee notice thereof
within thirty (30) days of Brazos' receipt of the purchase contract, Lessee may
proceed with the sale to a purchaser designated by it; provided that on or
before the date of such sale Lessee shall pay to Brazos the amount set forth in
the bill for excess wear and tear. Within thirty (30) days of Lessee's receipt
of Brazos' notice provided for in the preceding sentence, Lessee may arrange for
such sale to be made to another purchaser designated by it, if such purchaser
shall pay an amount sufficient to render SECTION 11.4(a)(iii) inapplicable.
Upon any sale of the Facility or FF&E to any third party hereunder,
Lessee (A) shall abandon the Facility or FF&E to the possession of such third
party at the closing, subject only to the Liens existing at such time, and (B)
shall deliver the Facility or FF&E in the same physical and operating condition
as on the first day of the Lease Term, less wear and tear attributable to normal
use and occupancy for an approved use, and in the manner required hereby. Upon
the end of the Lease Term or any Renewal Term, unless Lessee purchases the
Facility or FF&E, Lessee shall surrender to Brazos all keys to the Facilities
and FF&E and give Brazos the combination of all safes or safe cabinets, if any,
which are to remain in the Facility. If Lessee does not purchase the Facility or
FF&E pursuant to the terms hereof, and fails to relinquish possession of the
Facility or FF&E in the condition required by this Section, Lessee shall pay to
Brazos, as Additional Rent, the greater of (A) the costs and expenses as
determined by Brazos with the approval of Agent as necessary to repair and
restore the Facility or FF&E to the condition required by this Section, or (B)
the reduction in fair market sales value attributable to such failure to deliver
the Facility or FF&E in the condition required by this Section as reasonably
determined by Brazos with the approval of Agent.
Section 11.6. ADDITIONAL PAYMENTS. In connection with any purchase or
sale of a Facility or FF&E under this ARTICLE XI, on or before the date such
purchase or sale occurs, Lessee shall pay to Brazos, in addition to any purchase
price
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payable, all Basic Rent payable, any Additional Rent, all amounts owing under
SECTION 11.4, and other amounts owing hereunder.
Section 11.7. TERMINATION OF FACILITIES LEASE. Upon receipt by Brazos
of the purchase price payable in connection with any sale or purchase of any
Facility or FF&E under this ARTICLE XI, together with all additional payments
required under SECTION 11.6 with respect to such Facility or FF&E, this
Facilities Lease shall terminate with respect to such Facility or FF&E.
Section 11.8. SURRENDER OF FACILITY. Subject to the provisions of this
ARTICLE XI and ARTICLES XII, XIII, XIV and XV hereof, upon termination of the
lease of any Facility or FF&E hereunder, Lessee shall surrender such Facility or
FF&E to Brazos. In connection with the sale of any Facility or FF&E by Brazos,
in consideration of the receipt of the purchase price and all other amounts
which may be owing to Brazos under SECTION 11.6, Brazos shall execute and
deliver all instruments of transfer necessary to convey Brazos' interest to the
purchaser of such Facility or FF&E. Each Facility or FF&E shall be surrendered
in the condition required by SECTION 8.2. Any cost of removal and delivery of
FF&E to Brazos shall be paid by Lessee.
ARTICLE XII
ECONOMIC DISCONTINUANCE
Section 12.1. UNECONOMIC FACILITY. In addition to Lessee's right to
terminate under SECTION 11.1 hereof, if, at any time during its Lease Term, in
the good faith judgment of Lessee, any Facility or FF&E shall have become
uneconomic for continued use and occupancy by Lessee (such Facility or FF&E
hereinafter sometimes called an "UNECONOMIC FACILITY"), then Lessee shall
deliver to Brazos and Assignee a written notice (an "UNECONOMIC NOTICE")
containing (i) notice of Lessee's intention to terminate the Facilities Lease as
to such Uneconomic Facility as of a Basic Rent Payment Date specified in such
notice, which Basic Rent Payment Date shall be within sixty (60) days of such
notice, and (ii) a certificate of an officer of Lessee stating that Lessee has
determined that such Facility or FF&E has become uneconomic for continued use
and occupancy by Lessee; provided that Lessee may not deliver an Uneconomic
Notice to Brazos under the terms of this ARTICLE XII for one (1) or more
Facilities and FF&E, the aggregate Acquisition Costs of which exceed ten percent
(10%) of the aggregate Acquisition Costs of all Facilities and FF&E; and
provided, further, that if at the end of the Lease Term the aggregate
Acquisition Costs of Facilities and FF&E for which Lessee has given Brazos an
Uneconomic Notice exceeds ten percent (10%) of the aggregate Acquisition Costs
of all Facilities and FF&E, Lessee shall not have the right to sell any
Facilities or FF&E to a third party pursuant to SECTION 11.4. Lessee shall
terminate this Facilities Lease with respect to such Uneconomic Facility and
shall either purchase the Uneconomic Facility for cash at its Acquisition Cost
on the Basic Rent Payment Date specified in such notice or sell such Uneconomic
Facility on such date; provided, that if the proceeds of the sale of the
Uneconomic Facility are less than the Acquisition Cost of such Uneconomic
Facility, then in addition to the purchase price Lessee shall pay to Brazos an
amount equal to such Acquisition Cost less the proceeds of such sale and, if
such proceeds of sale exceed the Acquisition Cost, Brazos will pay any excess to
Lessee.
Section 12.2. PAYMENT. In connection with any purchase or sale pursuant
to this ARTICLE XII, on the Basic Rent Payment Date upon which such purchase or
sale occurs, Lessee shall pay or cause the purchaser to pay to Brazos the
purchase price, and Lessee shall pay all Basic Rent payable and any Additional
Rent and other amounts owing hereunder.
Section 12.3. NO RIGHT TO USE. If Lessee terminates this Facilities
Lease with respect to any Facility pursuant to this ARTICLE XII, neither Lessee
nor any Affiliate of Lessee shall have the right for one year following the date
of such termination to use, and shall not use, such Facility as a Facility.
ARTICLE XIII
EVENTS OF DEFAULT
Section 13.1. EVENTS OF DEFAULT. Any of the following events of default
shall constitute an "EVENT OF DEFAULT" and shall give rise to the rights on the
part of Brazos described in SECTION 13.2 hereof:
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(a) FAILURE TO MAKE PAYMENTS. Failure of Lessee to pay amounts due to
Brazos at the time of any scheduled sale of a Facility hereunder, failure of
Lessee to pay any payment due hereunder, including without limitation, Basic
Rent or Additional Rent for more than five (5) Business Days after such payment
is due pursuant to ARTICLE VI hereof.
(b) FAILURE TO MAINTAIN INSURANCE. Failure of Lessee to maintain the
insurance required by ARTICLE IX hereof, or default in the performance of the
covenant contained in SECTION 9.4 hereof.
(c) OTHER DEFAULTS. Lessee shall default in the performance or
observance of any other term, covenant, condition or obligation contained in
this Facilities Lease or any Consent and such default shall (i) continue for
thirty (30) days after written notice shall have been given to Lessee by Brazos
or any Assignee specifying such default and requiring such default to be
remedied or (ii) if such default is of a nature that it is not capable of being
cured within such 30-day period, Lessee shall not have diligently commenced
curing such default, proceeded diligently and in good faith thereafter to
complete curing such default, or cured such default within sixty (60) days from
the date of written notice.
(d) BANKRUPTCY. (i) The entry of a decree or order for relief in
respect of Lessee or Guarantor by a court having jurisdiction in the premises in
an involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Lessee or Guarantor or of any
substantial part of Lessee's or Guarantor's property, or ordering the winding up
or liquidation of Lessee's or Guarantor's affairs, and the continuance of any
such decree or order unstayed and in effect for a period of sixty (60)
consecutive days; or (ii) the general suspension or discontinuance of Lessee's
or Guarantor's business operations, its insolvency (however evidenced) or its
admission of insolvency or bankruptcy, or the commencement by Lessee or
Guarantor of a voluntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or the consent by it to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Lessee or Guarantor or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the failure of Lessee or Guarantor generally to pay its
debts as such debts become due, or the taking of corporate action by Lessee or
Guarantor in furtherance of any such action.
(e) PAYMENT OF OBLIGATIONS. A default or event of default, the effect
of which results in the holder or holders of any Indebtedness of Lessee or
Guarantor, or a trustee or agent on behalf of such holder or holders,
accelerating Indebtedness prior to its stated maturity shall occur under the
provisions of any instrument evidencing Indebtedness in excess of $1,000,000 of
Lessee or Guarantor (or under the provisions of any agreement pursuant to which
such instrument was issued).
(f) MISREPRESENTATIONS. Any representation or warranty made by Lessee
in this Facilities Lease or any Consent or which is contained in any
certificate, document or financial or other statement furnished under or in
connection with this Facilities Lease proves to be false or misleading in any
material respect when made or deemed made.
(g) DEFAULT UNDER LEASE DOCUMENTS. An Event of Default (as defined in
the Agreement for Facilities Lease, Agreement for Ground Lease or Ground Lease)
shall occur and be continuing under the Agreement for Facilities Lease,
Agreement for Ground Lease or Ground Lease, respectively.
(h) OTHER AGREEMENTS. Lessee shall default in any material respect in
the performance or observance of any term, covenant, condition or obligation
contained in any other material written agreement executed by Lessee with or for
the benefit of Brazos or Agent and such default shall not have been cured within
any applicable grace or cure period and shall be continuing.
(i) UNAUTHORIZED ASSIGNMENT. Any assignment by Lessee of any interest
in this Facilities Lease other than in accordance with the terms of this
Facilities Lease.
(j) GUARANTY. An Event of Default under the Guaranty shall occur and be
continuing or any representation or warranty made by Guarantor in the Guaranty,
any Consent or any document contemplated hereby or thereby proves to be false or
misleading in any material respect when made or deemed made, or Guarantor
defaults in the performance of any term, condition, covenant or obligation
contained in the Guaranty or any Consent, or any default or event of default
occurs thereunder and such default shall not have been cured within any
applicable grace or cure period and shall be continuing
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or any provision of any Guaranty shall for any reason be terminated or
challenged or cease to be in full force and effect and a valid and binding
obligation of the Guarantor, or the Guarantor shall challenge or repudiate in
writing its liability thereunder.
(k) FACILITY TERMINATION. The occurrence of any Event of Facility
Termination with respect to a Facility.
(l) DEFAULT UNDER CORPORATE CREDIT DOCUMENTS. The occurrence and
continuation of any Default under any of the Corporate Credit Documents.
Section 13.2. RIGHTS UPON DEFAULT. Upon the occurrence and continuation
of any Event of Default Brazos or any Assignee may in its discretion declare
this Facilities Lease to be in default and do, to the extent permitted by
applicable law, any one or more of the following:
(a) Terminate this Facilities Lease as to any or all Facilities leased
hereunder;
(b) Whether or not this Facilities Lease as to any Facility is
terminated, take immediate possession of and remove any or all FF&E and other
equipment or property of Brazos in the possession of Lessee, wherever situated,
and for such purpose, enter upon any premises without liability to Lessee for so
doing;
(c) Whether or not any action has been taken under (a) or (b) above,
sell any Facility or Brazos' interest in any Acquired Facilities Lease (with or
without the concurrence or request of Lessee);
(d) Hold, use, occupy, operate, remove, lease or keep idle any or all
Facilities as Brazos in its sole discretion may determine, without any duty to
account to Lessee with respect to any such action or inaction or for any
proceeds thereof;
(e) Exercise any other right or remedy which may be available under
applicable law and in general proceed by appropriate judicial proceedings,
either at law or in equity, to enforce the terms hereof or to recover damages
for the breach hereof; and
(f) Declare an Event of Facility Termination as to any or all
Facilities and/or FF&E leased hereunder.
Suit or suits for the recovery of any default in the payment of any sum
due hereunder or for damages may be brought by Brazos from time to time at
Brazos' election, and nothing herein contained shall be deemed to require Brazos
to await the date whereon this Facilities Lease or the term hereof would have
expired by limitation had there been no such default by Lessee or no such
termination or cancellation.
The receipt of any payments under this Facilities Lease by Brazos with
knowledge of any breach of this Facilities Lease by Lessee or of any default by
Lessee in the performance of any of the terms, covenants or conditions of this
Facilities Lease, shall not be deemed to be a waiver of any provision of this
Facilities Lease.
No receipt of moneys by Brazos from Lessee after the termination or
cancellation hereof in any lawful manner shall reinstate, continue or extend the
Lease Term or any Renewal Term, or affect any notice theretofore given to
Lessee, or operate as a waiver of the right of Brazos to enforce the payment of
Basic Rent or Additional Rent or other charges payable hereunder, or operate as
a waiver of the right of Brazos to recover possession of any Facility or FF&E by
proper suit, action, proceedings or remedy; it being agreed that, after the
service of notice to terminate or cancel this Facilities Lease, and the
expiration of the time therein specified, if the default has not been cured in
the meantime, or after the commencement of suit, action or summary proceedings
or of any other remedy, or after a final order, warrant or judgment for the
possession of the Facility, Brazos may demand, receive and collect any moneys
payable hereunder, without in any manner affecting such notice, proceedings,
suit, action, order, warrant or judgment; and any and all such moneys so
collected shall be deemed to be payments on account for the use, operation and
occupation of the Facility, or at the election of Brazos, on account of Lessee's
liability hereunder. Acceptance of the keys to any Facility, or any similar act,
by Brazos, or any agent or employee, during the term hereof, shall not be deemed
to be an acceptance of a surrender of any Facility unless Brazos shall consent
thereto in writing.
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If, after an Event of Default shall have occurred, Lessee fails to
surrender promptly after written request by Brazos or converts or destroys any
Facility, Lessee shall be liable to Brazos for all Basic Rent and Additional
Rent then due and payable with respect to such Facility, all other amounts
payable under this Facilities Lease, the Acquisition Cost of such Facility as of
the date of such request, conversion or destruction and all losses, damages and
expenses (including, without limitation, attorneys' fees and expenses) sustained
by Brazos by reason of such Event of Default and the exercise of Brazos'
remedies with respect thereto.
If, after an Event of Default Brazos repossesses any Facility,
notwithstanding any termination of this Facilities Lease, Lessee shall be liable
for and Brazos may recover from Lessee all Basic Rent accrued and any Additional
Rent owing with respect to such Facility to the date of such repossession, all
other amounts payable under this Facilities Lease, and all losses, damages and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) sustained by Brazos by reason of such Event of Default and the
exercise of Brazos' remedies with respect thereto. In addition, Brazos may sell
Brazos' interest in any Facility upon any terms that Brazos deems satisfactory,
free of any rights of Lessee or any person claiming through or under Lessee. In
the event of such sale, in addition to the amounts payable under the first
sentence of this paragraph, Brazos shall be entitled to recover from Lessee, as
liquidated damages, and not as a penalty, an amount equal to the Acquisition
Cost of any Facility so sold, minus the net proceeds of such sale (deducting
from the gross proceeds of such sale any reasonable legal expenses, commissions,
sales taxes or other costs or expenses associated with such sale) received by
Brazos; provided, however, if the proceeds of such sale are in excess of the
amount payable to Brazos pursuant hereto, such excess shall be the property of
Lessee. In lieu of such sale, in addition to the amounts payable under the first
sentence of this paragraph, Brazos may cause Lessee to pay to Brazos, and Lessee
shall pay to Brazos, as liquidated damages, and not as a penalty, an amount
equal to the Acquisition Cost of any or all of the Facilities, and upon payment
in full of all such amounts Brazos shall transfer all of Brazos' right, title
and interest in and to the Facility to Lessee.
Brazos may (i) sell all or any part of the Facility or FF&E at public
or private sale, as Brazos may determine, free and clear of any rights of the
Lessee and without any duty to account to the Lessee with respect to such action
or inaction or any proceeds with respect thereto (except to the extent required
by clause (ii) below if Brazos shall elect to exercise its rights thereunder) in
which event the Lessee's obligation to pay Basic Rent hereunder for periods
commencing after the date of such sale shall be terminated or proportionately
reduced, as the case may be; and (ii) if Brazos shall so elect, demand that the
Lessee pay to Brazos, and the Lessee shall pay to Brazos, on the date of such
sale, as liquidated damages for loss of a bargain and not as a penalty (the
parties agreeing that Brazos' actual damages would be difficult to predict, but
the aforementioned liquidated damages represent a reasonable approximation of
such amount) (in lieu of Basic Rent due for periods commencing on or after the
Basic Rent Payment Date coinciding with such date of sale (or, if the sale date
is not a Basic Rent Payment Date, the Basic Rent Payment Date next preceding the
date of such sale)), an amount equal to (A) the excess, if any, of (1) the
Acquisition Cost calculated as of such Basic Rent Payment Date (including all
Rent due and unpaid to and including such Basic Rent Payment Date), over (2) the
net proceeds of such sale, if any (that is, after deducting all reasonable costs
and expenses incurred by Brazos, the Agent and the Assignees incident to such
conveyance, including, without limitation, repossession costs, brokerage
commissions, prorations, transfer taxes, fees and expenses for counsel, title
insurance fees, survey costs, recording fees, and any repair or alteration
costs); plus (B) all damages, reasonable costs and expense of Brazos under the
Ground Lease; plus (C) interest at the overdue rate provided in SECTION 6.3
hereof on the foregoing amount from such Basic Rent Payment Date until the date
of payment.
Brazos may exercise any other right or remedy that may be available to
it under applicable law, or proceed by appropriate court action (legal or
equitable) to enforce the terms hereof or to recover damages for the breach
hereof. Separate suits may be brought to collect any such damages for any
period(s), and such suits shall not in any manner prejudice Brazos' right to
collect any such damages for any subsequent period(s), or Brazos may defer any
such suit until after the expiration of the Term, in which event such suit shall
be deemed not to have accrued until the expiration of the Lease Term.
In the event that a court of competent jurisdiction rules that this
Facilities Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties pursuant to SECTION 3.3, and subject
to the availability of such remedy under applicable law, then Brazos and the
Lessee agree that the Lessee hereby grants, bargains, sells, transfers, assigns
and conveys unto the trustee named as such in the Lien granted by Brazos to
Agent, as trustee and herein referred to as "trustee", and its successors
(Brazos hereby reserving the right to from time to time, with or without cause
and at Brazos' sole discretion, by instrument in writing, substitute a successor
or successors to trustee, which instrument, executed by Brazos duly acknowledged
and recorded in the office of the recorder of the county or counties where the
Facility is
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situated, shall be conclusive proof of proper substitution of such successor,
who shall, without conveyance from trustee or any successor trustee to trustee,
succeed to all his title, estate, rights, powers and duties), in trust a lien
and security interest against the Facility, to have and to hold the Facility,
together with all and singularly the rights, hereditaments, and appurtenances in
any way appertaining or belonging thereto, unto such trustee and such trustee's
successor or substitute in such trust, and such trustee's and its or his
successors and assigns, in trust, and that, upon the occurrence and during the
continuance of any Event of Default such trustee, at the direction of Brazos,
may proceed with foreclosure, and in such event such trustee, at the direction
of Brazos, is hereby authorized and empowered, and it shall be such trustee's
special duty, upon such request of Brazos, acting upon a request from the Agent
or Assignees, to sell the Facility, or any part thereof, to the highest bidder
or bidders for cash or credit, as directed by Brazos, acting upon a request from
the Agent or Assignees, at the location at the county courthouse specified by
the commissioner's court in the county in the state wherein the Facility then
subject to the lien hereof is situated or, if no such location is specified by
the commissioner's court, then at the location specified in such trustee's
notice of such sale to the Lessee; provided, that if the Facility is situated in
more than one county, then such sale of the Facility, or part thereof, may be
made in any county in the state wherein any part of the Facility then subject to
the lien hereof is situated. Any such sale shall be made at public outcry
between the hours of ten o'clock (10:00) A.M. and four o'clock (4:00) P.M. on
the first (1st) Tuesday in any month. Written or printed notice of such sale
shall be posted at the courthouse door in the county, or if more than one, then
in each of the counties, wherein the Facility then subject to the lien hereof is
situated. Such notice shall designate the county where the Facility, or part
thereof, will be sold and the earliest time at which the sale will occur, and
such notice shall be posted at least twenty-one (21) days prior to the date of
sale. Such notice shall also be filed with the county clerk in the county, or if
more than one, then in each of the counties wherein the Facility is located.
Trustee shall, at least twenty-one (21) days preceding the date of sale, serve
written notice of the proposed sale by certified mail on Lessee and each other
debtor obligated to pay the Acquisition Cost and other obligations secured
hereby according to the records of the Agent and Assignees. After such sale,
Brazos shall make to the purchaser or purchasers thereunder good and sufficient
assignments, deed, bills of sale, and other instruments, in the name of Brazos,
conveying the Facility, or part thereof, so sold to the purchaser or purchasers
with general warranty of title by Brazos. The sale of a part of the Facility
shall not exhaust the power of sale, but sales may be made from time to time
until the Acquisition Cost and other obligations secured hereby are paid and
performed in full. It shall not be necessary to have present or to exhibit at
any such sale any of the personal property. Upon the occurrence and during the
continuance of a Lease Event of Default, Brazos, in lieu of or in addition to
exercising any power of sale hereinabove given, may proceed by a suit or suits
in equity or at law, whether for a foreclosure hereunder, or for the sale of the
Facility, or against the Lessee on a recourse basis for the Acquisition Cost, or
the specific performance of any covenant or agreement herein contained or in aid
of the execution of any power herein granted, or for the appointment of a
receiver pending any foreclosure hereunder or the sale of the Facility, or for
the enforcement of any other appropriate legal or equitable remedy.
Sales pursuant to this SECTION 13.2, by Brazos of any part of the
Facility, may be by private or public sale, in such order or otherwise in such
manner as Brazos may elect in its sole discretion. Brazos shall have, with
respect to the FF&E, in addition to any other rights and remedies which may be
available to it at law or in equity or pursuant to this Facilities Lease or any
other contract or agreement, all rights and remedies of a secured party under
any applicable version of the Uniform Commercial Code of the relevant
jurisdictions relating to the FF&E, and it is expressly agreed that if Brazos
should proceed to dispose of or utilize the FF&E, or any part thereof, in
accordance with the provisions of said Uniform Commercial Code, ten (10) days'
notice by Brazos to Lessee shall be deemed to be reasonable notice of any such
provision requiring such notice. Any sale of FF&E by Brazos may be made on such
terms as it may choose, without assuming any credit risk and without any
obligation to advertise or give notice of any kind other than that necessary
under applicable law or otherwise required hereunder. Brazos shall incur no
liability as a result of the sale of the FF&E, or any part thereof, at any
private or public sale. Lessee hereby waives, to the extent permitted by law,
any claims against Brazos arising by reason of the fact that the price at which
the FF&E may have been sold at such private sale was less than the price which
may have been obtained at a public sale or was less than the aggregate account
of the amounts due from Lessee to Brazos hereunder, even if Brazos accepts the
first offer received and does not offer the FF&E to more than one possible
purchaser.
No remedy referred to in this SECTION 13.2 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to Brazos at law or in equity, and the exercise in
whole or in part by Brazos of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Brazos of any or all such other
remedies. No waiver by Brazos of any Event of Default hereunder shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default.
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With respect to the termination of this Facilities Lease as to any
Facility as a result of an Event of Default, Lessee hereby waives service of any
notice of intention to re-enter. Lessee hereby waives any and all rights to
recover or regain possession of any Facility or to reinstate this Facilities
Lease as permitted or provided by or under any statute, law or decision now or
hereafter in force and effect.
Section 13.3. EVENTS OF FACILITY TERMINATION. The occurrence of any of
the following shall constitute an Event of Facility Termination with respect to
a Facility:
(a) UNSATISFACTORY TITLE. If at any time title to any Facility
is not satisfactory to Brazos or Assignee by reason of any Lien or
other defect not disclosed in writing at the time of any advance (even
though the same may have existed at the time of any such advance),
except the Permitted Encumbrances, and such Lien, encumbrance or other
defect would have a material adverse effect on the Facility and is not
corrected to the satisfaction of Brazos and Assignee within one hundred
eighty (180) days after written notice to Lessee unless such defect
whether material or not would cause a loss or forfeiture of title to a
Facility or the loss of priority of any Lien for the benefit of
Assignee, in which case such defect shall be cured immediately and
prior to any such loss of title or priority.
(b) NONCONFORMING WORK. If Lessee shall fail to promptly
correct any structural defect in a Facility or replace any FF&E which
does not conform to the specifications for same upon demand of Brazos.
(c) NON-COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. If Lessee
fails to materially comply with any requirement of any Governmental
Authority with respect to such Facility and such non-compliance results
in a material adverse effect on the value of the Facility or to contest
such requirement by means of a Permitted Contest under ARTICLE XVIII
(i) within thirty (30) days after notice in writing of such requirement
shall have been given to Lessee by such Governmental Authority or by
Brazos or Assignee, or (ii) if such requirement is of a nature that it
cannot be complied with within such 30-day period, if Lessee shall fail
after such notice either diligently to commence complying with such
requirement or to proceed thereafter with reasonable diligence and in
good faith to comply with such requirement; provided, however, that (i)
Lessee shall in any event comply with such requirement prior to the
date on which such Facility may be seized or sold as a result of such
non-compliance, and (ii) a potential adverse impact reasonably likely
to be less than $500,000 in the aggregate with respect to all
Facilities or FF&E shall be deemed to be not material.
(d) PERMITS. If Lessee shall fail to obtain or be unable to
obtain any Permit, or if any Permit shall be revoked or otherwise cease
to be in full force and effect and Lessee shall not have obtained
reinstatement or reissuance of such Permit within thirty (30) days
after the revocation or expiration thereof, or if such reinstatement or
reissuance is of a nature that it cannot be completely effected within
thirty (30) days, Lessee shall not have diligently commenced
application for such reinstatement or reissuance and shall thereafter
be diligently proceeding to complete said reinstatement or reissuance.
(e) DEFAULT UNDER ACQUIRED FACILITIES LEASE. Lessee shall
default after the expiration of all applicable cure periods under such
Acquired Facilities Lease or as may be allowed under local Law in the
observance or performance of any term, covenant or condition of the
Acquired Facilities Lease relating to such Facility on the part of
Brazos, as tenant thereunder, to be observed or performed, unless any
such observance or performance shall have been waived or not required
by the landlord under the Acquired Facilities Lease, or if any one or
more of the events referred to in the Acquired Facilities Lease shall
occur which would cause the Acquired Facilities Lease to terminate
without notice or action by the landlord thereunder or which would
entitle the landlord under the Acquired Facilities Lease to terminate
the Acquired Facilities Lease and the term thereof by the giving of
notice to Brazos, as tenant thereunder, or if the Acquired Facilities
Lease shall be terminated or canceled for any reason or under any
circumstance whatsoever, or if any of the terms, covenants or
conditions of the Acquired Facilities Lease shall in any manner be
modified, changed, supplemented, altered or amended in any material
respect without the consent of Brazos.
Section 13.4. BRAZOS' RIGHT UPON EVENT OF FACILITY TERMINATION. If any
Event of Facility Termination with respect to a Facility shall occur, Brazos
may, with Agent's approval, as liquidated damages and not as a penalty, require
Lessee to purchase such Facility on the next Basic Rent Payment Date at a price
equal to the Acquisition Cost for such Facility by giving written notice of such
required purchase or assume all obligations of Brazos under an Acquired
Facilities Lease. In connection with any such purchase under this SECTION 13.4,
on the Basic Rent Payment Date upon which such purchase shall
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occur, Lessee shall pay to Brazos, in addition to any purchase price payable,
all Basic Rent then due and payable and any Additional Rent and other amounts
owing hereunder with respect to such Facility. At the time of such sale, Lessee
shall be required to pay to Brazos the obligations, costs, losses, damages, and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) sustained by Brazos by reason of such Event of Facility Termination
and exercise of Brazos' rights under this SECTION 13.4.
ARTICLE XIV
LOSS OF OR DAMAGE TO FACILITIES
Section 14.1. LESSEE'S RISK. Lessee hereby assumes all risk of loss of
or damage to Facilities, however caused. No loss of or damage to any Facility
shall impair any obligation of Lessee under this Facilities Lease, which shall
continue in full force and effect with respect to any lost or damaged Facility.
Section 14.2. REPAIR. In the event of damage of any kind whatsoever to
any Facility (unless the same is determined by Lessee to be damaged beyond
repair as provided in SECTION 14.3 hereof) Lessee, at its own cost and expense,
shall place the same in good operating order, repair, condition and appearance.
Section 14.3. FACILITY DAMAGED BEYOND REPAIR. If a material part of a
Facility is unusable for sixty (60) days or more, or if the cost of repair
exceeds fifty percent (50%) of the Acquisition Cost, or if any Facility is
destroyed, lost, stolen, seized, confiscated, rendered unfit for use or damaged
beyond repair (in the reasonable judgment of Lessee), or if the use of any
Facility by Lessee in the ordinary course of business is prevented by the act of
any third person or persons or governmental instrumentality for a period
exceeding ninety (90) days (other than an act which is a Taking which is
substantial as described in SECTION 15.1 of this Facilities Lease), or if the
Acquired Facilities Lease applicable to such Facility is terminated due to
casualty, or if such Facility is attached (other than on a claim against Brazos
as to which Lessee is not obligated to indemnify Brazos) and the attachment is
not removed within ninety (90) days, or if a Taking which is substantial as
described in SECTION 15.1 shall occur, then in any such event, (i) Lessee shall
promptly notify Brazos and Assignee in writing of such event, (ii) on the Basic
Rent Payment Date following such event, unless such Basic Rent Payment Date
occurs within ten (10) days of such event, in which case on the next Basic Rent
Payment Date, Lessee shall pay to Brazos an amount equal to the Acquisition Cost
of such Facility (after deducting any insurance proceeds received by Brazos in
respect of such event or the net amount after Brazos' expenses of proceeds to
Brazos from any award or sale made in connection with a Taking); provided that
insurance or net Taking proceeds, if any, received by Brazos in excess of the
Acquisition Cost of the affected Facility shall be paid by Brazos to Lessee,
(iii) the Lease Term or Renewal Term of such Facility shall continue until the
Basic Rent Payment Date on which Brazos receives payment from Lessee of the
amount payable pursuant to this SECTION 14.3 and the Basic Rent and any
Additional Rent and other amounts owing hereunder, and shall thereupon terminate
and (iv) Brazos shall on such Basic Rent Payment Date transfer title to such
Facility to Lessee, and Lessee shall be subrogated to Brazos' rights in the
affected transaction.
ARTICLE XV
CONDEMNATION OF FACILITY
Section 15.1. TAKING OF SUBSTANTIALLY ALL OF A FACILITY. If Lessee or
Brazos shall receive notice that the use, occupancy or title to all or
substantially all of a Facility is to be taken, requisitioned or sold in, by or
on account of eminent domain proceedings or other action by any person or
authority having the power of eminent domain (such events collectively referred
to as a "TAKING"), and such Taking is substantial, then the Lease Term or
Renewal Term shall terminate as provided in SECTION 14.3. A Taking shall be
deemed substantial if the Facility or the remainder of the Property on which it
is located is unusable for Lessee's ordinary business purposes or the Acquired
Facilities Lease applicable to such Facility is terminated as a result of such
Taking.
Section 15.2. TAKING OF LESS THAN SUBSTANTIALLY ALL OF A FACILITY. If
less than substantially all of a Facility or the Property on which it is located
is subject to a Taking, then this Facilities Lease shall continue in effect as
to such Facility not taken and Lessee, at its own cost and expense, shall place
the same in good operating order, repair, condition and appearance. Brazos and
Lessee each hereby waives any statutory or common law right allowing either of
them to petition
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any court to terminate this Facilities Lease in the event of a Taking of less
than substantially all of the Facility or the Property on which it is located.
Section 15.3. GRANT OF MINOR EASEMENTS. So long as no Event of Default
or Event of Facility Termination hereunder has occurred and is continuing,
Lessee shall have the right to grant minor easements and dedications for the
benefit of any Facility or which are deemed reasonably necessary for Lessee's
use of the Facility. If Lessee receives any monetary consideration for such
easement or dedication, Lessee shall promptly deliver such consideration to
Brazos. Lessee shall exercise the above power to grant without the joinder of
Brazos, except that Brazos will cooperate, at Lessee's expense, as necessary and
join in the execution of any appropriate instrument. As a condition precedent to
Lessee's exercise of any of Lessee's powers under this Article, Lessee shall
give Brazos ten (10) days' prior written notice of the proposed action. Upon the
giving of such notice, Lessee shall be deemed to have certified that such action
will not materially adversely affect either the market value of such Facility or
the use of such Facility for its intended purpose, will not affect Brazos' or
any Assignee's ability to exercise its rights and remedies under this Facilities
Lease and that Lessee undertakes to remain obligated under this Facilities Lease
to the same extent as if Lessee had not exercised its powers under this Article
and Lessee will perform all obligations under such instrument and shall prepare
all required documents and provide all other instruments and certificates as
Brazos may reasonably request.
ARTICLE XVI
LEASEHOLD INTERESTS
The following provisions relate to each lease (an "ACQUIRED FACILITIES
LEASE") under which a leasehold interest in a Facility is being subleased to
Lessee hereunder:
(a) This Facilities Lease is subject and subordinate to all of the
terms, covenants, provisions, conditions and agreements contained in each
Acquired Facilities Lease and the matters to which the Acquired Facilities Lease
is subject and subordinate.
(b) Lessee hereunder covenants and agrees to perform and to observe all
of the terms, covenants, provisions, conditions and agreements of the underlying
Acquired Facilities Lease on Brazos' part as lessee thereunder to be performed
and observed including, without limitation, payment of all rent, additional rent
and other amounts payable by Brazos as lessee under the Acquired Facilities
Lease, to the end that all things shall be done which are necessary to keep
unimpaired the rights of Brazos as lessee under the Acquired Facilities Lease.
Each of the parties hereto agree to promptly provide the other with copies of
any notices or other information received in writing from any landlord under an
Acquired Facilities Lease. If in the reasonable judgment of Lessee, the lessor
under any Acquired Facilities Lease shall default in any of its obligations to
Brazos with respect to the Facility or FF&E demised by such Acquired Facilities
Lease, Lessee shall have the right, after giving Brazos prior written notice of
its intention to act and of the nature of the action proposed to be taken by
Lessee, to take such action in its own name in order to enforce the rights of
the lessee in respect of the Property demised; provided, however, Lessee agrees
to indemnify, defend and hold Brazos harmless from and against all liability,
damage or expense which Brazos shall suffer or incur by reason of such action.
(c) Lessee covenants and agrees that it will not do or cause to be done
or suffer or permit any act or thing to be done which would cause such Acquired
Facilities Lease or the rights of Brazos as lessee thereunder to be canceled,
terminated or forfeited or which would make Lessee or Brazos liable for any
losses, costs, liabilities, damages, claims, penalties or other expenses. Brazos
covenants and agrees, subject to any limitations on its rights and obligations
hereunder, that it will not do or cause to be done or knowingly suffer or
knowingly permit any act or thing to be done without notice to Lessee which
would or might cause such Acquired Facilities Lease or the rights of Brazos as
lessee thereunder to be canceled, terminated or forfeited or which would make
Lessee or Brazos liable for any losses, costs, liabilities, damages, claims,
penalties or other expenses.
(d) Lessee covenants and agrees pursuant to ARTICLE X hereof to
indemnify and hold harmless Brazos and any Assignee from and against any and all
liability, loss, damage, suits, penalties, claims and demands of every kind and
nature (including, without limitation, reasonable attorneys' fees and expenses)
by reason of Lessee's failure to comply with any Acquired Facilities Lease or
the provisions of this ARTICLE XVI.
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(e) Brazos and Lessee agree that any services which are required to be
provided or repairs or restorations which are required to be made in accordance
with the provisions of such Acquired Facilities Lease by the lessor thereunder
will be provided and made by such lessor, and Brazos shall have no obligation to
provide any such services or to make any such repairs or restorations. Brazos
shall in no event be liable to Lessee nor shall the obligations of Lessee
hereunder be impaired or the performance thereof excused because of any failure
or delay on the part of the lessor under the Acquired Facilities Lease in
providing such services or making such restorations or repairs and such failure
or delay shall not constitute a basis for any claim against Brazos or any offset
against any amount payable to Brazos under this Facilities Lease.
(f) If Brazos' interest under any Acquired Facilities Lease shall
expire, terminate or otherwise be extinguished, the Facilities Lease of the
Facility to which such Acquired Facility Lease relates shall thereupon terminate
as provided in this paragraph. Upon such expiration, termination or
extinguishment (i) on the Basic Rent Payment Date next succeeding such event,
Lessee shall pay to Brazos an amount equal to the Acquisition Cost of such
Facility and (ii) the Lease Term or Renewal Term of such Facility shall continue
until the date on which Brazos receives payment from Lessee of the amount
payable pursuant to this paragraph (f) and of all Basic Rent payable and any
Additional Rent and other amounts owing hereunder, and shall then terminate upon
the payment of such amounts.
ARTICLE XVII
FF&E TO BE PERSONAL PROPERTY
It is the intention and understanding of Brazos and Lessee that all
FF&E shall be and at all times remain personal property. Lessee shall obtain and
record such instruments and take such steps as may be necessary to prevent any
person from acquiring any rights in FF&E paramount to the rights of Brazos by
reason of such FF&E being deemed to be real property. If, notwithstanding the
intention of the parties and the provisions of this ARTICLE XVII, any person
acquires or claims to have acquired any rights in any FF&E superior to the
rights of Brazos, by reason of such FF&E being deemed to be real property,
Lessee, upon becoming aware of such fact, shall promptly notify Brazos in
writing of such fact and (unless the basis for such claim is waived or
eliminated to the reasonable satisfaction of Brazos within a period of thirty
(30) days from the date it is asserted) Lessee shall on the Basic Rent Payment
Date following the expiration of the 30-day period referred to above in this
sentence pay to Brazos an amount equal to the Acquisition Cost of such FF&E at
the time of payment. On such Basic Rent Payment Date, in addition to the payment
of the Acquisition Cost, Lessee shall pay to Brazos Basic Rent payable and any
Additional Rent and other amounts owing hereunder and the lease of such FF&E
shall thereupon terminate. Concurrently with the payment of such Acquisition
Cost to Brazos, Brazos shall transfer title to such FF&E to Lessee, and Lessee
shall be subrogated to Brazos' rights in the affected transaction.
ARTICLE XVIII
PERMITTED CONTESTS
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(a) Lessee shall not be required, nor shall Brazos have the right, to
pay, discharge or remove any tax, assessment, levy, fee, rent, charge, Lien or
encumbrance, or to comply or cause any Facility or FF&E to comply with any Legal
Requirements applicable to any Facility or FF&E or the occupancy, use or
operation thereof, so long as no Event of Default or Event of Facility
Termination exists under this Facilities Lease with respect to any Facility,
and, in the opinion of Lessee's counsel, Lessee shall have reasonable grounds to
contest, and shall be diligently contesting, the existence, amount,
applicability or validity thereof by appropriate proceedings, which proceedings
in the reasonable judgment of Brazos, (i) shall not involve any material danger
that any Facility or FF&E or any Basic Rent or any Additional Rent would be
subject to sale, forfeiture or loss, as a result of failure to comply therewith,
(ii) shall not affect the payment of any Basic Rent or any Additional Rent or
other sums due and payable hereunder, (iii) could not result in any criminal
liability from a failure to comply therewith, and could not reasonably be
expected to cause either Brazos or any Assignee to incur civil liability which,
in the sole judgment of Brazos or any Assignee, is not adequately indemnified
(Lessee's obligations under ARTICLE X of this Facilities Lease shall be deemed
to be adequate indemnification if no Event of Default, Event of Facility
Termination, Potential Default or Potential Facility Termination exists and if
such civil liability is reasonably likely to be less than $100,000 per Facility
or FF&E and $1,000,000 in the aggregate for all Facilities and FF&E), (iv) shall
be permitted under the provisions of the Acquired Facilities Lease, if any, on
such Facility, (v) if involving taxes, shall suspend the collection of taxes,
and (vi) shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Lessee or the Facility or FF&E is
subject and shall not constitute a default thereunder. Lessee shall conduct all
such contests in good faith and with due diligence and shall promptly after the
final determination (including appeals) of such contest, pay and discharge all
amounts which shall be determined to be payable therein. Notwithstanding
anything in this paragraph (a) to the contrary, Lessee shall not be obligated to
actively contest any mechanics' or materialmens' Lien or claim which does not
exceed $500,000; provided that the failure to so contest does not violate
clauses (i)-(iv) or (vi) above, provided further that such Lien is junior to any
Lien of an Assignee on such Facility, and provided further, that Lessee shall in
any event diligently contest and defend against the enforcement of any such Lien
or claim in good faith and with due diligence and shall promptly, after the
final determination (including appeals of such contest), pay and discharge all
amounts which shall be determined to be payable therein.
(b) At least ten (10) days prior to the commencement thereof, Lessee
shall notify Brazos and Agent in writing of any such proceeding in which the
amount in contest exceeds $100,000, and shall describe such proceeding in
reasonable detail. If a taxing authority or subdivision thereof proposes an
additional assessment or levy of any tax for which Lessee is obligated to
reimburse Brazos under this Facilities Lease, or if Brazos is notified of the
commencement of an audit or similar proceeding which could result in such an
additional assessment, then Brazos shall in a timely manner notify Lessee in
writing of such proposed levy or proceeding.
ARTICLE XIX
MISCELLANEOUS
Section 19.1. SURVIVAL. All agreements, indemnities, representations
and warranties, and the obligation to pay Additional Rent contained in this
Facilities Lease shall survive the expiration or other termination hereof.
Section 19.2. ENTIRE AGREEMENT. This Facilities Lease and the Facility
Leasing Records covering Facilities and FF&E leased pursuant hereto and the
instruments, documents or agreements referred to herein constitute the entire
agreement between the parties and no representations, warranties, promises,
guarantees or agreements, oral or written, express or implied, have been made by
any party hereto with respect to this Facilities Lease or the Facility, except
as provided herein or therein.
Section 19.3. MODIFICATIONS. This Facilities Lease may not be amended,
modified or terminated, nor may any obligation hereunder be waived orally, and
no such amendment, modification, termination or waiver shall be effective for
any purpose unless it is in writing and is signed by the party against whom
enforcement thereof is sought. A waiver on one occasion shall not be construed
to be a waiver with respect to any other occasion.
SECTION 19.4. GOVERNING LAW. THIS FACILITIES LEASE SHALL WITH RESPECT
TO EACH FACILITY IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH SUCH FACILITY IS LOCATED,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. ANY PROVISION
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OF THIS FACILITIES LEASE WHICH IS PROHIBITED BY LAW OR UNENFORCEABLE IN ANY
JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF
SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINING
PROVISIONS HEREOF, AND THE PARTIES HERETO SHALL NEGOTIATE IN GOOD FAITH
APPROPRIATE MODIFICATIONS TO REFLECT SUCH CHANGES AS MAY BE REQUIRED BY LAW,
AND, AS NEARLY AS POSSIBLE, TO PRODUCE THE SAME ECONOMIC EFFECTS AS THE
PROVISION WHICH IS PROHIBITED OR UNENFORCEABLE; AND ANY SUCH PROHIBITION OR
UNENFORCEABILITY IN ANY JURISDICTION SHALL NOT INVALIDATE OR RENDER
UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, LESSEE AND BRAZOS HEREBY WAIVE ANY PROVISION OF LAW WHICH
RENDERS ANY PROVISION HEREOF PROHIBITED OR UNENFORCEABLE IN ANY RESPECT.
Section 19.5. NO OFFSETS. The obligations of Lessee to pay all amounts
payable pursuant to this Facilities Lease (including specifically and without
limitation amounts payable due under ARTICLES VI and X hereof) shall be absolute
and unconditional under any and all circumstances of any character, and such
amounts shall be paid without notice, demand, defense, setoff, deduction or
counterclaim and without abatement, suspension, deferment, diminution or
reduction of any kind whatsoever, except as herein expressly otherwise provided.
The obligation of Lessee to lease and pay Basic Rent, Additional Rent or any
other amounts for any and all Facilities is without any warranty or
representation, express or implied, as to any matter whatsoever on the part of
Brazos or any Assignee or any Affiliate of either, or anyone acting on behalf of
any of them.
NEITHER BRAZOS NOR ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER, NOR ANYONE
ACTING ON BEHALF OF ANY OF THEM, MAKES ANY REPRESENTATION OR WARRANTY OF ANY
KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, AS TO THE
SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY,
CONFORMITY TO SPECIFICATION, ENVIRONMENTAL CONDITION (INCLUDING THE PRESENCE OR
ABSENCE OF HAZARDOUS MATERIALS), OR ANY OTHER CHARACTERISTIC, OF ANY FACILITY OR
FF&E, OR AS TO WHETHER ANY FACILITY OR FF&E OR THE OWNERSHIP, USE, OCCUPANCY OR
POSSESSION THEREOF COMPLIES WITH ANY LAWS, RULES, REGULATIONS OR REQUIREMENTS OF
ANY KIND.
AS BETWEEN BRAZOS AND LESSEE, ANY ASSIGNEE OR ANY INDEMNIFIED PERSON,
AND TO THE EXTENT ALLOWED BY LAW AND EXCEPT AS OTHERWISE PROVIDED HEREIN, LESSEE
ASSUMES ALL RISKS AND WAIVES ANY AND ALL DEFENSES, SET-OFFS, DEDUCTIONS,
COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR FUTURE, TO ITS OBLIGATION TO PAY
BASIC RENT, ADDITIONAL RENT AND ALL OTHER AMOUNTS PAYABLE HEREUNDER, INCLUDING,
WITHOUT LIMITATION, ANY RELATING TO:
(a) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE,
MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF ANY FACILITY OR FF&E, LATENT OR NOT;
(b) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR OTHER
RIGHT WHICH LESSEE MAY HAVE AGAINST BRAZOS, ANY ASSIGNEE, OR ANY INDEMNIFIED
PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER TRANSACTION OR
MATTER;
(c) ANY DEFECT IN TITLE OR OWNERSHIP OF ANY FACILITY OR FF&E OR ANY
TITLE ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE FACILITY OR
FF&E;
(d) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR DESTRUCTION
OF, OR DAMAGE TO, ANY FACILITY OR FF&E, IN WHOLE OR IN PART, OR CESSATION OF THE
USE OR POSSESSION OF ANY FACILITY OR FF&E BY LESSEE FOR ANY REASON WHATSOEVER
AND OF WHATEVER DURATION, OR ANY CONDEMNATION, CONFISCATION, REQUISITION,
SEIZURE, PURCHASE, TAKING OR FORFEITURE OF ANY FACILITY OR FF&E, IN WHOLE OR IN
PART;
(e) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE, OWNERSHIP,
OCCUPANCY OR POSSESSION OF THE FACILITY OR FF&E BY LESSEE;
Page 33
<PAGE> 40
(f) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING BY
OR AGAINST LESSEE, GUARANTOR OR BRAZOS;
(g) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER
TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(h) THE INVALIDITY OR UNENFORCEABILITY OF THIS FACILITIES LEASE OR ANY
OTHER INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF BRAZOS OR LESSEE TO
ENTER INTO THIS FACILITIES LEASE; OR
(i) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER, WHETHER OR NOT
SIMILAR TO ANY OF THE FOREGOING.
LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY BE
CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT, RESCIND
OR SURRENDER THIS FACILITIES LEASE EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS
HEREOF. NOTHING CONTAINED IN THIS SECTION 19.5 SHALL BE DEEMED TO BENEFIT ANY
THIRD PARTY OR TO CONSTITUTE A WAIVER OR LIMITATION OF ANY RIGHT THAT LESSEE MAY
HAVE AGAINST ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY LESSOR OF AN
ACQUIRED FACILITIES LEASE (OTHER THAN BRAZOS) OR ANY PRIOR OWNER OF ANY
FACILITY.
Section 19.6. NON-RECOURSE. Brazos' obligations hereunder are intended
to be the limited obligations of the limited partnership and of the corporation
which is the general partner thereof. Notwithstanding any other provision of
this Facilities Lease, Lessee agrees that the personal liability of Brazos and
the limited partners of Brazos shall be strictly and absolutely limited to the
Facilities and FF&E and no recourse for the payment of any amount due under this
Facilities Lease or any other agreement contemplated hereby, or for any claim
based thereon or otherwise in respect thereof, shall be had against any other
assets of the limited partnership or of the general or of any limited partner of
Brazos or any incorporator, shareholder, officer, director or Affiliate (past,
present or future) of such general partner or limited partner, or of any
Affiliate of either, or of any successor corporation to any corporate general
partner or any corporate limited partner of Brazos, it being understood that
Brazos is a limited partnership entering into the transactions involved in and
relating to this Facilities Lease on the express understanding aforesaid.
Section 19.7. NOTICES.
(a) Any notice or request which by any provision of this Facilities
Lease is required or permitted to be given by either party to the other shall be
deemed to have been given when delivered by hand (including, delivery by
courier), three (3) days after being deposited in the mail, postage prepaid, by
certified or registered mail or, if promptly confirmed by mail or by
hand-delivery, as provided above, when sent by telex, or other written
telecommunication, addressed to the following specified addresses or to such
other addresses as Brazos or Lessee may specify by written notice to the other
party:
If to Brazos:
Brazos Automotive Properties, L.P.
c/o Brazos Automotive Properties Management, Inc.
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Gregory C. Greene
Telephone: (214) 522-7296
Telecopy: (214) 520-2009
with a copy to:
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<PAGE> 41
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Commercial Equipment Finance Division,
Portfolio Manager
If to Agent or Assignee:
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
Attention: Philip M. Hendrix, Vice President
Telephone: (716) 258-5437
Telecopy: (716) 258-7604
with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002-4086
Attention: Carol M. Burke
Telephone: (713) 308-5561
Telecopy: (713) 308-5555
If to Lessee:
Monro Leasing, LLC
200 Holleder Parkway
Rochester, New York 14615
Attention: Catherine D'Amico, Senior Vice President
Telephone: (716) 647-6400 X 335
Telecopy: (716) 627-0941
With a copy to any Assignee at such other address as such Assignee may specify
by written notice to Brazos and Lessee.
(b) Brazos shall within five (5) Business Days give to Lessee a copy of
all notices received by Brazos pursuant to any Credit Agreement or any Acquired
Facility Lease and any other notices received with respect to any Facility.
Section 19.8. USURY. No provision of this Facilities Lease, the
Agreement for Facilities Lease or any other instrument relating to this
Facilities Lease, shall require the payment or permit the collection of interest
in excess of the maximum non-usurious interest rate under applicable law (the
"MAXIMUM RATE"). If any excess interest in such respect is so provided for, or
shall be adjudicated to be so provided for, the provisions of this SECTION 19.8
shall govern, and neither Lessee nor its successors or assigns shall be
obligated to pay the amount of such interest to the extent it is in excess of
the Maximum Rate. In determining the Maximum Rate, any interest shall be spread
over the term of the Facilities Lease to the extent permitted by applicable U.S.
Federal or state law, notwithstanding the actual time for the payment of any
rent or other amounts hereunder. It is expressly stipulated and agreed to be the
intent of Brazos and Lessee at all times to comply with applicable state law
governing the Maximum Rate or the amount of interest payable pursuant to this
Facilities Lease (or applicable U.S. Federal law to the extent that it permits
Brazos to contract for, charge, take, reserve or receive a greater amount of
interest than under state law). If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under the Facilities
Lease, the Agreement for Facilities Lease or any of the other documents relating
to this Facilities Lease or any amount contracted for, charged, taken, reserved
or received with respect to this Facilities Lease, or if Brazos' exercise of any
option contained herein or in any other document to accelerate the payment of
amounts required hereunder results in Lessee having paid any interest in excess
of that permitted by applicable law, then it is Brazos' and Lessee's intent that
all excess amounts theretofore collected by Brazos be credited on the remaining
balance of payments due hereunder (or, if all amounts due hereunder have been or
would thereby be paid in full, refunded to Lessee) and the provisions of this
Facilities Lease shall immediately be deemed reformed and the amounts thereafter
collectible hereunder
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<PAGE> 42
reduced, without the necessity of the execution of any new documents, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and under any other document relating
hereto. If at any time the amount of any interest for a year, would, but for
this SECTION 19.8, exceed the amount of interest that would have been accrued
during such year if the Maximum Rate had from time to time been in effect, the
total interest payable for such year shall be limited to the amount that would
have been accrued if the Maximum Rate had from time to time been in effect, and
to the fullest extent permitted by applicable law, such excess shall be (i)
spread and allocated to the preceding periods in which the interest paid was
less than the interest that would have been accrued at the Maximum Rate or (ii)
spread and allocated to subsequent periods in which the total payments on
account of interest are less than the interest that would have accrued at the
Maximum Rate.
Section 19.9. NO MERGER. There shall be no merger of this Facilities
Lease or of the leasehold estate hereby created with the fee estate in any
Facility by reason of the fact that the same person acquires or holds, directly
or indirectly, this Facilities Lease or the leasehold estate hereby created or
any interest herein or in such leasehold estate as well as the fee estate in any
Facility or any interest in such fee estate.
Section 19.10. SALE OR ASSIGNMENT BY BRAZOS.
(a) So long as no Event of Default shall be continuing, Brazos shall
not sell, mortgage or encumber or assign its right, title, interest or
obligations in a Facility or under this Facilities Lease, except that Brazos
shall have the right to finance the acquisition and ownership of the Facility by
selling, assigning or granting a security interest in its right, title and
interest in this Facilities Lease as provided in the Credit Agreement and any or
all amounts due from Lessee or any third party under this Facilities Lease as
provided in the Credit Agreement; provided that any such sale, assignment or
grant of a security interest shall be subject to the rights and interests of
Lessee under this Facilities Lease.
(b) Upon the occurrence of an event of default under the Credit
Agreement, any Assignee shall, except as otherwise agreed by Brazos and
Assignee, have all the rights, powers, privileges and remedies of Brazos
hereunder, and Lessee's obligations as between itself and such Assignee
hereunder shall not be subject to any claims or defense that Lessee may have
against Brazos or any prior Assignee. Upon written notice to Lessee of any such
assignment, Lessee shall attorn to any Assignee, and Lessee shall thereafter
make payments of Basic Rent, Additional Rent and other sums due hereunder to
Assignee, to the extent specified in such notice, and such payments shall
discharge the obligation of Lessee to Brazos hereunder to the extent of such
payments. Anything contained herein to the contrary notwithstanding, no Assignee
shall be obligated to perform any duty, covenant or condition required to be
performed by Brazos hereunder, and any such duty, covenant or condition shall be
and remain the sole obligation of Brazos except as set forth in the
Subordination and Attornment Agreement for each Facility.
Section 19.11. INCOME TAXES. Brazos agrees that it will not file any
Federal, state or local income tax returns any, with respect to any Facility or
FF&E that are inconsistent with the treatment of Lessee as owner of such
Facility for Federal, state and local income tax purposes during the Lease Term
or any Renewal Term.
19.12. TRANSFER ON AS-IS BASIS. In connection with any sale of Facility
pursuant to this Facilities Lease, when Brazos transfers title, such transfer
shall be on an as-is, non-installment sale basis, without warranty by, or
recourse to, Brazos, but free of the Lien created by a Credit Agreement and any
Lien created by Brazos contrary to the terms of this Facilities Lease.
Section 19.13. RIGHT TO PERFORM FOR LESSEE.
(a) If Lessee fails to perform or comply with any of its covenants or
agreements contained in this Facilities Lease, Brazos may, upon notice to Lessee
but without waiving or releasing any obligations or default, itself perform or
comply with such covenant or agreement, and the amount of the reasonable
expenses of Brazos incurred in connection with such performance or compliance,
shall be payable by Lessee, not later than ten (10) days after written notice by
Brazos.
(b) Without in any way limiting the obligations of Lessee hereunder,
Lessee hereby irrevocably appoints Brazos as its agent and attorney at the time
at which Lessee is obligated to deliver possession of any Facility to Brazos, to
demand and take possession of such Facility in the name and on behalf of Lessee
from whomsoever shall be at the time in possession thereof.
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Section 19.14. MERGER, CONSOLIDATION OR SALE OF ASSETS.
(a) Lessee shall not consolidate with or merge into any other
corporation which is not a Subsidiary or sell all or substantially all of its
assets to any Person which is not a Subsidiary, except that Lessee may
consolidate with or merge into any other corporation, or sell all or
substantially all of its assets to any Person; provided that, (i) no default or
event of default occurs under the Corporate Credit Documents and (ii) the
surviving corporation or transferee Person shall assume, by execution and
delivery of instruments satisfactory to Brazos and Agent, the obligations of
Lessee hereunder and become successor to Lessee, but Lessee, if it is the
surviving corporation, shall not thereby be released, without the consent of
Brazos and Agent, from its obligations hereunder and, provided further, that
such surviving corporation or transferee Person will, on a pro forma basis,
immediately after such consolidation, merger or sale, possess a consolidated net
worth greater than or equal to that of Lessee immediately prior to such
consolidation, merger or sale and no Event of Default or Event of Facility
Termination shall have occurred or result therefrom.
(b) Brazos may not consolidate with or merge into any other corporation
or sell all or substantially all of its assets to any Person, except that Brazos
may consolidate with or merge into any other corporation, or sell all or
substantially all of its assets to any Person; provided that, the surviving
corporation or transferee Person shall assume, by execution and delivery of
instruments satisfactory to Lessee and Agent, the obligations of Brazos
hereunder and become successor to Brazos, but Brazos shall not thereby be
released without the consent of Lessee and Agent from its obligations hereunder
and, provided further, that such surviving corporation or transferee Person
will, on a pro forma basis, immediately after such consolidation, merger or
sale, possess a consolidated net worth greater than or equal to that of Brazos
immediately prior to such consolidation, merger or sale.
(c) The terms and provisions of this Facilities Lease shall be binding
upon and inure to the benefit of Brazos and Lessee and their respective
successors and assigns.
Section 19.15. EXPENSES. Lessee shall pay all of the out-of-pocket
costs and expenses incurred by Brazos and any Assignee in connection with this
Facilities Lease as set forth on an invoice showing the basis for such costs and
expenses, including without limitation the reasonable fees and disbursements of
counsel to Brazos and counsel to any Assignee.
Section 19.16. PAYMENT OF TAXES. In connection with the sale or
purchase of any Facility pursuant to this Facilities Lease, Lessee shall pay or
shall cause the purchaser of such Facility to pay in addition to the purchase
price, all transfer taxes, transfer gains taxes, if any, recording and filing
fees and all other similar taxes (except mortgage taxes), fees, expenses and
closing costs (including reasonable attorneys' fees) in connection with the
conveyance of such Facility to Lessee or any purchaser; provided that Lessee or
any purchaser shall not be required to pay U.S. Federal net income or capital
gains taxes.
Section 19.17. RULE AGAINST PERPETUITIES. The parties hereto do not
intend any interest created by this Facilities Lease to be a perpetuity or to be
subject to invalidation under the perpetuities rule, however, if the rule is to
be applied, then the perpetuities period shall be twenty-one (21) years after
the last to die of the currently living great-grandchildren and/or grandchildren
of George H. W. Bush.
Section 19.18. REEXECUTION. The parties hereto shall reexecute this
Facilities Lease to the extent necessary to make this Facilities Lease
enforceable under the laws of any State in which a Facility is located.
Section 19.19. PURCHASE OR SALE OF PROPERTY. Notwithstanding anything
to the contrary herein, Lessee shall not have the right to purchase any Facility
or arrange for the sale of any Facility to a third party unless simultaneous
with such purchase or sale any Property on which such Facility is located is
purchased by Lessee or sold to a third party.
Section 19.20. SEVERABILITY. In case one or more provisions of this
Facilities Lease shall be invalid, illegal or unenforceable in any respect under
any applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired thereby.
Section 19.21. INDEPENDENT OBLIGATIONS. Lessee hereby affirms and
agrees with Brazos that its obligations under SECTIONS 9.3 and 13.4 and under
ARTICLES X, XI, XII, XIV, XV and XVI are obligations of Lessee independent of
this Facilities Lease and are intended to be fully enforceable as contractual
obligations of Lessee and its permitted assignees
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<PAGE> 44
hereunder without regard to the enforceability or continuation of this
Facilities Lease or Lessee's continued use or occupancy of the Facility. Lessee
acknowledges that Brazos has obtained commitments for financing of Facilities
and Assignees have entered into the Credit Agreement in reliance on these
independent obligations of Lessee.
Section 19.22. EXECUTION IN COUNTERPARTS. This Facilities Lease may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 19.23. CONFIDENTIALITY. Brazos shall keep confidential all
information of a confidential nature received by it from Lessee pursuant to this
Facilities Lease; provided, however, that such information may be disclosed,
where necessary: (i) to directors, officers, employees, agents, representatives
or outside counsel of Brazos or of the Agent or any Bank or any Affiliate of any
Bank under the Credit Agreement; (ii) to any auditor, government official or
examiner; (iii) pursuant to any subpoena or other court order or otherwise as
may be required by applicable law; or (iv) to any assignee of or participant in,
or prospective assignee of or participant in, any Bank's Advances or its
Commitment or any part thereof under the Credit Agreement who, in each case,
agrees in writing to be bound by the terms of this Section; and provided
further, that no confidentiality obligation shall attach to any information
which (1) is or becomes publicly known, through no wrongful act on the part of
any Person who shall have received such information, (2) is rightfully received
by such Person from a third party, (3) is independently developed by such
Person, or (4) is explicitly approved for release by Lessee.
Section 19.24. EXECUTION BY LESSEE. By execution of the Memorandum of
Lease for a Facility or FF&E, Lessee agrees to all of the terms and conditions
of this Facility Lease and is deemed to have executed this Facility Lease as of
the date of the request for advance with respect to such Facility or FF&E.
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IN WITNESS WHEREOF, Brazos and Lessee have caused this Facilities Lease
to be executed and delivered by their duly authorized officers as of the day and
year first above written.
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
a Delaware limited partnership
By: BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT,
INC., a Delaware corporation, General Partner
By: /s/ Daniel D. Boeckman
----------------------------------------------
Daniel D. Boeckman, Executive Vice President
MONRO LEASING, LLC,
a Delaware limited liability company
By: MONRO MUFFLER BRAKE, INC., its Sole Member
By: /s/ Catherine D'amico
----------------------------------------------
Catherine D'Amico, Senior Vice President and
Chief Financial Officer
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STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the ___ day of September 1998, before me personally came Daniel D.
Boeckman, who, being by me duly sworn, did depose and say that he is the
Executive Vice President of BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT, INC., a
Delaware corporation, the General Partner of BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership, and as said officer executed the foregoing
instrument.
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF NEW YORK
[SEAL]
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the ___ day of September 1998, before me personally came Catherine
D'Amico who, being by me duly sworn, did depose and say that she is the Senior
Vice President and Chief Financial Officer of MONRO MUFFLER BRAKE, INC., a New
York corporation, the Sole Member of MONRO LEASING, LLC, a Delaware limited
liability company, and as said officer executed the foregoing instrument.
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF NEW YORK
[SEAL]
Page 40
<PAGE> 47
EXHIBIT A
SCHEDULE OF INSURANCE
1. All risk direct physical damage insurance for the Property and all
improvements, equipment and structures located thereon in the amounts and
subject to the deductibles and self-insurance provisions that are applicable
under like insurance coverage maintained by Lessee for similar property and
equipment owned, leased or held by Lessee and which are approved by Agent.
2. Commercial general liability insurance, including, without
limitation, coverage for legal liability against claims for bodily injury, death
or property damage, occurring on, in or about each Property and the
improvements, equipment and structures located thereon, in the minimum amount of
$1,000,000 combined single limit per occurrence for bodily injury and property
damage, $2,000,000 annual aggregate. Liability coverage may be subject to such
deductibles as may be usual and customary for Lessee to carry in its normal
course of business. However, in no event shall a deductible be applied as
respects Lessee's interest.
3. Workers' compensation and employers' liability insurance covering
Lessee's employees in such amount as is required by law, or if permissible under
state law, any legally appropriate alternative providing substantially similar
compensation for injured workers.
Page 41
<PAGE> 1
EXHIBIT 10.6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT FOR GROUND LEASE
between
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
and
MONRO LEASING, LLC
Dated as of September 15, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS AGREEMENT FOR GROUND LEASE HAS BEEN ASSIGNED
AS SECURITY FOR INDEBTEDNESS
OF BRAZOS AUTOMOTIVE PROPERTIES, L.P.
SEE SECTION 11.12.
-------------
This Agreement for Ground Lease has been manually executed in 10 counterparts,
numbered consecutively from 1 through 10, of which this is No. ____. To the
extent, if any, that this Agreement for Ground Lease constitutes chattel paper
(as such term is defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest
<PAGE> 2
in this Agreement for Ground Lease may be created or perfected through the
transfer or possession of any counterpart other than the original counterpart
which shall be the counterpart identified as counterpart No. 1.
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
AGREEMENT FOR GROUND LEASE
Page
----
<S> <C> <C> <C>
ARTICLE I DEFINITIONS............................................................................................1
Section 1.1. Defined Terms..............................................................................1
Section 1.2. Forms......................................................................................5
Section 1.3. Recitals, Table of Contents, Titles, and Headings..........................................5
Section 1.4. Interpretation.............................................................................6
ARTICLE II APPOINTMENT OF LESSEE.................................................................................6
Section 2.1. Appointment and Duties.....................................................................6
Section 2.2. Termination of Appointment and Duties......................................................6
Section 2.3. Lease of Property..........................................................................6
Section 2.4. Powers of Lessee...........................................................................7
ARTICLE III ADVANCES.............................................................................................8
Section 3.1. Agreement to Make Advances.................................................................8
Section 3.2. Procedure for Advances.....................................................................8
Section 3.3. Determination of Amounts of Advances.......................................................8
Section 3.4. Partial Advances...........................................................................9
Section 3.5. Use of Proceeds............................................................................9
Section 3.6. No Obligation to Advance...................................................................9
Section 3.7. Brazos Equity..............................................................................9
Section 3.8. Brazos Covenants..........................................................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF LESSEE.............................................................10
Section 4.1. Corporate Matters.........................................................................10
Section 4.2. Authorization; Binding Agreement..........................................................10
Section 4.3. Power and Authority.......................................................................10
Section 4.4. Consents, Approvals and Authorizations....................................................10
Section 4.5. Financial Statements......................................................................11
Section 4.6. Changes...................................................................................11
Section 4.7. Litigation................................................................................11
Section 4.8. No Default................................................................................11
Section 4.9. Property Liens............................................................................11
Section 4.10. Availability of Utilities................................................................11
Section 4.11. Brokerage................................................................................11
Section 4.12. Suitability of Property..................................................................11
Section 4.13. Acquired Ground Lease....................................................................11
Section 4.14. Accuracy of Value........................................................................12
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
ARTICLE V AFFIRMATIVE COVENANTS.................................................................................12
Section 5.1. Performance under Other Agreements........................................................12
Section 5.2. Expenses..................................................................................12
Section 5.3. Certificates; Other Information...........................................................12
Section 5.4. Conduct of Business and Maintenance of Existence..........................................13
Section 5.5. Notices...................................................................................13
Section 5.6. Legal Requirements. ......................................................................13
Section 5.7. Leasing of Property.......................................................................14
Section 5.8. Filings...................................................................................14
ARTICLE VI CONDITIONS PRECEDENT TO THE INITIAL ADVANCE OR ADDITIONAL
ADVANCE WITH RESPECT TO A PROPERTY OR ADDITIONAL PROPERTY............................................14
Section 6.1. Acquisition Documents.....................................................................14
Section 6.2. No Event of Default.......................................................................16
Section 6.3. Continuing Representations................................................................16
Section 6.4. Additional Matters........................................................................16
Section 6.5. Properties Acquired in Brazos' Name.......................................................17
ARTICLE VII CONDITIONS PRECEDENT TO THE RECONCILIATION ADVANCE
WITH RESPECT TO A PROPERTY..........................................................................17
Section 7.1. Reconciliation Advance....................................................................17
ARTICLE VIII EVENTS OF DEFAULT..................................................................................17
Section 8.1. Events of Default.........................................................................17
Section 8.2. Rights Upon Default.......................................................................19
ARTICLE IX INDEMNITIES..........................................................................................20
Section 9.1. Indemnified Persons.......................................................................20
Section 9.2. Payments..................................................................................20
Section 9.3. Continuing Indemnification................................................................20
Section 9.4. Limitations...............................................................................20
Section 9.5. Litigation................................................................................21
ARTICLE X PERMITTED CONTESTS....................................................................................21
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
ARTICLE XI MISCELLANEOUS........................................................................................22
Section 11.1. Survival.................................................................................22
Section 11.2. Entire Agreement.........................................................................22
Section 11.3. Modifications............................................................................22
Section 11.4. Governing Law............................................................................22
Section 11.5. No Offsets...............................................................................22
Section 11.6. Non-Recourse.............................................................................23
Section 11.7. Notices..................................................................................24
Section 11.8. Fundamental Changes......................................................................25
Section 11.9. Usury....................................................................................25
Section 11.10. No Waivers..............................................................................25
Section 11.11. Brazos and Assignee Sole Beneficiaries..................................................26
Section 11.12. Sale or Assignment by Brazos............................................................26
Section 11.13. Rights Cumulative.......................................................................26
Section 11.14. Reassignment............................................................................26
Section 11.15. Severability............................................................................27
Section 11.16. Execution in Counterparts...............................................................27
Section 11.17. Confidentiality.........................................................................27
Section 11.18. Execution by Lessee.....................................................................27
</TABLE>
iii
<PAGE> 6
iv
<PAGE> 7
LIST OF EXHIBITS
----------------
Exhibit A Form of Ground Lease Agreement
Exhibit B Form of Initial Advance Certificate
Exhibit C Form of Reconciliation Certificate
Exhibit D Form of Additional Advance Certificate
Exhibit E Form of Opinion of Counsel
Exhibit F Form of Request for Initial Advance
Schedule 4.13 List of Acquired Ground Leases
v
<PAGE> 8
AGREEMENT FOR GROUND LEASE
THIS AGREEMENT FOR GROUND LEASE (this "AGREEMENT") is made and entered
into as September 15, 1998, by and between BRAZOS AUTOMOTIVE PROPERTIES, L.P., a
Delaware limited partnership ("BRAZOS") and MONRO LEASING, LLC, a Delaware
limited liability company ("LESSEE").
W I T N E S S E T H:
WHEREAS, on or after the date of this Agreement Brazos and Lessee
propose to enter into a Ground Lease Agreement, providing for the lease or
sublease by Lessee of such parcels of real property as may be acquired by Brazos
for lease to Lessee; and
WHEREAS, Brazos desires to appoint Lessee to act as agent for Brazos in
connection with the acquisition of fee or leasehold interests in parcels of real
property from time to time and Lessee wishes to accept such appointment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Brazos and Lessee hereby agree as follows:
ARTICLE I
---------
DEFINITIONS
Section 1.1. DEFINED TERMS. For the purposes of this Agreement each of
the following terms shall have the meaning specified with respect thereto:
"ACQUIRED GROUND LEASE" means each ground lease entered into by Brazos
under which a leasehold interest in a Property is being leased to Brazos by the
owner of such Property, including without limitation, the leases set forth on
SCHEDULE 4.13 hereto.
"ACQUISITION COST" means for any Property, the sum of (a) the amount of
the Initial Advance, (b) the Reconciliation Advance, if any, and (c) the
Additional Advance, if any, made pursuant to this Agreement with respect to such
Property.
"ADDITIONAL ADVANCE" means, with respect to any Additional Property,
the advance made by Brazos upon satisfaction of the conditions of ARTICLE VI
hereof.
" ADDITIONAL ADVANCE CERTIFICATE" means the written certification of
Lessee to be delivered to Brazos and Agent which contains the information and
representations of Lessee as required by SECTION 6.1, and which is substantially
in the form of EXHIBIT "D" attached hereto.
"ADDITIONAL PROPERTY" means each parcel of land which is contiguous to
Property already under the Ground Lease in which either a fee interest has been
acquired by Brazos or a leasehold interest acquired by Brazos pursuant to an
Acquired Ground Lease, in each case for the purpose of making such parcel of
land part of the Property and which is approved by Agent.
"AFFILIATE" means any other Person controlling, controlled by or under
direct or indirect common control with any Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
AGREEMENT FOR GROUND LEASE - Page 1
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<PAGE> 9
"AGENT" means The Chase Manhattan Bank, a national banking association.
"AGREEMENT" means this Agreement for Ground Lease, as the same may be
amended, restated, supplemented or otherwise modified in accordance with the
terms hereof from time to time.
"AGREEMENT FOR FACILITIES LEASE" means the Agreement for Facilities
Lease, dated of even date herewith, between Brazos and Lessee, as the same may
be amended, restated, supplemented or otherwise modified in accordance with the
terms thereof.
"ASSIGNEE" means any lender or agent for a lender under the Credit
Agreement and each person, firm, corporation or other entity to which any part
of Brazos' interest under this Agreement or the Ground Lease shall at the time
have been assigned, conditionally or otherwise, by Brazos in accordance with
SECTION 11.12 of this Agreement.
"AVAILABLE COMMITMENT" means at any particular time, an amount equal to
the aggregate available commitment for the benefit of Brazos under the Credit
Agreement for the acquisition of Properties pursuant to this Agreement and for
the acquisition of equipment and for the construction, equipping and furnishing
of the buildings and other facilities on the Properties pursuant to the
Agreement for Facilities Lease.
"BANKS" means a "Bank", as defined in the Credit Agreement.
"BRAZOS" means Brazos Automotive Properties, L.P. or any successor or
successors to all of its rights and obligations hereunder.
"BUDGET" means the budget submitted by Lessee to Brazos and Agent in
connection with advances to be made under this Agreement, which must be approved
by the Agent.
"BUSINESS DAY" means a day other than a Saturday, Sunday, or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"CAPITALIZED LEASES" means, as applied to any Person, any lease of any
property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on the balance
sheet of such Person.
"CHASE CREDIT AGREEMENT" means that certain Credit Agreement dated as
of September 15, 1998 executed among Guarantor, Agent, and the other financial
institutions from time to time party thereto, as the same may have been amended
and in effect on the date hereof.
"CONTRACTUAL OBLIGATIONS" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"CORPORATE CREDIT AGREEMENT" means the Chase Credit Agreement as the
same may hereafter be amended, amended and restated, renewed, extended or
otherwise modified or supplemented from time to time, together with any credit
agreement or similar instrument, agreement or document executed from time to
time in respect of any financing arrangement entered into to replace, or which
is in substitution for, the financing arrangement evidenced by the Chase Credit
Agreement.
"CREDIT AGREEMENT" means the Credit Agreement dated of even date
herewith, by and among Brazos, the Agent and the Banks named therein for the
financing of the acquisition of Properties by Brazos in connection with this
Agreement, as it may be amended, restated, modified or supplemented, from time
to time.
AGREEMENT FOR GROUND LEASE - Page 2
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<PAGE> 10
"CORPORATE CREDIT DOCUMENTS" means any and all notes, guarantees and
other loan documents executed pursuant to the Corporate Credit Agreement and any
document, instrument or other agreement entered in replacement or substitution
of such document or instrument.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations, rules, rulings, and
interpretations promulgated or adopted by the Internal Revenue Service or the
United States Department of Labor thereunder.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.1 hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government having jurisdiction over Agent, Brazos, Guarantor or Lessee, or
any of their respective properties.
"GROUND LEASE" means the Ground Lease Agreement, dated of even date
herewith, by and between Brazos, as lessor, and Lessee, as lessee, as it may be
further amended, restated, modified or supplemented from time to time, in
accordance with the terms thereof, originally in the form of EXHIBIT "A"
attached hereto.
"GUARANTOR" means Monro Muffler Brake, Inc., a New York corporation.
"GUARANTY" means the Guaranty, dated of even date herewith, by and
between Guarantor and Brazos, as it may be further amended, restated, modified
or supplemented, from time to time, in accordance with the terms thereof.
"INDEBTEDNESS" means, with respect to any Person, (a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of property or services; (d)
obligations of such Person as lessee under Capitalized Leases; (e) reimbursement
obligations in respect of bonds or letters of credit; (f) obligations of such
Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) of such Person to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness of
others of the kinds referred to in clauses (a) through (e) above; and (g)
indebtedness of others of the kinds referred to in clauses (a) through (f)
secured by any Lien on or in respect of any property of such Person whether or
not assumed by such Person; provided, however, that all trade accounts payable
and accrued expenses incurred in the ordinary course of business of such Person
and not overdue shall be excluded from the foregoing.
"INDEMNIFIED PERSON" means any Person as defined in SECTION 9.1.
"INITIAL ADVANCE" means, with respect to any Property, the advance made
by Brazos upon satisfaction of the conditions set forth in ARTICLE VI hereof.
"INITIAL ADVANCE CERTIFICATE" means the written certification of Lessee
to be delivered to Brazos and Agent in connection with each purchase of a fee
interest, reimbursement of the advance of funds by Lessee for a fee interest or
each acquisition of a leasehold interest in a Property by Brazos through Lessee,
which contains the information and representations of Lessee as required by
SECTION 6.1, and which is substantially in the form of EXHIBIT "B" attached
hereto.
"LEGAL REQUIREMENTS" means all laws, judgments, decrees, ordinances and
regulations and any other governmental rules, orders and determinations and all
requirements having the force of law, now or hereafter enacted, made or issued,
whether or not presently contemplated, and all agreements, covenants, conditions
and restrictions, applicable to each Property and/or the ownership, operation,
or use thereof, including, without limitation, all requirements of the Americans
With Disabilities Act (P.L. 101-335) and environmental statutes, compliance with
which is required at any time from the date hereof until the date such Property
becomes subject to the terms and provisions of the Ground Lease, whether or not
such compliance shall require structural, unforeseen or extraordinary changes to
any Property, or the operation, occupancy or use thereof.
AGREEMENT FOR GROUND LEASE - Page 3
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<PAGE> 11
"LESSEE" means Monro Leasing, LLC, a Delaware limited liability
company.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"LIEN OF RECORD" means, with the exception of the Lien of a lender or a
lender's agent under a Credit Agreement and Permitted Exceptions, (i) any
mechanics' or materialmen's lien for which Lessee does not hold retainage or
trapped funds in amounts required by applicable law, (ii) any lien securing the
payment of taxes, assessments, or governmental charges and levies which are due,
payable and delinquent, (iii) any judgment lien, or (iv) any other filed,
recorded, or docketed matter (whether or not the same shall constitute a
Permitted Exception or be the subject of a Permitted Contest) which in the case
of any of the foregoing (a) is reasonably likely to result in a sale for
satisfaction of same, a loss, forfeiture, reversion of title, or right of
reentry with respect to any Property, or (b) whether or not valid, is reasonably
likely to interfere with the due and timely payment of any sum payable or the
exercise of any rights or the performance of any of the duties or
responsibilities of Lessee under this Agreement.
"MAXIMUM RATE" means the rate specified in SECTION 11.9 hereof.
"MORTGAGEABLE GROUND LEASE" means a ground lease presented by Lessee
for Brazos' execution which shall include the terms set forth herein or if
lacking any of the terms set forth below, shall have such terms and
characteristics as shall be required by Brazos and Agent, which terms and
characteristics shall include, without limitation, the following: (a) the
lessee's interest therein must be freely assignable, (b) have a remaining term
of at least twenty (20) years, (c) contain no provisions for percentage or
variable rent, (d) permit any lawful use, (e) have no provision for a security
deposit, (f) provide for the delivery to Brazos and Agent of copies of all
notices delivered under or pursuant to such ground lease, (g) provide Brazos and
Agent written notice and the right to cure any defaults (whether monetary or
non-monetary in nature) within thirty (30) days after receipt of such notice
under such ground lease, (h) prohibit any mortgages or other Liens on the
underlying fee, (i) permit Brazos or Agent the right to invalidate any
termination of such ground lease within thirty (30) days of the effective date
of such termination by notice given to the lessor thereunder of intention to
cure, or to foreclose and cure, all curable defects, and, in the event of any
termination of such ground lease, the right to receive a new lease on the same
provisions and with the same expiration date of the original ground lease, (j)
provide that insurance proceeds for damage to improvements and condemnation
proceeds for damage to leasehold interests or improvements shall be within the
control of the lessee under such ground lease, and (k) be delivered with such
estoppel certificates from the lessor, recognition and attornment agreements, or
confirmation of customary mortgagee protection as are acceptable to Brazos and
Agent.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a) (3) of ERISA, to which the Guarantor, Lessee, or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
three (3) calendar years, has made, or been obligated to make, contributions.
"PERMITTED CONTEST" means any good-faith contest permitted by and in
accordance with the terms of ARTICLE X.
"PERMITTED EXCEPTIONS" means the following Liens and other matters
affecting the title of any Property, (a) Liens securing the payment of taxes,
assessments and governmental charges or levies, either not delinquent or being
contested by Lessee as a Permitted Contest; (b) zoning and planning
restrictions, subdivision and platting restrictions, easements, rights-of-way,
licenses, reservations, covenants, conditions, waivers, restrictions on the use
of the Property, minor encroachments or minor irregularities of title none of
which materially impairs or may materially impair the intended use of the
Property by Lessee; (c) reservations of mineral interests; (d) the lien created
pursuant to a Credit Agreement contemporaneously with each Initial Advance; (e)
any mechanics' or materialmen's lien for which Lessee holds retainage or trapped
funds in amounts required by and in accordance with applicable law; (f) Liens
constituting Permitted
AGREEMENT FOR GROUND LEASE - Page 4
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<PAGE> 12
Encumbrances under the Ground Lease; and (g) any other matters; provided that
such other or additional matters shall be approved in writing by Brazos and
Agent, whose approvals shall not be unreasonably withheld or delayed.
"PERSON" means an individual, partnership, corporation, business trust,
joint venture, joint stock company, trust, unincorporated association,
Governmental Authority or other entity of whatever nature.
"POTENTIAL DEFAULT" means any event which, but for the lapse of time,
or giving of notice, or both, would constitute an Event of Default.
"PROPERTY" means each individual parcel of land approved by Agent in
which either a fee interest has been or will be acquired by Brazos or a
leasehold interest has been or will be acquired by Brazos pursuant to an
Acquired Ground Lease, in each case for the purpose of entering into the Ground
Lease, and the respective easements, rights and appurtenances relating to such
parcel of land, but excluding all improvements thereon and all structures,
equipment and materials affixed thereon or located thereon, therein or
thereunder. Any reference to a particular Property shall refer collectively to
such Property and the Additional Property, if any.
"PROPERTY LEASING RECORD" means an instrument evidencing the ground
lease or sublease of a Property under the Ground Lease, as prepared and executed
by Brazos, as lessor or sublessor, accepted and executed by Lessee, as lessee or
sublessee.
"RECONCILIATION ADVANCE" means, with respect to any Property, the
advance made by Brazos pursuant to SECTION 7.1 hereof upon reconciliation of the
Initial Advance or the Additional Advance made with respect to such Property.
"RECONCILIATION CERTIFICATE" means the written certification of Lessee
to be delivered to Brazos and Agent which contains the information and
representations of Lessee as required by SECTION 7.1, and which is substantially
in the form of EXHIBIT "C" attached hereto.
"REQUEST FOR ADVANCE" means the document referred to in SECTIONS 6.1(b)
and 7.1(e) which shall be substantially in the form of attached EXHIBIT "F".
"RESPONSIBLE OFFICER" means any President, Treasurer, Executive Vice
President or Senior Vice President of Guarantor or of Lessee.
"REVISED PROPERTY LEASING RECORD" means a Property Leasing Record
delivered in connection with a Reconciliation Advance or Additional Advance.
"SPECIAL FLOOD HAZARD AREA" has the meaning given such term in the
Flood Disaster Protection Act of 1973, as amended by the National Flood
Insurance Reform Act of 1994.
"SUBSIDIARY" means with respect to any Person, any corporation of which
voting control or more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at such time capital stock of any
other class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency) is at the time directly or indirectly owned
by such Person.
"TITLE COMPANY" means with respect to the acquisition or lease of any
particular Property, Old Republic National Title Insurance Company, Alamo Title
Insurance of Texas, Stewart Title Company, Ticor Title Insurance Company, Ticor
Title Insurance Company of California, Title Insurance Company of Minnesota,
Chicago Title Insurance Company, Commonwealth Land Title Insurance Company,
First American Title Insurance Company, Lawyers Title Insurance Corporation,
Transamerica Title Insurance Company and such other title insurance companies as
may be
AGREEMENT FOR GROUND LEASE - Page 5
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<PAGE> 13
specifically approved by Brazos and Agent in writing, together with such
reinsurers or coinsurers of such title companies satisfactory to the Agent.
"VALUE" means, with respect to a Property, the value as determined by
Lessee as set forth in a certificate or as set forth in a statement of cost and
benefit prepared by Lessee.
Section 1.2. FORMS. All forms specified by the text hereof or by
reference to exhibits attached hereto shall be substantially as set forth
herein, subject to such changes by Brazos and Lessee by mutual consent that do
not alter the substantive rights of the parties hereto or of the Assignees or as
may be required by applicable laws hereafter enacted.
Section 1.3. RECITALS, TABLE OF CONTENTS, TITLES, AND HEADINGS. The
terms and phrases used in the recitals of this Agreement have been included for
convenience of reference only and the meaning, construction, and interpretation
of such words and phrases for purposes of this Agreement shall be determined
solely by reference to SECTION 1.1 hereof. The table of contents, titles, and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference only and are not to be considered a part hereof and
shall not in any way modify or restrict any of the terms or provisions hereof
and shall not be considered or given any effect in construing this Agreement or
any provision hereof or in ascertaining intent, if any question of intent should
arise.
Section 1.4. INTERPRETATION. Unless the context requires otherwise,
words of the masculine gender shall be construed to include correlative words of
the feminine and neuter genders and vice versa, and words of the singular number
shall be construed to include correlative words of the plural number and vice
versa. This Agreement, and all the terms and provisions hereof, shall be
liberally construed to effect the purposes set forth herein and to sustain the
validity of this Agreement.
ARTICLE II
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APPOINTMENT OF LESSEE
Section 2.1. APPOINTMENT AND DUTIES. Brazos hereby appoints and
empowers Lessee as its agent (a) to select Properties, (b) to negotiate and
contract for the acquisition and purchase of fee interests in Properties on
behalf of Brazos, (c) to negotiate and contract for the acquisition of leasehold
estates for Brazos under Acquired Ground Leases, and (d) to purchase Properties
in the name of Brazos to the extent provided in SECTION 2.4(c) hereof, all of
which is subject to the approval of Agent as set forth herein. Lessee agrees to
exercise its best business judgment in connection with the performance of its
responsibilities under this Agreement on behalf of Brazos. Notwithstanding the
foregoing, Brazos and Agent reserve the right to accept or reject any Property
selected by Lessee in their sole discretion.
Section 2.2. TERMINATION OF APPOINTMENT AND DUTIES. Lessee may
terminate its appointment and duties under this Agreement at any time, upon
thirty (30) days advance written notice to Brazos. Any such termination by
Lessee shall be deemed a termination of this Agreement, however such termination
shall not affect any outstanding request for an advance under ARTICLE III
hereof.
Section 2.3. LEASE OF PROPERTY.
(a) Upon delivery to Brazos and Agent of the Initial Advance
Certificate with respect to a Property, Lessee shall request the Initial Advance
with respect to such Property which shall be within the Available Commitment and
within the Budget submitted by Lessee and approved by Agent, and which, subject
to SECTION 3.3(a) hereof, shall be sufficient to provide for payment of all
closing and acquisition costs of the Property. By delivery of the Initial
Advance Certificate and acceptance of the Initial Advance with respect to a
Property, Lessee (i) evidences its acceptance of such Property for lease under
the Ground Lease, (ii) acknowledges that such Property has been delivered to
Lessee in good condition and has been accepted for lease by Lessee as of the
date of the Initial Advance, (iii) acknowledges that such Property is subject to
all of the covenants, terms and conditions of the Ground Lease, and (iv)
certifies that the representations and warranties
AGREEMENT FOR GROUND LEASE - Page 6
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<PAGE> 14
contained in Article II of the Ground Lease are true and correct in all material
respects on and as of the date of the Initial Advance as though made on and as
of such date and that there exists on such date no (1) Event of Default under
this Agreement or Event of Default (as defined in the Ground Lease) or (2)
Potential Default under this Agreement or Potential Default (as defined in the
Ground Lease). Upon making the Initial Advance with respect to such Property,
Brazos shall prepare and deliver to Lessee a Property Leasing Record for such
Property and Lessee shall promptly execute the Property Leasing Record and
return it to Brazos. Each Property Leasing Record shall give a full description
of the Property covered thereby, the Acquisition Cost of such Property, the
Lease Term (as such term is defined in the Ground Lease) for such Property, its
location, and such other details as Brazos, as lessor, and Lessee, as lessee,
may from time to time agree.
(b) Upon delivery to Brazos and Agent of the Reconciliation Certificate
with respect to a Property, Lessee shall request the Reconciliation Advance with
respect to such Property which shall be within the Available Commitment and
within the Budget submitted by Lessee and approved by Agent, and which, subject
to SECTION 3.3(b) hereof, shall be sufficient to pay in full the amount by which
the acquisition and closing costs of such Property exceeds the Acquisition Cost
of such Property as reflected in the Property Leasing Record. By delivery of the
Reconciliation Certificate and acceptance of the Reconciliation Advance, Lessee
(i) acknowledges that such Property is subject to all of the covenants, terms
and conditions of the Ground Lease, and (ii) certifies that the representations
and warranties contained in Article II of the Ground Lease are true and correct
in all material respects on and as of the date of the Reconciliation Advance as
though made on and as of such date and that there exists on such date no (1)
Event of Default under this Agreement or Event of Default (as defined in the
Ground Lease) or (2) Potential Default under this Agreement or Potential Default
(as defined in the Ground Lease). Upon making the Reconciliation Advance with
respect to such Property, Brazos shall prepare and deliver to Lessee a Revised
Property Leasing Record for such Property and Lessee shall promptly execute the
Revised Property Leasing Record and return it to Brazos.
(c) Upon delivery to Brazos and Agent of the Additional Advance
Certificate with respect to Additional Property, Lessee shall request the
Additional Advance with respect to such Additional Property which shall be
within the Available Commitment and within the Budget submitted by Lessee and
approved by Agent, and which, subject to SECTION 3.3(c) hereof, shall be
sufficient to provide for payment of all closing and acquisition costs of the
Additional Property. By delivery of the Additional Advance Certificate and
acceptance of the Additional Advance with respect to Additional Property, Lessee
(i) evidences its acceptance of such Additional Property for lease under the
Ground Lease, (ii) acknowledges that such Additional Property has been delivered
to Lessee in good condition and has been accepted for lease by Lessee as of the
date of the Additional Advance, (iii) acknowledges that such Additional Property
is subject to all of the covenants, terms and conditions of the Ground Lease,
and (iv) certifies that the representations and warranties contained in Article
II of the Ground Lease are true and correct in all material respects on and as
of the date of the Additional Advance as though made on and as of such date and
that there exists on such date no (1) Event of Default under this Agreement or
Event of Default (as defined in the Ground Lease) or (2) Potential Default under
this Agreement or Potential Default (as defined in the Ground Lease). Upon
making the Additional Advance with respect to such Additional Property, Brazos
shall prepare and deliver to Lessee a Revised Property Leasing Record for the
Property to which the Additional Property was added and Lessee shall promptly
execute the Revised Property Leasing Record and return it to Brazos. Each
Revised Property Leasing Record shall give a full description of the Additional
Property covered thereby, the Acquisition Cost of such Additional Property, the
Lease Term (as such term is defined in the Ground Lease) for such Additional
Property, its location, and such other details as Brazos, as lessor, and Lessee,
as lessee, may from time to time agree.
AGREEMENT FOR GROUND LEASE - Page 7
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<PAGE> 15
Section 2.4. POWERS OF LESSEE.
(a) Subject to SECTION 8.2(b) and the right retained by Brazos and the
Agent to accept or reject any Property, Lessee in its capacity as agent for
Brazos shall have the right and obligation to act for Brazos and on Brazos'
behalf with full and complete authority to select potential future sites for
acquisition or for future lease pursuant to a Mortgageable Ground Lease,
negotiate and contract for purchase or lease of such sites as Property, appear
before each applicable Governmental Authority on behalf of Brazos for the
purpose of resolving issues related to the platting, zoning, installation of
utilities, and use of the Property, to grant and obtain minor easements for the
benefit of any Property or which are deemed reasonably necessary by Lessee for
the intended use of the Property, voluntarily to dedicate or convey portions of
any Property for road, highway and other public purposes as required in the good
faith judgment of Lessee in order to obtain the use of all or part of the
Property for the purposes intended (provided that no such action shall
materially adversely affect either the market value of such Property or the use
of such Property for its intended purpose) and to approve all related vouchers,
invoices and statements. Brazos agrees to cooperate with Lessee in connection
with any such activities and to sign any agreements, documents, plats or other
instruments necessary to carry out the intent of this Agreement, and Brazos will
use its best efforts to obtain any necessary approvals or consents under the
Credit Agreement. No payment shall be made relating to the acquisition of a
Property without the prior approval of Lessee, and each amount so approved and
paid shall be part of the Acquisition Cost of that Property and must be in
compliance with the Budget for such Property. If Lessee has unreasonably delayed
or withheld giving the approvals required to make such payments in violation of
any contract, Brazos may make payments which are properly due and payable in
accordance with the contracts with said parties and the Budget approved by the
Agent, and any such payment so made shall be and become a part of the
Acquisition Cost of that Property; provided, however, that Brazos shall not make
any such payment if it is subject to a Permitted Contest and, in any event,
Brazos shall give two (2) Business Days notice to Lessee prior to making any
such payment.
(b) Notwithstanding anything herein contained, Lessee shall have no
authority to, and shall not attempt to, enter into any Acquired Ground Lease on
behalf of and in the name of Brazos or to acquire any Property in the name of
Brazos without the advance written consent of Brazos.
(c) Lessee may, with the advance written consent of Brazos and Agent,
acquire Property in the name of Brazos by advancing Lessee's own funds at the
closing of such Property for the purchase price of the Property and any closing
costs. In the event Lessee advances its own funds for such purpose, Lessee shall
submit an Initial Advance Certificate to Brazos within thirty (30) days, or such
other period of time as may be agreed upon by Brazos and Lessee, of the closing
of such purchase pursuant to SECTION 2.3(a) above. The funding of such Initial
Advance to reimburse Lessee shall be subject to the terms and conditions hereof
to the same extent as an Initial Advance in connection with the acquisition of a
Property by Brazos with its own funds from an Initial Advance. Lessee
acknowledges that any Property so acquired is still subject to approval by
Brazos and Agent in their sole discretion. Any Property which is acquired by
Lessee in the name of Brazos and which is not the subject of an Initial Advance,
Reconciliation Advance or Additional Advance under this Agreement shall be
reassigned by Brazos to Lessee pursuant to SECTION 11.14 hereof.
AGREEMENT FOR GROUND LEASE - Page 8
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<PAGE> 16
ARTICLE III
-----------
ADVANCES
Section 3.1. AGREEMENT TO MAKE ADVANCES. Subject to the conditions and
upon the terms herein provided, including, without limitation, that the
Available Commitment not be exceeded and that all advances be within the Budget
for a Property, Brazos agrees to make available to Lessee advances for each
Property up to an aggregate principal amount determined with respect to that
Property in accordance with SECTION 3.3 hereof. Subject to the terms of this
Agreement, Brazos agrees to make (a) an Initial Advance in accordance with the
Initial Advance Certificate at the time (i) Brazos' fee interest in a Property
is acquired, Brazos approves and executes a Mortgageable Ground Lease for a
Property or an Acquired Ground Lease included in SCHEDULE 4.13 attached hereto
or as otherwise approved by Brazos for a Property, or within thirty (30) days,
or such other period of time as may be agreed upon by Brazos and Lessee, of the
advance of funds by Lessee for the purchase of Property in the name of Brazos to
the extent permitted by SECTION 2.4(c), and (ii) the conditions in ARTICLE VI
are satisfied, (b) a Reconciliation Advance in accordance with the
Reconciliation Certificate at the time the conditions in ARTICLE VII are
satisfied and (c) an Additional Advance in accordance with the Additional
Advance Certificate at the time (i) Brazos' fee interest in Additional Property
is acquired or Brazos approves and executes a Mortgageable Ground Lease for
Additional Property and (ii) the conditions in ARTICLE VI are satisfied.
Section 3.2. PROCEDURE FOR ADVANCES. Lessee shall give Brazos and Agent
at least five (5) Business Days' notice of its irrevocable request for an
advance pursuant to this Agreement, specifying a Business Day on which such
advance is to be made and the amount of the advance. Not later than 11:00 a.m.
Dallas, Texas time on the date for the advance specified in such notice;
provided the conditions set forth in SECTION 2.3 and ARTICLE VI, with respect to
the Initial Advance or Additional Advance, or ARTICLE VII, with respect to a
Reconciliation Advance, have been satisfied, and subject to SECTION 3.6 Brazos
shall provide to Lessee, in immediately available funds, the amount of the
advance then requested.
Section 3.3. DETERMINATION OF AMOUNTS OF ADVANCES.
(a) INITIAL ADVANCE. With respect to any Property, the amount of the
Initial Advance shall be made in accordance with the Initial Advance
Certificate, and shall be sufficient to pay in full all acquisition and closing
costs of the Property, including, without limitation, the vendor's contract
price therefor, amounts paid or payable with respect to such Property to parties
other than the vendor of such Property, any amounts paid by vendee on behalf of
vendor in addition to, and not as a credit against the contract price (including
without limitation, payments made in satisfaction of prior liens, and payment of
any transfer, transfer gains or similar taxes imposed in respect of the
conveyance of such Property), survey and survey inspection charges, recording
and filing fees, brokerage commissions, appraisal, architectural, rentals,
engineering, soil analysis and market analysis fees, environmental inspection
reports, Legal Requirements audits, transfer fees and taxes that are customarily
the responsibility of the purchaser, documentary fees, sales taxes on personal
property, title insurance premiums and costs of appropriate endorsements,
closing adjustments for taxes, utilities, and the like, escrow fees, legal fees
and expenses (including the legal fees and expenses of Brazos, Lessee and any
Assignee), and all reasonable printing, reproduction, closing and other normally
capitalized administrative fees and expenses paid by Lessee and any other
reasonable expenses relating to due diligence investigations. All such costs for
which the Initial Advance is requested shall be specifically set forth in the
Initial Advance Certificate and the request for the Initial Advance, and Brazos
shall have no obligation to advance any funds in the Initial Advance which are
not so specifically set forth in such documents. Lessee shall submit to Brazos
and Agent at least two weeks before the delivery of an Initial Advance
Certificate with respect to a Property, the Budget for the acquisition of the
Property which must be approved (such approval not to be unreasonably withheld)
by Agent and which will govern all advances made with respect to that Property.
(b) RECONCILIATION ADVANCE. With respect to any reconciliation of an
Initial Advance or Additional Advance, the amount of the Reconciliation Advance
shall be made in accordance with the Reconciliation Certificate, and shall be
sufficient to pay in full the amount by which the acquisition and closing costs
of the Property exceeds the Acquisition Cost of such Property as reflected in
the Property Leasing Record subject to the Budget. All such costs for which the
Reconciliation Advance is requested shall be specifically set forth in the
Reconciliation Certificate and the request for the
AGREEMENT FOR GROUND LEASE - Page 9
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<PAGE> 17
Reconciliation Advance, and Brazos shall have no obligation to advance any funds
in the Reconciliation Advance which are not so specifically set forth in such
documents.
(c) ADDITIONAL ADVANCE. With respect to any Additional Property, the
amount of the Additional Advance shall be made in accordance with the Additional
Advance Certificate, and shall be sufficient to pay in full all acquisition and
closing costs of the Additional Property, including, without limitation, the
vendor's contract price therefor, amounts paid or payable with respect to such
Additional Property to parties other than the vendor of such Additional
Property, any amounts paid by vendee on behalf of vendor in addition to, and not
as a credit against the contract price (including without limitation, payments
made in satisfaction of prior liens, and payment of any transfer, transfer gains
or similar taxes imposed in respect of the conveyance of such Additional
Property), survey and survey inspection charges, recording and filing fees,
brokerage commissions, appraisal, architectural, rentals, engineering, soil
analysis and market analysis fees, environmental inspection reports, Legal
Requirements audits, transfer fees and taxes that are customarily the
responsibility of the purchaser, documentary fees, sales taxes on personal
property, title insurance premiums and costs of appropriate endorsements,
closing adjustments for taxes, utilities, and the like, escrow fees, legal fees
and expenses (including the legal fees and expenses of Brazos, Lessee and any
Assignee), and all reasonable printing, reproduction, closing and other normally
capitalized administrative fees and expenses paid by Lessee and any other
reasonable expenses relating to due diligence investigations subject to the
Budget. All such costs for which the Additional Advance is requested shall be
specifically set forth in the Additional Advance Certificate and the request for
the Additional Advance, and Brazos shall have no obligation to advance any funds
in the Additional Advance which are not so specifically set forth in such
documents or in conformance with the Budget.
Section 3.4. PARTIAL ADVANCES. If any or all conditions precedent to
either an Initial Advance, a Reconciliation Advance or an Additional Advance
have not been satisfied on the applicable date for a requested advance, Brazos,
in its sole discretion, may, but shall have no obligation to, disburse a part of
the requested advance.
Section 3.5. USE OF PROCEEDS. The proceeds of each advance with respect
to a Property shall be used by Lessee for payment or reimbursement of costs
specified in the applicable request for the advance.
Section 3.6. NO OBLIGATION TO ADVANCE. Notwithstanding anything
contained herein to the contrary, Brazos shall have no obligation (a) to make
any advance hereunder which would exceed the Available Commitment, or (b) to
make any advance hereunder if the funds therefor are not made available to
Brazos under the Credit Agreement for any reason; provided, however, this
SECTION 3.6 shall not be interpreted to relieve any Bank under the Credit
Agreement from the obligation to provide funds to Brazos in accordance with the
terms of the Credit Agreement.
Section 3.7. BRAZOS EQUITY. Brazos agrees that it will advance its
equity from its own funds in connection with each advance made hereunder upon
approval by Agent so that the maximum amount of debt advanced under the Credit
Agreement for any Property will not exceed ninety-seven percent (97%) of the
Acquisition Cost of such Property provided that the equity advanced by Brazos
shall not exceed 3% of such Acquisition Cost without the prior written approval
of Agent. Brazos agrees that it will not withdraw its equity advanced hereunder
for a Property except upon approval by Agent or the termination of the Ground
Lease for such Property.
Section 3.8. BRAZOS COVENANTS. In the absence of an Event of Default
which is continuing, Brazos agrees that it will not engage any broker in
connection with the purchase or sale of any Property without Lessee's prior
written consent. Within one hundred and twenty (120) days after the end of
Brazos' fiscal year, Brazos will provide to Lessee Brazos' unaudited balance
sheet dated as of the end of its fiscal year prepared in accordance with GAAP,
certified by an officer of the General Partner of Brazos.
AGREEMENT FOR GROUND LEASE - Page 10
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<PAGE> 18
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF LESSEE
In order to induce Brazos to enter into this Agreement and the Credit
Agreement and to agree to make advances, Lessee hereby represents and warrants
to Brazos on the date of each advance (it being understood that all
representations and warranties in this ARTICLE IV with respect to any Property
shall refer to the Property for which each such advance is requested) that:
Section 4.1. CORPORATE MATTERS. Lessee (a) has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
state of its organization, (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 the Ground Lease and this Agreement and (c) is duly
qualified to do business as a foreign corporation in good standing in each
jurisdiction, including, without limitation, each state or other jurisdiction in
which a Property is located, in which its ownership or leasing of properties or
the conduct of its business requires such qualification and where
nonqualification, singly or in the aggregate, would materially adversely affect
the financial condition or creditworthiness of Lessee, or would impair the
ability of Lessee to perform its obligations under the Ground Lease or this
Agreement.
Section 4.2. AUTHORIZATION; BINDING AGREEMENT. This Agreement has been
duly authorized, executed and delivered by Lessee, and, assuming the due
authorization, execution and delivery of this Agreement by Brazos, this
Agreement is a legal, valid and binding obligation of Lessee, enforceable
according to its terms, subject, as to enforceability, to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 4.3. POWER AND AUTHORITY. The consummation of the transactions
herein contemplated and the performance and observance of Lessee's obligations
under this Agreement have been duly authorized by all necessary corporate action
on the part of Lessee. The execution, delivery and performance by Lessee of this
Agreement will not result in any violation of any term of the certificate of
incorporation or the by-laws of Lessee, do not require approval of the board of
directors or shareholders of Lessee or the approval or consent of any trustee or
holders of Indebtedness 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 (other than a Lien on any Property, as may be
contemplated herein) 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 where breach or default, singly or in the
aggregate, could materially adversely affect the financial condition or
creditworthiness of Lessee, or any existing applicable law, rule, regulation,
license, judgment, order or decree of any Governmental Authority or court having
jurisdiction over Lessee or any of its activities or properties.
Section 4.4. CONSENTS, APPROVALS AND AUTHORIZATIONS. There are no
consents, licenses, orders, authorizations or approvals of, or notices to or
registrations with, any Governmental Authority which are required in connection
with the valid execution, delivery and performance of this Agreement that have
not been obtained or made, except (i) such permits and licenses as Lessee will
be required to obtain for the occupancy, use or operation of a Property, and
which, in the ordinary course of business, are not obtained until just prior to
the commencement of such occupancy, use or operation, and (ii) any such
consents, licenses, orders, authorizations, approvals, notices and
registrations, the failure of which to obtain would not reasonably be expected
to cause a Material Adverse Change. Any such consents, licenses, orders,
authorizations, approvals, notices and registrations that have been obtained or
made are in full force and effect.
Section 4.5. FINANCIAL STATEMENTS. Lessee has caused to be furnished to
Brazos and Agent copies of the most recent financial information and
certificates required to be furnished pursuant to the Corporate Credit
Documents, since March 31, 1998, which fairly present the financial position,
results of operations and cash flows with respect to Guarantor
AGREEMENT FOR GROUND LEASE - Page 11
--------------------------
<PAGE> 19
and its consolidated subsidiaries, as of the dates and for the periods indicated
therein and comply with all applicable requirements.
Section 4.6. CHANGES. Since the date of the most recent financial
statements delivered pursuant to SECTION 4.5, there has been no adverse change
in the financial condition or business of any Guarantor or Lessee which would
materially impair the ability of such Guarantor or Lessee to perform their
respective obligations under this Agreement or the Ground Lease or which would
materially impair the ability of Guarantor to perform its obligations under the
Guaranty.
Section 4.7. LITIGATION. Except as disclosed to Brazos, 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 in writing
or affecting Lessee or Guarantor or any property or rights of Lessee or
Guarantor, which affects any Property, as to which there is a significant
possibility of an adverse determination, and which if adversely determined,
could reasonably be expected to have a material adverse impact on the financial
condition or business of Lessee or Guarantor or which, if adversely determined,
could reasonably be expected to materially impair the ability of Lessee or
Guarantor to perform its obligations hereunder or of Guarantor to perform its
obligations under the Guaranty, or which, if adversely determined, could
reasonably be expected to have a material adverse impact on the Value or
intended use of a Property (it being agreed that a potential adverse impact
reasonably likely to be less than $500,000 in the aggregate with respect to all
Properties shall be deemed not to be material), 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 or Guarantor after due inquiry, threatened which
questions or would question the validity of this Agreement.
Section 4.8. NO DEFAULT. Neither Lessee nor Guarantor is in default,
after the expiration of all applicable grace periods, under or with respect to
any Contractual Obligation in any respect which could be materially adverse to
the business, operations, property or financial or other condition of Lessee or
Guarantor, or which could materially adversely affect the ability of Lessee or
Guarantor to perform its obligations under this Agreement or the Ground Lease.
Section 4.9. PROPERTY LIENS. Except as specifically disclosed by Lessee
in writing to Brazos, to Lessee's actual knowledge, no Property is subject to a
Lien of Record, and, to the best of Lessee's actual knowledge, no Property is
subject to any other Lien, except for Permitted Exceptions previously disclosed
in writing to Brazos and Agent.
Section 4.10. AVAILABILITY OF UTILITIES. To the best of Lessee's actual
knowledge, all utility services and facilities (including, without limitation,
gas, electrical, water and sewage services and facilities) that are necessary
for the intended use of the Property under the Ground Lease without impediment
or unreasonable delay are or will reasonably be available when needed at the
boundaries of the Property.
Section 4.11. BROKERAGE. Except as may be contemplated by the Ground
Lease, no brokerage or other fee, commission or compensation is to be paid by
Brazos in connection with this Agreement, and Lessee hereby indemnifies Brazos
against any claims for brokerage fees or commissions and agrees to pay all
reasonable expenses incurred by Brazos in connection with the defense of any
action or proceeding brought to collect any such brokerage fees or commissions;
provided such claim is made through or under Lessee.
Section 4.12. SUITABILITY OF PROPERTY. Each Property is suitable in
material respects (including, without limitation, ground conditions, utilities,
and condition of title) for the intended use of the Property under the Ground
Lease.
Section 4.13. ACQUIRED GROUND LEASE. Each Acquired Ground Lease is a
Mortgageable Ground Lease except to the extent agreed to in writing by Brazos
and Agent, and to the best of Lessee's actual knowledge is in full force and
effect and has not been amended, restated, modified or changed in any manner
that has not been disclosed in writing to Brazos and Agent, nor to the best of
Lessee's actual knowledge is there any material default under any Acquired
Ground Lease nor the occurrence of any event which, with the giving of notice or
the passage of time or both, would constitute a default under such Acquired
Ground Lease, nor to the best of Lessee's actual knowledge has any party under
any Acquired Ground
AGREEMENT FOR GROUND LEASE - Page 12
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<PAGE> 20
Lease commenced any action or given or received any notice for the purpose of
terminating any Acquired Ground Lease, and to the best of Lessee's actual
knowledge all rents, additional rents and other sums due and payable under the
Acquired Ground Lease have been paid in full.
Section 4.14. ACCURACY OF VALUE. Lessee has no knowledge or reason to
believe that the Value contained in any certificate or statement furnished to
Brazos or Agent by Lessee with respect to any Property is not accurate and
complete in all material respects.
ARTICLE V
---------
AFFIRMATIVE COVENANTS
Lessee hereby agrees that, so long as this Agreement remains in effect,
Lessee shall keep and perform fully each and all of the following covenants:
Section 5.1. PERFORMANCE UNDER OTHER AGREEMENTS. Lessee shall duly
perform and observe all of the covenants, agreements and conditions on its part
to be performed and observed hereunder and shall duly perform and observe all of
the covenants, agreements and conditions on its part which it is obligated to
perform or observe under the Ground Lease and all other agreements related to
any Property.
Section 5.2. EXPENSES. Lessee shall pay upon demand all obligations,
reasonable costs and expenses incurred by Brazos (or its limited partners, if
payable to any such limited partner as Additional Rent under the Ground Lease or
if incurred in connection with the closing (as opposed to on-going
administrative expenses)) with respect to any and all transactions contemplated
herein and the preparation of any document reasonably required hereunder,
including (without limiting the generality of the foregoing) and without
duplication all amounts required to reimburse Brazos or its Affiliate for its
interest costs, obligations, costs, fees and expenses arising in connection with
any Credit Agreement or the termination thereof (whether as a result of a
default thereunder or otherwise), title and conveyancing charges, recording and
filing fees and taxes, title search fees, rent under each Acquired Ground Lease,
mortgage taxes, real property taxes and assessments, intangible personal
property taxes, escrow fees, revenue and tax stamp expenses, insurance premiums
(including title insurance premiums), brokerage commissions, finders' fees,
placement fees, court costs, surveyors', photographers', appraisers',
architects', engineers', rating agencies', accountants' and reasonable
attorneys' fees and disbursements (including, without limitation, the
preparation of any tax return or report relating to a Property), and will
reimburse to Brazos all expenses paid by Brazos or its partners of the nature
described in this SECTION 5.2 which have been or may be incurred by Brazos with
respect to any and all of the transactions contemplated herein. If Lessee or
Guarantor shall fail to reimburse Brazos within twenty (20) days after
presentation of a bill and demand for payment therefor, Brazos may pay or
deduct, from the advances to be made under the Credit Agreement, any of such
expenses; provided the same are within the Budget and any proceeds so applied
shall be deemed advances under this Agreement, and deducted from the total funds
available for the Property. Notwithstanding anything to the contrary contained
in the foregoing, neither Lessee nor the Guarantor shall be required to
reimburse Brazos for any of the foregoing obligations, costs and expenses which
constitute properly capitalized costs and which Brazos has agreed to capitalize
and to include as an element of the Acquisition Cost of a particular Property or
which are included in the calculation of Basic Rent (as defined in the Ground
Lease). Expenses incurred by Brazos in financing obligations, costs and expenses
pending allocation as a capitalized cost to a Property shall be payable by
Lessee or the Guarantor hereunder, if not capitalized by Brazos.
AGREEMENT FOR GROUND LEASE - Page 13
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<PAGE> 21
Section 5.3. CERTIFICATES; OTHER INFORMATION. Lessee shall furnish to
Brazos and Agent:
(a) concurrently with the delivery of the annual financial
statements referred to in SECTION 5.3(b), the Compliance Certificate
(as defined in the Guaranty) required to be provided by Guarantor
pursuant to Section 7(b) of the Guaranty, and a certificate of a
Responsible Officer stating that, to the best of such Responsible
Officer's knowledge, Lessee during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition contained in this Agreement to be observed, performed
or satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Event of Default or Potential Default, except as
specified in such certificate; and
(b) from time to time, (i) promptly upon request, copies of
the quarterly financial statements required to be delivered under
Section 8.1(b) of the Corporate Credit Documents, together with each
certificate required to be delivered under Section 8.1 of the Corporate
Credit Documents, and within one hundred (100) days after the end of
Guarantor's fiscal year, copies of the annual financial statements
required to be delivered under Section 8.1(a) of the Corporate Credit
Documents, together with each certificate required to be delivered
under Section 8.1 of the Corporate Credit Documents, (ii) promptly upon
request, such other information with respect to Guarantor or Lessee or
Guarantor's or Lessee's operations, business, property, assets or
financial condition as Brazos or Agent shall reasonably request, (iii)
promptly after a Responsible Officer obtains knowledge of any Event of
Default or Potential Default, a certificate of a Responsible Officer
specifying the nature and period of existence of such Event of Default
or Potential Default, and what action, if any, Lessee has taken, is
taking, or proposes to take with respect thereto, (iv) promptly after a
Responsible Officer obtains knowledge of any material adverse change in
the financial condition or business of Guarantor or Lessee or of any
litigation of the type described in SECTION 4.7, a certificate of a
Responsible Officer describing such change or litigation as the case
may be, and (v) promptly after Lessee obtains knowledge of any and all
Liens other than Permitted Exceptions on any Property or other matter
which may materially adversely affect the value or intended use of a
Property, a detailed statement describing each such Lien or other
matter.
Section 5.4. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Lessee
shall preserve, renew and keep in full force and effect its corporate existence
(except as otherwise permitted herein), and take all reasonable action to
maintain all rights, privileges and franchises material to the conduct of its
business; and comply with all its material Contractual Obligations; provided,
however, that nothing contained in this SECTION 5.4 shall prevent Lessee from
ceasing or omitting to exercise any rights, privileges or franchises which in
the reasonable judgment of Lessee can no longer be profitably exercised or
prevent Lessee from selling, abandoning or otherwise disposing of any property,
the retention of which in the reasonable judgment of Lessee is inadvisable to
the business of Lessee, or prevent any liquidation of any subsidiary of Lessee,
or any merger, consolidation or sale, permitted by the provisions of SECTION
11.8.
Section 5.5. NOTICES. Each party hereto shall give notice or copies, as
applicable, to the other party promptly upon the occurrence (or becoming aware
of or receiving notice) of:
(a) any litigation or proceedings affecting any Property in
which the amount involved (individually or collectively) is $100,000 or
more and not covered by insurance or in which injunctive or similar
relief is sought;
(b) any notices given to or received from the lessor under any
Acquired Ground Lease; and
(c) the imposition of any Lien, other than Permitted
Exceptions, or Lien of Record of which Lessee has knowledge.
AGREEMENT FOR GROUND LEASE - Page 14
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<PAGE> 22
Each notice given by Lessee pursuant to this Section shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action Lessee proposes to take with respect
thereto.
Section 5.6. LEGAL REQUIREMENTS. Lessee shall comply in all material
respects with all Legal Requirements affecting the execution, delivery and
performance of this Agreement, and Lessee will not do or permit any act or thing
which is contrary in any material respect to any Legal Requirements, or which
might impair in any material respect, other than in the normal use thereof, the
value or usefulness of any Property; provided, in each case, that Lessee shall
not be required to comply with any Legal Requirements if (a) in the case of any
Legal Requirements with respect to laws affecting the environment, Lessee acts
diligently to cure such non-compliance upon becoming aware of it and (b) in
every case, such non-compliance, individually or in the aggregate, (i) shall not
involve any material danger that any Property would be subject to sale,
forfeiture, or loss as a result of failure to comply therewith; (ii) could not
reasonably be expected to cause either Brazos or any Assignee to incur (x) civil
liability which, in the sole judgment of Brazos or any Assignee, is not
adequately indemnified (Lessee's obligations under ARTICLE IX of this Agreement
shall be deemed to be adequate indemnification if no Event of Default or
Potential Default exists and if such civil liability is reasonably likely to be
less than $100,000 per Property and $500,000 in the aggregate) or (y) any
criminal liability as a result of failure to comply therewith; (iii) is
permitted under the provisions of the Acquired Ground Lease, if any, on such
Property, and (iv) is consistent with business practices normal within the
industry of Lessee or the practices of Lessee with respect to properties owned
by Lessee.
Section 5.7. LEASING OF PROPERTY. Lessee shall lease (or in the case of
Property under an Acquired Ground Lease, shall sublease) such Property from
Brazos pursuant to the Ground Lease in accordance with the procedures of SECTION
2.3 hereof. Upon the acquisition of a Property by purchase or lease, such
Property shall cease to be governed by the terms, provisions, and conditions of
this Agreement, and shall be governed by the terms, provisions, and conditions
of the Ground Lease; provided that nothing contained herein shall be deemed to
relieve Brazos from its obligation to make the Reconciliation Advance or
Additional Advance if the conditions hereof for such Reconciliation Advance or
Additional Advance shall be satisfied by Lessee or to relieve Lessee from the
obligation of satisfaction of all Liens with respect to any Property, it being
expressly agreed that such obligation shall survive the making of the Initial
Advance and the date of the Property Leasing Record.
Section 5.8. FILINGS. Lessee shall promptly and duly execute, deliver,
file, and record, at Lessee's expense, all such documents, statements, filings,
and registrations, and take such further action as Brazos or Assignee shall from
time to time reasonably request in order to establish, perfect and maintain
Brazos' title to and interest in the Property and any Assignee's interest in
this Agreement or any Property as against Lessee or any third party in any
applicable jurisdiction.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE INITIAL ADVANCE OR ADDITIONAL
ADVANCE WITH RESPECT TO A PROPERTY OR ADDITIONAL PROPERTY
Brazos shall not be obligated to make the Initial Advance with respect
to a Property or an Additional Advance with respect to an Additional Property,
or if no advance is being made pursuant to Brazos acquiring a leasehold estate
in a Mortgageable Ground Lease Brazos shall not be required to acquire such
leasehold estate, until all of the conditions set forth in this ARTICLE VI shall
have been satisfied.
Section 6.1. ACQUISITION DOCUMENTS. In connection with the acquisition
of any Property with the proceeds of an Initial Advance, except as may otherwise
be agreed by Brazos and Agent, Brazos and Agent shall have received at least
five (5) Business Days prior to any advance, in each case in form and substance
satisfactory to Brazos and Agent, the following:
AGREEMENT FOR GROUND LEASE - Page 15
--------------------------
<PAGE> 23
(a) GROUND LEASE. A fully executed copy of the Ground Lease.
The delivery of the Ground Lease to satisfy this condition precedent
with respect to the first Property shall serve to satisfy this
condition precedent for each subsequent Property.
(b) REQUEST FOR ADVANCE. A Request for Advance, executed by
Lessee, which shall set out the total amount of the Initial Advance or
Additional Advance requested, the date on which the advance is to be
paid, the name and address of the escrow or closing agent to which the
Initial Advance or Additional Advance is to be tendered, and an
itemization of the various costs constituting the amount of the Initial
Advance or Additional Advance in such detail as will be necessary to
provide disbursement instructions to the escrow or closing agent.
(c) INITIAL ADVANCE CERTIFICATE OR ADDITIONAL ADVANCE
CERTIFICATE. The Initial Advance Certificate or the Additional Advance
Certificate, as applicable, containing, among other things, a
certification by Lessee that the proposed cost of such Property
contained in such certificate is within the Budget approved by Agent
and is true, complete, correct, and accurately represents all expected
costs of acquiring the Property, and that the Property is not
encumbered by any Liens of Record created by Lessee or, to the best
knowledge of Lessee, by any other Liens of Record.
(d) SPECIAL WARRANTY DEED AND BILL OF SALE. Where fee title is
to be acquired by Brazos, a photocopy of the Special Warranty Deed and
Bill of Sale to be executed and delivered at the closing of the
acquisition of each Property, conveying indefeasible title to Brazos,
subject only to Permitted Exceptions, but not subject to any Liens of
Record. For purposes of the Initial Advance and Additional Advance,
Permitted Exceptions shall NOT include any Liens of Record (whether or
not the subject of a Permitted Contest).
(e) ACQUIRED GROUND LEASE. Where Brazos is acquiring an
Acquired Ground Lease listed on SCHEDULE 4.13 attached hereto or
otherwise approved by Brazos, an assignment of such Acquired Ground
Lease. Where Brazos is acquiring leasehold estate in a Property
pursuant to a Mortgageable Ground Lease, an original of the
Mortgageable Ground Lease to be executed and delivered at the closing
of the acquisition of Brazos' leasehold estate, certified by Lessee as
complying in all respects with this Agreement and with Article XVI of
the Ground Lease, and subject only to Permitted Exceptions but not
subject to any Liens of Record which are not Permitted Exceptions
(other than a lien of a lender to a landlord which is subordinate to
the Acquired Ground Lease or for which a nondisturbance agreement has
been obtained), along with any estoppel certificates deemed necessary
by Brazos or Agent (as, for example, when Lessee's interest in an
existing Acquired Ground Lease is being assigned to Brazos),
recognition and attornment agreements deemed necessary by Brazos or
Agent, and other confirmations required by legal counsel to Brazos and
Agent that such Acquired Ground Lease is a Mortgageable Ground Lease.
For purposes of the Initial Advance and Additional Advance, Permitted
Exceptions shall NOT include any Liens of Record (whether or not the
subject of a Permitted Contest).
(f) TAXES. Evidence that all past and current taxes and
assessments (excluding those which are due and payable but not yet
delinquent) applicable to the Property for which the Initial Advance or
Additional Advance, respectively, is requested have been paid in full.
(g) TITLE INSURANCE POLICY. A commitment for a fee (or
Leasehold or Mortgagee's, as the case may be) Policy of Title Insurance
on the most current ALTA form or, if not permitted by local regulations
such other form as is acceptable to Brazos and Agent. At closing,
Brazos and Agent shall receive fee (or Leasehold, or Mortgagee, as the
case may be) policies of title insurance (or binding commitments
therefor) issued by the Title Company with respect to the Property in
the amount of the vendor's contract price or the leasehold value for
such Property, insuring Brazos' title and the interest of any Assignee
to be good and indefeasible subject only to the Ground Lease, Permitted
Exceptions (but not subject to Liens of Record other than a lien of a
lender to a landlord for which a nondisturbance agreement has been
obtained), shortages in area, taxes for the current year not yet due
and payable and subsequent tax assessments for prior years due to a
change in land usage or ownership, and where applicable, the terms of
the Acquired Ground Lease, and containing such available endorsements
and
AGREEMENT FOR GROUND LEASE - Page 16
--------------------------
<PAGE> 24
affirmative coverages as Brazos and Agent may require. Brazos also
shall have received evidence satisfactory to it that all premiums in
respect of such policies will be paid at the closing of title.
(h) SURVEY. Brazos shall have received a survey of the
Property certified to Brazos and Agent, dated a date within ninety (90)
days prior to closing (or such shorter period as any title issuer may
require), by an independent, licensed registered public land surveyor,
which survey shall be made in accordance with the "Minimum Standard
Detail Requirements for Land Title Surveys" established by the American
Land Title Association and the American Congress on Surveying and
Mapping, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such survey the following: (A) the
location of the established building setback lines; (B) the lines of
streets abutting the Property and the width thereof; (C) all access and
other easements appurtenant to or necessary or desirable to use the
Property; (D) all roadways, paths, driveways, easements, encroachments
and overhanging projections and similar encumbrances affecting the
Property, whether recorded, apparent from a physical inspection of the
Property or otherwise known to the surveyor; (E) the location of any
existing improvements on the Property; (F) any encroachments on any
adjoining property by the building structures and improvements on the
Property; and (G) if the Property is described by reference to a filed
map, a legend relating the survey to said map.
(i) AVAILABILITY OF UTILITIES. With respect to each Property,
evidence satisfactory to Brazos and Agent that all utility services and
facilities (including, without limitation, gas, electrical, water and
sewage services and facilities) that are necessary for the intended use
of the Property under the Ground Lease without impediment or delay are
or will be available to the Property.
(j) FLOOD INSURANCE. Either (i) a policy of flood insurance in
an amount equal to the Acquisition Cost for such Property, or (ii) a
certification by the surveyor that the Property is not located in a
Special Flood Hazard Area.
(k) OPINION OF COUNSEL FOR GUARANTOR. Concurrently with the
execution of this Agreement, an opinion of Schulte Roth & Zabel LLP, in
form and substance reasonably satisfactory to Brazos and Agent.
(l) OPINION OF LOCAL COUNSEL. With respect to (i) any proposed
acquisition by Brazos of a fee interest in a Property in a state or
jurisdiction in which no Property has previously been acquired under
this Agreement and (ii) any proposed acquisition by Brazos of a
Property under an Acquired Ground Lease, an opinion of local counsel,
in each case in form and substance reasonably satisfactory to Brazos
and Agent and generally to the same effect as EXHIBIT "E" attached
hereto.
(m) CERTIFICATES OF INSURANCE. Certificates of insurance or
other evidence reasonably acceptable to Brazos and Agent certifying
that the insurance then carried or maintained on each Property complies
with the terms of the Ground Lease.
(n) ZONING. Satisfactory evidence that the Property is zoned
in the manner which permits the use intended by Lessee.
(o) MEMORANDUM OF LEASE. A memorandum of lease for the
Property in recordable form, executed by Lessee and Brazos, reciting
therein that the Property covered thereby is subject to the terms and
conditions of the Ground Lease.
(p) ENVIRONMENTAL ASSESSMENT. An environmental assessment
prepared by a third party environmental assessment firm of some of the
Property and a letter from Underberg & Kessler LLP relating to the
environmental condition of all of the Property, both of which must be
delivered to Brazos and Agent in form and substance acceptable to
Brazos and Agent and their counsel on the Effective Date. No report
delivered pursuant to this SECTION 6.1(q) shall disclose, in the
reasonable judgment of Brazos or Agent, a violation of
AGREEMENT FOR GROUND LEASE - Page 17
--------------------------
<PAGE> 25
Environmental Law (as defined in the Ground Lease), the existence of an
Environmental Claim (as defined in the Ground Lease) or Lien against
such Property, or the existence of any material Environmental (as
defined in the Ground Lease) contamination of such Property.
(q) OTHER DOCUMENTS. All other documents or certificates
reasonably requested by Brazos or Agent, including, but not limited to,
a Value of the Property including the Facility and/or FF&E, opinions of
counsel and other corporate documents and certificates all in form and
substance acceptable to Brazos and Agent; provided however, Brazos and
Agent reserve the right to require Lessee to provide, at its sole cost
and expense, and appraisal of the Property if required by any
Governmental Authority or by the auditors of the Agent.
Section 6.2. NO EVENT OF DEFAULT. No Event of Default or Potential
Default shall have occurred and be continuing on the date of the Initial Advance
or Additional Advance or after giving effect to the advance to be made on such
date.
Section 6.3. CONTINUING REPRESENTATIONS. All representations and
warranties made in this Agreement, in the Ground Lease, and in connection with
the Initial Advance or Additional Advance or which are contained in any
certificate, document or financial or other statement furnished at any time
under or in connection herewith shall be true and correct as of the date they
are made or are deemed to be made.
Section 6.4. ADDITIONAL MATTERS. All other documents and legal matters
in connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to Brazos and Agent, the Property
must be approved by the Agent and the amount of each advance to be made in
connection with such Property must be within the Budget approved by the Agent.
Section 6.5. PROPERTIES ACQUIRED IN BRAZOS' NAME. In connection with an
Initial Advance for a Property acquired by Lessee in Brazos' name with Lessee's
own funds, except as may otherwise be agreed by Brazos and Agent, Brazos and
Agent shall have received at least five (5) Business Days prior to any advance,
in each case in form and substance satisfactory to Brazos and Agent, such of the
documents and instruments referenced in Section 6.1 as may be required for
funding under the Credit Agreement.
ARTICLE VII
-----------
CONDITIONS PRECEDENT TO THE RECONCILIATION ADVANCE
WITH RESPECT TO A PROPERTY
Section 7.1. RECONCILIATION ADVANCE. Brazos' obligation to make the
Reconciliation Advance with respect to a Property shall be subject to the
satisfaction of the following conditions:
(a) RECONCILIATION CERTIFICATE. A fully executed copy of the
Reconciliation Certificate shall have been delivered to Brazos and
Agent.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made herein or which are contained in any certificate,
document or financial or other statement furnished at any time under or
in connection herewith, shall be correct on and as of the date for such
advance as if made on and as of such date.
(c) NO EVENT OF DEFAULT. No Event of Default or Potential
Default shall have occurred and be continuing on such date or after
giving effect to the advance to be made on such date.
(d) EVIDENCE OF COMPLIANCE. Brazos and Agent shall have been
furnished with such documents, reports, certificates, affidavits and
other information, in form and substance satisfactory to Brazos or
Agent in
AGREEMENT FOR GROUND LEASE - Page 18
--------------------------
<PAGE> 26
their reasonable judgment, as Brazos or Agent may require to evidence
compliance by Lessee with all of the provisions of this Agreement.
(e) REQUEST FOR ADVANCE. Brazos and Agent shall have received
a Request for Advance, executed by Lessee, and stating the total amount
of the Reconciliation Advance requested, the date on which such
Reconciliation Advance is to be made, and a specific breakdown of items
and costs for which the Reconciliation Advance is being made all of
which must be within the amounts specified for same in the Budget
approved by the Agent.
(f) SATISFACTORY TITLE. There shall have been no changes in
the state of title and no additional survey exceptions or Liens, except
for Permitted Exceptions. Brazos and Agent shall have received a list
of all Liens of Record and of all other Liens known to Lessee against
the Property and the amounts thereof and, in the case of an Acquired
Ground Lease, an estoppel certificate from the lessor confirming that
there are no defaults under the Acquired Ground Lease and such other
information satisfactory to Brazos and Agent.
ARTICLE VIII
------------
EVENTS OF DEFAULT
Section 8.1. EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an Event of Default:
(a) FAILURE TO MAKE PAYMENTS. Failure of Lessee to pay any
amount hereunder within five (5) Business Days from written demand for
such payment.
(b) OTHER DEFAULTS. Lessee shall default in the performance or
observance of any other term, covenant, condition or obligation
contained in this Agreement and such default shall (i) continue for
thirty (30) days after written notice shall have been given to Lessee
by Brazos or any Assignee specifying such default and requiring such
default to be remedied or (ii) if such default is of a nature that it
is not capable of being cured within such 30-day period, Lessee shall
not have diligently commenced curing such default, proceeded diligently
and in good faith thereafter to complete curing such default, or cured
such default within sixty (60) days from the date of written notice.
(c) BANKRUPTCY. (i) The entry of a decree or order for relief
in respect of Lessee or Guarantor by a court having jurisdiction in the
premises in an involuntary case under the Federal bankruptcy laws, as
now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Lessee or Guarantor or of any substantial part of Lessee's
or Guarantor's property, or ordering the winding up or liquidation of
Lessee's or Guarantor's affairs, and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60) consecutive
days; or (ii) the general suspension or discontinuance of Lessee's or
Guarantor's business operations, its insolvency (however evidenced) or
its admission of insolvency or bankruptcy, or the commencement by
Lessee or Guarantor of a voluntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal
or state bankruptcy, insolvency or other similar law, or the consent by
it to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of Lessee or of Guarantor of any substantial part of
its property, or the making by it of an assignment for the benefit of
creditors, or the failure of Lessee or Guarantor generally to pay its
debts as such debts become due, or the taking of corporate action by
Lessee or Guarantor in furtherance of any such action.
(d) PAYMENT OF OBLIGATIONS. A default or event of default
which results in the holder or holders of any Indebtedness of Lessee or
of Guarantor, or a trustee or agent on behalf of such holder or
holders, accelerating such Indebtedness prior to its stated maturity
under the provisions of any instrument evidencing
AGREEMENT FOR GROUND LEASE - Page 19
--------------------------
<PAGE> 27
Indebtedness in excess of $1,000,000 of Lessee or Guarantor (or under
the provisions of any agreement pursuant to which such instrument was
issued) or the occurrence of a default as specified in Section
7.1(d)(iii) of the Credit Agreement.
(e) MISREPRESENTATIONS. Any representation or warranty made by
Lessee herein or which is contained in any certificate, document or
financial or other statement furnished under or in connection with this
Agreement proves to be false or misleading in any material respect when
made or deemed made.
(f) DEFAULT UNDER LEASE DOCUMENTS. An Event of Default (as
defined in the Ground Lease, the Agreement for Facilities Lease or the
Facilities Lease) shall occur and be continuing under the Ground Lease,
the Agreement for Facilities Lease or the Facilities Lease,
respectively.
(g) GUARANTY. An Event of Default under the Guaranty shall
occur and be continuing or any representation or warranty made by
Guarantor in the Guaranty, any Consent (as defined in the Facilities
Lease) or any document contemplated hereby or thereby proves to be
false or misleading in any material respect when made or deemed made or
the Guarantor defaults in the performance of any term, covenant,
condition or obligation contained in the Guaranty or any Consent, and
such default shall not have been cured within any applicable grace or
cure period and such default shall be continuing or any provision of
the Guaranty shall for any reason be terminated or cease to be in full
force and effect and a valid and binding obligation of the Guarantor,
or the Guarantor shall challenge or repudiate in writing its liability
thereunder.
(h) OTHER AGREEMENTS. Any Lessee or the Guarantor shall
default in any material respect in the performance or observance of any
term, covenant, condition or obligation contained in any other written
agreement between Lessee and Brazos or any Consent to which any Lessee
or Guarantor is a party and such default shall not have been cured
within any applicable grace or cure period.
(i) UNAUTHORIZED ASSIGNMENTS. Any assignment by Lessee of any
interest in this Agreement or any advance to be made hereunder other
than in accordance with the terms of this Agreement.
(j) DEFAULT UNDER CORPORATE CREDIT DOCUMENTS. The occurrence
of any Default under any of the Corporate Credit Documents.
Section 8.2. RIGHTS UPON DEFAULT. Upon the occurrence and continuation
of any Event of Default, Brazos may in its discretion, in a writing delivered to
Lessee, declare this Agreement to be in default and do any one or more of the
following:
(a) Terminate this Agreement and/or Brazos' obligations to
make Initial Advances, Reconciliation Advances and Additional Advances
hereunder by giving written notice to that effect to Lessee;
(b) Terminate or suspend Lessee's right to act as agent of
Brazos under SECTION 2.4 by giving written notice to that effect to
Lessee;
(c) Recover from Lessee any sums due hereunder; and
(d) Exercise any other right or remedy which may be available
under applicable law and in general proceed by appropriate judicial
proceedings, either at law or in equity, to enforce the terms hereof or
to recover damages for the breach hereof.
Suit or suits for the recovery of any default in the payment of any sum
due hereunder or for damages may be brought by Brazos from time to time at
Brazos' election, and nothing herein contained shall be deemed to require Brazos
AGREEMENT FOR GROUND LEASE - Page 20
--------------------------
<PAGE> 28
to await the date whereon this Agreement or the term hereof would have expired
by limitation had there been no such default by Lessee or no such termination or
cancellation.
The receipt of any payments under this Agreement by Brazos with
knowledge of any breach of this Agreement by Lessee or of any default by Lessee
in the performance of any of the terms, covenants or conditions of this
Agreement, shall not be deemed to be a waiver of any provision of this
Agreement.
No receipt of moneys by Brazos from Lessee after the termination or
cancellation hereof in any lawful manner shall reinstate or continue this
Agreement or operate as a waiver of the right to receive any and all amounts
owing by Lessee to or on behalf of Brazos hereunder; it being agreed that, after
the service of notice to terminate or cancel this Agreement, and the expiration
of the time therein specified, if the default has not been cured in the
meantime, or after the commencement of suit, action or summary proceedings or of
any other remedy, or after a final order, warrant or judgment for the possession
of the Property, Brazos may demand, receive and collect any moneys payable
hereunder, without in any manner affecting such notice, proceedings, suit,
action, order, warrant or judgment; and any and all such moneys so collected
shall be deemed to be payments on account of Lessee's liability hereunder.
Lessee shall be liable to Brazos for Brazos' obligations, costs, and
expenses incurred reasonably in connection with its obligations hereunder,
including, without limitation, all losses, damages and expenses (including,
without limitation, attorneys' fees and expenses) sustained by Brazos by reason
of such Event of Default and the exercise of Brazos' remedies with respect
thereto.
No remedy referred to in this SECTION 8.2 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to Brazos at law or in equity, and the exercise in
whole or in part by Brazos of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Brazos of any or all such other
remedies. No waiver by Brazos of any Event of Default hereunder shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default.
Lessee hereby waives any and all rights to reinstate this Agreement as
permitted or provided by or under any statute, law or decision now or hereafter
in force and effect.
ARTICLE IX
----------
INDEMNITIES
Section 9.1. INDEMNIFIED PERSONS. Lessee shall indemnify and hold
harmless Brazos, each general and limited partner of Brazos, any Assignee, any
successor or successors and any Affiliate of each of them, and their respective
officers, directors, incorporators, shareholders, partners (general and limited,
including, without limitation, the general and limited partners of Brazos),
employees, agents and servants (each of the foregoing an "Indemnified Person")
from and against all liabilities, taxes, losses, obligations, claims, damages,
penalties, causes of action, suits, costs and expenses (including, without
limitation, reasonable attorneys' and accountants' fees and expenses) or
judgments of any nature, except to the extent resulting from gross negligence or
willful misconduct of such Indemnified Person, relating to or in any way arising
out of:
(a) The ordering, delivery, acquisition, construction, title on
acquisition, rejection, installation, possession, titling, retitling,
registration, reregistration, custody by Lessee of title and registration
documents, ownership, use, non-use, misuse, lease, operation, transportation,
repair, control or disposition of any Property;
(b) The assertion of any claim or demand based upon any infringement or
alleged infringement of any patent or other right, by or in respect of any
Property; provided, however, that upon request of Lessee, Brazos will make
available to Lessee Brazos' rights under any similar indemnification arising
from any manufacturer's or vendor's warranties or undertakings with respect to
any Property; or
AGREEMENT FOR GROUND LEASE - Page 21
--------------------------
<PAGE> 29
(c) Any violation or alleged violation (other than an alleged violation
by Brazos) by Lessee of this Agreement or of any contracts or agreements to
which Lessee is a party or by which it is bound, or any laws, rules,
regulations, orders, writs, injunctions, decrees, consents, approvals,
exemptions, authorizations, licenses and withholdings of objection, of any
governmental or public body or authority and any other Legal Requirements,
including, without limitation, any Legal Requirements with respect to the
environment or the regulation of hazardous materials or substances, or any
breach of a representation or warranty by Lessee under this Agreement.
Section 9.2. PAYMENTS. Lessee shall forthwith upon demand reimburse any
Indemnified Person for any sum or sums expended with respect to any of the items
set forth in SECTION 9.1 or, upon request from any Indemnified Person, shall pay
such amounts directly. Any payment made to or on behalf of any Indemnified
Person pursuant to this ARTICLE IX shall be increased to such amount as will,
after taking into account all taxes imposed with respect to the accrual or
receipt of such payment (as the same may be increased pursuant to this
sentence), equal the amount of the payment, reduced by the amount of any savings
in such taxes actually realized by the Indemnified Person as a result of the
payment or accrual of the amounts in respect of which the payment to or on
behalf of the Indemnified Person hereunder is made. Any Indemnified Person
seeking indemnification under this ARTICLE IX shall give Lessee written evidence
supporting the amount demanded, and such written evidence shall be deemed to be
conclusive, absent manifest error. To the extent that Lessee in fact indemnifies
any Indemnified Person under the indemnity provisions of this Agreement, Lessee
shall be subrogated to such Indemnified Person's rights in the affected
transaction and shall have a right to determine the settlement of claims
therein.
Section 9.3. CONTINUING INDEMNIFICATION. The indemnities contained in
this ARTICLE IX shall not be affected by and shall survive any termination of
this Agreement as a whole or in respect of any Property, or any failure or
refusal of Lessee to accept any Property acquired pursuant to the terms hereof.
Section 9.4. LIMITATIONS.
(a) Brazos and Lessee agree that the activities of Lessee under the
Agreement for Ground Lease relating to the preparation or approval of any maps,
drawings, opinions, reports, surveys, change orders, designs, or specifications
relating to any Property is being done by Lessee in its capacity as the
prospective lessee of the Property and not as the agent or employee of Brazos.
Lessee and Brazos agree that to the greatest extent possible without causing any
indemnification provision of the Agreement for Ground Lease to be void and
unenforceable under the laws of any state, it is the intention of the parties to
the Agreement for Ground Lease for Lessee to bear all responsibility for and to
indemnify Brazos against, except to the extent resulting from the gross
negligence or willful misconduct of Brazos, any liability, claims, damages,
losses or expenses, including attorneys fees, arising out of the preparation or
approval of any maps, drawings, opinions, reports, surveys, change orders,
designs, or specifications relating to the Property.
(b) Brazos and Lessee agree that the terms of any state law or the laws
of other jurisdictions which may affect the rights of any Indemnified Person or
Lessee under this ARTICLE IX may be set forth in the Memorandum of Ground Lease
for the affected Property and shall apply as though set forth in this Agreement.
AGREEMENT FOR GROUND LEASE - Page 22
--------------------------
<PAGE> 30
Section 9.5. LITIGATION. If any claim, action, proceeding or suit is
brought against an Indemnified Person with respect to which Lessee would be
required to indemnify such Indemnified Person, Lessee shall have the right to
assume the defense thereof, including the employment at its expense of counsel;
provided that Lessee shall not have such right, to the extent that such
Indemnified Person shall deliver to Lessee a written notice waiving the benefits
of the indemnification of such Indemnified Person provided by this ARTICLE IX in
connection with such claim, action, proceeding or suit. Notwithstanding the
foregoing, if (i) any claim, action, proceeding or suit is brought against an
Indemnified Person who is an individual, (ii) the action threatens to restrain
or adversely affect the conduct of the business of the Indemnified Person, but
not the business of Brazos' ownership of the Property under this Agreement,
(iii) the claim, action, proceeding or suit seeks damages of more than
$1,000,000, or (iv) independent counsel to an Indemnified Person shall conclude
that there may be defenses available to the Indemnified Person which may
conflict with those available to Lessee, Lessee shall not have the right to
assume the defense of any such action on behalf of the Indemnified Person if
such Indemnified Person chooses to defend such action (with counsel reasonably
acceptable to Lessee), and all reasonable costs, expenses and attorneys' fees
incurred by the Indemnified Person in defending such action shall be borne by
Lessee. Notwithstanding the assumption of its defense by Lessee pursuant to this
paragraph, any Indemnified Person shall have the right to employ separate
counsel and to participate in its defense, but the fees and expenses of such
counsel shall be borne by the Indemnified Person. In addition, Lessee will not
be liable for any settlement of any claim, action, proceeding or suit unless
Lessee has consented thereto in writing. Any decision by an Indemnified Person
to employ its own counsel rather than counsel selected by Lessee (whether or not
at Lessee's expense) shall in no way affect any rights of such Indemnified
Person otherwise arising under this ARTICLE IX.
ARTICLE X
---------
PERMITTED CONTESTS
(a) Lessee shall not be required, nor shall Brazos have the right, to
pay, discharge or remove any tax, assessment, levy, fee, rent, charge, Lien or
encumbrance, or to comply or cause any Property to comply with any Legal
Requirements applicable to any Property or the occupancy, use or operation
thereof, so long as no Event of Default exists under this Agreement or the
Ground Lease, and, in the opinion of Lessee's counsel, Lessee shall have
reasonable grounds to contest, and shall be diligently contesting, the
existence, amount, applicability or validity thereof by appropriate proceedings,
which proceedings in the reasonable judgment of Brazos, (i) shall not involve
any material danger that any Property would be subject to sale, forfeiture or
loss, as a result of failure to comply therewith, (ii) could not result in any
criminal liability from a failure to comply therewith, and could not reasonably
be expected to cause either Brazos or any Assignee to incur civil liability
which, in the sole judgment of Brazos or any Assignee, is not adequately
indemnified (Lessee's obligations under ARTICLE IX of this Agreement shall be
deemed to be adequate indemnification if no Event of Default or Potential
Default exists and if such civil liability is reasonably likely to be less than
$100,000 per Property and $1,000,000 in the aggregate), (iii) shall be permitted
under the provisions of the Acquired Ground Lease, if any, on such Property,
(iv) if involving taxes, shall suspend the collection of such taxes and (v)
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which Lessee or the Property is subject and shall not
constitute a default thereunder. Lessee shall conduct all such contests in good
faith and with due diligence and shall promptly after the final determination
(including appeals) of such contest, pay and discharge all amounts which shall
be determined to be payable therein.
(b) At least ten (10) days prior to the commencement thereof, Lessee
shall notify Brazos in writing of any such proceeding in which the amount in
contest exceeds $100,000, and shall describe such proceeding in reasonable
detail. If a taxing authority or subdivision thereof proposes an additional
assessment or levy of any tax for which Lessee is obligated to reimburse Brazos
under this Agreement, or if Brazos is notified of the commencement of an audit
or similar proceeding which could result in such an additional assessment, then
Brazos shall in a timely manner notify Lessee in writing of such proposed levy
or proceeding.
ARTICLE XI
----------
MISCELLANEOUS
AGREEMENT FOR GROUND LEASE - Page 23
--------------------------
<PAGE> 31
Section 11.1. SURVIVAL. All agreements, indemnities, representations,
and warranties shall survive the expiration or other termination hereof.
Section 11.2. ENTIRE AGREEMENT. This Agreement and the instruments,
documents or agreements referred to herein constitute the entire agreement
between the parties and no representations, warranties, promises, guarantees or
agreements, oral or written, express or implied, have been made by any party
hereto with respect to this Agreement or the Property, except as provided herein
or therein.
Section 11.3. MODIFICATIONS. This Agreement may not be amended,
modified or terminated, nor may any obligation hereunder be waived orally, and
no such amendment, modification, termination or waiver shall be effective for
any purpose unless it is in writing, signed by the party against whom
enforcement thereof is sought. A waiver on one occasion shall not be construed
to be a waiver with respect to any other occasion.
Section 11.4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
ANY PROVISION OF THIS AGREEMENT WHICH IS PROHIBITED BY LAW OR UNENFORCEABLE IN
ANY JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF
SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINING
PROVISIONS HEREOF, AND THE PARTIES HERETO SHALL NEGOTIATE IN GOOD FAITH
APPROPRIATE MODIFICATIONS TO REFLECT SUCH CHANGES AS MAY BE REQUIRED BY LAW,
AND, AS NEARLY AS POSSIBLE, TO PRODUCE THE SAME ECONOMIC EFFECTS AS THE
PROVISION WHICH IS PROHIBITED OR UNENFORCEABLE; AND ANY SUCH PROHIBITION OR
UNENFORCEABILITY IN ANY JURISDICTION SHALL NOT INVALIDATE OR RENDER
UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, BRAZOS AND LESSEE HEREBY WAIVE ANY PROVISION OF LAW WHICH
RENDERS ANY PROVISION HEREOF PROHIBITED OR UNENFORCEABLE IN ANY RESPECT.
Section 11.5. NO OFFSETS. The obligations of Lessee to pay all amounts
payable pursuant to this Agreement shall be absolute and unconditional under any
and all circumstances of any character, and such amounts shall be paid without
notice, demand, defense, setoff, deduction or counterclaim and without
abatement, suspension, deferment, diminution or reduction of any kind
whatsoever, except as herein expressly otherwise provided.
LESSEE HAS SELECTED AND SHALL SELECT EACH PROPERTY ACQUIRED ON THE
BASIS OF ITS OWN JUDGMENT. NEITHER BRAZOS NOR ANY ASSIGNEE NOR ANY AFFILIATE OF
EITHER, NOR ANYONE ACTING ON BEHALF OF ANY OF THEM, MAKES ANY REPRESENTATION OR
WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, AS TO THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR
USE, MERCHANTABILITY, CONFORMITY TO SPECIFICATION, ENVIRONMENTAL CONDITION
(INCLUDING THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS), OR ANY OTHER
CHARACTERISTIC, OF ANY PROPERTY, OR AS TO WHETHER ANY PROPERTY OR THE OWNERSHIP,
USE, OCCUPANCY OR POSSESSION THEREOF COMPLIES WITH ANY LAWS, RULES, REGULATIONS
OR REQUIREMENTS OF ANY KIND.
AS BETWEEN BRAZOS AND LESSEE, ANY ASSIGNEE OR ANY INDEMNIFIED PERSON,
AND TO THE EXTENT ALLOWED BY LAW AND EXCEPT AS OTHERWISE PROVIDED HEREIN, LESSEE
ASSUMES ALL RISKS AND WAIVES ANY AND ALL DEFENSES, SET-OFFS, DEDUCTIONS,
COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR FUTURE, TO ITS OBLIGATION TO PAY
ALL AMOUNTS PAYABLE HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY RELATING TO:
AGREEMENT FOR GROUND LEASE - Page 24
--------------------------
<PAGE> 32
(a) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE,
MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF ANY PROPERTY, LATENT OR NOT;
(b) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR OTHER
RIGHT WHICH LESSEE MAY HAVE AGAINST BRAZOS, ANY ASSIGNEE, OR ANY INDEMNIFIED
PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER TRANSACTION OR
MATTER;
(c) ANY DEFECT IN TITLE OR OWNERSHIP OF ANY PROPERTY OR ANY TITLE
ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE PROPERTY;
(d) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR DESTRUCTION
OF, OR DAMAGE TO, ANY PROPERTY, IN WHOLE OR IN PART, OR CESSATION OF THE USE OR
POSSESSION OF ANY PROPERTY BY LESSEE FOR ANY REASON WHATSOEVER AND OF WHATEVER
DURATION, OR ANY CONDEMNATION, CONFISCATION, REQUISITION, SEIZURE, PURCHASE,
TAKING OR FORFEITURE OF ANY PROPERTY, IN WHOLE OR IN PART;
(e) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE, OWNERSHIP,
OCCUPANCY OR POSSESSION OF THE PROPERTY BY LESSEE;
(f) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING BY
OR AGAINST LESSEE, GUARANTOR OR BRAZOS;
(g) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER
TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(h) THE INVALIDITY OR UNENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER
INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF BRAZOS OR LESSEE TO ENTER
INTO THIS AGREEMENT; OR
(i) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER, WHETHER OR NOT
SIMILAR TO ANY OF THE FOREGOING.
LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY BE
CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT, RESCIND
OR SURRENDER THIS AGREEMENT EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS HEREOF.
NOTHING CONTAINED IN THIS SECTION 11.5 SHALL BE DEEMED TO BENEFIT ANY THIRD
PARTY OR TO CONSTITUTE A WAIVER OR LIMITATION OF ANY RIGHT THAT LESSEE MAY HAVE
AGAINST ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY LESSOR OF AN
ACQUIRED GROUND LEASE (OTHER THAN BRAZOS) OR ANY PRIOR OWNER OF ANY PROPERTY.
Section 11.6. NON-RECOURSE. Brazos' obligations hereunder are intended
to be the limited obligations of the limited partnership and of the corporation
which is the general partner thereof. Notwithstanding any other provision of
this Agreement, Lessee agrees that, except for a breach by Brazos of SECTION
11.12 or SECTION 11.14, the personal liability of Brazos and the limited
partners of Brazos shall be strictly and absolutely limited to the Property and
no recourse for the payment of any amount due under this Agreement, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
other assets of the limited partnership or of the general or of any limited
partner of Brazos or of any incorporator, shareholder, officer, director or
Affiliate (past, present or future) of such general partner or limited partner
AGREEMENT FOR GROUND LEASE - Page 25
--------------------------
<PAGE> 33
of Brazos or of any Affiliate of either, or of any successor corporation to any
corporate general partner or any corporate limited partner of Brazos, it being
understood that Brazos is a limited partnership entering into the transactions
involved in and relating to this Agreement and the Ground Lease on the express
understanding aforesaid.
Section 11.7. NOTICES.
(a) Any notice or request which by any provision of this Agreement is
required or permitted to be given by either party to the other shall be deemed
to have been given when delivered by hand (including, delivery by courier),
three (3) Business Days after being deposited in the mail, postage prepaid, by
certified or registered mail or, if promptly confirmed by mail or by
hand-delivery, as provided above, when sent by telex, or other written
telecommunication, addressed to the following specified addresses or to such
other addresses as Brazos or Lessee may specify by written notice to the other
party:
If to Brazos:
Brazos Automotive Properties, L.P.
c/o Brazos Automotive Properties Management, Inc.
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Gregory C. Greene
Telephone: (214) 522-7296
Telecopy: (214) 520-2009
with a copy to:
Heller Financial, Inc.
500 West Moroe Street
Chicago, Illinois 60661
Attention: Commercial Equipment Finance Division,
Portfolio Manager
If to Agent or Assignee:
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
Attention: Philip M. Hendrix, Vice President
Telephone: (716) 258-5437
Telecopy: (716) 258-7604
with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002-4086
Attention: Carol M. Burke
Telephone: (713) 308-5561
Telecopy: (713) 308-5555
If to Lessee:
Monro Leasing, LLC
200 Holleder Parkway
Rochester, New York 14615
AGREEMENT FOR GROUND LEASE - Page 26
--------------------------
<PAGE> 34
Attention: Catherine D'Amico, Senior Vice-President
Telephone: (716) 647-6400 X 335
Telecopy: (716) 627-0941
With a copy to any Assignee at such other address as such Assignee may specify
by written notice to Brazos and Lessee.
(b) Brazos shall within five (5) Business Days give to Lessee a copy of
all notices received by Brazos pursuant to any Credit Agreement or any Acquired
Ground Lease and any other notices received with respect to any Property.
Section 11.8. FUNDAMENTAL CHANGES. Lessee shall not consolidate with or
merge into any other corporation which is not a Subsidiary or sell all or
substantially all of its assets to any Person which is not a Subsidiary, except
that Lessee may consolidate with or merge into any other corporation, or sell
all or substantially all of its assets to any Person; provided that, (i) no
default or event of default occurs under the Corporate Credit Documents and (ii)
the surviving corporation or transferee Person shall assume, by execution and
delivery of instruments satisfactory to Brazos and Agent, the obligations of
Lessee hereunder and become successor to Lessee, but Lessee, if it is a
surviving corporation, shall not thereby be released, without the consent of
Brazos, such consent not to be unreasonably withheld or delayed, from its
obligations hereunder and, provided further, that such surviving corporation or
transferee Person will, on a pro forma basis, immediately after such
consolidation, merger or sale, possess a consolidated net worth greater than or
equal to that of Lessee immediately prior to such consolidation, merger or sale,
and provided further that each Guarantor shall reaffirm its obligations under
the Guaranty by execution and delivery of instruments satisfactory to Brazos and
Agent and no Event of Default shall have occurred or result therefrom. Lessee
may assign its rights and obligations under this Agreement with respect to any
Property to a Subsidiary of Lessee; provided that Lessee shall, in connection
with any such assignment, continue to be liable hereunder without regard to such
assignment and Lessee shall guaranty the performance of all obligations of such
assignee.
AGREEMENT FOR GROUND LEASE - Page 27
--------------------------
<PAGE> 35
Section 11.9. USURY. No provision of this Agreement or any other
instrument relating to this Agreement, shall require the payment or permit the
collection of interest in excess of the maximum nonusurious interest rate under
applicable law (the "MAXIMUM RATE"). If any excess interest in such respect is
so provided for, or shall be adjudicated to be so provided for, the provisions
of this SECTION 11.9 shall govern, and neither Lessee nor its successors or
assigns shall be obligated to pay the amount of such interest to the extent it
is in excess of the Maximum Rate. In determining the Maximum Rate, any interest
shall be spread over the term of this Agreement to the extent permitted by
applicable U.S. Federal or state law, notwithstanding the actual time for the
payment of any rent or other amounts hereunder. It is expressly stipulated and
agreed to be the intent of Brazos and Lessee at all times to comply with
applicable state law governing the Maximum Rate or the amount of interest
payable pursuant to this Agreement (or applicable U.S. Federal law to the extent
that it permits Brazos to contract for, charge, take, reserve or receive a
greater amount of interest than under state law). If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Agreement, the Agreement or any of the other documents relating to this
Agreement or any amount contracted for, charged, taken, reserved or received
with respect to this Agreement, or if Brazos' exercise of any option herein or
in any other document contained to accelerate the payment of amounts required
hereunder results in Lessee having paid any interest in excess of that permitted
by applicable law, then it is Brazos' and Lessee's intent that all excess
amounts theretofore collected by Brazos be credited on the remaining balance of
payments due hereunder (or, if all amounts due hereunder have been or would
thereby be paid in full, refunded to Lessee) and the provisions of this
Agreement shall immediately be deemed reformed in the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and under any
other document relating hereto. If at any time the amount of any interest for a
year, would, but for this SECTION 11.9, exceed the amount of interest that would
have been accrued during such year if the Maximum Rate had from time to time
been in effect, the total interest payable for such year shall be limited to the
amount that would have been accrued if the Maximum Rate had from time to time
been in effect, and to the fullest extent permitted by applicable law, such
excess shall be (i) spread and allocated to the preceding periods in which the
interest paid was less than the interest that would have been accrued at the
Maximum Rate or (ii) spread and allocated to subsequent periods in which the
total payments on account of interest are less than the interest that would have
accrued at the Maximum Rate.
Section 11.10. NO WAIVERS. No advance hereunder shall constitute a
waiver of any of the conditions of Brazos' obligation to make further advances
nor, if Lessee is unable to satisfy any such condition, shall any waiver of such
condition have the effect of precluding Brazos from thereafter declaring such
inability to be an Event of Default as herein provided. Any advance made by
Brazos and any sums expended by Brazos pursuant to this Agreement shall be
deemed to have been made pursuant to this Agreement, notwithstanding the
existence of an uncured Event of Default. No advance at a time when an Event of
Default exists shall constitute a waiver of any right or remedy of Brazos
existing by reason of such Event of Default, including, without limitation, the
right to refuse to make further advances.
Section 11.11. BRAZOS AND ASSIGNEE SOLE BENEFICIARIES. All conditions
of the obligation of Brazos to make advances hereunder are imposed solely and
exclusively for the benefit of Brazos and Assignee and their assigns and no
other person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Brazos will refuse to
make advances in the absence of strict compliance with any or all thereof and no
other person shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any or all of which may be freely waived in whole or in part by
Brazos, with the consent of Agent, at any time if in its sole discretion it
deems it advisable to do so. Brazos' sole obligation hereunder is to make the
advances if and to the extent required by this Agreement.
AGREEMENT FOR GROUND LEASE - Page 28
--------------------------
<PAGE> 36
Section 11.12. SALE OR ASSIGNMENT BY BRAZOS.
(a) Brazos shall not sell, mortgage or encumber or assign its right,
title, interest or obligations in a Property or under this Agreement, except
that Brazos shall have the right to finance the acquisition and ownership of the
Property by selling, assigning or granting a security interest in its right,
title and interest in this Agreement as provided in the Credit Agreement and any
or all amounts due from Lessee or any third party under this Agreement as
provided in the Credit Agreement; provided that any such sale, assignment or
grant of a security interest shall be subject to the rights and interests of
Lessee under this Agreement and the Ground Lease.
(b) Upon the occurrence of an event of default under the Credit
Agreement, any Assignee shall, except as otherwise agreed by Brazos and
Assignee, have all the rights, powers, privileges and remedies of Brazos
hereunder, and Lessee's obligations as between itself and such Assignee
hereunder shall not be subject to any claims or defense that Lessee may have
against Brazos. Upon written notice to Lessee of any such assignment, Lessee
shall attorn to any Assignee, and Lessee shall thereafter make payments of any
and all sums due hereunder to Assignee, to the extent specified in such notice,
and such payments shall discharge the obligation of Lessee to Brazos hereunder
to the extent of such payments. Anything contained herein to the contrary
notwithstanding, no Assignee shall be obligated to perform any duty, covenant or
condition required to be performed by Brazos hereunder, and any such duty,
covenant or condition shall be and remain the sole obligation of Brazos except
as set forth in the Subordination, Non-Disturbance and Attornment Agreement (as
defined in the Credit Agreement) for each Property.
Section 11.13. RIGHTS CUMULATIVE. All rights, powers and remedies
herein given to Brazos are cumulative and not alternative, and are in addition
to all statutes or rules of law; any forbearance or delay by Brazos in
exercising the same shall not be deemed to be a waiver thereof, and the exercise
of any right or partial exercise thereof shall not preclude the further exercise
thereof, and the same shall continue in full force and effect until specifically
waived by an instrument in writing executed by Brazos. All representations and
covenants by Lessee shall survive the making of the advances, and the provisions
hereof shall be binding upon and inure to the benefit of the respective
successors and permitted assigns, if any, of the parties hereto. Lessee may not,
however, assign its rights or obligations as agent hereunder other than in
accordance with the terms of this Agreement.
Section 11.14. REASSIGNMENT. In the event that Lessee advances its own
funds for the acquisition of any Property in the name of Brazos and an Initial
Advance for such Property is not made under this Agreement for any reason,
including a default on the part of Lessee, Brazos hereby agrees to execute all
instruments of assignment and transfer with respect to such Property, without
warranty (except for special warranties against the actions of Brazos), or
recourse to Brazos except to the extent of any applicable title insurance, which
may be necessary to transfer all of Brazos' right, title and interest in and to
such Property to Lessee. Any Property which is assigned and transferred by
Brazos to Lessee pursuant to this Section shall not thereafter be acquired by
Brazos or by Lessee on behalf of Brazos under this Agreement. All agreements,
indemnities, warranties and representations of Lessee pertaining to such
Property shall survive any transfer by Brazos to Lessee pursuant to this SECTION
11.14. The obligations of Brazos under this SECTION 11.14 shall survive any
termination of this Agreement.
Section 11.15. SEVERABILITY. In case one or more provisions of this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired thereby.
Section 11.16. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 11.17. CONFIDENTIALITY. Brazos shall keep confidential all
information of a confidential nature received by it from Lessee pursuant to this
Agreement; provided, however, that such information may be disclosed where
necessary: (i) to directors, officers, employees, agents, representatives or
outside counsel of Brazos or of the Agent or any Bank or
AGREEMENT FOR GROUND LEASE - Page 29
--------------------------
<PAGE> 37
any Affiliate of any Bank under any Credit Agreement; (ii) to any auditor,
government official or examiner; (iii) pursuant to any subpoena or other court
order or otherwise as may be required by applicable law; or (iv) to any assignee
of or participant in, or prospective assignee of or participant in, any Bank's
Advances or its Commitment or any part thereof under any Credit Agreement who,
in each case, agrees in writing to be bound by the terms of this Section; and
provided further, that no confidentiality obligation shall attach to any
information which (1) is or becomes publicly known, through no wrongful act on
the part of any Person who shall have received such information, (2) is
rightfully received by such Person from a third party, (3) is independently
developed by such Person, or (4) is explicitly approved for release by Lessee.
Section 11.18. EXECUTION BY LESSEE. By execution of the Memorandum of
Lease for a Property, Lessee agrees to all of the terms and conditions of this
Agreement and is deemed to have executed this Agreement as of the date of the
request for advance with respect to such Property.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
AGREEMENT FOR GROUND LEASE - Page 30
--------------------------
<PAGE> 38
IN WITNESS WHEREOF, Brazos and Lessee have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership
By: BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT,
INC., a Delaware corporation, its General Partner
By: /s/ Daniel D. Boeckman
------------------------------------------------------
Daniel D. Boeckman, Executive Vice President
MONRO LEASING, LLC,
a Delaware limited liability company
By: MONRO MUFFLER BRAKE, INC.,
its Sole Member
By: /s/ Catherine D'Amico
------------------------------------------------------
Catherine D'Amico, Senior Vice President and
Chief Financial Officer
AGREEMENT FOR GROUND LEASE - Page 31
--------------------------
<PAGE> 39
STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
On the 15th day of September 1998, before me personally came Daniel D.
Boeckman who, being by me duly sworn, did depose and say that he is the
Executive Vice President of BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT, INC., a
Delaware corporation, the General Partner of BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership, and as said officer executed the foregoing
instrument.
--------------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF NEW YORK
[SEAL]
STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
On the 15th day of September 1998, before me personally came Catherine
D'Amico who, being by me duly sworn, did depose and say that she is the Senior
Vice President and Chief Financial Officer of MONRO MUFFLER BRAKE, INC., a New
York corporation, the Sole Member of MONRO LEASING, LLC, a Delaware limited
liability company, and as said officer executed the foregoing instrument.
--------------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF NEW YORK
[SEAL]
AGREEMENT FOR GROUND LEASE - Page 32
--------------------------
<PAGE> 40
EXHIBIT A
FORM OF GROUND LEASE AGREEMENT
AGREEMENT FOR GROUND LEASE - Page 33
--------------------------
<PAGE> 41
EXHIBIT B
Property No._________
INITIAL ADVANCE CERTIFICATE
MONRO LEASING, LLC ("LESSEE"), the Lessee under a certain Agreement for
Ground Lease (the "AGREEMENT FOR GROUND LEASE") dated as of September 15, 1998,
between BRAZOS AUTOMOTIVE PROPERTIES, L.P. ("OWNER") and Lessee, delivers this
Initial Advance Certificate as a part of Lessee's Request for Initial Advance
made with respect to the above noted Property. All capitalized terms used in
this Certificate shall have the meanings given to such terms in the Agreement
for Ground Lease. Lessee hereby certifies, warrants and represents to Owner as
follows:
1. LEGAL DESCRIPTION. Accompanying this Certificate is a copy of
the form of deed by which the Property will be conveyed to
Owner, which sets forth a true and complete legal description
for the Property. The Property is being acquired pursuant to
the Purchase Option Agreement or Acquired Ground Lease
accompanying this Certificate (being a true, complete, and
correct copy thereof and of all amendments thereto).
2. ITEMIZATION OF COSTS. Accompanying this Certificate is a true,
complete, and correct itemization of all costs incurred to
date or to be incurred in connection with the closing of the
acquisition of Owner's interest in the Property. Each item of
cost is for the Property described herein and is within the
Budget approved by Agent.
3. TITLE. Accompanying this Certificate is a true, complete, and
correct copy of a Commitment for Title Insurance issued with
respect to the Property by _____________ Title Insurance
Company, bearing Commitment No. ____________ and an Effective
Date of _____________. To the best of Lessee's knowledge,
after due inquiry, no mechanics' or materialmen's liens have
been filed in connection with the Property, and with the
exception of the Deed of Trust, Security Agreement, Assignment
of Rents and Fixture Filing granted by Owner in connection
with the acquisition of the Property, there are no Liens of
Record affecting the title to the subject Property.
All matters affecting title to the Property as to which Lessee
has any knowledge, recorded or unrecorded, are disclosed to
Owner in writing as reflected in the documents constituting
this Request for Initial Advance with respect to such
Property, and all such matters are Permitted Exceptions.
4. SURVEY. Accompanying this Certificate is a true, complete, and
correct copy of the survey covering the Property contained in
the files of Lessee. To the best of Lessee's knowledge, there
has been no change in the location of the established building
setback lines or in the lines of streets abutting the Property
and the width thereof since the date of the survey.
5. TAXES. Taxes levied on the Property for years prior to
_______________ have been paid in full.
6. FLOOD INSURANCE. The subject Property does not lie within the
flood hazard area, and no flood insurance is required in
connection with the improvement of said Property or if the
subject Property does lie within the flood hazard area, a
policy of flood insurance has been obtained in accordance with
the Agreement for Ground Lease.
7. REPRESENTATIONS. Lessee represents to Owner that (a) all costs
and expenses which are the subject of the Initial Advance
requested hereby have been or will be paid in full out of the
proceeds of this Initial Advance; (b) all representations,
covenants, and warranties of Lessee contained in the Agreement
for Ground Lease and in the Ground Lease are true and correct
in all material respects as of the date hereof;
AGREEMENT FOR GROUND LEASE - Page 34
--------------------------
<PAGE> 42
(c) all additional matters required by Section 6.1 of the
Agreement for Ground Lease are enclosed herewith; and (d) no
Event of Default exists under the Agreement for Ground Lease,
and none will arise after giving effect to the Initial Advance
to be made hereunder.
8. INSURANCE. Lessee maintains the insurance coverage required by
the Ground Lease as indicated by the certificates of insurance
previously delivered to Owner or to be delivered on or after
closing to Owner. Such insurance will be effective as to the
subject Property upon acquisition thereof by Owner.
Dated as of _________ , _____.
MONRO LEASING, LLC
By: MONRO MUFFLER BRAKE, INC.,
its Sole Member
By:___________________________________
Name:_________________________________
Title:________________________________
AGREEMENT FOR GROUND LEASE - Page 35
--------------------------
<PAGE> 43
EXHIBIT "C"
Property No. _______________
RECONCILIATION CERTIFICATE
MONRO LEASING, LLC ("LESSEE"), the Lessee under a certain Agreement for
Ground Lease (the "AGREEMENT FOR GROUND LEASE") dated as of September 15, 1998,
between BRAZOS AUTOMOTIVE PROPERTIES, L.P. ("OWNER") and Lessee, delivers this
Reconciliation Certificate as part of Lessee's Request for Reconciliation
Advance made with respect to the above noted Property. All capitalized terms
used in this Certificate shall have the meanings given to such terms in the
Agreement for Ground Lease. Lessee hereby certifies, warrants and represents to
Owner as follows:
1. COMPLETION OF ACQUISITION. The completion of the acquisition
of the Property has occurred.
2. STATEMENT OF EXPENDITURES. Attached hereto is a true,
complete, and correct itemization of all costs actually
incurred in connection with the acquisition of the Property
and for which the Reconciliation Advance is being made. The
Initial Advance was $ ___________. With the Reconciliation
Advance, the total expenditures will be $ _____________. Each
item of cost is for the Property described herein and is
within the Budget approved by Agent.
3. TITLE. After matters affecting title to the Property as to
which Lessee has any knowledge, recorded or unrecorded, are
described in an Exhibit attached hereto or were disclosed to
Owner in writing as reflected in the documents constituting
the Request for Initial Advance with respect to such Property,
and all such matters are Permitted Exceptions. To the best of
Lessee's knowledge, since the Initial Advance there has been
no change in the state of title of the Property, and no
additional survey or title exceptions or Liens have been
discovered or created. Upon acquisition of the Property, Owner
granted a Deed of Trust, Security Agreement, Assignment of
Rents and Fixture Filing to ______________ Title Insurance
Company as Trustee for the benefit of ______________[Lender],
which Deed of Trust, Security Agreement, Assignment of Rents
and Fixture Filing is recorded in Book _________, Page ___, of
the Official Public Records of ________ County, ______.
4. REPRESENTATIONS. Lessee represents to owner that (a) all costs
and expenses which are the subject of the Reconciliation
Advance requested hereby are amounts which have been paid by
Lessee and all such amounts have been paid in connection with
the acquisition of the Property, (b) all representations,
covenants and warranties of Lessee contained in the Agreement
for Ground Lease and in the Ground Lease are true and correct
in all material respects as of the date hereof, (c) all
additional matters required by Section 7.1 of the Agreement
for Ground Lease are enclosed herewith, and (d) no Event of
Default exists under the Agreement for Ground Lease, and none
will arise after giving effect to the Reconciliation Advance
to be made hereunder.
5. INSURANCE. Lessee maintains the insurance coverage required by
the Ground Lease as indicated by the certificate of insurance
delivered to Owner or to be delivered on or after closing to
Owner. Such insurance is effective with respect to the
Property and complies with the terms of the Ground Lease.
MONRO LEASING, LLC
Dated as of _______________
By: MONRO MUFFLER BRAKE, INC.,
its Sole Member
By:________________________________
Name:______________________________
Title:_____________________________
AGREEMENT FOR GROUND LEASE - Page 36
--------------------------
<PAGE> 44
EXHIBIT "D"
Property No.
ADDITIONAL ADVANCE CERTIFICATE
MONRO LEASING, LLC ("LESSEE"), the Lessee under a certain Agreement for
Ground Lease (the "AGREEMENT FOR GROUND LEASE") dated as of September 15, 1998,
between BRAZOS AUTOMOTIVE PROPERTIES, L.P. ("OWNER") and Lessee, delivers this
Additional Advance Certificate as part of Lessee's Request for Additional
Advance made with respect to Additional Property contiguous to the above noted
Property. All capitalized terms used in this Certificate shall have the meanings
given to such terms in the Agreement for Ground Lease. Lessee hereby certifies,
warrants and represents to Owner as follows:
1. LEGAL DESCRIPTION. Accompanying this Certificate is a copy of
the form of Warranty Deed or Acquired Ground Lease by which
the Additional Property will be conveyed or leased to Owner,
which sets forth a true and complete legal description for the
Additional Property. The Additional Property is being acquired
pursuant to the Purchase Option Agreement or Acquired Ground
Lease accompanying this Certificate (being a true, complete,
and correct copy thereof and of all amendments thereto) and is
contiguous to Property No. ___________.
2. ITEMIZATION OF COSTS. Accompanying this Certificate is a true,
complete, and correct itemization of all costs incurred to
date or to be incurred in connection with the closing of the
acquisition of Owner's interest in the Property. Each item of
cost is for the Additional Property described herein and is
within the Budget approved by Agent.
3. TITLE. Accompanying this Certificate is a true, complete, and
correct copy of a Commitment for Title Insurance issued with
respect to the Additional Property by ___________ Title
Insurance Company, bearing Commitment No. ______________ and
an Effective Date of _____________. Owner is the owner in fee
of the Additional Property. To the best of Lessee's knowledge,
after due inquiry, no mechanics' or materialmen's liens have
been filed in connection with the Additional Property, and
with the exception of the Deed of Trust, Security Agreement,
Assignment of Rents and Fixture Filing granted by Owner in
connection with the acquisition of the Additional Property,
there are no recorded mechanics' or materialmen's liens or
other Liens of Record affecting the title to the Additional
Property.
All matters affecting title to the Additional Property as to
which Lessee has any knowledge, recorded or unrecorded, are
disclosed to Owner in writing as reflected in the documents
constituting this Request for Additional Advance with respect
to such Additional Property, and all such matters are
Permitted Exceptions.
4. TAXES. Taxes levied on the subject Additional Property for
years prior to ____________ have been paid in full.
5. FLOOD INSURANCE. The Additional Property does not lie within
the flood hazard area, and no flood insurance is required in
connection with the improvement of said property or if the
Additional Property does lie within the flood hazard area, a
policy of flood insurance has been obtained in accordance with
the Agreement for Ground Lease.
6. REPRESENTATIONS. Lessee represents to Owner that (a) all costs
and expenses which are the subject of the Additional Advance
requested hereby have been or will be paid in full out of the
proceeds of this Additional Advance, (b) all representations,
covenants, and warranties of Lessee contained in the Agreement
for Ground Lease and in the Ground Lease are true and correct
in all material respects as of the date hereof, (c) all
additional matters required by Section 6.1 of the Agreement
for Ground Lease are enclosed herewith, and (d) no Event of
Default exists under the Agreement for Ground Lease, or
AGREEMENT FOR GROUND LEASE - Page 37
--------------------------
<PAGE> 45
Ground Lease Agreement, and none will arise after giving
effect to the Additional Advance to be made hereunder.
7. INSURANCE. Lessee maintains the insurance coverage required by
the Ground Lease as indicated by the certificates of insurance
previously delivered to Owner or to be delivered on or after
closing to Owner. Such insurance will be effective as to the
Additional Property upon acquisition thereof by Owner.
Dated as of __________________.
MONRO LEASING, LLC
By: MONRO MUFFLER BRAKE, INC.,
its Sole Member
By:_____________________________________
Name:___________________________________
Title:__________________________________
AGREEMENT FOR GROUND LEASE - Page 38
--------------------------
<PAGE> 46
EXHIBIT "E"
FORM OF LOCAL COUNSEL OPINION
1. The form of the Deed of Trust and Assignment of Leases and Rents to
be filed in ______________ is in proper form under applicable law to (a) be
accepted for recording in the office of the [Recorder of Deeds] in and for any
county in __________________; (b) create and constitute a valid mortgage lien on
or security interest in the [Trust Estate (as defined in such Deed of Trust and
Assignment of Leases and Rents)]; and (c) be enforceable against the Borrower,
in accordance with its terms.
2. The recording of the Deed of Trust to be filed in ______________
with the office of the [Recorder of Deeds] in the county where the real property
to be encumbered is located is the only recording or filing necessary to publish
notice to perfect the liens and security interests created by the Deed of Trust
and Assignment of Leases and Rents to the extent such liens and security
interests may be perfected under the laws of __________.
3. Except for the payment of recording or filing fees with respect to
UCC-1 Financing Statements and any Deed of Trust to be filed in
__________________ no other taxes and governmental fees and charges are required
by any applicable Governmental Authority in connection with (a) the creation,
perfection, or the recording of the liens purported to be created by the
Security Documents, (b) the execution and delivery of the Credit Documents, or
(c) the obtaining of credit under the Credit Agreement.
4. Upon the filing of appropriate UCC-1 Financing Statements with the
____________________ Secretary of State, the security interests of the
Banks in the Collateral created by the Security Agreement will constitute
perfected security interests under the Uniform Commercial Code as in effect to
the extent that a security interest in the Collateral may be perfected by filing
with the ____________.
5. The Lease Documents are in acceptable legal form and constitute
legal, valid, and binding obligations of the respective parties thereto
enforceable against them under ____________ law in accordance with the terms of
such documents.
AGREEMENT FOR GROUND LEASE - Page 39
--------------------------
<PAGE> 47
EXHIBIT "F"
FORM OF REQUEST FOR INITIAL ADVANCE
September 15, 1998
Brazos Automotive Properties, L.P.
2911 Turtle Creek Blvd., Suite 1240
Dallas, TX 75219
Attention: Mr. Gregory Greene
Re: Request for Initial Advance for Facility No. ___________,
located at ________________________________.
Dear Mr. Greene:
This Request for Initial Advance is delivered pursuant to the Lease
Documents dated as of September 15, 1998, between Brazos Automotive Properties,
L.P.("BRAZOS") and Monro Leasing, LLC ("MONRO"). The complete Request for
Initial Advance consists of this statement and the various documents provided
herewith, and the complete Request for Initial Advance is being provided to
legal counsel for Brazos and The Chase Manhattan Bank, respectively. All
documents provided herewith, including the Initial Advance Certificate, are true
and correct. All capitalized terms used herein shall have the meanings given to
such terms in either the Agreement for Ground Lease or the Agreement for
Facilities Lease, whichever is applicable.
It is contemplated that the Effective Date of the Facility, as will be
evidenced by a Facility Leasing Record, will be September 15, 1998 and you are
requested to pay on that date the sum of $____________ (comprised of a ground
advance of $________________ and a facility advance of $_____________) by wire
transfer of immediately available funds to CHICAGO TITLE INSURANCE COMPANY. The
representative of MONRO to contact with regard to the wire transfer is Catherine
D'Amico at (716) 647-6400.
MONRO LEASING, LLC,
a Delaware limited liability company
By: MONRO MUFFLER BRAKE, INC.,
a New York corporation, its Sole Member
By:______________________________________
Name:____________________________________
Title:___________________________________
Enclosures
cc: Philip M. Hendrix
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
AGREEMENT FOR GROUND LEASE - Page 40
--------------------------
<PAGE> 48
Carol M. Burke
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 700
Houston, Texas 77002
AGREEMENT FOR GROUND LEASE - Page 41
--------------------------
<PAGE> 49
SCHEDULE 4.13
LIST OF ACQUIRED GROUND LEASES
APPRAISAL
NUMBER LOCATION VALUE ($)
5/0655 Hartford, CT 50,000
6/0656 Waterbury, CT 90,000
20/0752 Elsmere, DE 70,000
46/2020 Newton, MA 40,000
47/2021 Waltham, MA 90,000
49/2026 Auburn, MA 70,000
50/2030 Danvers, MA 200,000
53/2056 Framingham, MA 90,000
61/2064 W. Springfield, MA 10,000
83/2122 Ferndale, MI 110,000
97/3105 Tonawanda, NY 50,000
98/3106 Willamsville, NY 90,000
101/3110 Bellmore, NY 100,000
102/3111 Hempstead, NY 80,000
104/3124 Huntington, NY 90,000
105/3125 North Hempstead, NY 100,000
107/3133 Valley Stream, NY 70,000
108/3134 Rockville Centre, NY 140,000
109/3135 Smithtown, NY 210,000
142/3452 Brooklyn, OH 100,000
160/3702 Penn Hill, PA 110,000
169/3726 Pittsburgh, PA 100,000
171/3731 Harrisburg, PA 110,000
172/3734 Philadelphia, PA 130,000
174/3736 York, PA 380,000
194/4501 Fairfax, VA 190,000
AGREEMENT FOR GROUND LEASE - Page 42
--------------------------
<PAGE> 1
EXHIBIT 10.7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROUND LEASE AGREEMENT
between
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
and
MONRO LEASING, LLC
Dated as of September 15, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS GROUND LEASE AGREEMENT HAS BEEN ASSIGNED AS
SECURITY FOR INDEBTEDNESS OF BRAZOS AUTOMOTIVE PROPERTIES, L.P.
SEE SECTION 18.10
This Ground Lease Agreement has been manually executed in 6 counterparts,
numbered consecutively from 1 through 10, of which this is No. . To the extent,
if any, that this Ground Lease Agreement 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 Ground Lease Agreement may be created
or perfected through the transfer or possession of any counterpart other than
the original executed counterpart which shall be the counterpart identified as
counterpart No. 1.
<PAGE> 2
TABLE OF CONTENTS
GROUND LEASE AGREEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS............................................................................................1
Section 1.1. Defined Terms..............................................................................1
Section 1.2. Forms......................................................................................7
Section 1.3. Recitals, Table of Contents, Titles, and Headings..........................................7
Section 1.4. Interpretation.............................................................................7
ARTICLE II REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE..................................................7
Section 2.1. Corporate Matters..........................................................................7
Section 2.2. Authorization; Binding Agreement...........................................................7
Section 2.3. Power and Authority........................................................................8
Section 2.4. Consents, Approvals, Authorizations........................................................8
Section 2.5. Financial Statements.......................................................................8
Section 2.6. Changes....................................................................................8
Section 2.7. Litigation.................................................................................8
Section 2.8. Delivery of Information....................................................................9
Section 2.9. Compliance with Legal Requirements and Insurance Requirements..............................9
Section 2.10. Agreement for Ground Lease................................................................9
Section 2.11. Property Liens...........................................................................10
Section 2.12. Brokerage................................................................................10
Section 2.13. Suitability of Property..................................................................10
ARTICLE III LEASE OF PROPERTY...................................................................................10
Section 3.1. Lease.....................................................................................10
Section 3.2. Property Leasing Record...................................................................10
Section 3.3. Ownership of Property.....................................................................11
Section 3.4. Brazos Covenants..........................................................................12
Section 3.5. Security..................................................................................12
ARTICLE IV DELIVERY AND ACCEPTANCE..............................................................................12
Section 4.1. Acceptance................................................................................12
Section 4.2. Payments Final............................................................................12
Section 4.3. No Warranties or Representations. ........................................................12
Section 4.4. Quiet Enjoyment...........................................................................13
Section 4.5. Indemnity to Title Insurance..............................................................13
Section 4.6. Other Financing Requirements..............................................................13
ARTICLE V LEASE TERM............................................................................................13
Section 5.1. Lease Term................................................................................13
Section 5.2. Termination...............................................................................13
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI RENT AND OTHER PAYMENTS..............................................................................13
Section 6.1. Basic Rent................................................................................13
Section 6.2. Other Amounts.............................................................................13
Section 6.3. Additional Rent...........................................................................14
Section 6.4. Payment in Advance........................................................................14
Section 6.5. Credit Agreement Losses...................................................................14
ARTICLE VII RESTRICTED USE; COMPLIANCE WITH LAWS................................................................14
Section 7.1. Insurance Requirement and Legal Requirement...............................................14
Section 7.2. Filings...................................................................................14
Section 7.3. Compliance with Other Requirements........................................................15
Section 7.4. Inspection................................................................................15
Section 7.5. No Liens..................................................................................15
Section 7.6. Interference..............................................................................15
Section 7.7. Delivery of Information...................................................................16
ARTICLE VIII MAINTENANCE OF PROPERTY............................................................................16
Section 8.1. Warranties................................................................................16
Section 8.2. Costs and Expenses........................................................................16
Section 8.3. Payment of Taxes..........................................................................16
Section 8.4. Environmental Report......................................................................17
ARTICLE IX INSURANCE............................................................................................17
Section 9.1. Liability and Property Damage.............................................................17
Section 9.2. Additional Insureds; Notice...............................................................18
Section 9.3. Application of Proceeds of Loss or Substantial Taking.....................................18
Section 9.4. Application of Proceeds of other than Loss or Substantial Taking..........................18
Section 9.5. Investment................................................................................18
Section 9.6. Application in Default....................................................................19
Section 9.7. Certificates..............................................................................19
Section 9.8. Covenant to Keep Insurance in Force.......................................................19
ARTICLE X INDEMNITIES...........................................................................................19
Section 10.1. Indemnified Persons......................................................................19
Section 10.2. Payments.................................................................................20
Section 10.3. Continuing Indemnification...............................................................20
Section 10.4. Limitations..............................................................................20
Section 10.5. Litigation...............................................................................21
ARTICLE XI RENEWAL AND TERMINATION..............................................................................21
Section 11.1. Lessee's Right to Terminate..............................................................21
Section 11.2. Brazos' Right to Terminate...............................................................21
Section 11.3. Renewal..................................................................................22
Section 11.4. Sales to Third Parties...................................................................22
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
Section 11.5. Additional Payments......................................................................23
Section 11.6. Termination of Ground Lease..............................................................23
Section 11.7. Surrender of Property....................................................................23
ARTICLE XII ECONOMIC DISCONTINUANCE.............................................................................23
Section 12.1. Uneconomic Property......................................................................23
Section 12.2. Payment..................................................................................24
Section 12.3. No Right to Use..........................................................................24
ARTICLE XIII EVENTS OF DEFAULT..................................................................................24
Section 13.1. Events of Default........................................................................24
Section 13.2. Rights Upon Default......................................................................25
Section 13.3. Events of Property Termination...........................................................28
Section 13.4. Brazos' Right Upon Event of Property Termination.........................................29
ARTICLE XIV LOSS OF OR DAMAGE TO PROPERTY.......................................................................29
Section 14.1. Lessee's Risk............................................................................29
Section 14.2. Repair...................................................................................30
Section 14.3. Property Damaged Beyond Repair...........................................................30
ARTICLE XV CONDEMNATION OF PROPERTY.............................................................................30
Section 15.1. Taking of Substantially all of a Property................................................30
Section 15.2. Taking of Less than Substantially all of a Property......................................30
Section 15.3. Grant of Minor Easements.................................................................30
ARTICLE XVI LEASEHOLD INTERESTS.................................................................................31
ARTICLE XVII PERMITTED CONTESTS.................................................................................32
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE XVIII MISCELLANEOUS.....................................................................................33
Section 18.1. Survival.................................................................................33
Section 18.2. Entire Agreement.........................................................................33
Section 18.3. Modifications............................................................................33
Section 18.4. GOVERNING LAW............................................................................33
Section 18.5. No Offsets...............................................................................33
Section 18.6. Non-Recourse.............................................................................35
Section 18.7. Notices..................................................................................35
Section 18.8. Usury....................................................................................36
Section 18.9. No Merger................................................................................37
Section 18.10. Sale or Assignment by Brazos............................................................37
Section 18.11. Income Taxes............................................................................37
Section 18.12. Transfer on As-Is Basis.................................................................38
Section 18.13. Right to Perform for Lessee.............................................................38
Section 18.14. Merger, Consolidation or Sale of Assets.................................................38
Section 18.15. Expenses................................................................................38
Section 18.16. Payment of Taxes........................................................................39
Section 18.17. Rule Against Perpetuities...............................................................39
Section 18.18. Reexecution.............................................................................39
Section 18.19. Purchase or Sale of Facility............................................................39
Section 18.20. Severability............................................................................39
Section 18.21. Independent Obligations.................................................................39
Section 18.22. Execution in Counterparts...............................................................39
Section 18.23. Confidentiality.........................................................................39
Section 18.24. Execution by Lessee.....................................................................39
</TABLE>
(iv)
<PAGE> 6
(v)
<PAGE> 7
(vi)
<PAGE> 8
LIST OF EXHIBITS
Exhibit A Schedule of Insurance
(vii)
<PAGE> 9
GROUND LEASE AGREEMENT
THIS GROUND LEASE AGREEMENT (this "GROUND LEASE") is made and entered
into as of September 15, 1998, by and between BRAZOS AUTOMOTIVE PROPERTIES, a
Delaware limited partnership ("BRAZOS"), and MONRO LEASING, LLC, a Delaware
limited liability company ("LESSEE").
W I T N E S S E T H:
WHEREAS, Brazos may hereafter acquire fee or leasehold interests in
certain parcels of real property; and
WHEREAS, on or about the date of this Ground Lease, Brazos and Lessee
entered into an Agreement for Ground Lease, providing for the acquisition by
Brazos of the fee or leasehold interests in such parcels of real property from
time to time; and
WHEREAS, Lessee wishes to lease or sublease such property under the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Brazos and Lessee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINED TERMS. For the purposes of this Ground Lease each
of the following terms shall have the meaning specified with respect thereto:
"ACQUIRED GROUND LEASE" means each ground lease entered into by Brazos
under which a leasehold interest in a Property is being leased to Brazos by the
owner of such Property.
"ACQUISITION COST" means, without duplication, for any Property, the
sum of (a) the outstanding amount of the advances under the Credit Agreement and
Article III of the Agreement for Ground Lease with respect to such Property, and
(b) the outstanding advances of all capital contributions made by the limited
partners of Brazos to Brazos with respect to such Property.
"ADDITIONAL PROPERTY" means each parcel of land which is contiguous to
Property already under the Ground Lease in which either a fee interest has been
acquired by Brazos or a leasehold interest has been acquired by Brazos pursuant
to an Acquired Ground Lease, in each case for the purpose of making such parcel
of land part of the Property and which is approved by Agent.
"ADDITIONAL RENT" has the meaning set forth in SECTION 6.3 hereof.
"AFFILIATE" means any other person controlling, controlled by or under
direct or indirect common control with any Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Page 1
<PAGE> 10
"AGENT" means The Chase Manhattan Bank, a national banking association.
"AGREEMENT FOR GROUND LEASE" means the Agreement for Ground Lease,
dated of even date herewith, between Brazos and Lessee providing for the
acquisition or lease of each Property, as it may be further amended, restated,
modified or supplemented, from time to time, in accordance with the terms
thereof.
"ASSIGNEE" means any lender or agent for a lender under the Credit
Agreement and each person, firm, corporation or other entity to which any part
of Brazos' interest under this Ground Lease or in any Property shall at the time
have been assigned, conditionally or otherwise, by Brazos in accordance with
SECTION 18.10 of this Ground Lease.
"ASSIGNMENT" means each assignment or security agreement referred to in
SECTION 18.10 hereof between Brazos and a third party, pursuant to which Brazos
assigns or grants a security interest in any of its rights under this Ground
Lease to such third party, as from time to time amended.
"BANK" means a "Bank" as defined in the Credit Agreement.
"BASIC RENT" means, so long as any borrowings are outstanding under the
Credit Agreement, with respect to any Property, for each calendar month the
amount computed by multiplying the following:
(i) the Acquisition Cost of such Property as of the Effective
Date with respect to the initial Basic Rent Payment Date
and thereafter, the Acquisition Cost of such Property
outstanding on the preceding Basic Rent Payment Date plus
(calculated on a daily basis from the date of any advance
since that date), any advances added to the Acquisition
Cost since said preceding Basic Rent Payment Date, by
(ii) the sum of (1) the Brazos Margin (calculated as a monthly
factor and with respect to advances during a month, a
daily factor) for the period plus (2) the interest rate
factor for interest accrued under the Credit Agreement
during such period with respect to outstanding advances
made in previous months and advances made during such
month under (without duplication) the Agreement for
Ground Lease and the Credit Agreement towards such
Acquisition Cost,
and adding to such amount the Preferred Return times the capital contribution of
the limited partners of Brazos (described under SUBPARAGRAPH (b) in the
definition of "ACQUISITION COST").
In the event no borrowings are outstanding under the Credit Agreement, the Basic
Rent shall be computed on a monthly basis and shall equal the Acquisition Cost
multiplied by a factor specified by Agent which shall equal the interest rate
factor which would be applicable if the Credit Agreement was still in effect.
"BASIC RENT PAYMENT DATE" means the first day of any calendar month
during the Lease Term or Renewal Term of any Property or, if such day is not a
Business Day, the next succeeding Business Day.
"BRAZOS" means Brazos Automotive Properties, L.P. or any successor or
successors to all of its rights and obligations hereunder and, for purposes of
SECTION 10.1(c), shall include any corporation, trust, individual, partnership
or other person or entity which computes its liability for income or other taxes
on a consolidated basis with Brazos or the income of which for purposes of such
taxes is determined or affected directly or indirectly by the income of Brazos
or its successor or successors.
Page 2
<PAGE> 11
"BRAZOS MARGIN" means the margin specified and calculated in accordance
with the letter from Brazos to Lessee dated as of September 15, 1998.
"BRAZOS PARTNERSHIP AGREEMENT" means that certain First Amended and
Restated Limited Partnership Agreement of Brazos dated as of September 15, 1998.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"CAPITALIZED LEASES" means, as applied to any Person, any lease of any
property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on the balance
sheet of such Person.
"CHARGE" has the meaning set forth in SECTION 8.3.
"CHASE CREDIT AGREEMENT" means that certain Credit Agreement dated as
of September 15, 1998 executed among Guarantor, Agent, and the other financial
institutions from time to time party thereto, as the same may have been amended
and in effect on the date hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSENT" means each consent of Lessee or Guarantor to an Assignment,
pursuant to which, among other things, Lessee or Guarantor, as the case may be,
consents to the terms of such Assignment insofar as they relate to this Ground
Lease, as from time to time amended.
"CORPORATE CREDIT AGREEMENT" means the Chase Credit Agreement as the
same may hereafter be amended, amended and restated, renewed, extended or
otherwise modified or supplemented from time to time, together with any credit
agreement or similar instrument, agreement or document executed from time to
time in respect of any financing arrangement entered into to replace, or which
is in substitution for, the financing arrangement evidenced by the Chase Credit
Agreement.
"CORPORATE CREDIT DOCUMENTS" means any and all notes, guarantees and
other loan documents executed pursuant to the Corporate Credit Agreement and any
document, instrument or other agreement entered in replacement or substitution
of such document or instrument.
"CREDIT AGREEMENT" means the Credit Agreement dated of even date
herewith by and among Brazos, the Agent and the banks named therein for the
financing of the acquisition of Properties by Brazos in connection with the
Agreement for Ground Lease, as it may be amended, restated, modified or
supplemented, from time to time.
"EFFECTIVE DATE" means with respect to any Property, the date on which
such Property is leased hereunder by Brazos to Lessee, pursuant to SECTION 3.1,
which date shall be set forth in the Property Leasing Record.
"ENVIRONMENTAL CLAIM" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including material claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law relating to any Property.
Page 3
<PAGE> 12
"ENVIRONMENTAL LAW" means all Legal Requirements arising from, relating
to, or in connection with the Environment (as defined in 43 U.S.C. Section
9601(8) (1988)), health, or safety, including without limitation (i) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, and (ii) Legal Requirements relating to (a) pollution,
contamination, injury, destruction, loss, protection, cleanup, reclamation or
restoration of the air, surface water, groundwater, land surface or subsurface
strata, or other natural resources; (b) solid, gaseous or liquid waste
generation, treatment, processing, recycling, reclamation, cleanup, storage,
disposal or transportation; (c) exposure to pollutants, contaminants, hazardous
materials or wastes; (d) the safety or health of employees; or (e) the
manufacture, processing, handling, transportation, distribution in commerce,
use, storage or disposal of hazardous, medical, infectious, or toxic
substances, materials or waste.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations, rules, rulings, and
interpretations promulgated or adopted by the Internal Revenue Service or the
United States Department of Labor thereunder.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 13.1.
"EVENT OF PROPERTY TERMINATION" means any of the events specified in
SECTION 13.3.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and all regulations promulgated by the Securities and Exchange Commission
thereunder.
"FACILITY" means all improvements of whatever kind or character now or
hereafter located on, in or under or affixed to an individual Property
including, without limitation, any utilities, paving, signage or lighting and
all additions, replacements and subsequent replacements thereof (including any
Additional Improvements), together with the FF&E installed in such Facility or
other building, in which a fee or leasehold interest has been or will be
acquired by Brazos for the purpose of entering into the Facilities Lease, but
excluding all parcels of land on which such Facility sits. Any reference to a
particular Facility shall refer collectively to such Facility and the Additional
Improvements, if any, made to such Facility.
"FACILITIES LEASE" means, with respect to any Facility or FF&E, the
facilities lease by and between Brazos, as lessor, and Lessee, as lessee.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government having jurisdiction over Brazos, Agent, any Assignee or Lessee, or
any of their respective properties..
"GROUND LEASE" means this Ground Lease Agreement and each Property
Leasing Record.
"GUARANTOR" means Monro Muffler Brake, Inc., a New York corporation.
"GUARANTY" means the Guaranty, dated of even date herewith, by and
between Guarantor and Brazos, as it may be further amended, restated, modified
or supplemented, from time to time, in accordance with the terms thereof.
"INDEBTEDNESS" means, with respect to any Person,(a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of property or services; (d)
obligations of such Person as lessee under Capitalized Leases; (e) reimbursement
obligations in respect of bonds or letters of credit; (f) obligations of such
Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) of such Person to purchase or otherwise acquire,
Page 4
<PAGE> 13
or otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e) above;
and (g) indebtedness or obligations of others of the kinds referred to in
clauses (a) through (f) secured by any Lien on or in respect of any property of
such Person whether or not assumed by such Person; provided, however, that all
trade accounts payable and accrued expenses incurred in the ordinary course of
business of such Person and not overdue shall be excluded from the foregoing.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 10.1 hereof.
"INSURANCE REQUIREMENTS" means all requirements of this Ground Lease
with respect to insurance, all terms of any insurance policy covering or
applicable to any Property, all requirements of the issuer of any such policy,
all statutory requirements and all orders, rules, regulations and other
requirements of any governmental body related to insurance applicable to any
Property.
"LEASE TERM" has the meaning set forth in SECTION 5.1 hereof.
"LEGAL REQUIREMENTS" means all laws, judgments, decrees, ordinances and
regulations and any other governmental rules, orders and determinations and all
requirements having the force of law, now or hereinafter enacted, made or
issued, whether or not presently contemplated, and all agreements, covenants,
conditions and restrictions, applicable to each Property and/or the ownership,
operation or use thereof, including, without limitation, all requirements of the
Americans With Disabilities Act (P.L. 101-335) and environmental statutes,
compliance with which is required at any time during the Lease Term and any
Renewal Term, whether or not such compliance shall require structural,
unforeseen or extraordinary changes to any Property or the operation, occupancy
or use thereof.
"LESSEE" means Monro Leasing, LLC, a Delaware limited liability
company.
"LESSOR PERSON" has the meaning set forth in SECTION 8.3.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"LIEN OF RECORD" means, with the exception of the Lien of a lender or a
lender's agent under a Credit Agreement, (i) any mechanics' or materialmen's
lien for which Lessee does not hold retainage or trapped funds in amounts
required by applicable law, (ii) any lien securing the payment of taxes,
assessments, or governmental charges and levies which are due, payable and
delinquent, (iii) any judgment lien, or (iv) any other filed, recorded, or
docketed matter (whether or not the same shall constitute a Permitted
Encumbrance or be the subject of a Permitted Contest) which in the case of any
of the foregoing (a) is reasonably likely to result in a sale for satisfaction
of same, a loss, forfeiture, reversion of title, or right of reentry with
respect to any Property, or (b) whether or not valid, is reasonably likely to
interfere with the due and timely payment of any sum payable or the exercise of
any of the rights or the performance of any of the duties or responsibilities of
Lessee under this Ground Lease.
"MAXIMUM RATE" has the meaning set forth in SECTION 18.8 hereof.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, to which the Guarantor, Lessee, or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
three (3) calendar years, has made, or been obligated to make, contributions.
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"PERMITTED CONTEST" means any good-faith contest permitted by and in
accordance with the terms of ARTICLE XVII.
"PERMITTED ENCUMBRANCES" means the following Liens and other matters
affecting the title or leasehold interest of any Property: (a) subject to the
terms of SECTION 7.5, mechanics' and materialmen's liens incurred in good faith
in the ordinary course of business and securing obligations that are junior to
any Liens of Assignee not exceeding $100,000 for any Property and $1,000,000 in
the aggregate which are not yet due or which are subject to a Permitted Contest;
(b) Liens securing the payment of taxes, assessments and governmental charges or
levies, either not delinquent or subject to a Permitted Contest; (c) zoning and
planning restrictions, subdivision and platting restrictions, easements,
rights-of-way, licenses, reservations, covenants, conditions, waivers,
restrictions on the use of property, minor encroachments or minor irregularities
of title which do not materially impair (i) the intended use of the Property by
Lessee or (ii) the value of any Property; (d) the lien created contemporaneously
with the acquisition of such Property pursuant to, and securing the obligations
under, the Credit Agreement; (e) any mechanics' or materialmen's lien for which
Lessee holds retainage or trapped funds in amounts required by and in accordance
with applicable law; (f) outstanding mineral interests; and (g) any other
matters; provided that such other or additional matters shall be approved in
writing by Brazos and Agent, whose approval shall not be unreasonably withheld
or delayed.
"PERSON" means an individual, partnership, corporation, business trust,
joint venture, joint stock company, trust, unincorporated association or
Governmental Authority or other entity of whatever nature.
"PLAN" means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Guarantor or any Subsidiary and covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code.
"POTENTIAL DEFAULT" means any event which, but for the lapse of time,
or giving of notice, or both, would constitute an Event of Default.
"POTENTIAL PROPERTY TERMINATION" means any event which, but for the
lapse of time, or giving of notice, or both, would constitute an Event of
Property Termination.
"PREFERRED RETURN" means the preferred return on the capital
contribution of the limited partners calculated in accordance with the terms of
the Brazos Partnership Agreement and payable to the limited partners of Brazos
which is added to the interest rate factor under the Credit Agreement in
computing the Limited Partner Preferred Return under the Brazos Partnership
Agreement.
"PREPAYMENT PREMIUMS" has the meaning set forth in the Brazos
Partnership Agreement.
"PROPERTY" means any and all parcels of land leased or to be leased
hereunder and when leased, evidenced by Property Leasing Records and the
respective easements, rights and appurtenances relating to such parcels of land,
but excluding all Facilities.
"PROPERTY LEASING RECORD" means an instrument evidencing the ground
lease or sublease of a Property under this Ground Lease, as prepared and
executed by Brazos, as lessor or sublessor, and accepted and executed by Lessee,
as lessee or sublessee.
"RENEWAL TERM" has the meaning set forth in SECTION 11.3(a) hereof.
"REPORTS" has the meaning set forth in SECTION 8.4 hereof.
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"RESPONSIBLE OFFICER" means any officer of any President, Treasurer,
Executive Vice President or Senior Vice President of the Guarantor or Lessee.
"REVISED PROPERTY LEASING RECORD" means a Property Leasing Record
executed under the terms of SECTION 3.2(b) hereof.
"SUBSIDIARY" means with respect to any Person, any corporation of which
voting control or more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at such time capital stock of any
other class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency) is at the time directly or indirectly owned
by such Person.
"TAKING" has the meaning set forth in SECTION 15.1.
"UNECONOMIC NOTICE" has the meaning set forth in SECTION 12.1.
"UNECONOMIC PROPERTY" has the meaning set forth in SECTION 12.1.
Section 1.2. FORMS. All forms specified by the text hereof or by
reference to exhibits attached hereto shall be substantially as set forth
herein, subject to such changes by Brazos and Lessee by mutual consent that do
not alter the substantive rights of the parties hereto or of the Assignees or as
may be required by applicable laws hereafter enacted.
Section 1.3. RECITALS, TABLE OF CONTENTS, TITLES, AND HEADINGS. The
terms and phrases used in the recitals of this Ground Lease have been included
for convenience of reference only and the meaning, construction, and
interpretation of such words and phrases for purposes of this Ground Lease shall
be determined solely by reference to SECTION 1.1 hereof. The table of contents,
titles, and headings of the Articles and Sections of this Ground Lease have been
inserted for convenience of reference only and are not to be considered a part
hereof and shall not in any way modify or restrict any of the terms or
provisions hereof and shall not be considered or given any effect in construing
this Ground Lease or any provision hereof or in ascertaining intent, if any
question of intent should arise.
Section 1.4. INTERPRETATION. Unless the context requires otherwise,
words of the masculine gender shall be construed to include correlative words of
the feminine and neuter genders and vice versa, and words of the singular number
shall be construed to include correlative words of the plural number and vice
versa. This Ground Lease, and all the terms and provisions hereof, shall be
liberally construed to effect the purposes set forth herein and to sustain the
validity of this Ground Lease.
ARTICLE II
----------
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE
Lessee represents and warrants to Brazos and agrees on the date of this
Ground Lease and as of the date the relevant Property is leased pursuant to this
Ground Lease (it being understood that all representations and warranties in
this ARTICLE II with respect to a Property shall refer to the Property then
being leased pursuant to the terms of this Ground Lease) the following:
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Section 2.1. CORPORATION MATTERS. Lessee (a) has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
state of its organization, (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 Ground Lease, the Agreement for Ground Lease and any
Consent, and (c) is duly qualified to do business as a foreign corporation in
good standing in each jurisdiction, including, without limitation, each state or
other jurisdiction in which a Property is located, in which its ownership or
leasing of properties or the conduct of its business requires such qualification
and where non-qualification, singly or in the aggregate, would materially
adversely affect the financial condition or creditworthiness of Lessee, or would
impair the ability of Lessee to perform its obligations under this Ground Lease
or under the Agreement for Ground Lease.
Section 2.2. AUTHORIZATION; BINDING AGREEMENT. This Ground Lease has
been duly authorized, executed and delivered by Lessee and, assuming the due
authorization, execution and delivery of this Ground Lease by Brazos, this
Ground Lease is a legal, valid and binding obligation of Lessee, enforceable
against Lessee, subject, as to enforceability, to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 2.3. POWER AND AUTHORITY. The consummation of the transactions
herein contemplated and the performance and observance of Lessee's obligations
under this Ground Lease and any Consent have been duly authorized by all
necessary corporate action on the part of Lessee. The execution, delivery and
performance by Lessee of this Ground Lease and any Consent will not result in
any violation of any term of the certificate of incorporation or the by-laws of
Lessee, do not require approval of the board of directors or shareholders of
Lessee or the approval or consent of any trustee or holders of Indebtedness 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 (other than
a Lien on any Property as may be contemplated herein) 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 where
breach or default, singly or in the aggregate, would materially adversely affect
(i) the financial condition or creditworthiness of Lessee or (ii) the ability of
Lessee to perform its obligations under the Agreement for Ground Lease, this
Ground Lease, the Facilities Lease or the Agreement for Facilities Lease
referred to in the Facilities Lease or the Consent executed by Lessee of even
date herewith, or any existing applicable law, rule, regulation, license,
judgment, order or decree of any Governmental Authority or court having
jurisdiction over Lessee or any of its activities or properties.
Section 2.4. CONSENTS, APPROVALS, AUTHORIZATIONS. There are no
consents, licenses, orders, authorizations or approvals of, or notices to or
registrations with, any Governmental Authority which are required for the valid
execution, delivery and performance of this Ground Lease that have not been
obtained or made, except (i) such permits and licenses as Lessee will be
required to obtain for the occupancy, use or operation of a Property and which,
in the ordinary course of business, are not obtained until just prior to the
commencement of such occupancy, use or operation, and (ii) any such consents,
licenses, orders, authorizations, approvals, notices and registrations, the
failure of which to obtain would not cause a Material Adverse Change. Any such
consents, licenses, orders, authorizations, approvals, notices and registrations
that have been obtained or made are in full force and effect.
Section 2.5. FINANCIAL STATEMENTS. Lessee has caused to be furnished to
Brazos and Agent copies of Guarantor's most recent financial information and
certificates required to be furnished pursuant to the Corporate Credit
Documents, since March 31, 1998, which fairly present the financial position,
results of operations and cash flows with respect to Guarantor and its
consolidated subsidiaries, as of the dates and for the periods indicated therein
and comply with all applicable requirements.
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Section 2.6. CHANGES. Since the date of the most recent financial
statements delivered pursuant to SECTION 2.5, there has been no adverse change
in the financial condition or business of any Guarantor or Lessee which would
materially impair the ability of such Guarantor or Lessee to perform their
respective obligations under this Ground Lease.
Section 2.7. LITIGATION. Except as disclosed to Lessor, 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 or Guarantor after due inquiry, threatened
against in writing or affecting Lessee or any property or rights of Lessee or,
to the best knowledge of Lessee, or Guarantor, which affects any Property, as to
which there is a significant possibility of an adverse determination, and which
if adversely determined, could reasonably be expected to have a material adverse
impact on the financial condition or business of Lessee or Guarantor or which,
if adversely determined, could reasonably be expected to materially impair the
ability of Lessee to perform its obligations hereunder or Guarantor under the
Guaranty, or which, if adversely determined, could reasonably be expected to
have a material adverse impact on the value or intended use of a Property (it
being agreed that a potential adverse impact reasonably likely to be less than
$500,000 in the aggregate for all Properties shall be deemed to be not material)
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 or Guarantor after due inquiry,
threatened which questions or would question the validity of this Ground Lease.
Section 2.8. DELIVERY OF INFORMATION. Lessee shall cause to be
delivered to Brazos from time to time, (a) promptly upon request, copies of the
quarterly financial statements required to be delivered under Section 8.1(b) of
the Corporate Credit Documents, together with each certificate required to be
delivered under Section 8.1 of the Corporate Credit Documents, and within one
hundred (100) days after the end of Guarantor's fiscal year, copies of the
annual financial statements required to be delivered under Section 8.1(a) of the
Corporate Credit Documents, together with each certificate required to be
delivered under Section 8.1 of the Corporate Credit Documents, (b) promptly upon
request, such other information with respect to Guarantor or Lessee or
Guarantor's or Lessee's operations, business, property, assets or financial
condition as Brazos or Agent shall reasonably request, (c) promptly after an
officer of Lessee obtains knowledge of any Event of Default or Event of Property
Termination hereunder or of any Potential Default or Potential Property
Termination, a certificate of an officer of Lessee specifying the nature and
period of existence of such Event of Default, Event of Property Termination,
Potential Default or Potential Property Termination, and what action, if any,
Lessee has taken, is taking, or proposes to take with respect thereto, (d)
promptly after an officer of Lessee obtains knowledge of any material adverse
change in the financial condition or business of Guarantor or Lessee or of any
litigation of the type described in SECTION 2.7, a certificate of an officer of
Lessee describing such change or litigation as the case may be, (e) promptly
after Lessee obtains knowledge of any and all Liens, other than Permitted
Encumbrances, on, or other matters, including any litigation affecting a
Property, which may materially adversely affect the value or intended use of,
any Property, a detailed statement describing each such Lien or other matter and
(f) promptly after Lessee obtains knowledge of any Environmental Claim, a
detailed statement describing such Environmental Claim and what action, if any,
Lessee has taken, is taking, or proposes to take with respect thereto.
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Section 2.9. COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE
REQUIREMENTS. The operation, use and physical condition of the Property comply
in all material respects with the Insurance Requirements and Lessee will not do
or knowingly permit any act or thing which is contrary in any material respect
to any Legal Requirements, or which would impair in any material respect, other
than in the normal use thereof, the value or usefulness of any Property;
provided, in each case, that Lessee shall not be required to comply with any
Legal Requirements if (a) in the case of Legal Requirements with respect to laws
affecting the environment, Lessee acts diligently to cure such non-compliance
upon becoming aware of it and (b) in every case, such non-compliance,
individually or in the aggregate, (i) shall not involve any material danger that
any Property would be subject to sale, forfeiture or loss, as a result of
failure to comply therewith, (ii) could not reasonably be expected to cause
either Brazos or any Assignee to incur (x) civil liability for which Brazos and
any Assignee are not adequately indemnified (Lessee's obligations under ARTICLE
X of this Ground Lease shall be deemed to be adequate indemnification if no
Event of Default, Event of Property Termination, Potential Default or Potential
Property Termination exists and if such civil liability is reasonably likely to
be less than $100,000 per Property and $1,000,000 in the aggregate), or (y) any
criminal liability as a result of failure to comply therewith, (iii) is
permitted under the provisions of the Acquired Ground Lease, if any, on such
Property, and (iv) is consistent with business practices normal in the industry
of Lessee or the practices of Lessee with respect to properties owned by Lessee.
Section 2.10. AGREEMENT FOR GROUND LEASE. Each Property leased pursuant
to the Agreement for Ground Lease was acquired and leased in accordance with the
terms of the Agreement for Ground Lease. The representations and warranties of
Lessee in the Agreement for Ground Lease are true and correct in all material
respects on and as of the date made.
Section 2.11. PROPERTY LIENS. Except as specifically disclosed by
Lessee in writing to Brazos, to the best of Lessee's knowledge, no Property is
subject to a Lien of Record, and, to the best of Lessee's knowledge, after due
inquiry, no Property is subject to any other Lien, except for Permitted
Encumbrances previously disclosed in writing to Brazos.
Section 2.12. BROKERAGE. Except as may be contemplated by the Ground
Lease, no brokerage or other fee, commission or compensation is to be paid by
Brazos in connection with this Ground Lease, and Lessee hereby indemnifies
Brazos against any claims for brokerage fees or commissions and agrees to pay
all reasonable expenses incurred by Brazos in connection with the defense of any
action or proceeding brought to collect any such brokerage fees or commissions,
provided such claim is made through or under Lessee.
Section 2.13. SUITABILITY OF PROPERTY. To the best of Lessee's
knowledge, each Property is suitable in all material respects (including,
without limitation, ground conditions, utilities, and condition of title) for
the intended use of the Property under the Ground Lease.
ARTICLE III
-----------
LEASE OF PROPERTY
Section 3.1. LEASE. Subject to the terms and conditions hereof, Brazos
hereby leases to Lessee, and Lessee hereby leases from Brazos pursuant to this
Ground Lease, or subleases in the case of an Acquired Ground Lease, any
Property, when Brazos makes an advance under the Agreement for Ground Lease with
respect to such Property and such Property is acquired under the Agreement for
Ground Lease, or if no advance is made with respect to a Property under an
Acquired Ground Lease, when Brazos enters into or acquires by assignment such
Acquired Ground Lease.
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The Effective Date of the lease or sublease of each Property shall be the date
of the initial advance with respect to such Property under the Agreement for
Ground Lease or the Effective Date of any Acquired Ground Lease.
Section 3.2. PROPERTY LEASING RECORD
(a) The lease of each Property shall be evidenced by a Property Leasing
Record, or if the terms of (b) or (c) below apply, a Revised Property Leasing
Record. Each Property Leasing Record shall give a full legal description of the
Property covered thereby, the Acquisition Cost of such Property, the Lease Term
for such Property, the location of such Property and such other details as
Brazos, Lessee and any Assignee may from time to time agree. Lessee shall
provide to Brazos the information necessary to describe in the Property Leasing
Record the Property, except that Brazos shall provide, pursuant to the terms
hereof, the Acquisition Cost and the Lease Term. Execution and delivery by
Lessee of a Property Leasing Record shall constitute (i) acknowledgment by
Lessee that the Property specified in such Property Leasing Record has been
delivered to Lessee in good condition and has been accepted for lease hereunder
by Lessee as of the Effective Date of the Property Leasing Record, (ii)
acknowledgment by Lessee that the Property specified in such Property Leasing
Record is subject to all of the covenants, terms and conditions of this Ground
Lease, and (iii) certification by Lessee that the representations and warranties
contained in ARTICLE II of this Ground Lease are true and correct in all
material respects on and as of the Effective Date of the Property Leasing Record
as though made on and as of such date and that there exists on such date no
Event of Default, Event of Property Termination, Potential Default or Potential
Property Termination.
(b) Upon the making of a Reconciliation Advance or Additional Advance
(as such terms are defined in the Agreement for Ground Lease) for a Property,
Brazos and Lessee shall execute a Revised Property Leasing Record to reflect the
change in Acquisition Cost for such Property caused by such advance.
(c) Upon the release or disposition of a Property or any portion
thereof and the application of proceeds therefrom in accordance with the Credit
Agreement, Brazos and Lessee shall execute a Revised Property Leasing Record to
reflect the change in Acquisition Cost for such Property caused by such release
or disposition.
Section 3.3. OWNERSHIP OF PROPERTY
(a) It is the intent of the parties hereto that: (i) this Ground Lease
constitutes an "operating lease" pursuant to Statement of Financial Accounting
Standards No. 13, as amended, for purposes of Lessee's financial reporting, and
(ii) for purposes of federal, state and local income or franchise taxes and for
any other tax imposed on or measured by income, the transaction contemplated
hereby is a financing arrangement and preserves ownership in the Property to the
Lessee. Nevertheless, the Lessee acknowledges and agrees that neither the Agent,
Brazos nor any Assignee has made any representations or warranties to the Lessee
concerning the tax, accounting or legal characteristics of the Credit Agreement
and Lease Documents (as defined in the Credit Agreement) and that the Lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Credit Agreement and Lease Documents (as defined in the Credit Agreement) as it
deems appropriate.
(b) Anything to the contrary notwithstanding, Brazos and the Lessee
intend and agree that with respect to the nature of the transactions evidenced
by this Ground Lease in the context of the exercise of remedies under the Credit
Agreement and Lease Documents (as defined in the Credit Agreement), including,
without limitation, in the case of any insolvency or receivership proceedings or
a petition under the United States bankruptcy laws or any other applicable
insolvency laws or statute of the United States of America or any state or
commonwealth thereof affecting the Lessee, Brazos, or any Assignee or any
enforcement or collection actions, (i) the transactions evidenced by this Ground
Lease are loans made by Brazos and the Agent as unrelated third party lenders to
the Lessee secured by the Property, (ii) the obligations of the Lessee under
this Ground Lease to pay Basic Rent and Additional Rent or
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other amounts in connection with a purchase of the Property pursuant to this
Ground Lease shall be treated as payments of interest on and principal of,
respectively, loans from Brazos and the Assignees to the Lessee, and (iii) this
Ground Lease grants a security interest and mortgage or deed of trust or lien,
as the case may be, in the Property to Brazos and the Assignees to secure the
Lessee's performance under and payment of all amounts under this Ground Lease
and the Credit Agreement and Lease Documents (as defined in the Credit
Agreement).
(c) Specifically, without limiting the generality of SUBSECTION (b)
of this Section, Brazos and the Lessee further intend and agree that, for the
purpose of securing the Lessee's obligations for the repayment of the
above-described loans from Brazos and the Agent to the Lessee, (i) this Lease
shall also be deemed to be a security agreement and financing statement within
the meaning of Article 9 of the Uniform Commercial Code (and specifically, a
construction mortgage, as said term is defined in Section 9-313(1)(c) of the
Uniform Commercial Code) and a real property mortgage or deed of trust; (ii) the
conveyance provided for in ARTICLE III shall be deemed to be a grant by the
Lessee to Brazos and the Assignees of a mortgage lien and security interest in
all of the Lessee's right, title and interest in and to the Property and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, investments, securities or other property (it being understood that Lessee
hereby mortgages and grants a security interest in the Property to Brazos and
the Assignees to secure such loans); (iii) the possession by Brazos or any of
its agents of notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the Uniform Commercial Code; and (iv) notifications to
Persons holding such property, and acknowledgments, receipts or confirmations
from financial intermediaries, bankers or agents (as applicable) of the Lessee
shall be deemed to have been given for the purpose of perfecting such security
interest under applicable law. Brazos and the Lessee shall, to the extent
consistent with this Ground Lease, take such actions and execute, deliver, file
and record such other documents, financing statements, mortgages and deeds of
trust as may be necessary to ensure that, if this Ground Lease were deemed to
create a security interest in the Property in accordance with this Section, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Ground Lease or any renewal hereof as provided in SECTION 5.1.
Section 3.4. BRAZOS COVENANTS. In the absence of an Event of Default
which is continuing, Brazos agrees that it will not engage any broker in
connection with the purchase or sale of any Facility without Lessee's prior
written consent. Within one hundred and twenty (120) days after the end of
Brazos' fiscal year, Brazos will provide to Lessee its unaudited balance sheet
dated as of the end of its fiscal year, prepared in accordance with GAAP,
certified by an officer of the General Partner of Brazos. Brazos will not take
any position on any tax return, report or form relating to income or franchise
taxes that is inconsistent with SECTION 3.3(c).
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Section 3.5. SECURITY. It is the intent of the parties that, under
applicable state and federal law, (i) the transaction evidenced by the Credit
Agreement constitutes a secured financing transaction between the banks named
therein and Lessor, (ii) the transaction evidenced by this Ground Lease
constitutes an operating lease transaction between Lessor and Lessee, (iii)
Lessor is the owner of the Properties, and (iv) Lessee's interest in the
Properties is a leasehold interest pursuant to the terms set forth herein. If,
however, notwithstanding the foregoing and the provisions of such documents, the
transactions contemplated by such documents are determined by a court of
competent jurisdiction to constitute a secured financing between all or any
combination of Agent, such banks and Lessor, on the one hand, and Lessee, on the
other, such that Lessee is determined to be the owner of any Property, (i) this
Ground Lease shall constitute a mortgage and a security agreement under
applicable state law with respect to such Property, and (ii) Lessee hereby
grants and conveys to Agent and Lessor a lien on and security interest in all of
Lessee's right, title and interest in and to each such Property, on behalf of
the Banks, as collateral security for the obligations, without duplication, with
mortgage covenants, upon statutory conditions and statutory power of sale, of
Lessee under this Ground Lease and (iii) Lessor hereby grants and conveys to
Agent, on behalf of the Banks, a lien on and security interest in all of
Lessor's right, title and interest in and to each such Property, as collateral
security for the Credit Agreement. It is the intention of the parties to this
Ground Lease that the security interest and mortgage or deed of trust or lien,
as the case may be, for each Property between Lessor and the Agent dated
September 15, 1998, and recorded as of even date herewith, be prior to this
Ground Lease.
ARTICLE IV
DELIVERY AND ACCEPTANCE
Section 4.1. ACCEPTANCE. Lessee shall accept Property acquired by
purchase or lease pursuant to and in accordance with the Agreement for Ground
Lease. Brazos shall not be liable to Lessee for any failure to obtain, or delay
in obtaining, any Property or any delay in the delivery of title or possession
thereof to Lessee.
Section 4.2. PAYMENTS FINAL. Each payment of Basic Rent, Additional
Rent and any other amount due hereunder made by Lessee shall be final, and
Lessee, without waiving any other remedies it may have, will not seek or have
any right to recover all or any part of such payment from Brazos or any Assignee
for any reason whatsoever. The making of payments under this Ground Lease by
Lessee (including payments pursuant to ARTICLE X) shall not be deemed to be a
waiver of any claim or claims that Lessee may assert against Brazos or any other
person. Brazos agrees to repay Lessee amounts paid to Brazos to the extent such
payments were in error and are not required by the various terms and provisions
of this Ground Lease.
Section 4.3. NO WARRANTIES OR REPRESENTATIONS. Notwithstanding any
other provision contained in this Ground Lease, it is specifically understood
and agreed that neither Brazos nor any Assignee nor any Affiliate of either, nor
anyone acting on behalf of any of them makes any warranties or representations
or has any responsibility to disclose any relevant information, or has any other
responsibility or duty, nor, except as set forth in SECTIONS 3.3, 3.4 and 18.11
of this Ground Lease, has Brazos or any Assignee or any Affiliate of either, or
anyone acting on behalf of any of them made any covenants or undertakings, as to
the accounting treatment to be accorded Lessee or as to the U.S. Federal or any
state income or any other tax consequences, if any, to Lessee as a result of or
by virtue of the transactions contemplated by this Ground Lease.
Section 4.4. QUIET ENJOYMENT. During the Lease Term or Renewal Term, if
any, of any Property hereunder and so long as no Event of Default, Event of
Property Termination, Potential Default or Potential Property Termination shall
have occurred and be continuing, Brazos covenants that as between Brazos and
Lessee, Lessee shall have the right to quiet enjoyment of the Property on the
terms and conditions provided in this Ground Lease without
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any interference from Brazos or any Person claiming by, through, under or in the
name of Brazos. Lessee agrees to attorn to any Assignee in the event such
Assignee succeeds to Brazos' interest in the Property, and Lessee will not hold
the Assignee responsible for Brazos' obligations incurred in the period prior to
the succession of the Assignee to Brazos' interest.
Section 4.5. INDEMNITY TO TITLE INSURANCE. In the event the title
insurance policy insuring Brazos' and Assignee's interest in any Property would
not, in the absence of special assurance by Lessee, become effective until the
date of recordation of the deed or assignment of the Acquired Ground Lease, as
applicable, then Lessee shall furnish such indemnity to the title insurance
company as it shall require in order to insure Brazos' interest in such
Property, effective as of the date of the Effective Date.
Section 4.6. OTHER FINANCING REQUIREMENTS. If Brazos is required by the
Agent pursuant to the terms of the Credit Agreement in effect on the date hereof
or modified hereafter with the prior written consent of Lessee to provide an
appraisal or other evidence of the value of a Property to the Agent under the
Credit Agreement, Lessee agrees to provide such appraisal or other evidence to
Brazos at Lessee's sole cost and expense.
ARTICLE V
LEASE TERM
Section 5.1. LEASE TERM. The "LEASE TERM" with respect to any Property
leased hereunder shall commence on the Effective Date for such Property and
shall end on September 15, 2003. The lease of any Property may be renewed for
one five (5) year renewal term and thirty (30) renewal terms of one year each,
pursuant to, and in accordance with, SECTION 11.3. The Lease Term or any Renewal
Term may be terminated earlier pursuant to ARTICLES XI, XII, XIII, XIV or XV
hereof or otherwise pursuant to operation of any Legal Requirements.
Section 5.2. TERMINATION. Notwithstanding anything contained in this
ARTICLE V or ARTICLE XI, this Ground Lease shall terminate on September 15,
2038, unless earlier terminated.
ARTICLE VI
RENT AND OTHER PAYMENTS
Section 6.1. BASIC RENT. Lessee hereby agrees to pay Brazos on each
Basic Rent Payment Date, Basic Rent for the calendar month in which such Basic
Rent Payment Date falls with respect to each Property leased prior to the last
two (2) Business Days of the preceding calendar month. Brazos shall notify
Lessee in writing at least two Business Days prior to each Basic Rent Payment
Date of the amount of the Basic Rent due with respect to each Property on such
Basic Rent Payment Date.
Section 6.2. OTHER AMOUNTS. Except as otherwise specifically provided
in this Ground Lease, Lessee hereby agrees to pay within twenty (20) days after
written demand all amounts (other than Basic Rent and amounts which are payable
on demand or pursuant to ARTICLES X-XV) due hereunder, including, without
limitation, all amounts payable to any Indemnified Person pursuant to ARTICLE X
hereof.
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Section 6.3. ADDITIONAL RENT. Lessee shall pay to Brazos from time to
time, on demand, as additional rent ("ADDITIONAL RENT") (i) amounts required to
reimburse Brazos for its obligations, costs and expenses (not previously
included in Basic Rent) incurred in acquiring, financing and leasing the
Property, including, without limitation, reasonable auditor's fees, if any, and
all amounts payable by Brazos under Sections 2.3, 2.6, 2.8, 2.9, 2.11, 5.5, 9.4
and 9.7 of the Credit Agreement, in effect on the date hereof or modified with
the prior written consent of Lessee or, at such time as no borrowing is
outstanding under the Credit Agreement (all such payments to be made at the time
specified in the Credit Agreement), all such amounts which are otherwise
provided for under the Credit Agreement, (ii) to the extent legally enforceable,
interest on each overdue amount not paid by Lessee to Brazos as provided in this
Ground Lease from the date such overdue amount was due until paid at the per
annum rate of interest equal to the most recent rate of interest calculated
pursuant to the Credit Agreement or established by Agent in the absence of any
borrowing under the Credit Agreement, plus two percent (2%), (iii) the amount of
all Prepayment Premiums payable to the limited partner of Brazos under the
Brazos Partnership Agreement, and (iv) all reasonable costs and expenses
incurred by the limited partner of Brazos (1) in connection with the occurrence
and during the continuance of a default under the Lease Documents or (2) in
connection with the review and execution of any amendment requested by Lessee or
Guarantor (whether or not such amendment is executed) to the Lease Documents (as
defined in the Guaranty), the Guaranty, any security agreement entered into in
connection with the Guaranty, or any consent requested by or on behalf of Lessee
in connection with the Lease Documents or the Brazos Partnership Agreement
whether or not said request is granted. Lessee shall also pay to Brazos on
demand an amount equal to any reasonable expenses and attorneys' fees incurred
by Brazos in collecting such unpaid sums and enforcing the obligations for such
unpaid sums.
Section 6.4. PAYMENT IN ADVANCE. Basic Rent and Additional Rent and any
other amount payable by Lessee to Brazos shall be paid sufficiently in advance
of the date due to assure that immediately available funds in the full amount
due are available on the date due, to such account of Brazos at such bank, or to
such account of such other person at such bank, or otherwise as Brazos may from
time to time designate in writing.
Section 6.5 CREDIT AGREEMENT LOSSES. In addition to all other payment
obligations hereunder, if the lease for any Property is terminated for any
reason prior to the end of the Lease Term or, if applicable, Renewal Term, then
Lessee shall pay to Brazos within three Business Days after receipt of the
billing statement referred to below an additional amount compensating Brazos for
all penalties, costs and expenses (including reasonable out-of-pocket costs and
expenses) as are incurred by Brazos under the Credit Agreement in connection
with such termination and as are set forth in a billing statement sent by Brazos
to Lessee containing the calculation thereof in reasonable detail.
ARTICLE VII
-----------
RESTRICTED USE; COMPLIANCE WITH LAWS
Section 7.1. INSURANCE REQUIREMENT AND LEGAL REQUIREMENT. So long as no
Event of Default or Event of Property Termination shall have occurred and be
continuing, Lessee may use the Property in the regular course of its business
for any lawful purpose. Lessee will not do or permit any act or thing which is
contrary in any material respect to any Insurance Requirement or which is
contary to any Legal Requirement or which would impair, other than in the normal
use thereof, the value or usefulness of any Property; provided, that Lessee
shall not be required to comply with any Legal Requirements to the extent
provided in SECTION 2.9.
Section 7.2. FILINGS. Lessee shall promptly and duly execute, deliver,
file and record, at Lessee's expense, all such documents, statements, filings
and registrations, and take such further action as Brazos or any Assignee shall
from time to time reasonably request in order to establish, perfect and maintain
Brazos' or such Assignee's title to and interest in the Property and any
Assignee's interest in this Ground Lease or any Property as against Lessee or
any third party in any applicable jurisdiction.
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Section 7.3. COMPLIANCE WITH OTHER REQUIREMENTS. Lessee shall use every
precaution which is commercially reasonable and which is usually employed by
corporations engaged in a business which involves owning or operating similar
property to prevent loss or damage to Property and to prevent injury to third
persons or property of third persons. Lessee and Brazos shall cooperate fully
with each other and with all insurance companies providing insurance pursuant to
ARTICLE IX hereof in the investigation and defense of any claims or suits
arising from the ownership, use, or occupancy of the Property; provided that
nothing contained in this SECTION 7.3 shall be construed as imposing on Brazos
any duty to investigate or defend any such claims or suits. Lessee shall comply
and shall use commercially reasonable efforts to cause all persons using or
occupying Property to materially comply with all Insurance Requirements and
Legal Requirements regarding acquiring, titling, registering, leasing, insuring,
using, occupying, operating and disposing of Property, and, if applicable, the
licensing of operators thereof; provided, that Lessee shall not be required to
comply with any Legal Requirements to the extent provided in SECTION 2.9 of this
Ground Lease.
Section 7.4. INSPECTION. Brazos or any Assignee or any authorized
representative of either may, upon five (5) days advance notice, during
reasonable business hours from time to time inspect Property and deeds,
registration certificates, certificates of title and related documents covering
Property wherever the same may be located, but neither Brazos nor any Assignee
shall have any duty to make any such inspection.
Section 7.5. NO LIENS. Lessee shall not permit or suffer to exist on
any Property any Lien, other than Liens which are the subject of a Permitted
Contest, Permitted Encumbrances and Liens placed thereon by, or arising from,
Brazos' own actions or omissions or those of any Assignee or Affiliate of Brazos
and in all such cases, approved by Lessee (provided, that any Liens of Record,
other than Liens placed thereon by, or arising from, Brazos' own actions or
those of any Assignee or Affiliate of Brazos and in all such cases, approved by
Lessee, may not exceed an aggregate amount of $1,000,000 with respect to the
aggregate of the Properties and Facilities, and an aggregate amount of $100,000
with respect to each Property and related Facility), nor may it assign any right
or interest herein or in any Property except as provided in SECTION 18.14(a) of
this Ground Lease. Lessee shall not without the prior written consent of Brazos
and Assignee sublease or otherwise relinquish possession of any Property, except
that, Lessee may sublease any Property to a Subsidiary or Guarantor, may
sublease up to twenty percent (20%) of the Properties to any party for any legal
use and may otherwise relinquish possession of Property to any contractor for
use in performing work for Lessee; provided that such relinquishment of
possession shall in no way affect the obligations of Lessee or the rights of
Brazos hereunder and with respect to the Property. Any sublease by Lessee shall
be expressly subordinate to this Ground Lease. Brazos and Assignee shall have
the present and continuing right to collect and enjoy all rents and other sums
of money payable under any such sublease, and Lessee hereby irrevocably assigns
such rents and other sums to Brazos and Assignee for the benefit and protection
of Brazos and Assignee for all amounts due to Brazos and Assignee under this
Ground Lease; provided that unless an Event of Default or Event of Property
Termination shall have occurred and be continuing hereunder, Lessee shall be
entitled to collect and enjoy such rents and other sums. Lessee shall, within
thirty (30) days after the execution of any such sublease, deliver a conformed
copy thereof to Brazos and Agent. Nothing contained in this Ground Lease shall
be construed as constituting the consent or request of Brazos, express or
implied, to or for the performance by any contractor, laborer, materialman or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to any Property
or any part thereof. Notice is hereby given that Brazos and Agent will not be
liable for any labor, services or materials furnished or to be furnished to
Lessee, or to anyone holding any Property or any part thereof through or under
Lessee, and that no mechanics' or other liens for any such labor, services or
materials shall attach to or affect the interest of Brazos or Assignee in and to
the Property.
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Section 7.6. INTERFERENCE. If any Lien or charge of any kind or any
judgment, decree or order of any court or other governmental authority
(including, without limitation, any state or local tax lien affecting the
Property), whether or not valid, shall be asserted or entered which is
reasonably likely to interfere with the due and timely payment of any sum
payable or the exercise of any of the rights or the performance of any of the
duties or responsibilities under this Ground Lease, Lessee shall, upon obtaining
knowledge thereof or upon receipt of notice to that effect from Brazos or Agent,
promptly take such action as may be necessary to prevent or terminate such
interference.
Section 7.7. DELIVERY OF INFORMATION. Lessee shall deliver to Brazos
and Agent (i) promptly after a Responsible Officer obtains knowledge of any
Event of Default or Potential Default, a certificate of a Responsible Officer
specifying the nature and period of existence of such Event of Default or
Potential Default, and what action, if any, Lessee has taken, is taking, or
proposes to take with respect thereto, and (ii) promptly after Lessee obtains
knowledge of any and all Liens other than Permitted Encumbrances on any Property
or other matter which may materially adversely affect the value or intended use
of a Property, a detailed statement describing each such Lien or other matter.
ARTICLE VIII
------------
MAINTENANCE OF PROPERTY
Section 8.1. WARRANTIES. Brazos, so long as no Event of Default or
Event of Property Termination shall have occurred and be continuing, hereby
assigns and agrees to make available to Lessee any and all rights Brazos may
have under any vendor's or manufacturer's warranties or undertakings with
respect to the Property. If any Event of Default or Event of Property
Termination shall have occurred and be continuing, the assignment of such rights
from Brazos to Lessee shall be deemed to be terminated, except to the extent
that such Event of Default or Event of Property Termination is the result of a
breach of any vendor's warranties or undertakings, in which case the foregoing
assignment will remain in full force and effect and Lessee will be allowed a
reasonable period of time to pursue such vendor and to cure the Event of Default
or Event of Property Termination.
Section 8.2. COSTS AND EXPENSES. Lessee shall pay all costs, expenses,
fees and charges incurred in connection with the ownership, use or occupancy of
any Property during the Lease Term and Renewal Term, if any, thereof, including,
without limitation, any rent and other charges under an Acquired Ground Lease.
Except as otherwise provided in ARTICLE XII hereof and, in the case of an
Acquired Ground Lease, in no event less than to the extent required thereunder,
Lessee shall at all times, at its own expense, and subject to reasonable wear
and tear, keep the Property in good operating order, repair, condition and
appearance. The foregoing undertaking to maintain Property in good repair shall
apply regardless of the cause necessitating repair, regardless of the
availability or adequacy of insurance or condemnation proceeds and regardless of
whether Lessee has possession of the Property, and as between Brazos and Lessee
all risks of damage to the Property are assumed by Lessee. With respect to any
Property, the undertaking to maintain in good repair shall include, without
limitation, all common area maintenance including, without limitation, removal
of dirt, snow, ice, rubbish and other obstructions and maintenance of sidewalks
and landscaping. Lessee hereby agrees to indemnify and hold Brazos and any
Assignee harmless from and against all costs, expenses, claims, losses, damages,
fines or penalties, including reasonable counsel fees, arising out of or due to
Lessee's failure to fulfill its obligations under this SECTION 8.2.
Section 8.3. PAYMENT OF TAXES. With respect to any Property, Lessee
shall make all required reports to the appropriate taxing authorities and shall
pay prior to delinquency: (i) all taxes, assessments, (which may be amortized
over the maximum period permitted by Law) levies, fees, water and sewer rents
and charges, and all other governmental, quasi-governmental and non-governmental
charges, general and special (which may be amortized over
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the maximum period permitted by Law), ordinary and extraordinary, foreseen and
unforeseen, which are, at any time during the Lease Term or any Renewal Term
hereof, imposed or levied upon or assessed against (A) the Property, (B) any
Basic Rent, any Additional Rent or other sum payable hereunder or (C) this
Ground Lease, the leasehold estate hereby created, or which arises in respect of
the ownership, operation, occupancy, possession or use of the Property, (ii) all
gross receipts or similar taxes (i.e., taxes based upon gross income which fail
to take into account all customary deductions (e.g., depreciation and interest)
relating to the Property) imposed or levied upon, assessed against or measured
by any Basic Rent, or any 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 acquisition, leasing or use of the Property, and (iv)
all charges of utilities and communications services serving the Property (a
"CHARGE"); provided, however, that Lessee shall not have any obligation to pay
(A) any tax on, based on or measured by the net income or net receipts of
Brazos, any tax on, based on or measured by the net income or net receipts,
capital or net worth of any Assignee or any Affiliate of Brazos or Assignee
(each, a "LESSOR PERSON"), (B) any tax to the extent the amount of such tax is
increased as a result of any Lessor Person engaging in activities in the
jurisdiction imposing such tax other than those contemplated by this Ground
Lease, (C) any tax imposed upon or in connection with any voluntary or
involuntary transfer by a Lessor Person of any interest in any Property or any
part thereof or interest therein or any interest arising under this Ground Lease
or any other document contemplated thereby unless such transfer results from an
Event of Default, (D) any tax or Charge imposed as a result of the gross
negligence or wilful misconduct of any Lessor Person, (E) any tax or Charge
arising from any act, event or omission that occurs after termination of this
Ground Lease, subject to SECTION 13.2 hereof, and (F) any tax to the extent of
the excess of such tax over the amount of such tax that would have been imposed
in the absence of a sale, transfer, or other disposition by a Lessor Person of
any interest in any Property or any part of either thereof, this Ground Lease or
any interest arising under this Ground Lease or any document contemplated
hereby. Lessee shall not be required to pay any estate, inheritance, transfer,
federal income or similar tax of Brazos (other than any tax referred to in
clause (ii) above) unless such tax is imposed, levied or assessed in
substitution for any other tax, assessment, charge or levy which Lessee is
required to pay pursuant to this SECTION 8.3; provided, however, that if at any
time during the term of this Ground Lease, the method of taxation shall be such
that there shall be levied, assessed or imposed on Brazos a capital levy or
other tax directly on the rents received therefrom, or upon the value of any
Property or any present or any future improvement or improvements on any
Property, then all such taxes, assessments, levies, or charges, or the part
thereof so measured or based, shall be payable by Lessee, but only to the extent
that such taxes would be payable if the Property affected were the only property
of Brazos, and Lessee shall pay and discharge the same as herein provided.
Lessee will furnish to Brazos, promptly after demand therefor, proof of payment
of all items referred to above, the payment of which is the responsibility of
Lessee. If any such assessments may legally be paid in installments, Lessee may
pay such assessment in installments. So long as, in the reasonable opinion of
Lessee's counsel, Lessee shall have reasonable grounds to contest the existence,
amount, applicability or validity of any tax Lessee is required to pay pursuant
to this Ground Lease, Lessee may contest such tax subject to the provisions of
ARTICLE XVII of this Ground Lease so long as adequate reserves therefor are
maintained by Lessee.
Section 8.4. ENVIRONMENTAL REPORTs. Upon reasonable notice, Lessee
shall furnish Brazos reports (the "REPORTS") prepared by a qualified independent
consultant, at the expense of Lessee, concerning the condition and status of any
Property in respect of any Environmental Laws; provided that Brazos, Agent, or
Assignee has demonstrable evidence that such Property may be affected by a
hazardous substance, a hazardous waste or an Environmental Claim not adequately
addressed in any environmental assessment previously delivered to Brazos or any
Assignee in connection with such Property.
ARTICLE IX
----------
INSURANCE
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Section 9.1. LIABILITY AND PROPERTY DAMAGE. Lessee shall, at its sole
cost and expense, including through self-insurance, maintain such liability and
property damage insurance with respect to all Property and insurance against
loss or damage to all Property of the types usually carried by corporations
engaged in the same or a similar business, of similar size as Lessee, and owning
similar property and which cover risks of the kind customarily insured against
by such corporations and such other insurance as may be required by law or as
may be reasonably requested by Brazos for purposes of assuring compliance with
this ARTICLE IX, including, without limitation, the insurance described on the
Schedule of Insurance attached hereto as EXHIBIT "A". Such insurance shall be
written by financially sound and reputable companies which are legally qualified
to issue such insurance and which are approved by Agent. Lessee may, at its cost
and expense, prosecute any claim against any insurer or contest any settlement
proposed by any insurer, and Lessee may bring any such prosecution or contest in
the name of Brazos, Lessee, or both, and Brazos will join therein at Lessee's
request; provided that Lessee shall indemnify Brazos against any losses, costs
or expenses (including reasonable attorneys' fees) which Brazos may incur in
connection with such prosecution or contest. Notwithstanding the foregoing,
Lessee at its sole option, may choose to self-insure for any liabilities or
damages which are otherwise to be covered by insurance as described herein.
Section 9.2. ADDITIONAL INSUREDS; NOTICE. Any policies of insurance
other than Workers' Compensation and Employer's Liability Insurance, carried in
accordance with this ARTICLE IX and any policies taken out in substitution or
replacement for any such policies (i) shall name Brazos and Assignee as
additional insureds, as their respective interests may appear (but without
imposing upon any such person any obligation imposed on the insured, including,
without limitation, the liability to pay the premium for any such policy), (ii)
shall have attached to the All Risk direct physical damage policy, a lender's
loss payable endorsement for the benefit of Brazos and Assignee as loss payees
and (iii) shall provide that as against Brazos and Assignee the insurers shall
waive any rights of subrogation. Lessee shall request the insurers to give
thirty (30) days advance written notice to Brazos and its assigns of any
cancellation of any insurance to be maintained under this Article. Lessee shall
give a copy to Brazos and any Assignee of any notice received by Lessee
regarding the cancellation or other termination of the insurance included in the
Schedule of Insurance attached hereto as EXHIBIT "A". Each liability policy (A)
shall be primary without right of contribution from any other insurance which is
carried by Brazos with respect to its interest as such in the Property and (B)
shall expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured.
Section 9.3. APPLICATION OF PROCEEDS OF LOSS OR SUBSTANTIAL TAKING. Any
insurance or condemnation proceeds received as the result of the occurrence of
(i) any event of loss described in SECTION 14.3 hereof or (ii) any event of
substantial Taking described in SECTION 15.1 shall be paid to Brazos, and
disposed of as contemplated by SECTION 14.3 hereof.
Section 9.4. APPLICATION OF PROCEEDS OF OTHER THAN LOSS OR SUBSTANTIAL
TAKING. As between Lessee and Brazos, if any insurance or condemnation proceeds
received as a result of any loss or Taking, other than a loss described in
SECTION 14.3 or an event of substantial Taking described in SECTION 15.1, is
less than $100,000, it is agreed that such proceeds will be paid to Lessee to be
used for repairs, replacement, reconstruction or restoration in accordance with
the terms of SECTIONS 14.2 and 15.2 hereof. If the proceeds equal or exceed
$100,000, then the proceeds shall be deposited in a special purpose account held
by Assignee, to be used only for the purpose set forth in this paragraph, and
Lessee shall be entitled (i) to receive the amounts so deposited against
certificates, invoices or bills in form reasonably satisfactory to Brazos and
Agent, delivered to Brazos and Assignee from time to time as such work or repair
progresses, and (ii) to direct the investment of the amounts so deposited as
provided in SECTION 9.5. Any moneys remaining in the aforesaid account after
final payment for repairs has been made shall be paid to Lessee.
Section 9.5. INVESTMENT. Agent, at Lessee's instruction, shall invest
the amounts deposited with Agent pursuant to SECTION 9.4 in the following:
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(i) direct obligations of the United States Government;
(ii) interest-bearing time deposits at, or obligations of, any
Assignee;
(iii) commercial paper supported by a letter of credit issued by any
Assignee; or
(iv) money market mutual funds that invest only in government
obligations or repurchase agreements secured by government
obligations.
Such investments shall mature in such amounts and on such dates so as to provide
that amounts shall be available on the draw dates sufficient to pay the amounts
requested by and due to Lessee. Any interest earned on investments of such funds
shall be paid to Lessee. Brazos and Agent shall not be liable for any loss
resulting from the liquidation of each and every such investment and Lessee
shall be liable for such loss, if any.
Section 9.6. APPLICATION IN DEFAULT. Any amount referred to in SECTIONS
9.3 or 9.4 which is payable to Lessee shall not be paid to Lessee or, if it has
been previously paid to Lessee and not applied by Lessee as provided in SECTION
9.3 or 9.4, shall not be retained by Lessee, if an Event of Default or Event of
Property Termination shall have occurred and be continuing. In such event, all
such amounts shall be paid to and held by Brazos as security for the obligations
of Lessee hereunder or, at Brazos' option, applied by Brazos toward payment of
any of such obligations of Lessee at the time due hereunder as Brazos may elect.
At such time as there shall not be continuing any Event of Default or Event of
Property Termination, all such amounts at the time held by Brazos in excess of
the amount, if any, which Brazos shall have elected to apply as above provided
shall be applied as provided in SECTIONS 9.3 or 9.4.
Section 9.7. CERTIFICATES. Subject to Lessee's right to self-insure as
set forth hereinabove, on or before the execution of this Ground Lease, and
annually on or before the anniversary of the date of this Ground Lease, Lessee
will furnish to Brazos and Agent certificates or other evidence reasonably
acceptable to Brazos and Agent certifying that the insurance then carried and
maintained on each Property complies with the terms hereof.
Section 9.8. COVENANT TO KEEP INSURANCE IN FORCE. Lessee covenants that
it will not use or occupy any Property or permit the use or occupancy of any
Property at a time when the insurance required by this ARTICLE IX is not in
force with respect to such Property.
ARTICLE X
---------
INDEMNITIES
Section 10.1. INDEMNIFIED PERSONS. Lessee shall indemnify and hold
harmless Brazos, each general and limited partner of Brazos, any Assignee, any
successor or successors, and any Affiliate of each of them, and their respective
officers, directors, incorporators, shareholders, partners (general and limited,
including without limitation, the general and limited partners of Brazos),
employees, agents and servants (each of the foregoing, an "INDEMNIFIED PERSON")
from and against all liabilities, taxes (except mortgage taxes), losses,
obligations, claims, damages, penalties, causes of action, suits, costs and
expenses (including, without limitation, reasonable attorneys' and accountants'
fees and expenses) or judgments of any nature relating to or in any way arising
out of:
(a) The acquisition, title on acquisition, rejection, possession,
titling, retitling, registration, reregistration, custody by Lessee of title and
registration documents, ownership, use, non-use, misuse, lease, operation,
repair, control or disposition of any Property leased or subleased or to be
leased or subleased hereunder, (i) except to
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the extent that such costs are included in the Acquisition Cost of such Property
and (ii) except for any general administrative expenses of Brazos;
(b) The assertion of any claim or demand based upon any infringement
or alleged infringement of any patent or other right, by or in respect of any
Property; provided, however, that upon request of Lessee, Brazos will make
available to Lessee Brazos' rights under any similar indemnification arising
from any manufacturer's or vendor's warranties or undertakings with respect to
any Property;
(c) Subject to SECTION 8.3, all U.S. Federal, state, county,
municipal, foreign or other fees and taxes of whatsoever nature arising from or
relating to ownership of the Property, including but not limited to license,
qualification, franchise, sales, use, gross income, gross receipts, ad valorem,
business, personal property, real estate, value added, excise, motor vehicle,
occupation fees and stamp or other taxes or tolls of any nature whatsoever, and
penalties and interest thereon, whether assessed, levied against or payable by
Brazos or otherwise, with respect to any Property or the acquisition, purchase,
sale, rental, use, operation, control, ownership or disposition of any Property
(including without limitation any claim by any governmental authority for
transfer tax, transfer gains tax, filing or other similar taxes or fees in
connection with the acquisition of any Property by Brazos or otherwise in
connection with this Ground Lease) or measured in any way by the value thereof
or by the business of, investment in, or ownership by Brazos with respect
thereto; provided that this indemnity shall not apply to (i) net income taxes
imposed by any state or local taxing authority, (ii) U.S. Federal net income,
alternative minimum taxes, or capital gains taxes or (iii) state and local net
income or capital gains taxes which are imposed by a state or locality because
of a relationship between Brazos and such state or locality unrelated to
ownership of the Property or to this Ground Lease; and provided further, that to
the extent Lessee's obligations hereunder include indemnifying Brazos for net
income taxes imposed by a state or local taxing authority, such obligations
shall be limited to indemnifying Brazos for the inability, disallowance or other
loss of deductions relating to ownership of the Property customarily allowed in
computing net income (e.g., interest expense, depreciation, financing,
administrative and other fees and expenses);
(d) Any violation or alleged violation (other than an alleged
violation alleged by Brazos) by Lessee of this Ground Lease or of any contracts
or agreements to which Lessee is a party or by which it is bound or any laws,
rules, regulations, orders, writs, injunctions, decrees, consents, approvals,
exemptions, authorizations, licenses and withholdings of objection, of any
governmental or public body or authority and all other Legal Requirements,
including, without limitation, any Legal Requirements with respect to the
environment or the regulation of hazardous materials or substances, or any
breach of a representation or warranty by Lessee under this Ground Lease;
(e) Any Environmental Claim or requirement of Environmental Law
concerning or relating to any Property, or the operations or business in respect
of any Property; or
(f) Any claim against Brazos' title or Assignee's interest in any
Property to the extent such claim is not fully paid by title insurance.
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Section 10.2. PAYMENTS. Lessee shall forthwith upon demand reimburse
any Indemnified Person for any sum or sums expended with respect to any of the
items set forth in SECTION 10.1 or, upon request from any Indemnified Person,
shall pay such amounts directly. Any payment made to or on behalf of any
Indemnified Person pursuant to this ARTICLE X shall be increased to such amount
as will, after taking into account all taxes imposed with respect to the accrual
or receipt of such payment (as the same may be increased pursuant to this
sentence), equal the amount of the payment, reduced by the amount of any savings
in such taxes actually realized by the Indemnified Person as a result of the
payment or accrual of the amounts in respect of which the payment to or on
behalf of the Indemnified Person hereunder is made. Any Indemnified Person
seeking indemnification under this ARTICLE X shall give Lessee written evidence
supporting the amount demanded, and such written evidence shall be deemed to be
conclusive, absent manifest error. To the extent that Lessee in fact indemnifies
any Indemnified Person under the indemnity provisions of this Ground Lease,
Lessee shall be subrogated to such Indemnified Person's rights in the affected
transaction and shall have a right to determine the settlement of claims
therein.
Section 10.3. CONTINUING INDEMNIFICATION. The indemnities contained in
this ARTICLE X shall not be affected by and shall survive any termination of
this Ground Lease as a whole or in respect of any Property leased hereunder or
any failure or refusal of Lessee to accept any Property acquired or ordered
pursuant to the Agreement for Ground Lease.
Section 10.4. LIMITATIONS. Brazos and Lessee agree that the terms of
any state Law which may affect the rights of Brazos and Lessee under this
ARTICLE X may be set forth in the Memorandum of Ground Lease for the affected
Property and shall apply as though set forth in full in this Ground Lease.
Section 10.5. LITIGATION. If any claim, action, proceeding or suit is
brought against an Indemnified Person with respect to which Lessee would be
required to indemnify such Indemnified Person, Lessee shall have the right to
assume the defense thereof, including the employment at its expense of counsel;
provided that Lessee shall not have such right, to the extent that such
Indemnified Person shall deliver to Lessee a written notice waiving the benefits
of the indemnification of such Indemnified Person provided by this ARTICLE X in
connection with such claim, action, proceeding or suit. Notwithstanding the
foregoing, if (i) any claim, action, proceeding or suit is brought against an
Indemnified Person who is an individual, (ii) the action threatens to restrain
or adversely affect the conduct of the business of the Indemnified Person, but
not the business of Brazos' ownership of the Property under this Ground Lease,
(iii) the claim, action, proceeding or suit seeks damages of more than
$1,000,000, or (iv) independent counsel to an Indemnified Person shall conclude
that there may be defenses available to the Indemnified Person which may
conflict with those available to Lessee, Lessee shall not have the right to
assume the defense of any such action on behalf of the Indemnified Person if
such Indemnified Person chooses to defend such action (with counsel reasonably
acceptable to Lessee), and all reasonable costs, expenses and attorneys' fees
incurred by the Indemnified Person in defending such action shall be borne by
Lessee. Notwithstanding the assumption of its defense by Lessee pursuant to this
paragraph, any Indemnified Person shall have the right to employ separate
counsel and to participate in its defense, but the fees and expenses of such
counsel shall be borne by the Indemnified Person. In addition, Lessee will not
be liable for any settlement of any claim, action, proceeding or suit unless
Lessee has consented thereto in writing. Any decision by an Indemnified Person
to employ its own counsel rather than counsel selected by Lessee (whether or not
at Lessee's expense) shall in no way affect any rights of such Indemnified
Person otherwise arising under this ARTICLE X.
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ARTICLE XI
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RENEWAL AND TERMINATION
Section 11.1. LESSEE'S RIGHT TO TERMINATE. So long as no Potential
Default, Potential Property Termination, Event of Default or Event of Property
Termination has occurred and is continuing and, with respect to all Properties,,
Lessee shall have the right, at any time during the Lease Term or any Renewal
Term, upon not less than thirty (30) days' written notice to Brazos and
Assignee, to terminate on the Basic Rent Payment Date specified in such notice
this Ground Lease with respect to all Properties and either (i) purchase all
Properties for cash at their respective Acquisition Cost or (ii) with the
consent of Brazos and Agent, arrange, at its own cost and expense, for all
Properties to be sold for cash pursuant to SECTION 11.4 and with the
consequences therein provided, except that such sale must occur on the Basic
Rent Payment Date stipulated in the written notice contemplated by this SECTION
11.1, and Lessee shall have such right only if (a) indemnity payments to Brazos
pursuant to SECTION 10.1(c) shall have been required and can reasonably be
expected to occur subsequently and such payments are or would be in the
aggregate (taking into account the recurring nature of the payments) sufficient
in the reasonable judgment of Lessee to render this Ground Lease uneconomic with
respect to all Properties, (b) due to a change in accounting rules or treatment,
this Ground Lease is no longer treated as an operating lease for accounting
purposes or (c) there exists an event of default under the Credit Agreement and
the payment obligations of Brazos thereunder are declared to be immediately due
and payable.
Section 11.2. BRAZOS' RIGHT TO TERMINATE. Brazos shall have the right
upon thirty (30) days' prior written notice to Lessee, to terminate the Ground
Lease of all Properties as of a Basic Rent Payment Date stipulated in such
notice if at any time: (1) by reason of a nexus between a state or local taxing
jurisdiction and any Property or the activities of any user (other than Brazos)
of the Property, Brazos incurs, or, in its reasonable judgment, in the future
would incur, a state or local tax which, in its sole but reasonable judgment,
renders the Ground Lease uneconomic; or (2) the Agreement for Ground Lease or
any other instrument relating to this Ground Lease shall be deemed to require
the payment or deemed to permit the collection of interest in excess of the
Maximum Rate and any such interest in excess of such Maximum Rate cannot be
spread and allocated either to the preceding or subsequent periods in which such
excess interest is to be paid or collected pursuant to SECTION 18.8 of this
Ground Lease. In the event of a termination of this Ground Lease with respect to
all Properties pursuant to this SECTION 11.2, Lessee shall either (i) purchase,
on the Basic Rent Payment Date stipulated in the written notice contemplated by
this SECTION 11.2, all Properties for cash at their respective Acquisition Cost
or (ii) with the consent of Brazos and Agent, arrange, at its own cost and
expense, for all Properties to be sold for cash pursuant to SECTION 11.4 and
with the consequences therein provided, except that such sale must occur on the
Basic Rent Payment Date stipulated in the written notice contemplated by this
SECTION 11.2.
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Section 11.3. RENEWAL.
(a) Not later than twelve months prior to the end of the Lease Term or
any Renewal Term, if any, as applicable, Brazos, with the consent of Agent if it
is electing to renew, shall give notice to Lessee as to whether it desires to
renew the lease with respect to all Properties and the terms and conditions
(including the rental amounts) of any such renewal. Not later than nine months
prior to the end of the Lease Term or Renewal Term, as applicable, Lessee shall
give notice to Brazos as to whether it will renew or not renew the lease.
Failure of Lessee to give such notice shall be deemed an election not to renew
the lease. If the parties elect to renew the Lease Term as set forth above,
Brazos will use commercially reasonable efforts to obtain financing, on terms
and conditions consistent with the Credit Agreement and partnership agreement of
Brazos or otherwise acceptable to Brazos and Lessee, for the Renewal Term. So
long as (i) no Event of Default or Event of Property Termination has occurred
and is continuing, and (ii) Brazos shall have received a commitment for
financing through the last day of the Renewal Term (as defined below) from the
Agent under the Credit Agreement, the lease shall be renewed for a term (the
"RENEWAL TERM") equal to five (5) years in the case of the initial Renewal Term
and one (1) year in the case of subsequent Renewal Terms commencing on the first
day of the calendar month following the last day of the Lease Term or Renewal
Term, as applicable, thereof; provided, however, the Lease Term or Renewal Term,
as applicable, shall not be renewed if on the first day of the new Renewal Term
the lender(s) fails to fund under its commitment pursuant to the terms of such
commitment for any reason. Lessee may give advance notice of its intention to
renew this Ground Lease with respect to all Properties for successive Renewal
Terms. Upon acceptance by Brazos and Agent of such successive Renewal Terms,
Lessee shall be bound by such renewals for the entire period of successive
Renewal Terms.
(b) If this Ground Lease is not being renewed, Lessee shall, at its
option, either (i) purchase all Properties for cash at its Acquisition Cost
during the period from one (1) month before the end of the Lease Term or Renewal
Term, as applicable, to five (5) Business Days before the end of the Lease Term
or Renewal Term, as applicable or (ii) arrange, at its own cost and expense, for
all Properties to be sold for cash pursuant to SECTION 11.4 and with the
consequences therein provided during the period from six (6) months before the
end of the Lease Term or Renewal Term, as applicable, to one (1) month before
the end of the Lease Term or Renewal Term, as applicable. Not later than eight
months prior to the end of the Lease Term or Renewal Term, as applicable, Lessee
shall give notice to Brazos of its election to either purchase or arrange for
the sale of all of the Property to a third party. Any notice given by Lessee
pursuant to the preceding sentence shall be irrevocable, except that Lessee may
revoke the election to have a Property sold to a third party if Lessee purchases
such Property.
Section 11.4. SALES TO THIRD PARTIES.
(a) If Lessee exercises its right to arrange for a sale of a Property
to a third party pursuant to SECTION 11.1, 11.2 or 11.3, Brazos shall receive
the proceeds of sale and:
(i) if the proceeds of sale are greater than the Acquisition
Cost of the Property sold, Brazos shall pay to Lessee the
amount by which such proceeds exceed such Acquisition Cost;
and
(ii) if the proceeds of sale are equal to or less than the
Acquisition Cost of the Property sold, Lessee shall pay to
Brazos an amount equal to (A) such Acquisition Cost less (B)
the proceeds of such sale.
For purposes of this SECTION 11.4, in connection with the sale of a Property
"PROCEEDS OF SALE" shall mean the aggregate proceeds from the sale of such
Property without reduction for any amounts paid by Lessee.
(b) All payments and credits referred to in PARAGRAPH (A) above shall
be made on the date of the sale of such Property, and the parties shall account
to each other for such payments and credits. In consideration for
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the receipt by Brazos of the proceeds of sale and all other amounts then due and
owing hereunder, Brazos shall transfer title to such Property to the purchaser
at the sale designated by Lessee pursuant to a special warranty deed. In the
event of a sale pursuant to this SECTION 11.4, neither Lessee nor any Affiliate
of Lessee shall purchase the Property. Any Property sold to a third party
pursuant to this PARAGRAPH (b) shall, unless SECTION 11.4 (a)(i) applies, be
free of any Liens at the time of sale, including Liens which would otherwise be
Permitted Encumbrances if such Liens would reduce the Value to the purchaser of
such Property; provided however, Lessee shall have the option to obtain
affirmative title insurance, if available, to insure over such Lien or to make
other arrangements acceptable to such purchaser.
(c) If a Property and all Facilities thereon are sold to the same
third party, the proceeds of sale shall be allocated prorata between such
Property and Facility based on the Acquisition Cost of such Property and the
Acquisition Cost (as defined in the Facilities Lease) of such Facility.
Section 11.5. ADDITIONAL PAYMENTS. In connection with any purchase or
sale of a Property under this ARTICLE XI, on or before the date such purchase or
sale occurs, Lessee shall pay to Brazos, in addition to any purchase price
payable, all Basic Rent payable, any Additional Rent, all amounts owing under
SECTION 11.4, and other amounts owing hereunder.
Section 11.6. TERMINATION OF GROUND LEASE. Upon receipt by Brazos of
the purchase price payable in connection with any sale or purchase of any
Property under this ARTICLE XI, together with all additional payments required
under SECTION 11.5 with respect to such Property, this Ground Lease shall
terminate with respect to such Property.
Section 11.7. SURRENDER OF PROPERTY. Subject to the provisions of this
ARTICLE XI and ARTICLES XII, XIII, XIV and XV hereof, upon termination of the
lease of any Property hereunder, Lessee shall surrender such Property to Brazos.
In connection with the sale of any Property by Brazos, in consideration of the
receipt of the purchase price and all other amounts which may be owing to Brazos
under SECTION 11.5, Brazos shall execute and deliver all instruments of transfer
necessary to convey Brazos' interest to the purchaser of such Property.
ARTICLE XII
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ECONOMIC DISCONTINUANCE
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Section 12.1. UNECONOMIC PROPERTY. In addition to Lessee's right to
terminate under SECTION 11 hereof, if, at any time after the end of its Lease
Term, in the good faith judgment of Lessee, any Property shall have become
uneconomic for continued use and occupancy by Lessee (such Property hereinafter
sometimes called an "UNECONOMIC PROPERTY"), then Lessee shall deliver to Brazos
and Assignee a written notice (an "UNECONOMIC NOTICE") containing (i) notice of
Lessee's intention to terminate the Ground Lease as to such Uneconomic Property
as of a Basic Rent Payment Date specified in such notice, which Basic Rent
Payment Date shall be within sixty (60) days of such notice, and (ii) a
certificate of an officer of Lessee stating that Lessee has determined that such
Property has become uneconomic for continued use and occupancy by Lessee;
provided that Lessee may not deliver an Uneconomic Notice to Brazos under the
terms of this ARTICLE XII for one (1) or more Properties, the aggregate
Acquisition Costs of which exceed ten percent (10%) of the aggregate Acquisition
Costs of all Properties; and provided, further, that if at the end of the Lease
Term the aggregate Acquisition Costs of Properties for which Lessee has given
Brazos an Uneconomic Notice exceeds ten percent (10%) of the aggregate
Acquisition Costs of all Properties, Lessee shall not have the right to sell any
Properties to a third party pursuant to SECTION 11.4. Lessee shall terminate
this Ground Lease with respect to such Uneconomic Property and shall either
purchase the Uneconomic Property for cash at its Acquisition Cost on the Basic
Rent Payment Date specified in such notice or sell such Uneconomic Property on
such date; provided, that if the proceeds of the sale of the Uneconomic Property
are less than the Acquisition Cost of such Uneconomic Property, then in addition
to the purchase price Lessee shall pay to Brazos an amount equal to such
Acquisition Cost less the proceeds of such sale and if such proceeds of sale
exceed the Acquisition Cost, Brazos will pay any excess to Lessee.
Section 12.2. PAYMENT. In connection with any purchase or sale pursuant
to this ARTICLE XII, on the Basic Rent Payment Date upon which such purchase or
sale occurs, Lessee shall pay or cause the purchaser to pay to Brazos the
purchase price, and Lessee shall pay all Basic Rent payable and any Additional
Rent and other amounts owing hereunder.
Section 12.3. NO RIGHT TO USE. If Lessee terminates this Ground Lease
with respect to any Property pursuant to this ARTICLE XII, neither Lessee nor
any Affiliate of Lessee shall have the right for one year following the date of
such termination to use, and shall not use, such Property in connection with the
development of a Facility.
ARTICLE XIII
------------
EVENTS OF DEFAULT
Section 13.1. EVENTS OF DEFAULT. Any of the following events of default
shall constitute an "EVENT OF DEFAULT" and shall give rise to the rights on the
part of Brazos described in SECTION 13.2 hereof:
(a) FAILURE TO MAKE PAYMENTS. Failure of Lessee to pay amounts due
to Brazos at the time of any scheduled sale of a Property hereunder, failure of
Lessee to pay any payment due hereunder, including without limitation, Basic
Rent or Additional Rent for more than five (5) Business Days after such payment
is due pursuant to ARTICLE VI hereof.
(b) FAILURE TO MAINTAIN INSURANCE. Failure of Lessee to maintain the
insurance required by ARTICLE IX hereof, or default in the performance of the
covenant contained in SECTION 9.4 hereof.
(c) OTHER DEFAULTS. Lessee shall default in the performance or
observance of any other term, covenant, condition or obligation contained in
this Ground Lease or any Consent and such default shall (i) continue for thirty
(30) days after written notice shall have been given to Lessee by Brazos or any
Assignee specifying such default and requiring such default to be remedied or
(ii) if such default is of a nature that it is not capable of being cured
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within such 30-day period, Lessee shall not have diligently commenced curing
such default, proceeded diligently and in good faith thereafter to complete
curing such default, or cured such default within sixty (60) days from the date
of written notice.
(d) BANKRUPTCY. (i) The entry of a decree or order for relief in
respect of Lessee or Guarantor by a court having jurisdiction in the premises in
an involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Lessee or Guarantor or of any
substantial part of Lessee's or Guarantor's property, or ordering the winding up
or liquidation of Lessee's or Guarantor's affairs, and the continuance of any
such decree or order unstayed and in effect for a period of sixty (60)
consecutive days; or (ii) the general suspension or discontinuance of Lessee's
or Guarantor's business operations, its insolvency (however evidenced) or its
admission of insolvency or bankruptcy, or the commencement by Lessee or
Guarantor of a voluntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or the consent by it to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Lessee or Guarantor or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the failure of Lessee or Guarantor generally to pay its
debts as such debts become due, or the taking of corporate action by Lessee or
Guarantor in furtherance of any such action.
(e) PAYMENT OF OBLIGATIONS. A default or event of default, the effect
of which results in the holder or holders of any Indebtedness of Lessee or
Guarantor, or a trustee or agent on behalf of such holder or holders,
accelerating Indebtedness prior to its stated maturity under the provisions of
any instrument evidencing Indebtedness in excess of $1,000,000 of Lessee or
Guarantor (or under the provisions of any agreement pursuant to which such
instrument was issued).
(f) MISREPRESENTATIONS. Any representation or warranty made by Lessee
in this Ground Lease or any Consent or which is contained in any certificate,
document or financial or other statement furnished under or in connection with
this Ground Lease proves to be false or misleading in any material respect when
made or deemed made.
(g) DEFAULT UNDER LEASE DOCUMENTS. An Event of Default (as defined in
the Agreement for Ground Lease, Agreement for Facilities Lease or Facilities
Lease) shall occur and be continuing under the Agreement for Ground Lease,
Agreement for Facilities Lease or Facilities Lease, respectively.
(h) OTHER AGREEMENTS. Lessee shall default in any material respect in
the performance or observance of any term, covenant, condition or obligation
contained in any other material written agreement executed by Lessee with or for
the benefit of Brazos or Agent and such default shall not have been cured within
any applicable grace or cure period and shall be continuing.
(i) UNAUTHORIZED ASSIGNMENT. Any assignment by Lessee of any interest
in this Ground Lease other than in accordance with the terms of this Ground
Lease.
(j) GUARANTY. An Event of Default under the Guaranty shall occur and
be continuing or any representation or warranty made by Guarantor in the
Guaranty, any Consent or any document contemplated hereby or thereby proves to
be false or misleading in any material respect when made or deemed made, or
Guarantor defaults in the performance of any term, condition, covenant or
obligation contained in the Guaranty or any Consent, or any default or event of
default occurs thereunder and such default shall not have been cured within any
applicable grace or cure period and shall be continuing or any provision of any
Guaranty shall for any reason be terminated or
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challenged or cease to be in full force and effect and a valid and binding
obligation of the Guarantor, or the Guarantor shall challenge or repudiate in
writing its liability thereunder.
(k) EVENT OF PROPERTY TERMINATION. The occurrence of any Event of
Property Termination.
(l) DEFAULT UNDER CORPORATE CREDIT DOCUMENTS. The occurrence and
continuation of any Default under any of the Corporate Credit Documents.
Section 13.2. RIGHTS UPON DEFAULT. Upon the occurrence and continuation
of any Event of Default Brazos or any Assignee may in its discretion declare
this Ground Lease to be in default and do, to the extent permitted by applicable
law, any one or more of the following:
(a) Terminate this Ground Lease as to any or all Properties leased
hereunder;
(b) Whether or not this Ground Lease as to any Property is
terminated, sell any Property or Brazos' interest in any Acquired Ground Lease
(with or without the concurrence or request of Lessee);
(c) Hold, use, occupy, lease or keep idle any or all Property as
Brazos in its sole discretion may determine, without any duty to account to
Lessee with respect to any such action or inaction or for any proceeds thereof;
(d) Exercise any other right or remedy which may be available under
applicable law and in general proceed by appropriate judicial proceedings,
either at law or in equity, to enforce the terms hereof or to recover damages
for the breach hereof; and
(e) Declare an Event of Property Termination as to any or all
Properties leased hereunder.
Suit or suits for the recovery of any default in the payment of any sum
due hereunder or for damages may be brought by Brazos from time to time at
Brazos' election, and nothing herein contained shall be deemed to require Brazos
to await the date whereon this Ground Lease or the term hereof would have
expired by limitation had there been no such default by Lessee or no such
termination or cancellation.
The receipt of any payments under this Ground Lease by Brazos with
knowledge of any breach of this Ground Lease by Lessee or of any default by
Lessee in the performance of any of the terms, covenants or conditions of this
Ground Lease, shall not be deemed to be a waiver of any provision of this Ground
Lease.
No receipt of moneys by Brazos from Lessee after the termination or
cancellation hereof in any lawful manner shall reinstate, continue or extend the
Lease Term or any Renewal Term, or affect any notice theretofore given to
Lessee, or operate as a waiver of the right of Brazos to enforce the payment of
Basic Rent or Additional Rent or other charges payable hereunder, or operate as
a waiver of the right of Brazos to recover possession of any Property by proper
suit, action, proceedings or remedy; it being agreed that, after the service of
notice to terminate or cancel this Ground Lease, and the expiration of the time
therein specified, if the default has not been cured in the meantime, or after
the commencement of suit, action or summary proceedings or of any other remedy,
or after a final order, warrant or judgment for the possession of the Property,
Brazos may demand, receive and collect any moneys payable hereunder, without in
any manner affecting such notice, proceedings, suit, action, order, warrant or
judgment; and any and all such moneys so collected shall be deemed to be
payments on account for the use, operation and occupation of the Property, or at
the election of Brazos, on account of Lessee's liability hereunder. Acceptance
of the keys to any
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Property, or any similar act, by Brazos, or any agent or employee, during the
term hereof, shall not be deemed to be an acceptance of a surrender of any
Property unless Brazos shall consent thereto in writing.
If, after an Event of Default shall have occurred, Lessee fails to
surrender promptly after written request by Brazos or converts or destroys any
Property, Lessee shall be liable to Brazos for all Basic Rent and Additional
Rent then due and payable with respect to such Property, all other amounts
payable under this Ground Lease, the Acquisition Cost of such Property as of the
date of such request, conversion or destruction and all losses, damages and
expenses (including, without limitation, attorneys' fees and expenses) sustained
by Brazos by reason of such Event of Default and the exercise of Brazos'
remedies with respect thereto.
If, after an Event of Default Brazos repossesses any Property,
notwithstanding any termination of this Ground Lease, Lessee shall be liable for
and Brazos may recover from Lessee all Basic Rent accrued and any Additional
Rent owing with respect to such Property to the date of such repossession, all
other amounts payable under this Ground Lease, and all losses, damages and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) sustained by Brazos by reason of such Event of Default and the
exercise of Brazos' remedies with respect thereto. In addition, Brazos may sell
Brazos' interest in any Property upon any terms that Brazos deems satisfactory,
free of any rights of Lessee or any person claiming through or under Lessee. In
the event of such sale, in addition to the amounts payable under the first
sentence of this paragraph, Brazos shall be entitled to recover from Lessee, as
liquidated damages, and not as a penalty, an amount equal to the Acquisition
Cost of any Property so sold, minus the net proceeds of such sale (deducting
from the gross proceeds of such sale any reasonable legal expenses, commissions,
sales taxes or other costs or expenses associated with such sale) received by
Brazos; provided, however, if the proceeds of such sale are in excess of the
amount payable to Brazos pursuant hereto, such excess shall be the property of
Lessee. In lieu of such sale, in addition to the amounts payable under the first
sentence of this paragraph, Brazos may cause Lessee to pay to Brazos, and Lessee
shall pay to Brazos, as liquidated damages, and not as a penalty, an amount
equal to the Acquisition Cost of any or all of the Property, and upon payment in
full of all such amounts Brazos shall transfer all of Brazos' right, title and
interest in and to the Property to Lessee.
Brazos may (i) sell all or any part of the Property at public or
private sale, as Brazos may determine, free and clear of any rights of the
Lessee and without any duty to account to the Lessee with respect to such action
or inaction or any proceeds with respect thereto (except to the extent required
by clause (ii) below if Brazos shall elect to exercise its rights thereunder) in
which event the Lessee's obligation to pay Basic Rent hereunder for periods
commencing after the date of such sale shall be terminated or proportionately
reduced, as the case may be; and (ii) if Brazos shall so elect, demand that the
Lessee pay to Brazos, and the Lessee shall pay to Brazos, on the date of such
sale, as liquidated damages for loss of a bargain and not as a penalty (the
parties agreeing that Brazos' actual damages would be difficult to predict, but
the aforementioned liquidated damages represent a reasonable approximation of
such amount) (in lieu of Basic Rent due for periods commencing on or after the
Basic Rent Payment Date coinciding with such date of sale (or, if the sale date
is not a Basic Rent Payment Date, the Basic Rent Payment Date next preceding the
date of such sale)), an amount equal to (A) the excess, if any, of (1) the
Acquisition Cost calculated as of such Basic Rent Payment Date (including all
Rent due and unpaid to and including such Basic Rent Payment Date), over (2) the
net proceeds of such sale, if any (that is, after deducting all reasonable costs
and expenses incurred by Brazos, the Agent and the Assignees incident to such
conveyance, including, without limitation, repossession costs, brokerage
commissions, prorations, transfer taxes, fees and expenses for counsel, title
insurance fees, survey costs, recording fees, and any repair or alteration
costs); plus (B) all damages, reasonable costs and expense of Brazos under the
Ground Lease; plus (C) interest at the overdue rate provided in SECTION 6.3
hereof on the foregoing amount from such Basic Rent Payment Date until the date
of payment.
Brazos may exercise any other right or remedy that may be available to
it under applicable law, or proceed by appropriate court action (legal or
equitable) to enforce the terms hereof or to recover damages for the breach
hereof.
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Separate suits may be brought to collect any such damages for any period(s), and
such suits shall not in any manner prejudice Brazos' right to collect any such
damages for any subsequent period(s), or Brazos may defer any such suit until
after the expiration of the Term, in which event such suit shall be deemed not
to have accrued until the expiration of the Lease Term.
In the event that a court of competent jurisdiction rules that this
Ground Lease constitutes a mortgage, deed of trust or other secured financing as
is the intent of the parties pursuant to SECTION 3.3, and subject to the
availability of such remedy under applicable law, then Brazos and the Lessee
agree that the Lessee hereby grants, bargains, sells, transfers, assigns and
conveys unto the trustee named as such in the Lien granted by Brazos to Agent,
as trustee and herein referred to as "trustee", and its successors (Brazos
hereby reserving the right to from time to time, with or without cause and at
Brazos' sole discretion, by instrument in writing, substitute a successor or
successors to trustee, which instrument, executed by Brazos duly acknowledged
and recorded in the office of the recorder of the county or counties where the
Property is situated, shall be conclusive proof of proper substitution of such
successor, who shall, without conveyance from trustee or any successor trustee
to trustee, succeed to all his title, estate, rights, powers and duties), in
trust a lien and security interest against the Property, to have and to hold the
Property, together with all and singularly the rights, hereditaments, and
appurtenances in any way appertaining or belonging thereto, unto such trustee
and such trustee's successor or substitute in such trust, and such trustee's and
its or his successors and assigns, in trust, and that, upon the occurrence and
during the continuance of any Event of Default such trustee, at the direction of
Brazos, may proceed with foreclosure, and in such event such trustee, at the
direction of Brazos, is hereby authorized and empowered, and it shall be such
trustee's special duty, upon such request of Brazos, acting upon a request from
the Agent or Assignees, to sell the Property, or any part thereof, to the
highest bidder or bidders for cash or credit, as directed by Brazos, acting upon
a request from the Agent or Assignees, at the location at the county courthouse
specified by the commissioner's court in the county in the state wherein the
Property then subject to the lien hereof is situated or, if no such location is
specified by the commissioner's court, then at the location specified in such
trustee's notice of such sale to the Lessee; provided, that if the Property is
situated in more than one county, then such sale of the Property, or part
thereof, may be made in any county in the state wherein any part of the Property
then subject to the lien hereof is situated. Any such sale shall be made at
public outcry between the hours of ten o'clock (10:00) A.M. and four o'clock
(4:00) P.M. on the first (1st) Tuesday in any month. Written or printed notice
of such sale shall be posted at the courthouse door in the county, or if more
than one, then in each of the counties, wherein the Property then subject to the
lien hereof is situated. Such notice shall designate the county where the
Property, or part thereof, will be sold and the earliest time at which the sale
will occur, and such notice shall be posted at least twenty-one (21) days prior
to the date of sale. Such notice shall also be filed with the county clerk in
the county, or if more than one, then in each of the counties wherein the
Property is located. Trustee shall, at least twenty-one (21) days preceding the
date of sale, serve written notice of the proposed sale by certified mail on
Lessee and each other debtor obligated to pay the Acquisition Cost and other
obligations secured hereby according to the records of the Agent and Assignees.
After such sale, Brazos shall make to the purchaser or purchasers thereunder
good and sufficient assignments, deed, bills of sale, and other instruments, in
the name of Brazos, conveying the Property, or part thereof, so sold to the
purchaser or purchasers with general warranty of title by Brazos. The sale of a
part of the Property shall not exhaust the power of sale, but sales may be made
from time to time until the Acquisition Cost and other obligations secured
hereby are paid and performed in full. It shall not be necessary to have present
or to exhibit at any such sale any of the personal property. Upon the occurrence
and during the continuation of a Lease Event of Default, Brazos, in lieu of or
in addition to exercising any power of sale hereinabove given, may proceed by a
suit or suits in equity or at law, whether for a foreclosure hereunder, or for
the sale of the Property, or against the Lessee on a recourse basis for the
Acquisition Cost, or the specific performance of any covenant or agreement
herein contained or in aid of the execution of any power herein granted, or for
the appointment of a receiver pending any foreclosure hereunder or the sale of
the Property, or for the enforcement of any other appropriate legal or equitable
remedy.
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No remedy referred to in this SECTION 13.2 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to Brazos at law or in equity, and the exercise in
whole or in part by Brazos of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Brazos of any or all such other
remedies. No waiver by Brazos of any Event of Default hereunder shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default.
With respect to the termination of this Ground Lease as to any Property
as a result of an Event of Default, Lessee hereby waives service of any notice
of intention to re-enter. Lessee hereby waives any and all rights to recover or
regain possession of any Property or to reinstate this Ground Lease as permitted
or provided by or under any statute, law or decision now or hereafter in force
and effect.
Section 13.3. EVENTS OF PROPERTY TERMINATION. The occurrence of any of
the following shall constitute an Event of Property Termination with respect to
a Property:
(a) UNSATISFACTORY TITLE. If at any time title to any Property
is not satisfactory to Brazos or Assignee by reason of any Lien or other defect
not disclosed in writing at the time of any advance (even though the same may
have existed at the time of any such advance), except the Permitted
Encumbrances, and such Lien, encumbrance or other defect would have a material
adverse effect on the Property and is not corrected to the satisfaction of
Brazos and Assignee within one hundred eighty (180) days after written notice to
Lessee unless such defect whether material or not would cause a loss or
forfeiture of title to a Property or the loss of priority of any Lien for the
benefit of Assignee, in which case such defect shall be cured immediately and
prior to any such loss of title or priority.
(b) NON-COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. If Lessee
fails to materially comply with any requirement of any Governmental Authority
with respect to such Property and such non-compliance results in a material
adverse effect on the value of the Property or to contest such requirement by
means of a Permitted Contest under ARTICLE XVII (i) within thirty (30) days
after notice in writing of such requirement shall have been given to Lessee by
such Governmental Authority or by Brazos or Assignee, or (ii) if such
requirement is of a nature that it cannot be complied with within such 30-day
period, if Lessee shall fail after such notice either diligently to commence
complying with such requirement or to proceed thereafter with reasonable
diligence and in good faith to comply with such requirement; provided, however,
that (i) Lessee shall in any event comply with such requirement prior to the
date on which such Property may be seized or sold as a result of such
non-compliance, and (ii) a potential adverse impact reasonably likely to be less
than $500,000 in the aggregate with respect to all Properties shall be deemed to
be not material.
(c) DEFAULT UNDER ACQUIRED GROUND LEASE. Lessee shall default
after the expiration of all applicable cure periods under such Acquired Ground
Lease or as may be allowed under local Law in the observance or performance of
any term, covenant or condition of the Acquired Ground Lease relating to such
Property on the part of Brazos, as tenant thereunder, to be observed or
performed, unless any such observance or performance shall have been waived or
not required by the landlord under the Acquired Ground Lease, or if any one or
more of the events referred to in the Acquired Ground Lease shall occur which
would cause the Acquired Ground Lease to terminate without notice or action by
the landlord thereunder or which would entitle the landlord under the Acquired
Ground Lease to terminate the Acquired Ground Lease and the term thereof by the
giving of notice to Brazos, as tenant thereunder, or if the Acquired Ground
Lease shall be terminated or canceled for any reason or under any circumstance
whatsoever, or if any of the terms, covenants or conditions of the Acquired
Ground Lease shall in any manner be modified, changed, supplemented, altered or
amended in any material respect without the consent of Brazos.
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Section 13.4. BRAZOS' RIGHT UPON EVENT OF PROPERTY TERMINATION. If any
Event of Property Termination with respect to a Property shall occur, Brazos
may, with Agent's approval, as liquidated damages and not as a penalty, require
Lessee to purchase such Property on the next Basic Rent Payment Date at a price
equal to the Acquisition Cost for such Property by giving written notice of such
required purchase or assume all obligations of Brazos under an Acquired Ground
Lease. In connection with any such purchase under this SECTION 13.4, on the
Basic Rent Payment Date upon which such purchase shall occur, Lessee shall pay
to Brazos, in addition to any purchase price payable, all Basic Rent then due
and payable and any Additional Rent and other amounts owing hereunder with
respect to such Property. At the time of such sale, Lessee shall be required to
pay to Brazos the obligations, costs, losses, damages, and expenses (including,
without limitation, reasonable attorneys' fees and expenses) sustained by Brazos
by reason of such Event of Property Termination and exercise of Brazos' rights
under this SECTION 13.4.
ARTICLE XIV
-----------
LOSS OF OR DAMAGE TO PROPERTY
Section 14.1. LESSEE'S RISK. Lessee hereby assumes all risk of loss of
or damage to Property, however caused. No loss of or damage to any Property
shall impair any obligation of Lessee under this Ground Lease, which shall
continue in full force and effect with respect to any lost or damaged Property.
Section 14.2. REPAIR. In the event of damage of any kind whatsoever to
any Property (unless the same is determined by Lessee to be damaged beyond
repair as provided in SECTION 14.3 hereof) Lessee, at its own cost and expense,
shall place the same in good operating order, repair, condition and appearance.
Section 14.3. PROPERTY DAMAGED BEYOND REPAIR. If a material part of a
Property is unusable for sixty (60) days or more, or if the cost of repair
exceeds fifty percent (50%) of the Acquisition Cost, or if any Property is
seized, confiscated, rendered unfit for use or if any improvements thereon are
destroyed or damaged beyond repair (in the reasonable judgment of Lessee), or if
the use of the Property by Lessee or the use of any improvement by the party
entitled thereto in the ordinary course of business is prevented by the act of
any third person or persons or governmental instrumentality for a period
exceeding ninety (90) days (other than an act which is a Taking which is
substantial as described in SECTION 15.1 of this Ground Lease), or if the
Acquired Ground Lease applicable to such Property is terminated due to casualty,
or if such Property is attached (other than on a claim against Brazos as to
which Lessee is not obligated to indemnify Brazos) and the attachment is not
removed within ninety (90) days, or if a Taking which is substantial as
described in SECTION 15.1 shall occur, then in any such event, (i) Lessee shall
promptly notify Brazos and Assignee in writing of such event, (ii) on the Basic
Rent Payment Date following such event, unless such Basic Rent Payment Date
occurs within ten (10) days of such event, in which case on the next Basic Rent
Payment Date, Lessee shall pay to Brazos an amount equal to the Acquisition Cost
of such Property (after deducting any insurance proceeds received by Brazos in
respect of such event or the net amount after Brazos' expenses of proceeds to
Brazos from any award or sale made in connection with a Taking); provided that
insurance or net Taking proceeds, if any, received by Brazos in excess of the
Acquisition Cost of the affected Property shall be paid by Brazos to Lessee,
(iii) the Lease Term or Renewal Term of such Property shall continue until the
Basic Rent Payment Date on which Brazos receives payment from Lessee of the
amount payable pursuant to this SECTION 14.3 and the Basic Rent and any
Additional Rent and other amounts owing hereunder, and shall thereupon terminate
and (iv) Brazos shall on such Basic Rent Payment Date transfer title to such
Property to Lessee, and Lessee shall be subrogated to Brazos' rights in the
affected transaction.
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ARTICLE XV
----------
CONDEMNATION OF PROPERTY
Section 15.1. TAKING OF SUBSTANTIALLY ALL OF A PROPERTY. If Lessee or
Brazos shall receive notice that the use, occupancy or title to all or
substantially all of a Property is to be taken, requisitioned or sold in, by or
on account of eminent domain proceedings or other action by any person or
authority having the power of eminent domain (such events collectively referred
to as a "TAKING"), and such Taking is substantial, then the Lease Term or
Renewal Term shall terminate as provided in SECTION 14.3. A Taking shall be
deemed substantial if the remainder of the Property is unusable for Lessee's
ordinary business purposes or the Acquired Ground Lease applicable to such
Property is terminated as a result of such Taking.
Section 15.2. TAKING OF LESS THAN SUBSTANTIALLY ALL OF A PROPERTY. If
less than substantially all of a Property is subject to a Taking, then this
Ground Lease shall continue in effect as to the portion of the Property not
taken and Lessee, at its own cost and expense, shall place the same in good
operating order, repair, condition and appearance. Brazos and Lessee each hereby
waives any statutory or common law right allowing either of them to petition any
court to terminate this Ground Lease in the event of a Taking of less than
substantially all of the Property.
Section 15.3. GRANT OF MINOR EASEMENTS. So long as no Event of Default
or Event of Property Termination hereunder has occurred and is continuing,
Lessee shall have the right (i) to grant minor easements and dedications for the
benefit of any Property or which are deemed reasonably necessary for Lessee's
use of the Property; (ii) voluntarily to dedicate or convey, as required,
portions of any Property for road, highway and other public purposes as required
in the good faith judgment of Lessee in order to obtain or maintain the use of
all or part of a Property for the purposes intended by Lessee; and (iii)
voluntarily to execute petitions to have any Property or a portion thereof
annexed to any municipality or included within any utility, highway or other
improvement or service district; provided that no more than minor restoration is
required. If Lessee receives any monetary consideration for such easement or
dedication, Lessee shall promptly deliver such consideration to Brazos. Lessee
shall exercise the above power to grant without the joinder of Brazos, except
that Brazos will cooperate, at Lessee's expense, as necessary and join in the
execution of any appropriate instrument. As a condition precedent to Lessee's
exercise of any of Lessee's powers under this Article, Lessee shall give Brazos
ten (10) days' prior written notice of the proposed action. Upon the giving of
such notice, Lessee shall be deemed to have certified that such action will not
materially adversely affect either the market value of such Property or the use
of such Property for its intended purpose, will not affect Brazos' or any
Assignee's ability to exercise its rights and remedies under this Ground Lease
and that Lessee undertakes to remain obligated under this Ground Lease to the
same extent as if Lessee had not exercised its powers under this Article and
Lessee will perform all obligations under such instrument and shall prepare all
required documents and provide all other instruments and certificates as Brazos
may reasonably request.
ARTICLE XVI
-----------
LEASEHOLD INTERESTS
The following provisions relate to each lease (an "ACQUIRED GROUND
LEASE") under which a leasehold interest in a Property is being subleased to
Lessee hereunder:
(a) This Ground Lease is subject and subordinate to all of the terms,
covenants, provisions, conditions and agreements contained in each Acquired
Ground Lease and the matters to which the Acquired Ground Lease is subject and
subordinate.
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(b) Lessee hereunder covenants and agrees to perform and to observe all
of the terms, covenants, provisions, conditions and agreements of the underlying
Acquired Ground Lease on Brazos' part as lessee thereunder to be performed and
observed including, without limitation, payment of all rent, additional rent and
other amounts payable by Brazos as lessee under the Acquired Ground Lease, to
the end that all things shall be done which are necessary to keep unimpaired the
rights of Brazos as lessee under the Acquired Ground Lease. Each of the parties
hereto agree to promptly provide the other with copies of any notices or other
information received in writing from any landlord under an Acquired Ground
Lease. If in the reasonable judgment of Lessee, the lessor under any Acquired
Ground Lease shall default in any of its obligations to Brazos with respect to
the Property demised by such Acquired Ground Lease, Lessee shall have the right,
after giving Brazos prior written notice of its intention to act and of the
nature of the action proposed to be taken by Lessee, to take such action in its
own name in order to enforce the rights of the lessee in respect of the
Property demised; provided, however, Lessee agrees to indemnify, defend and hold
Brazos harmless from and against all liability, damage or expense which Brazos
shall suffer or incur by reason of such action.
(c) Lessee covenants and agrees that it will not do or cause to be done
or suffer or permit any act or thing to be done which would cause such Acquired
Ground Lease or the rights of Brazos as lessee thereunder to be canceled,
terminated or forfeited or which would make Lessee or Brazos liable for any
losses, costs, liabilities, damages, claims, penalties or other expenses. Brazos
covenants and agrees, subject to any limitations on its rights and obligations
hereunder, that it will not do or cause to be done or knowingly suffer or
knowingly permit any act or thing to be done without notice to Lessee which
would or might cause such Acquired Ground Lease or the rights of Brazos as
lessee thereunder to be canceled, terminated or forfeited or which would make
Lessee or Brazos liable for any losses, costs, liabilities, damages, claims,
penalties or other expenses.
(d) Lessee covenants and agrees pursuant to ARTICLE X hereof to
indemnify and hold harmless Brazos and any Assignee from and against any and all
liability, loss, damage, suits, penalties, claims and demands of every kind and
nature (including, without limitation, reasonable attorneys' fees and expenses)
by reason of Lessee's failure to comply with any Acquired Ground Lease or the
provisions of this ARTICLE XVI.
(e) Brazos and Lessee agree that any services which are required to be
provided or repairs or restorations which are required to be made in accordance
with the provisions of such Acquired Ground Lease by the lessor thereunder will
be provided and made by such lessor, and Brazos shall have no obligation to
provide any such services or to make any such repairs or restorations. Brazos
shall in no event be liable to Lessee nor shall the obligations of Lessee
hereunder be impaired or the performance thereof excused because of any failure
or delay on the part of the lessor under the Acquired Ground Lease in providing
such services or making such restorations or repairs and such failure or delay
shall not constitute a basis for any claim against Brazos or any offset against
any amount payable to Brazos under this Ground Lease.
(f) If Brazos' interest under any Acquired Ground Lease shall expire,
terminate or otherwise be extinguished, the Ground Lease of the Property to
which such Acquired Ground Lease relates shall thereupon terminate as provided
in this paragraph. Upon such expiration, termination or extinguishment (i) on
the Basic Rent Payment Date next succeeding such event, Lessee shall pay to
Brazos an amount equal to the Acquisition Cost of such Property and (ii) the
Lease Term or Renewal Term of such Property shall continue until the date on
which Brazos receives payment from Lessee of the amount payable pursuant to this
paragraph (f) and of all Basic Rent payable and any Additional Rent and other
amounts owing hereunder, and shall then terminate upon the payment of such
amounts.
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ARTICLE XVII
------------
PERMITTED CONTESTS
(a) Lessee shall not be required, nor shall Brazos have the right, to
pay, discharge or remove any tax, assessment, levy, fee, rent, charge, Lien or
encumbrance, or to comply or cause any Property to comply with any Legal
Requirements applicable to any Property or the occupancy, use or operation
thereof, so long as no Event of Default or Event of Property Termination exists
under this Ground Lease with respect to any Property, and, in the opinion of
Lessee's counsel, Lessee shall have reasonable grounds to contest, and shall be
diligently contesting, the existence, amount, applicability or validity thereof
by appropriate proceedings, which proceedings in the reasonable judgment of
Brazos, (i) shall not involve any material danger that any Property or any Basic
Rent or any Additional Rent would be subject to sale, forfeiture or loss, as a
result of failure to comply therewith, (ii) shall not affect the payment of any
Basic Rent or any Additional Rent or other sums due and payable hereunder, (iii)
could not result in any criminal liability from a failure to comply therewith,
and could not reasonably be expected to cause either Brazos or any Assignee to
incur civil liability which, in the sole judgment of Brazos or any Assignee, is
not adequately indemnified (Lessee's obligations under ARTICLE X of this Ground
Lease shall be deemed to be adequate indemnification if no Event of Default,
Event of Property Termination, Potential Default or Potential Property
Termination exists and if such civil liability is reasonably likely to be less
than $100,000 per Property and $1,000,000 in the aggregate for all Properties),
(iv) shall be permitted under the provisions of the Acquired Ground Lease, if
any, on such Property, (v) if involving taxes, shall suspend the collection of
such taxes, and (vi) shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Lessee or the Property is
subject and shall not constitute a default thereunder. Lessee shall conduct all
such contests in good faith and with due diligence and shall promptly after the
final determination (including appeals) of such contest, pay and discharge all
amounts which shall be determined to be payable therein. Notwithstanding
anything in this paragraph (a) to the contrary, Lessee shall not be obligated to
actively contest any mechanics' or materialmens' Lien or claim which does not
exceed $500,000; provided that the failure to so contest does not violate
clauses (i)- (iv) or (vi) above; provided further, that such Lien is junior to
any Lien of an Assignee on such Property, and provided further, that Lessee
shall in any event diligently contest and defend against the enforcement of any
such Lien or claim in good faith and with due diligence and shall promptly,
after the final determination (including appeals of such contest), pay and
discharge all amounts which shall be determined to be payable therein.
(b) At least ten (10) days prior to the commencement thereof, Lessee
shall notify Brazos and Agent in writing of any such proceeding in which the
amount in contest exceeds $100,000, and shall describe such proceeding in
reasonable detail. If a taxing authority or subdivision thereof proposes an
additional assessment or levy of any tax for which Lessee is obligated to
reimburse Brazos under this Ground Lease, or if Brazos is notified of the
commencement of an audit or similar proceeding which could result in such an
additional assessment, then Brazos shall in a timely manner notify Lessee in
writing of such proposed levy or proceeding.
ARTICLE XVIII
-------------
MISCELLANEOUS
Section 18.1. SURVIVAL. All agreements, indemnities, representations
and warranties, and the obligation to pay Additional Rent contained in this
Ground Lease shall survive the expiration or other termination hereof.
Section 18.2. ENTIRE AGREEMENT. This Ground Lease and the Property
Leasing Records covering Property leased pursuant hereto and the instruments,
documents or agreements referred to herein constitute the entire agreement
between the parties and no representations, warranties, promises, guarantees or
agreements, oral or written,
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express or implied, have been made by any party hereto with respect to this
Ground Lease or the Property, except as provided herein or therein.
Section 18.3. MODIFICATIONS. This Ground Lease may not be amended,
modified or terminated, nor may any obligation hereunder be waived orally, and
no such amendment, modification, termination or waiver shall be effective for
any purpose unless it is in writing and is signed by the party against whom
enforcement thereof is sought. A waiver on one occasion shall not be construed
to be a waiver with respect to any other occasion.
Section 18.4. GOVERNING LAW. THIS GROUND LEASE SHALL WITH RESPECT TO
EACH PROPERTY IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH SUCH PROPERTY IS LOCATED,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. ANY PROVISION
OF THIS GROUND LEASE WHICH IS PROHIBITED BY LAW OR UNENFORCEABLE IN ANY
JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF
SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINING
PROVISIONS HEREOF, AND THE PARTIES HERETO SHALL NEGOTIATE IN GOOD FAITH
APPROPRIATE MODIFICATIONS TO REFLECT SUCH CHANGES AS MAY BE REQUIRED BY LAW,
AND, AS NEARLY AS POSSIBLE, TO PRODUCE THE SAME ECONOMIC EFFECTS AS THE
PROVISION WHICH IS PROHIBITED OR UNENFORCEABLE; AND ANY SUCH PROHIBITION OR
UNENFORCEABILITY IN ANY JURISDICTION SHALL NOT INVALIDATE OR RENDER
UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, LESSEE AND BRAZOS HEREBY WAIVE ANY PROVISION OF LAW WHICH
RENDERS ANY PROVISION HEREOF PROHIBITED OR UNENFORCEABLE IN ANY RESPECT.
Section 18.5. NO OFFSETS. The obligations of Lessee to pay all amounts
payable pursuant to this Ground Lease (including specifically and without
limitation amounts payable due under ARTICLES VI and X hereof) shall be absolute
and unconditional under any and all circumstances of any character, and such
amounts shall be paid without notice, demand, defense, setoff, deduction or
counterclaim and without abatement, suspension, deferment, diminution or
reduction of any kind whatsoever, except as herein expressly otherwise provided.
The obligation of Lessee to lease and pay Basic Rent, Additional Rent or any
other amounts for any and all Property is without any warranty or
representation, express or implied, as to any matter whatsoever on the part of
Brazos or any Assignee or any Affiliate of either, or anyone acting on behalf of
any of them.
NEITHER BRAZOS NOR ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER, NOR ANYONE
ACTING ON BEHALF OF ANY OF THEM, MAKES ANY REPRESENTATION OR WARRANTY OF ANY
KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, AS TO THE
SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY,
CONFORMITY TO SPECIFICATION, ENVIRONMENTAL CONDITION (INCLUDING THE PRESENCE OR
ABSENCE OF HAZARDOUS MATERIALS), OR ANY OTHER CHARACTERISTIC, OF ANY PROPERTY,
OR AS TO WHETHER ANY PROPERTY OR THE OWNERSHIP, USE, OCCUPANCY OR POSSESSION
THEREOF COMPLIES WITH ANY LAWS, RULES, REGULATIONS OR REQUIREMENTS OF ANY KIND.
AS BETWEEN BRAZOS AND LESSEE, ANY ASSIGNEE OR ANY INDEMNIFIED PERSON,
AND TO THE EXTENT ALLOWED BY LAW AND EXCEPT AS OTHERWISE PROVIDED HEREIN, LESSEE
ASSUMES ALL RISKS AND WAIVES ANY AND ALL DEFENSES, SET-OFFS, DEDUCTIONS,
COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR FUTURE, TO ITS OBLIGATION TO PAY
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BASIC RENT, ADDITIONAL RENT AND ALL OTHER AMOUNTS PAYABLE HEREUNDER, INCLUDING,
WITHOUT LIMITATION, ANY RELATING TO:
(a) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE,
MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF ANY PROPERTY, LATENT OR NOT;
(b) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR
OTHER RIGHT WHICH LESSEE MAY HAVE AGAINST BRAZOS, ANY ASSIGNEE, OR ANY
INDEMNIFIED PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER
TRANSACTION OR MATTER;
(c) ANY DEFECT IN TITLE OR OWNERSHIP OF ANY PROPERTY OR ANY TITLE
ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE PROPERTY;
(d) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS OR DESTRUCTION OF, OR
DAMAGE TO, ANY PROPERTY, IN WHOLE OR IN PART, OR CESSATION OF THE USE OR
POSSESSION OF ANY PROPERTY BY LESSEE FOR ANY REASON WHATSOEVER AND OF WHATEVER
DURATION, OR ANY CONDEMNATION, CONFISCATION, REQUISITION, SEIZURE, PURCHASE,
TAKING OR FORFEITURE OF ANY PROPERTY, IN WHOLE OR IN PART;
(e) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE, OWNERSHIP,
OCCUPANCY OR POSSESSION OF THE PROPERTY BY LESSEE;
(f) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING
BY OR AGAINST LESSEE, GUARANTOR OR BRAZOS;
(g) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER
TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(h) THE INVALIDITY OR UNENFORCEABILITY OF THIS GROUND LEASE OR ANY
OTHER INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF BRAZOS OR LESSEE TO
ENTER INTO THIS GROUND LEASE; OR
(i) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER, WHETHER OR NOT
SIMILAR TO ANY OF THE FOREGOING.
LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY BE
CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT, RESCIND
OR SURRENDER THIS GROUND LEASE EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS
HEREOF. NOTHING CONTAINED IN THIS SECTION 18.5 SHALL BE DEEMED TO BENEFIT ANY
THIRD PARTY OR TO CONSTITUTE A WAIVER OR LIMITATION OF ANY RIGHT THAT LESSEE MAY
HAVE AGAINST ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY LESSOR OF AN
ACQUIRED GROUND LEASE (OTHER THAN BRAZOS) OR ANY PRIOR OWNER OF ANY PROPERTY.
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Section 18.6. NON-RECOURSE. Brazos' obligations hereunder are intended
to be the limited obligations of the limited partnership and of the corporation
which is the general partner thereof. Notwithstanding any other provision of
this Ground Lease, Lessee agrees that the personal liability of Brazos and the
limited partners of Brazos shall be strictly and absolutely limited to the
Properties and no recourse for the payment of any amount due under this Ground
Lease or any other agreement contemplated hereby, or for any claim based thereon
or otherwise in respect thereof, shall be had against any other assets of the
limited partnership or of the general or of any limited partner of Brazos or any
incorporator, shareholder, officer, director or Affiliate (past, present or
future) of such general partner or limited partner, or of any Affiliate of
either, or of any successor corporation to any corporate general partner or any
corporate limited partner of Brazos, it being understood that Brazos is a
limited partnership entering into the transactions involved in and relating to
this Ground Lease on the express understanding aforesaid.
Section 18.7. NOTICES.
(a) Any notice or request which by any provision of this Ground Lease
is required or permitted to be given by either party to the other shall be
deemed to have been given when delivered by hand (including, delivery by
courier), three (3) days after being deposited in the mail, postage prepaid, by
certified or registered mail or, if promptly confirmed by mail or by
hand-delivery, as provided above, when sent by telex, or other written
telecommunication, addressed to the following specified addresses or to such
other addresses as Brazos or Lessee may specify by written notice to the other
party:
If to Brazos:
Brazos Automotive Properties, L.P.
c/o Brazos Automotive Properties Management, Inc.
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Gregory C. Greene
Telephone: (214) 522-7296
Telecopy: (214) 520-2009
with a copy to:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Commercial Equipment Finance Division,
Portfolio Manager
If to Agent or Assignee:
The Chase Manhattan Bank
One Chase Square, Tower 9
Rochester, New York 14643
Attention: Philip M. Hendrix, Vice President
Telephone: (716) 258-5437
Telecopy: (716) 258-7604
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with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002-4086
Attention: Carol M. Burke
Telephone: (713) 308-5561
Telecopy: (713) 308-5555
If to Lessee:
Monro Leasing, LLC
200 Holleder Parkway
Rochester, New York 14615
Attention: Catherine D'Amico, Senior Vice-President
Telephone: (716) 647-6400 X 335
Telecopy: (716) 627-0941
With a copy to any Assignee at such other address as such Assignee may specify
by written notice to Brazos and Lessee.
(b) Brazos shall within five (5) Business Days give to Lessee a copy
of all notices received by Brazos pursuant to any Credit Agreement or any
Acquired Ground Lease and any other notices received with respect to any
Property.
Section 18.8. USURY. No provision of this Ground Lease, the Agreement
for Ground Lease or any other instrument relating to this Ground Lease, shall
require the payment or permit the collection of interest in excess of the
maximum non- usurious interest rate under applicable law (the "MAXIMUM RATE").
If any excess interest in such respect is so provided for, or shall be
adjudicated to be so provided for, the provisions of this SECTION 18.8 shall
govern, and neither Lessee nor its successors or assigns shall be obligated to
pay the amount of such interest to the extent it is in excess of the Maximum
Rate. In determining the Maximum Rate, any interest shall be spread over the
term of the Ground Lease to the extent permitted by applicable U.S. Federal or
state law, notwithstanding the actual time for the payment of any rent or other
amounts hereunder. It is expressly stipulated and agreed to be the intent of
Brazos and Lessee at all times to comply with applicable state law governing the
Maximum Rate or the amount of interest payable pursuant to this Ground Lease (or
applicable U.S. Federal law to the extent that it permits Brazos to contract
for, charge, take, reserve or receive a greater amount of interest than under
state law). If the applicable law is ever judicially interpreted so as to render
usurious any amount called for under the Ground Lease, the Agreement for Ground
Lease or any of the other documents relating to this Ground Lease or any amount
contracted for, charged, taken, reserved or received with respect to this Ground
Lease, or if Brazos' exercise of any option contained herein or in any other
document to accelerate the payment of amounts required hereunder results in
Lessee having paid any interest in excess of that permitted by applicable law,
then it is Brazos' and Lessee's intent that all excess amounts theretofore
collected by Brazos be credited on the remaining balance of payments due
hereunder (or, if all amounts due hereunder have been or would thereby be paid
in full, refunded to Lessee) and the provisions of this Ground Lease shall
immediately be deemed reformed and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new documents, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and under any other document relating
hereto. If at any time the amount of any interest for a year, would, but for
this SECTION 18.8, exceed the amount of interest that would have been accrued
during such year if the Maximum Rate had from time to time
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been in effect, the total interest payable for such year shall be limited to the
amount that would have been accrued if the Maximum Rate had from time to time
been in effect, and to the fullest extent permitted by applicable law, such
excess shall be (i) spread and allocated to the preceding periods in which the
interest paid was less than the interest that would have been accrued at the
Maximum Rate or (ii) spread and allocated to subsequent periods in which the
total payments on account of interest are less than the interest that would have
accrued at the Maximum Rate.
Section 18.9. NO MERGER. There shall be no merger of this Ground Lease
or of the leasehold estate hereby created with the fee estate in any Property by
reason of the fact that the same person acquires or holds, directly or
indirectly, this Ground Lease or the leasehold estate hereby created or any
interest herein or in such leasehold estate as well as the fee estate in any
Property or any interest in such fee estate.
Section 18.10. SALE OR ASSIGNMENT BY BRAZOS.
(a) So long as no Event of Default shall be continuing, Brazos shall
not sell, mortgage or encumber or assign its right, title, interest or
obligations in a Property or under this Ground Lease, except that Brazos shall
have the right to finance the acquisition and ownership of the Property by
selling, assigning or granting a security interest in its right, title and
interest in this Ground Lease as provided in the Credit Agreement and any or all
amounts due from Lessee or any third party under this Ground Lease as provided
in the Credit Agreement; provided that any such sale, assignment or grant of a
security interest shall be subject to the rights and interests of Lessee under
this Ground Lease.
(b) Upon the occurrence of an event of default under the Credit
Agreement, any Assignee shall, except as otherwise agreed by Brazos and
Assignee, have all the rights, powers, privileges and remedies of Brazos
hereunder, and Lessee's obligations as between itself and such Assignee
hereunder shall not be subject to any claims or defense that Lessee may have
against Brazos or any prior Assignee. Upon written notice to Lessee of any such
assignment, Lessee shall attorn to any Assignee, and Lessee shall thereafter
make payments of Basic Rent, Additional Rent and other sums due hereunder to
Assignee, to the extent specified in such notice, and such payments shall
discharge the obligation of Lessee to Brazos hereunder to the extent of such
payments. Anything contained herein to the contrary notwithstanding, no Assignee
shall be obligated to perform any duty, covenant or condition required to be
performed by Brazos hereunder, and any such duty, covenant or condition shall be
and remain the sole obligation of Brazos except as set forth in the
Subordination and Attornment Agreement for each Property.
Section 18.11. INCOME TAXES. Brazos agrees that it will not file any
Federal, state or local income tax returns with respect to any Property that are
inconsistent with the treatment of Lessee as owner of such Property for Federal,
state and local income tax purposes during the Lease Term or any Renewal Term.
Section 18.12. TRANSFER ON AS-IS BASIS. In connection with any sale of
Property pursuant to this Ground Lease, when Brazos transfers title, such
transfer shall be on an as-is, non-installment sale basis, without warranty by,
or recourse to, Brazos, but free of the Lien created by a Credit Agreement and
any Lien created by Brazos contrary to the terms of this Ground Lease.
Section 18.13. RIGHT TO PERFORM FOR LESSEE.
(a) If Lessee fails to perform or comply with any of its covenants or
agreements contained in this Ground Lease, Brazos may, upon notice to Lessee but
without waiving or releasing any obligations or default, itself perform or
comply with such covenant or agreement, and the amount of the reasonable
expenses of Brazos incurred in connection with such performance or compliance,
shall be payable by Lessee, not later than ten (10) days after written notice by
Brazos.
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(b) Without in any way limiting the obligations of Lessee hereunder,
Lessee hereby irrevocably appoints Brazos as its agent and attorney at the time
at which Lessee is obligated to deliver possession of any Property to Brazos, to
demand and take possession of such Property in the name and on behalf of Lessee
from whomsoever shall be at the time in possession thereof.
Section 18.14. MERGER, CONSOLIDATION OR SALE OF ASSETS.
(a) Lessee shall not consolidate with or merge into any other
corporation which is not a Subsidiary or sell all or substantially all of its
assets to any Person which is not a Subsidiary, except that Lessee may
consolidate with or merge into any other corporation, or sell all or
substantially all of its assets to any Person; provided that, (i) no default or
event of default occurs under the Corporate Credit Documents and (ii) the
surviving corporation or transferee Person shall assume, by execution and
delivery of instruments satisfactory to Brazos and Agent, the obligations of
Lessee hereunder and become successor to Lessee, but Lessee, if it is the
surviving corporation, shall not thereby be released, without the consent of
Brazos and Agent, from its obligations hereunder and, provided further, that
such surviving corporation or transferee Person will, on a pro forma basis,
immediately after such consolidation, merger or sale, possess a consolidated net
worth greater than or equal to that of Lessee immediately prior to such
consolidation, merger or sale and no Event of Default or Event of Property
Termination shall have occurred or result therefrom.
(b) Brazos may not consolidate with or merge into any other
corporation or sell all or substantially all of its assets to any Person, except
that Brazos may consolidate with or merge into any other corporation, or sell
all or substantially all of its assets to any Person; provided that, the
surviving corporation or transferee Person shall assume, by execution and
delivery of instruments satisfactory to Lessee and Agent, the obligations of
Brazos hereunder and become successor to Brazos, but Brazos shall not thereby be
released without the consent of Lessee and Agent from its obligations hereunder
and, provided further, that such surviving corporation or transferee Person
will, on a pro forma basis, immediately after such consolidation, merger or sale
possess a consolidated net worth greater than or equal to that of Brazos
immediately prior to such consolidation, merger or sale.
(c) The terms and provisions of this Ground Lease shall be binding
upon and inure to the benefit of Brazos and Lessee and their respective
successors and assigns.
Section 18.15. EXPENSES. Lessee shall pay all of the out-of-pocket
costs and expenses incurred by Brazos and any Assignee in connection with this
Ground Lease as set forth on an invoice showing the basis for such costs and
expenses, including without limitation the reasonable fees and disbursements of
counsel to Brazos and counsel to any Assignee.
Section 18.16. PAYMENT OF TAXES. In connection with the sale or
purchase of any Property pursuant to this Ground Lease, Lessee shall pay or
shall cause the purchaser of such Property to pay in addition to the purchase
price, all transfer taxes, transfer gains taxes, if any, recording and filing
fees and all other similar taxes (except mortgage taxes), fees, expenses and
closing costs (including reasonable attorneys' fees) in connection with the
conveyance of such Property to Lessee or any purchaser; provided that Lessee or
any purchaser shall not be required to pay U.S. Federal net income or capital
gains taxes.
Section 18.17. RULE AGAINST PERPETUITIES. The parties hereto do not
intend any interest created by this Ground Lease to be a perpetuity or to be
subject to invalidation under the perpetuities rule, however, if the rule is to
be applied, then the perpetuities period shall be twenty-one (21) years after
the last to die of the currently living great-grandchildren and/or grandchildren
of George H. W. Bush.
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Section 18.18. REEXECUTION. The parties hereto shall reexecute this
Ground Lease to the extent necessary to make this Ground Lease enforceable under
the laws of any State in which a Property is located.
Section 18.19. PURCHASE OR SALE OF FACILITY. Notwithstanding anything
to the contrary herein, Lessee shall not have the right to purchase any Property
or arrange for the sale of any Property to a third party unless simultaneous
with such purchase or sale any Facility located on such Property is purchased by
Lessee or sold to a third party.
Section 18.20. SEVERABILITY. In case one or more provisions of this
Ground Lease shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired thereby.
Section 18.21. INDEPENDENT OBLIGATIONS. Lessee hereby affirms and
agrees with Brazos that its obligations under SECTIONS 9.3 and 13.4 and under
ARTICLES X, XI, XII, XIV, XV and XVI are obligations of Lessee independent of
this Ground Lease and are intended to be fully enforceable as contractual
obligations of Lessee and its permitted assignees hereunder without regard to
the enforceability or continuation of this Ground Lease or Lessee's continued
use or occupancy of the Property. Lessee acknowledges that Brazos has obtained
commitments for financing of Properties and Assignees have entered into the
Credit Agreement in reliance on these independent obligations of Lessee.
Section 18.22. EXECUTION IN COUNTERPARTS. This Ground Lease may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 18.23. CONFIDENTIALITY. Brazos shall keep confidential all
information of a confidential nature received by it from Lessee pursuant to this
Ground Lease; provided, however, that such information may be disclosed, where
necessary: (i) to directors, officers, employees, agents, representatives or
outside counsel of Brazos or of the Agent or any Bank or any Affiliate of any
Bank under the Credit Agreement; (ii) to any auditor, government official or
examiner; (iii) pursuant to any subpoena or other court order or otherwise as
may be required by applicable law; or (iv) to any assignee of or participant in,
or prospective assignee of or participant in, any Bank's Advances or its
Commitment or any part thereof under the Credit Agreement who, in each case,
agrees in writing to be bound by the terms of this Section; and provided
further, that no confidentiality obligation shall attach to any information
which (1) is or becomes publicly known, through no wrongful act on the part of
any Person who shall have received such information, (2) is rightfully received
by such Person from a third party, (3) is independently developed by such
Person, or (4) is explicitly approved for release by Lessee.
Section 18.24. EXECUTION BY LESSEE. By execution of the Memorandum of
Lease for a Property, Lessee agrees to all of the terms and conditions of this
Ground Lease and is deemed to have executed this Ground Lease as of the date of
the request for advance with respect to such Property.
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IN WITNESS WHEREOF, Brazos and Lessee have caused this Ground Lease to
be executed and delivered by their duly authorized officers as of the day and
year first above written.
BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership
By: BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT,
INC., a Delaware corporation, General Partner
By: /s/ Daniel D. Boeckman
---------------------------------------------
Daniel D. Boeckman, Executive Vice
President
MONRO LEASING, LLC,
a Delaware limited liability company
By: MONRO MUFFLER BRAKE, INC., its Sole Member
By: /s/ Catherine D'amico
---------------------------------------------
Catherine D'Amico, Senior Vice
President and Chief Financial Officer
Page S-1
<PAGE> 52
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the 14th day of September 1998, before me personally came Daniel D.
Boeckman who, being by me duly sworn, did depose and say that he is the
Executive Vice President of BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT, INC., a
Delaware corporation, the General Partner of BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership, and as said officer executed the foregoing
instrument.
---------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF NEW YORK
[SEAL]
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the 14th day of September 1998, before me personally came Catherine
D'Amico who, being by me duly sworn, did depose and say that she is the Senior
Vice President and Chief Financial Officer of MONRO MUFFLER BRAKE, INC., a New
York corporation, the Sole Member of MONRO LEASING, LLC, a Delaware limited
liability company, and as said officer executed the foregoing instrument.
---------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF NEW YORK
[SEAL]
Page S-2
<PAGE> 53
EXHIBIT A
SCHEDULE OF INSURANCE
---------------------
1. All risk direct physical damage insurance for the Property and all
improvements, equipment and structures located thereon in the amounts and
subject to the deductibles and self-insurance provisions that are applicable
under like insurance coverage maintained by Lessee for similar property and
equipment owned, leased or held by Lessee and which are approved by Agent.
2. Commercial general liability insurance, including, without
limitation, coverage for legal liability against claims for bodily injury, death
or property damage, occurring on, in or about each Property and the
improvements, equipment and structures located thereon, in the minimum amount of
$1,000,000 combined single limit per occurrence for bodily injury and property
damage, $2,000,000 annual aggregate. Liability coverage may be subject to such
deductibles as may be usual and customary for Lessee to carry in its normal
course of business. However, in no event shall a deductible be applied as
respects Lessee's interest.
3. Workers' compensation and employers' liability insurance covering
Lessee's employees in such amount as is required by law, or if permissible under
state law, any legally appropriate alternative providing substantially similar
compensation for injured workers.
Page S-3
<PAGE> 1
EXHIBIT 10.8
GUARANTY
As of September 15, 1998
Brazos Automotive Properties, L.P. (the "LESSOR")
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Mr. Gregory C. Greene
Re: Agreement for Ground Lease, Ground Lease Agreement ("GROUND
LEASE"), Agreement for Facilities Lease and Facilities Lease
Agreement ("FACILITIES LEASE") (collectively, the "LEASE
DOCUMENTS") each between Brazos Automotive Properties, L.P., a
Delaware corporation, and Monro Leasing, LLC, a Delaware
limited liability company (the "LESSEE"), and each effective
as of September 15, 1998 (the "CLOSING DATE")
Gentlemen:
1. GUARANTY. For value received, and in consideration of your entering
into the Lease Documents with the Lessee, MONRO MUFFLER BRAKE, INC., a New York
corporation (the "GUARANTOR"), does hereby unconditionally, irrevocably, and
absolutely guarantee (a) the full payment when due, whether at the stated due
date, by acceleration or otherwise, of any and all rent, indebtedness 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 you
by the Lessee pursuant to the Lease Documents and the Lessee Consent (as defined
in the Lease Documents), and (b) the performance by the Lessee of its
obligations under the (i) Lease Documents pursuant to the terms of the Lease
Documents and (ii) the Lessee Consent pursuant to the Lessee Consent (all such
obligations being hereinafter collectively called the "LIABILITIES"). The
Guarantor hereby agrees that upon any default by the Lessee in the payment of
any of the Liabilities when and as due or in the performance of its other
obligations thereunder, it will, upon written demand by the Lessor, forthwith
pay the same immediately or perform or cause Lessee to perform such obligations.
2. GUARANTY CONTINUING, ABSOLUTE, UNLIMITED. This Guaranty is a
continuing, irrevocable, absolute guaranty of performance and payment as a
primary obligor and not as a surety. This Guaranty shall apply to all
Liabilities. The Liabilities shall be conclusively presumed to have been created
in reliance on this Guaranty. You shall not be required to proceed first against
the Lessee or any other person, firm or corporation or against any property
securing any of the Liabilities before resorting to the Guarantor for payment.
To the extent permitted by applicable law, this Guaranty shall be construed as a
guarantee of payment without regard to the enforceability of any of the
Liabilities, the rejection of the Lease Documents in bankruptcy, or any
limitation of claims against the Lessee, and notwithstanding any claim, defense
(other than payment or performance by the Guarantor) or right of set-off which
the Lessee or the Guarantor may have against you, 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 the Lessee,
or any other obligor, or to vary any terms of payment, and without regard to any
other circumstances which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. The Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time payment to you of the Liabilities or any part thereof is rescinded or must
otherwise be returned by you to the Guarantor upon the insolvency, bankruptcy or
reorganization of the Lessee, or otherwise, as though such payment to you had
not been made. To the extent permitted by applicable law, the Guarantor's
obligation to fully pay or perform the Liabilities and any remedy for the
enforcement thereof shall not be impaired, modified, released, or limited in any
way by any impairment, modification, release, or limitation of the liability of
Lessee or its bankruptcy estate, resulting from the operation of any present or
future provision of the Bankruptcy Code or any Debtor Relief Law or from the
decision of any court interpreting the same.
3. GUARANTY NOT AFFECTED BY CHANGE IN SECURITY OR OTHER ACTIONS. You
may, from time to time, without the consent of or notice to the Guarantor, take
any or all of the following actions without impairing or affecting
1
<PAGE> 2
(except insofar as the Liabilities are reduced or modified thereby) the
Guarantor's obligations under this Guaranty or releasing or exonerating the
Guarantor from any of its Liabilities hereunder:
(a) retain or obtain a security interest in any property to
secure any of the Liabilities 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 Liabilities;
(c) extend the time or change the manner, place or terms of
payment of, or renew or amend any note or other instrument evidencing
the Liabilities or any part thereof, or amend in any manner any
agreement relating thereto, in each case in accordance with the terms
of each such agreement;
(d) release or compromise, in whole or in part, or accept full
or partial payment for, any of the Liabilities hereby guaranteed, or
any liability of any nature of any other party or parties with respect
to the Liabilities or any security therefor;
(e) enforce your security interest, if any, in all or any
properties securing any of the Liabilities or any obligations hereunder
in order to obtain full or partial payment of the Liabilities then
outstanding; or
(f) release or fail to perfect, protect, or enforce your
security interest, if any, in all or any properties securing any of the
Liabilities or any obligation hereunder, or permit any substitution or
exchange for any such property.
4. WAIVERS. The Guarantor hereby expressly waives to the extent
permitted by law:
(a) notice of acceptance of this Guaranty;
(b) notice of the existence or incurrence of any or all of the
Liabilities in accordance with the Lease Documents;
(c) presentment, demand, notice of dishonor, protest, and all
other notices whatsoever (except the written demand referred to in
SECTION 1 hereinabove);
(d) any requirement that proceedings first be instituted by
you against the Lessee;
(e) all diligence in collection or protection of or
realization upon the Liabilities or any part thereof, or any obligation
hereunder, or any collateral for any of the foregoing;
(f) any rights or defenses based on the Lessor's election of
remedies, including any defense to the Lessor's action to recover any
deficiency after a non-judicial sale; and
(g) the occurrence of every other condition precedent to which
the Guarantor might otherwise be entitled.
5. DEFINITIONS. As used in this Guaranty, the following terms will have
the following meanings, unless the context otherwise requires:
ACCOUNTANTS mean Pricewaterhouse Coopers, LLP or other firm of
independent public accountants of nationally recognized standing retained by
Guarantor or any other firm acceptable to the Lessor.
2
<PAGE> 3
ADJUSTED DEBT means Funded Debt, plus the product of eight (8) times
Rental Payments.
AFFILIATE means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether as
general partner, through ownership of a Control Percentage of such Person or the
general partner of such Person, by contract or otherwise.
AGENT means The Chase Manhattan Bank, a national banking association,
and its successor or successors as administrative agent for Lenders under the
Credit Agreement.
BUSINESS DAY means for all purposes, any day other than Saturday,
Sunday, and any other day that commercial banks are authorized by Law to be
closed in New York, New York.
CAPEX means, for any Four Quarter Period, capital expenditures for
fixed or capital assets that are required to be capitalized on a balance sheet
prepared in accordance with GAAP minus any net proceeds of allowable
sale/leasebacks permitted by SECTION 8N.
CAPITALIZED LEASE means any lease the obligation for Rental Payments
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.
CASH EQUIVALENTS means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government of any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers acceptances and repurchase
agreements of any commercial bank which has capital and surplus in excess of
$100,000,000 having maturities of one year or less from the date of acquisition,
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Group or P-2 by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments, (d) money market
accounts or funds with or issued by "Qualified Issuers", (e) repurchase
obligations with a term of not more than 90 days for underlying securities of
the types described in clause (a) above entered into with any bank meeting the
qualifications specified in clause (b) above, (f) demand deposit accounts
maintained in the ordinary course of business with any bank, or with any bank
that is not a bank, not in excess of $100,000 in the aggregate on deposit with
any such bank, and (g) marketable securities of the same or similar type as
owned by the Guarantor as of July 31, 1998, the aggregate actual purchase price
of which shall not exceed $100,000 at any one time.
CHANGE OF CONTROL shall mean the occurrence of one or more of the
following: (a) until Guarantor hires a Chief Executive Officer, members of the
Ownership Group ceasing to own in the aggregate, directly or indirectly,
beneficially or of record, at least (i) sixty percent 60%of the Preferred Stock,
issued and outstanding at any time or (ii) fifteen percent (15%) of the Common
Stock, issued and outstanding at any time, or (b) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any person or group, other
than the Ownership Group, of (i) shares representing more than 35% of the Common
Stock, issued and outstanding at any time or (ii) more than sixty percent (60%)
of the Preferred Stock, issued and outstanding at any time, or (c) the
occupation of a majority of the seats (other than vacant seats) on the board of
directors of Guarantor or any Subsidiary of Guarantor by Persons who were
neither (i) nominated by the board of directors of Guarantor nor (ii) appointed
by directors so nominated. As used in this definition of "Change of Control,"
terms defined in the Securities Exchange Act of 1934 or the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof,
shall have the respective meanings ascribed to them therein.
CHASE means The Chase Manhattan Bank.
CLOSING DATE has the meaning given to that term in the Credit
Agreement.
CODE means the Internal Revenue Code of 1986, as amended from time to
time, and related rules and regulations promulgated thereunder by the Internal
Revenue Service.
COMMON STOCK means the common stock of the Guarantor, $.01 par value
per share.
COMPANY OR COMPANIES means, at any time, Guarantor and each of its
Subsidiaries.
3
<PAGE> 4
COMPLIANCE CERTIFICATE means a certificate substantially in the form of
the attached EXHIBIT A and signed by a Responsible Officer.
CONTROL PERCENTAGE means, with respect to any Person (a) in the case of
a corporation, the percentage of the outstanding capital stock of such Person
having ordinary voting power which gives the direct or indirect holder of such
stock the power to elect a majority of the Board of Directors of such Person and
(b) in the case of a limited partnership, the percentage of the outstanding
limited partnership interests of such Person which gives the direct or indirect
holder of such limited partnership interests the power to remove the general
partner or partners of such Person or to take actions reserved for the limited
partners under the applicable limited partnership act.
CREDIT AGREEMENT means the Senior Secured Credit Agreement among the
Guarantor, the Agent, the Syndication Agent named therein and the Lenders named
therein, as amended, supplemented or restated from time to time.
CURRENT FINANCIALS means, at any time, the consolidated Financial
Statements of Guarantor and its Subsidiaries most recently delivered to Agent
under SECTIONS 7A.(I) or 7A.(II), as the case may be.
DEBT means (without duplication), for any Person, (a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of property or services; (d)
obligations of such Person as lessee under Capitalized Leases required to be
capitalized under GAAP; (e) reimbursement obligations in respect of bonds or
letters of credit; (f) obligations of such Person under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) of such
Person to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness of others of the kinds referred to in
clauses (a) through (e) above; and (g) indebtedness of others of the kinds
referred to in clauses (a) through (f) secured by any Lien on or in respect of
any property of such Person whether or not assumed by such Person; provided,
however, that all trade accounts payable and accrued expenses incurred in the
ordinary course of business of such Person and not overdue shall be excluded
from the foregoing.
DEBTOR RELIEF LAWS means Title 11 of the United States Code and all
other applicable state or federal liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments or similar Laws affecting creditors' Rights in effect from time to
time.
DEFAULT is defined in SECTION 10.
DISTRIBUTION means, with respect to any shares of any capital stock or
other equity securities or other interests issued by a Person, (a) the
retirement, redemption, purchase or other acquisition for value of those
securities by such Person, (b) the declaration or payment of any dividend on or
with respect to those securities by such Person (except distributions in the
form of such securities, (c) any loan or advance by that Person to, or other
investment by that Person in, the holder of any of those securities, and (d) any
other payment by that Person with respect to those securities.
DOLLARS and $ means lawful money of the United States of America.
EBITDAR means, as determined, on a rolling twelve month basis and in
respect of any Person the sum of (i) the Net Income of such Person, plus (ii)
the Interest Expense of such Person for such period as determined in accordance
with GAAP and as such item is reported on such Person's financial statements,
(iii) the income tax expense of such Person for such period, (iv) the amount
reported as the depreciation of the assets of such Person for such period,
computed in accordance with GAAP, and as such item is used in the computation of
such Person's Net Income for such period, (v) the amount reported as the
amortization of intangibles for such Person for such period, computed in
accordance with GAAP, and as such item is used in the computation of such
Person's Net Income for such period, and (vi) Rental Payments.
EMPLOYEE PLAN means an employee pension benefit plan covered by Title
IV of ERISA and established or maintained by any Company.
ENVIRONMENTAL LAW means any Law that relates to the pollution or
protection of the environment or to Hazardous Substances.
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ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and related rules and regulations.
FINANCIAL STATEMENTS of a Person means balance sheets, profit and loss
statements, reconciliations of capital and surplus, and statements of cash flow
prepared (a) according to GAAP, (b) in comparative form to prior year-end
figures or corresponding periods of the preceding fiscal year, as applicable,
and (c) on a consolidated basis if that Person had any consolidated Subsidiaries
during the applicable period.
FIXED COVERAGE RATIO means, as determined, on a rolling twelve month
basis the ratio of (a) EBITDAR minus CAPEX for such period, to (b) (i) Rental
Payments, plus (ii) Interest Expense due in respect of Debt for such period of
Guarantor and its Subsidiaries on a consolidated basis determined in accordance
with GAAP.
FOUR QUARTER PERIOD means a period of four full consecutive fiscal
quarter-annual periods, taken together as one accounting period; provided,
however, for the (a) first fiscal quarter period following the Closing Date and
ending on December 31, 1998, the income statement times four (4) annualized
shall be utilized; (b) second fiscal quarter period following the Closing Date
and ending March 31, 1999, the six (6) months income statement times two (2)
annualized shall be utilized; and (c) third fiscal quarter period following the
Closing Date and ending June 30, 1999, the nine (9) months income statement
divided by three (3) then multiplied times four (4) annualized shall be
utilized.
FUNDED DEBT means, when determined, on a rolling twelve month basis,
calculated using the month-end balance for each month on a consolidated basis
for the Companies in accordance with GAAP: (a) indebtedness of such Person for
borrowed money; (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, and (c) obligations of such Person as lessee
under Capitalized Leases; excluding notes generated in the ordinary course of
payable within one year not to exceed $1,000,000 and trade payables and accrued
expenses; PROVIDED HOWEVER, the calculation for the period commencing with the
Closing Date and ending twelve months thereafter, shall be based on the average
of the month-end balance for the months elapsed since the Closing Date.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time,
applied on a basis consistent with those used in preparation of the audited
consolidated financial statements referred to in SECTION 7A.(I) (except for
changes concurred in by Guarantor's Accountants).
HAZARDOUS SUBSTANCE means any substance (a) the presence of which
requires removal, remediation, or investigation under any Environmental Law, or
(b) that is defined or classified as a hazardous waste, hazardous material,
pollutant, contaminant or toxic or hazardous substance under any Environmental
Law.
INTEREST EXPENSE means, in respect of a Person, for any Four Quarter
Period, all interest paid or accrued and amortization of debt discount with
respect to all Funded Debt of such Person for such period (after giving effect
to the net cost associated with all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements, or other financial arrangements
designed to protect such Person against fluctuations in interest rates) and
after giving credit for interest income and construction period interest income.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions and
interpretations of any Tribunal, as in effect from time to time.
LENDER LIENS means Liens in favor of Lenders, or Agent on behalf of
Lenders, securing any of the Obligations (as that term is defined in the Credit
Agreement).
LENDERS means the financial institutions named in the Credit Agreement,
and their respective successors and assigns (but not any Participant who is not
otherwise a party to the Credit Agreement).
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds prior
to the claims of other creditors or the owners.
LITIGATION means any action by or before any Tribunal.
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MATERIAL ADVERSE EVENT means any circumstance or event that,
individually or collectively with other circumstances or events, reasonably is
expected to result in any (a) impairment of the ability of Lessee to perform any
of its payment or other material obligations under any Lease Document or of the
Guarantor to perform any of its payment or other material obligations under this
Guaranty, (b) impairment of the ability of Lessor to enforce (i) any of the
material obligations of the Guarantor under this Guaranty or (ii) any of their
respective Rights under the Lease Documents, or (c) material and adverse effect
on the business, assets, property or condition (financial or otherwise) of the
Companies as a whole as represented to Lessor in the Current Financials.
MATERIAL AGREEMENT means, for any Person, any agreement (excluding
purchase orders for material or inventory in the ordinary course of business) to
which that Person is a party, by which that Person is bound, or to which any
assets of that Person may be subject, and that is not cancelable by that Person
upon thirty (30) or fewer days' notice without liability for further payment
other than nominal penalty, and that requires that Person to pay more than
$1,000,000 during any 12-month period.
MINORITY INTERESTS means any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that are
not owned by the Guarantor and/or one or more of its Wholly-Owned Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests constituting
preferred stock at the voluntary or involuntary liquidating value of such
preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in Preferred Stock.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which any Company
(or any Person that, for purposes of Title IV of ERISA, is a member of
Guarantor's controlled group or is under common control with Guarantor within
the meaning of Section 414 of the Code) is making, or has made, or is accruing,
or has accrued, an obligation to make contributions.
NET INCOME means, in respect of a Person, the net income of such Person
computed in accordance with GAAP and as such item is reported from time to time
on such Person's statement of income and retained earnings (or similar
statement) (after deduction for payment of all taxes).
OWNERSHIP GROUP means Peter J. Solomon, Donald Glickman, Richard
Solomon and their spouses or lineal descendants, or any estate of such parties
or any trust of which any of the foregoing are the exclusive beneficiaries.
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established under ERISA.
PERMITTED DEBT means Debt described on the attached SCHEDULE 6N.
PERMITTED LIENS means Liens described on the attached SCHEDULE 6J.
PERSON means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof, or any trustee, receiver, custodian or similar official.
POTENTIAL DEFAULT means the occurrence of any event or the existence of
any circumstance that would, upon notice or lapse of time or both, become a
Default.
PREFERRED STOCK means the Guarantor's Class C Convertible Preferred
Stock, $1.50 par value per share.
QUALIFIED ISSUER means any commercial bank (a) which has capital and
surplus in excess of $100,000,000 and (b) the outstanding long term debt
securities of which are rated at least A-2 by Standard & Poors Ratings Group or
at least P-2 by Moody's Investors Service, Inc., or carry an equivalent rating
by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments.
RENTAL PAYMENTS means, as determined, on a rolling twelve month basis
ending on the last day of the accounting period covered by the consolidated
financial statements of Guarantor and its Subsidiaries, and delivered pursuant
to this Guaranty, the dollar amount of the fixed payments which Guarantor or its
Subsidiaries are required to make by the terms
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of any lease to its landlords during such period; (a) excluding, however (i)
rentals under Capitalized Leases, (ii) maintenance, repairs, taxes and other
similar changes included in such payments, and (iii) amounts constituting step
rent in accordance with GAAP and (b) less (x) rental income and (y) amortization
of deferred gains on sale-leasebacks; PROVIDED, HOWEVER, the calculation for the
period commencing with the Closing Date and ending twelve months thereafter,
shall be based on (1) the Four Quarter Period for all lease or ground lease
payments which Guarantor or its Subsidiaries are required to make to Brazos
Automotive Properties, L.P., as lessor under an operating lease with Monro
Leasing, LLC, and (2) the average of all lease or ground lease payments which
Guarantor or its Subsidiaries are required to make in connection with properties
acquired under the APA.
REPORTABLE EVENT means an event described in Section 4043 of ERISA
excluding any such event for which the notice requirement is waived under
applicable regulations of the PBGC.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys and agents.
RESPONSIBLE OFFICER means the chairman, president, senior
vice-president, executive vice-president, chief executive officer or chief
financial officer of Guarantor.
RIGHTS means rights, remedies, powers, privileges and benefits.
SOLVENT means, as to a Person, that (a) the aggregate fair market value
of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable
it to pay its Debts as they mature, and (c) it does not have unreasonably small
capital to conduct its businesses.
SUBSIDIARY of any Person means any entity of which at least 50% (in
number of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person.
TANGIBLE ASSETS of any Person means, as of the date of any
determination thereof, the total amount of all assets of such Person (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting the following: good will, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets (other than prepaid insurance and
deferred taxes), any write up in the book value of any asset resulting from a
revaluation thereof subsequent to December 31, 1998, and such other assets as
are properly classified as "intangible assets" in accordance with GAAP.
TANGIBLE NET WORTH means as of the date of any determination thereof,
the sum of the capital stock of all classes, paid-in-capital and surplus
accounts (net of treasury shares) plus (or minus in the case of a deficit) the
retained earnings of the Guarantor and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, after elimination of Minority
Interests, less all assets which are not Tangible Assets.
TAXES means, for any Person, taxes, assessments or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises or assets.
TRIBUNAL means any (a) local, state, or federal judicial, executive, or
legislative instrumentality, (b) private arbitration board or panel having
binding authority with respect to any party to be bound thereby pursuant to a
written agreement entered into by such party, or (c) central bank.
UCP means the Uniform Customs and Practices for Documentary Credit
(1993 version), International Chamber of Commerce Publication No. 500 (as
amended or modified from time to time).
WHOLLY-OWNED SUBSIDIARY means a Subsidiary owned 100% by Guarantor.
6. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lessor as follows:
a. CORPORATE EXISTENCE, GOOD STANDING, AUTHORITY AND COMPLIANCE. Each
of the Guarantor and the Lessee is duly organized, validly existing and in good
standing under the Laws of the jurisdiction in which it is incorporated or
organized as identified on the attached SCHEDULE 6a. or on the most recently
amended SCHEDULE 6a. Except where failure is not a Material Adverse Event, each
of the Guarantor and the Lessee (a) is duly qualified to transact business and
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is in good standing as a foreign corporation or other entity in each
jurisdiction where the nature and extent of its business and properties require
due qualification and good standing (those jurisdictions being identified on the
attached SCHEDULE 6a. or on the most recently amended SCHEDULE 6a., (b)
possesses all requisite authority, permits and power to conduct its business as
is now being, or is contemplated by this Guaranty to be, conducted, and (c) is
in compliance with all applicable Laws, except in each case where the failure to
so qualify, to possess such authority, permits or power or to comply with such
Law would not cause a Material Adverse Event.
b. SUBSIDIARIES. As of the date of this Guaranty, Guarantor has no
Subsidiaries except as disclosed on the attached SCHEDULE 6b. or on the most
recently amended SCHEDULE 6b. reflecting changes to the schedule as a result of
transactions permitted by this Guaranty. All of the outstanding shares of
capital stock (or similar voting interests) of those Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and are owned of record
and beneficially as set forth thereon, free and clear of any Liens,
restrictions, claims or Rights of another Person, other than Permitted Liens,
and are not subject to any warrant, option or other acquisition Right of any
Person or subject to any transfer restriction except for restrictions imposed by
securities Laws and general corporate Laws.
c. AUTHORIZATION AND CONTRAVENTION. The execution and delivery by the
Guarantor of this Guaranty and by the Lessee of each Lease Document or related
document to which it is a party and the performance by it of its obligations
thereunder (a) are within its corporate or limited liability company power, as
the case may be, (b) have been duly authorized by all necessary corporate or
limited liability company action, as the case may be, (c) require no action by
or filing with any Tribunal (other than any action or filing that has been taken
or made on or before the date of this Guaranty or which would not cause a
Material Adverse Event), (d) do not violate any provision of its charter or
bylaws, (e) do not violate any provision of Law or order of any Tribunal
applicable to it, other than violations that individually or collectively are
not a Material Adverse Event, (f) do not violate any Material Agreements to
which it is a party, other than a violation which would not cause a Material
Adverse Event, (g) do not result in the creation or imposition of any Lien
(other than the Lender Liens) on any asset of the Lessee or the Guarantor, (h)
are in furtherance of the corporate purposes of the Guarantor and (i) do not
require the consent or approval of the shareholders of the Guarantor.
d. BINDING EFFECT. Upon execution and delivery by all parties thereto,
each Lease Document will constitute a legal and binding obligation of the
Lessee, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable Debtor Relief Laws and general
principles of equity.
e. FINANCIAL STATEMENTS; FISCAL YEAR. The Current Financials were
prepared in accordance with GAAP and present fairly, in all material respects,
the consolidated financial condition, results of operations, and cash flows of
the Companies as of, and for the portion of the fiscal year ending on the date
or dates thereof (subject only to normal year-end adjustments). All material
liabilities of the Companies as of the date or dates of the Current Financials
are reflected therein or in the notes thereto. Except for transactions directly
related to, or specifically contemplated by, the Lease Documents or disclosed to
Lessor, no subsequent material adverse changes have occurred in the consolidated
financial condition of the Companies from that shown in the Current Financials,
nor has any Company incurred any subsequent material liability.
f. LITIGATION. Except as disclosed on the attached SCHEDULE 6f. or the
most recently amended SCHEDULE 6f., neither the Lessee nor the Guarantor is
subject to, or aware of the threat of, any Litigation that is reasonably likely
to be determined adversely to the Lessee or the Guarantor or, if so adversely
determined, is a Material Adverse Event. Except as permitted under SECTION 10D.,
no outstanding and unpaid judgments against either the Lessee or the Guarantor
exist.
g. TAXES. All Tax returns of each of the Lessee and the Guarantor
required to be filed have been filed (or extensions have been granted) before
delinquency, except for returns for which the failure to file is not a Material
Adverse Event, and all Taxes imposed upon each of the Lessee and the Guarantor
that are due and payable have been paid before delinquency, other than Taxes for
which the criteria for Permitted Liens have been satisfied or for which
nonpayment is not a Material Adverse Event.
h. ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 6h. or on the
most recently amended SCHEDULE 6h., (a) no Company knows of any environmental
condition or circumstance materially adversely affecting any Company's
properties taken as a whole or operations, (b) no Company has received any
report of any Company's material violation of any Environmental Law, (c) no
Company knows that any Company is under any obligation to remedy any material
violation of any Environmental Law, or (d) no facility of any Company is used
for, or to the knowledge of any Company has been used for, storage, treatment or
disposal of any Hazardous Substance, excluding the storage of Hazardous
Substances in amounts commonly and lawfully used in automotive repair shops
which have been handled in compliance
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with applicable Environmental Law. Except as disclosed in SCHEDULE 6h., each
Company has taken prudent steps to determine that its properties and operations
do not violate any Environmental Law, other than violations that are not,
individually or in the aggregate, a Material Adverse Event, except where such
condition, circumstance, violation or non-compliance would not reasonably be
expected to have a monetary impact or cost to the Guarantor equal to or in
excess of five percent (5%) of the Guarantor's pre-tax income during the
preceding Four Quarter Period, such amount not to exceed $1,000,000.
i. EMPLOYEE PLANS. Except where occurrence or existence is not a
Material Adverse Event, (a) no Employee Plan has incurred an "accumulated
funding deficiency" (as defined in section 302 of ERISA or section 412 of the
Code), (b) no Company has incurred liability under ERISA to the PBGC in
connection with any Employee Plan (other than required insurance premiums, all
of which have been paid), (c) no Company has withdrawn in whole or in part from
participation in a Multiemployer Plan, (d) no Company has engaged in any
"prohibited transaction" (as defined in section 406 of ERISA or section 4975 of
the Code), and (e) no Reportable Event has occurred, excluding events for which
the notice requirement is waived under applicable PBGC regulations.
j. PROPERTIES; LIENS. Each of the Guarantor and the Lessee has good and
marketable title to all its property reflected on the Current Financials (except
for property that is obsolete or that has been disposed in the ordinary course
of business or, after the date of this Guaranty, as otherwise permitted by
SECTION 8H. or SECTION 8I.). Except for Permitted Liens, no Lien exists on any
property of the Guarantor or the Lessee, and the execution, delivery,
performance or observance of the Lease Documents will not require or result in
the creation of any Lien (other than Lender Liens) on the Guarantor's or the
Lessee's property.
k. GOVERNMENT REGULATIONS. No Company is subject to regulation under
the Investment Company Act of 1940, as amended, or the Public Utility Holding
Company Act of 1935, as amended.
l. TRANSACTIONS WITH AFFILIATES. Except as disclosed on the attached
SCHEDULE 6L. other than the most recently amended SCHEDULE 6l. (if the
disclosures are approved by the Lessor), neither the Guarantor nor the Lessee is
a party to a material transaction with any of its Affiliates (excluding other
Companies), other than transactions in the ordinary course of business and upon
fair and reasonable terms not materially less favorable than it could obtain or
could become entitled to in an arm's-length transaction with a Person that was
not its Affiliate. For purposes of this SECTION 6l., a transaction is "material"
if it requires either the Guarantor or the Lessee to pay more than $1,000,000
during the term of the governing agreement.
m. DEBT. Neither the Guarantor nor the Lessee is an obligor on any
Funded Debt, other than Permitted Debt.
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n. MATERIAL AGREEMENTS. No default or potential default exists on the
part of either the Guarantor or the Lessee under any Material Agreement that is
a Material Adverse Event.
o. INSURANCE. Each of the Guarantor and the Lessee maintains with
financially sound, responsible, and reputable insurance companies or
associations (or, as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the jurisdictions in which it
operates) insurance concerning its properties and businesses against casualties
and contingencies and of types and in amounts (and with co-insurance and
deductibles) as is customary in the case of similar businesses.
p. LABOR MATTERS. No actual or threatened strikes, labor disputes, slow
downs, walkouts, or other concerted interruptions of operations by the employees
of the Guarantor or the Lessee that are a Material Adverse Event exist. Hours
worked by and payment made to employees of the Guarantor and the Lessee have not
been in violation of the Fair Labor Standards Act or any other applicable Law
dealing with labor matters, other than any violations, individually or
collectively, that are not a Material Adverse Event. All payments due from the
Guarantor and the Lessee for employee health and welfare insurance have been
paid or accrued as a liability on its books, other than any nonpayments that are
not, individually or collectively, a Material Adverse Event.
q. SOLVENCY. As of the date of this Guaranty, the Lessee and the
Guarantor are, and after giving effect to this Guaranty the Guarantor will be,
Solvent.
r. TRADE NAMES. Neither the Guarantor nor the Lessee has used or
transacted business under any other corporate or trade name in the five-year
period preceding the date of this Guaranty, except as disclosed on the attached
SCHEDULE 6R..
s. INTELLECTUAL PROPERTY. Each of the Guarantor and the Lessee owns or
has the right to use all material licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications and trade names
necessary to continue to conduct its businesses as presently conducted by it and
proposed to be conducted by it immediately after the date of this Guaranty. Each
of the Guarantor and the Lessee is conducting its business without infringement
or claim of infringement of any license, patent, copyright, service mark,
trademark, trade name, trade secret or other intellectual property right of
others, other than any infringements or claims that, if successfully asserted
against or determined adversely to either the Guarantor or the Lessee, would
not, individually or collectively, constitute a Material Adverse Event. To the
knowledge of the Guarantor, no infringement or claim of infringement by others
of any material license, patent, copyright, service mark, trademark, trade name,
trade secret or other intellectual property of either the Guarantor or the
Lessee exists.
t. FULL DISCLOSURE. All information previously furnished, furnished on
the date of this Guaranty, and furnished in the future, by the Guarantor or the
Lessee to Lessor in connection with the Lease Documents (a) was, is, and will
be, true and accurate in all material respects or based on reasonable estimates
on the date the information is stated or certified, and (b) did not, does not,
and will not, fail to state any fact the omission of which would otherwise make
any such information materially misleading.
u. YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the Guarantor's and its
Subsidiaries' computer systems and (b) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Guarantor's or
its Subsidiaries' systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by October 1, 1999; provided,
however, that Guarantor shall provide to Lessor and Agent a status report on the
efforts of Guarantor and its Subsidiaries to complete the foregoing programming
by July 1, 1999. The cost to the Guarantor and its Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of year
2000 to the Guarantor and its Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or a Material Adverse Event.
7. AFFIRMATIVE COVENANTS. So long as any Lease Document is in force and
effect, Guarantor covenants and agrees as follows:
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a. ITEMS TO BE FURNISHED. Guarantor shall cause the following to be
furnished to Lessor:
i. Promptly after preparation, and no later than one hundred
(100) days after the last day of each fiscal year of Guarantor, Financial
Statements showing the consolidated financial condition and results of
operations of the Companies as of, and for the year ended on, that last day,
accompanied by:
(i) the unqualified opinion of Guarantor's
Accountants, based on an audit using generally accepted auditing
standards, that the Financial Statements were prepared in accordance
with GAAP and present fairly, in all material respects, the
consolidated financial condition and results of operations of the
Companies,
(ii) a certificate from the accounting firm to Lessor
indicating that during its audit it obtained no knowledge of any
Default or Potential Default or, if it obtained knowledge, the nature
and period of existence thereof, and
(iii) a Compliance Certificate with respect to the
Financial Statements.
ii. Promptly after preparation, and no later than fifty (50)
days after the last day of the first three fiscal quarters of Guarantor,
Financial Statements showing the consolidated financial condition and results of
operations of the Companies for the fiscal quarter and for the period from the
beginning of the current fiscal year to the last day of the fiscal quarter,
subject to ordinary year-end adjustments, accompanied by a Compliance
Certificate with respect to the Financial Statements.
iii. Within thirty (30) days after the end of each fiscal year
of Guarantor (commencing with the fiscal year ending March 31, 1999, in the case
of financial projections, and commencing with the fiscal year ending March 31,
1999, in the case of financial budgets), financial projections for the
succeeding three (3) fiscal years and the financial budget for the next
succeeding fiscal year, accompanied by a certificate executed by a Responsible
Officer certifying that the projections and budget were prepared by Guarantor
based on assumptions that, in light of the historical performance of the
Companies and their prospects for the future, are reasonable as of the date
prepared.
iv. Promptly after receipt, a copy of each interim or special
audit report and management letter issued by Guarantor's Accountants with
respect to any Company or its financial records.
v. Notice, promptly after Guarantor knows or has reason to
know, of (i) the existence and status of any Litigation that, if determined
adversely to any Company, would be a Material Adverse Event, (ii) any change in
any material fact or circumstance represented or warranted by the Guarantor or
the Lessee in any Lease Document, (iii) the receipt by any Company of notice of
any violation or alleged violation of ERISA or any Environmental Law (which
individually or collectively with other violations or allegations could
constitute a Material Adverse Event), or (iv) a Default or Potential Default,
specifying the nature thereof and what action the Companies have taken, are
taking, or propose to take.
vi. Promptly after filing, copies of all material reports or
filings filed by or on behalf of the Guarantor or the Lessee with any Tribunal.
vii. Promptly upon reasonable request by Lessor information
(not otherwise required to be furnished under the Lease Documents) respecting
the business affairs, assets and liabilities of the Guarantor or the Lessee and
opinions, projections, certifications and documents in addition to those
mentioned in this Guaranty.
b BOOKS AND RECORDS. Guarantor will, and will cause the Lessee to
maintain books, records and accounts necessary to prepare financial statements
in accordance with GAAP.
c INSPECTIONS. Upon reasonable request and reasonable prior notice,
Guarantor will, and will cause Lessee to, allow Lessor (or its Representatives)
to inspect any of its properties, to review reports, files and other records and
to make and take away copies, to conduct tests or investigations, and to discuss
any of its affairs, conditions and finances with its other creditors, directors,
officers, employees or representatives from time to time, during reasonable
business hours.
11
<PAGE> 12
d TAXES. Guarantor will, and will cause Lessee to, promptly pay when
due any and all Taxes, other than Taxes which are being contested in good faith
by lawful proceedings diligently conducted, against which reserve or other
provision required by GAAP has been made, and in respect of which levy and
execution of any Lien have been and continue to be stayed.
e PAYMENT OF OBLIGATIONS. Guarantor will, and will cause Lessee to,
promptly pay (or renew and extend) all of its material obligations as they
become due (unless the obligations are being contested in good faith by
appropriate proceedings).
f EXPENSES. Guarantor shall promptly pay, or shall cause Lessee to,
within five (5) days following the receipt of an invoice therefor setting forth
the amount thereof (a) all costs, fees and expenses paid or incurred by Lessor
(or any limited partner of Lessor) in connection with the arrangement,
syndication and negotiation of the Facilities and the negotiation, preparation,
delivery and execution of (i) the Lease Documents and (ii) any related
amendment, waiver or consent (including in each case, without limitation, the
reasonable fees and expenses of Lessor's counsel but excluding, in the case of
amendments, waivers, and consents described in clause (ii) costs and expenses of
a limited partner of Lessor unless such amendments, waivers and consents are
requested by Guarantor or Lessee) and (b) all costs, fees and expenses of Lessor
(or any limited partner of Lessor, if a default has occurred and is continuing)
incurred by Lessor in connection with the enforcement of the obligations of the
Lessee arising under the Lease Documents or of the Guarantor arising hereunder
or the exercise of any Rights arising under this Guaranty or the Lease Documents
(including, but not limited to, reasonable attorneys' fees, expenses and costs
paid or incurred in connection with any workout or restructure and any action
taken in connection with any Debtor Relief Laws), all of which shall be a part
of the Liabilities and shall bear interest, if not paid upon demand, at the
Default Rate (as defined in the Credit Agreement) until repaid.
g MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as otherwise
permitted by SECTION 8I., Guarantor will, and will cause Lessee to, (a) maintain
its corporate or limited liability company existence, as the case may be, and
good standing in its state of organization and its authority to transact
business in all other states where failure to maintain its authority to transact
business is a Material Adverse Event; (b) maintain all licenses, permits and
franchises necessary for its business where failure to do so is a Material
Adverse Event; (c) keep all of its assets that are useful in and necessary to
its business in good working order and condition (ordinary wear and tear
excepted) and make all necessary repairs and replacements.
h INSURANCE. Guarantor will, and will cause Lessee to, maintain with
financially sound, responsible and reputable insurance companies or associations
(or, as to workers' compensation or similar insurance, with an insurance fund or
by self-insurance authorized by the jurisdictions in which it operates)
insurance concerning its properties and businesses against casualties and
contingencies and of types and in amounts (and with co-insurance and
deductibles) as is customary in the case of similar businesses similarly
situated, which insurance may provide for reasonable deductibility from coverage
thereof, Guarantor shall, and shall cause Lessee to, deliver to Lessor
certificates of insurance for each policy of insurance and evidence of payment
of all premiums which certificates of insurance shall name Agent as an
additional insured, secured party, mortgagee and loss payee and which provide
Agent with at least thirty (30) days notice of cancellation or reduction in
coverage. If any insurance policy covered by an insurance certificate previously
delivered to Lessor is altered or canceled, then Guarantor shall cause to be
promptly delivered to Lessor a replacement certificate (in form and substance
satisfactory to Lessor).
i PRESERVATION AND PROTECTION OF RIGHTS. Guarantor will, and will cause
Lessee to, perform the acts and duly authorize, execute, acknowledge, deliver,
file and record any additional writings as Lessor may reasonably deem necessary
or appropriate to protect the Rights of Lessor under this Guaranty or any Lease
Document.
j ENVIRONMENTAL LAWS. Guarantor will, and will cause Lessee to, (a)
conduct its business so as to comply with all applicable Environmental Laws and
shall promptly take corrective action to remedy any non-compliance with any
Environmental Law, except where failure to comply or take action would not have
a monetary impact or cost to the Guarantor equal to or in excess of five percent
(5%) of the Guarantor's pre-tax income during the preceding Four Quarter Period,
or would otherwise be a Material Adverse Event, such amount in no event to
exceed $1,000,000, and (b) establish and maintain a management system designed
to ensure compliance with applicable Environmental Laws and minimize financial
and other risks to Guarantor and Lessee arising under applicable Environmental
Laws or as the result of environmentally related injuries to Persons or
property. Guarantor shall deliver reasonable evidence of compliance with the
foregoing covenant to Lessor within thirty (30) days after any request from
Lessor.
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<PAGE> 13
k INDEMNIFICATION. GUARANTOR WILL INDEMNIFY, PROTECT AND HOLD LESSOR
AND ITS PARTNERS AND THEIR RESPECTIVE PARENTS, SUBSIDIARIES, REPRESENTATIVES,
SUCCESSORS AND ASSIGNS (INCLUDING ALL OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS)(COLLECTIVELY, THE "INDEMNIFIED PARTIES") HARMLESS FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS AND PROCEEDINGS AND ALL COSTS, EXPENSES (INCLUDING,
WITHOUT LIMITATION, ALL ATTORNEYS' FEES AND LEGAL EXPENSES WHETHER OR NOT SUIT
IS BROUGHT) AND DISBURSEMENTS OF ANY KIND OR NATURE (THE "INDEMNIFIED
LIABILITIES") THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST THE INDEMNIFIED PARTIES, IN ANY WAY RELATING TO OR ARISING OUT OF (A)
THE DIRECT OR INDIRECT RESULT OF THE VIOLATION BY ANY COMPANY OF ANY
ENVIRONMENTAL LAW, (B) ANY COMPANY'S GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR PRESENCE IN
CONNECTION WITH ITS PROPERTIES OF A HAZARDOUS SUBSTANCE (INCLUDING, WITHOUT
LIMITATION, (I) ALL DAMAGES OF ANY USE, GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR PRESENCE, OR (II)
THE COSTS OF ANY ENVIRONMENTAL INVESTIGATION, MONITORING, REPAIR, CLEANUP OR
DETOXIFICATION AND THE PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL
OR OTHER PLANS), OR (C) THE LEASE DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN. HOWEVER, ALTHOUGH EACH INDEMNIFIED PARTY HAS THE RIGHT TO
BE INDEMNIFIED UNDER THE LEASE DOCUMENTS FOR ITS OWN ORDINARY NEGLIGENCE, NO
INDEMNIFIED PARTY HAS THE RIGHT TO BE INDEMNIFIED UNDER THE LEASE DOCUMENTS FOR
ITS OWN FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE PROVISIONS OF AND
UNDERTAKINGS AND INDEMNIFICATION SET FORTH IN THIS PARAGRAPH SHALL SURVIVE THE
SATISFACTION AND PAYMENT OF THE LIABILITIES AND TERMINATION OF THIS GUARANTY.
GUARANTOR'S INDEMNITY OBLIGATION SHALL BE JOINT AND SEVERAL WITH ANY SIMILAR
SUCH INDEMNITY PROVIDED BY ANY AFFILIATE OF GUARANTOR TO LESSOR.
l FURTHER ASSURANCES. The Guarantor shall, and shall cause each
Guarantor to, do such further things and execute such additional documents
(including, without limitation, the perfection of security interest, in
after-acquired property) as are reasonably requested by Lessor.
m. CHANGE OF CONTROL. Guarantor shall promptly, but in any event within
five (5) Business Days, give written notice to Lessor and Agent upon obtaining
knowledge of the occurrence of a Change of Control.
8 NEGATIVE COVENANTS. So long as any Lease Document is in force and
effect, Guarantor covenants and agrees as follows:
a EMPLOYEE PLANS. Except where a Material Adverse Event would not
result, Guarantor may not and may not permit any Company to permit any of the
events or circumstances described in SECTION 6i. to exist or occur.
b DEBT AND DEBT INSTRUMENTS. Guarantor may not and may not permit
Lessee to create, incur or suffer to exist any Funded Debt, other than Permitted
Debt.
c LIENS. Guarantor may not and may not permit Lessee to (a) create,
incur or suffer or permit to be created or incurred or to exist any Lien upon
any of its assets other than Permitted Liens or (b) enter into or permit to
exist any arrangement or agreement that directly or indirectly prohibits
Guarantor or Lessee from creating or incurring any Lien on any of its assets,
other than the Lease Documents and leases that place a Lien prohibition on only
the leased property.
d TRANSACTIONS WITH AFFILIATES. Except as disclosed on the attached
SCHEDULE 6l., or on the most recently amended SCHEDULE 6l., (if the disclosures
are approved by Lessor), Guarantor may not and may not permit Lessee to enter
into any material transaction with any of its Affiliates (excluding other
Companies), other than transactions in the ordinary course of business and upon
fair and reasonable terms not materially less favorable than it could obtain or
could become entitled to in an arm's-length transaction with a Person that was
not its Affiliate. For purposes of this SECTION 8d., a transaction is "material"
if it requires Guarantor or Lessee to pay more than $1,000,000 during the term
of the agreement governing such transaction.
e COMPLIANCE WITH LAWS AND DOCUMENTS. Guarantor may not and may not
permit Lessee to (a) violate the provisions of any Laws applicable to it or of
any Material Agreement to which it is a party if that violation alone, or when
13
<PAGE> 14
aggregated with all other violations, would be a Material Adverse Event, (b)
violate the provisions of its charter or bylaws, or (c) repeal, replace or amend
any provision of its charter or bylaws if that action would be a Material
Adverse Event.
f LOANS, ADVANCES AND INVESTMENTS. Except for investments permitted by
SECTION 8g. or SECTION 8i., Guarantor may not and may not permit Lessee to make
any loan, advance, extension of credit or capital contribution to, make any
investment in, or purchase or commit to purchase any stock or other securities
or evidences of Debt of, or interests in, any other Person; provided, however,
that Guarantor or Lessee may make an advance to, investment in or purchase from
another Person if (1) (a) such action results in the acquisition of such Person
by Guarantor, (b) such action results in the Guarantor's direct or indirect
ownership of new stores, (c) the Person being acquired is in a line of business
which is substantially the same as or complimentary to the Guarantor's principal
line of business, and (d) immediately after giving effect to such acquisition,
the Guarantor shall be in compliance with all covenants under ARTICLE 9 and
shall not be in Default or Potential Default under this Guaranty; provided,
further, that if any acquisition is in excess of an aggregate cost to the
Guarantor of more than $5,000,000, the Guarantor shall provide to the Lessor
evidence of compliance with all covenants in this Guaranty prior to the
consummation of such acquisition, or (2) such action is for investments in Cash
Equivalents.
g DIVIDENDS AND DISTRIBUTIONS. Guarantor may not and may not permit
Lessee to declare, make or pay any Distribution other than Distributions
declared, made or paid by (a) Guarantor wholly in the form of its capital stock,
(b) Lessee to Guarantor, or (c) Guarantor on its planned issuance of $25,000,000
in convertible preferred shares; provided that such shares are issued at the
market rate for similar such securities, Guarantor may not and may not permit
Lessee to enter into or permit to exist any arrangement or agreement (other than
this Guaranty or the Credit Agreement) that prohibits it from paying dividends
or other distributions to its shareholders.
h SALE OF ASSETS. Guarantor may not and may not permit Lessee to sell,
assign, lease, transfer or otherwise dispose of any of its assets, other than
(a) sales of inventory in the ordinary course of business, (b) the sale,
discount or transfer of delinquent accounts receivable in the ordinary course of
business for purposes of collection, (c) occasional sales, leases or other
dispositions of immaterial assets for consideration not less than fair market
value, (d) sales, leases or other dispositions of assets that are obsolete or
have negligible fair market value, (e) sales of equipment for a fair and
adequate consideration (but if replacement equipment is necessary for the proper
operation of the business of the seller, the seller must promptly replace the
sold equipment), (f) sale and leasebacks of real property which do not in the
aggregate exceed forty percent (40%) of the Guarantor's capital expenditures in
the applicable fiscal year, (g) sale, lease or other disposition by Lessee of
its assets to the Guarantor (subject to the terms of the Lease Documents), or
(h) sales of assets having an aggregate fair market value not exceeding
$2,000,000 during any fiscal year of Guarantor and sold for a price which is
within a fair market value for such assets, or (i) as disclosed on the attached
Schedule 8.h.
i MERGERS AND DISSOLUTIONS. Guarantor may not and may not permit Lessee
to merge or consolidate with any other Person or liquidate, wind up or dissolve
(or suffer any liquidation or dissolution); provided, however, if after giving
effect thereto, no Default shall have occurred and be continuing (a) any Person
(other than Lessee) may merge into the Guarantor in a transaction in which the
Guarantor is the surviving corporation, (b) any Person other than the Guarantor
may merge into any Subsidiary of the Guarantor (other than Lessee) in a
transaction in which the surviving entity is such Subsidiary and (c) any
Subsidiary of the Guarantor (other than Lessee) may liquidate or dissolve so
long as the Guarantor determines in good faith that such liquidation or
dissolution is in the best interests of the Guarantor.
j ASSIGNMENT. Guarantor may not and may not permit Lessee to assign or
transfer any of its Rights, duties, or obligations under any of the Lease
Documents.
k FISCAL YEAR AND ACCOUNTING METHODS. Guarantor may not and may not
permit any Company to change its fiscal year or its method of accounting (other
than immaterial changes in methods or as required or permitted by GAAP).
l NEW BUSINESSES. Guarantor may not and may not permit Lessee to engage
in any business except the businesses in which they are presently engaged and
any other reasonably related business.
m GOVERNMENT REGULATIONS. Guarantor may not and may not permit Lessee
to conduct its business in a way that it becomes regulated under the Investment
Company Act of 1940, as amended, or the Public Utility Holding Company Act of
1935, as amended.
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<PAGE> 15
n LEASES; SALE-LEASEBACKS. Except as otherwise provided herein the
Guarantor will not, and will not permit Lessee to, enter into any arrangement
whereby the Guarantor or Lessee shall sell or transfer property owned by the
Guarantor or Lessee and then or thereafter as Lessee rent or lease such property
(any such arrangement being herein referred to as a "sale-leaseback") other than
(i) a sale-leaseback solely with the Guarantor or a Wholly-Owned Subsidiary,
(ii) sale-leasebacks of equipment pursuant to an off-balance sheet transaction
with Fleet National Bank existing on the date hereof (and extensions and
renewals thereof), or (iii) a lease for temporary period, not in excess of three
(3) months, to permit the orderly relocation of operations carried on in or at a
facility subsequent to the sale thereof and prior to the surrender of possession
thereof, unless (x) such sale-leaseback transaction is completed within one
hundred eighty (180) days of the date of acquisition of the property involved,
and (y) such sale-leaseback is entered into in compliance with any applicable
limitations hereof and (z) at the time of consummation thereof and after giving
effect thereto no Default or Potential Default exists.
o SUBSIDIARIES. Permit any Person other than a Company to acquire,
directly or indirectly, beneficially or of record, shares representing more than
twenty percent (20%) of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of any Subsidiary of the Guarantor.
9 FINANCIAL COVENANTS. So long as any Lease Document is on force and
effect, Guarantor covenants and agrees to comply with the following financial
covenants as calculated on the last day of each fiscal quarter period and
certified by Guarantor in the most recent Compliance Certificate delivered to
Lessor from time to time in accordance with the terms of this Guaranty:
<TABLE>
<CAPTION>
===================================================================================================================================
Maximum Minimum EBITDAR less
Adjusted Debt/EBITDAR CAPEX to Interest Minimum Tangible
Expense plus Rental Payments Net Worth
===================================================================================================================================
<S> <C> <C> <C>
At 12/31/98 Not greater than 5.30 to 1.0 Not less than .85 to 1.0 $70,000,000 at 12/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
At 3/31/99 thru 06/30/99 Not greater than 5.30 to 1.0 Not less than .85 to 1.0 $70,000,000 at 3/31/99
- -----------------------------------------------------------------------------------------------------------------------------------
At 9/30/99 thru 12/31/99 Not greater than 4.70 to 1.0 Not less than .85 to 1.0 $70,000,000 at 9/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
At 3/31/00 thru 12/31/00 Not greater than 4.25 to 1.0 Not less than 1.30 to 1.0 $80,000,000 at 3/31/00
- -----------------------------------------------------------------------------------------------------------------------------------
At 3/31/01 thru 12/31/01 Not greater than 3.85 to 1.0 Not less than 1.50 to 1.0 $92,600,000 at 3/31/01
- -----------------------------------------------------------------------------------------------------------------------------------
At 3/31/02 and thereafter Not greater than 3.55 to 1.0 Not less than 1.70 to 1.0 $110,000,000 at 3/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing covenants, upon receipt of the proceeds
from the issuance of at least $25,000,000 of equity or equity related securities
to the Guarantor, the following covenants shall apply:
<TABLE>
<CAPTION>
==================================================================================================================================
Maximum Minimum EBITDAR less
Adjusted Debt/EBITDAR CAPEX to Interest Minimum Tangible
Expense plus Rental Payments Net Worth
==================================================================================================================================
<S> <C> <C> <C>
At 12/31/98 Not greater than 4.60 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 12/31//98
- ----------------------------------------------------------------------------------------------------------------------------------
At 3/31/99 thru 06/30/99 Not greater than 4.60 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 3/31/99
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
At 9/30/99 thru 12/31/99 Not greater than 4.10 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 9/30/99
- ----------------------------------------------------------------------------------------------------------------------------------
At 3/31/00 thru 12/31/00 Not greater than 3.70 to 1.0 Not less than 1.40 to 1.0 $105,000,000 at 3/31/00
- ----------------------------------------------------------------------------------------------------------------------------------
At 3/31/01 thru 12/31/01 Not greater than 3.35 to 1.0 Not less than 1.70 to 1.0 $117,600,000 at 3/31/01
- ----------------------------------------------------------------------------------------------------------------------------------
At 3/31/02 and thereafter Not greater than 3.05 to 1.0 Not less than 1.90 to 1.0 $135,000,000 at 3/31/02
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10 DEFAULT. The term "DEFAULT" means the occurrence of any one or more
of the following events:
a LEASE DOCUMENTS. The failure of Lessee to pay any part of the
Liabilities within five (5) Business Days after it becomes due and payable under
the Lease Documents or the occurrence and continuation of a Default under any
Lease Document.
b COVENANTS. The failure of Guarantor (and, if applicable, Lessee) to
punctually and properly perform, observe and comply with:
i. Any covenant or agreement contained in SECTIONS 8g., 8h.,
8i., 8j., OR 8n.;
ii. Any covenant or agreement contained in SECTION 7a.(i) AND
(ii), 7b., 7c., 7g., 8a., 8b., 8f., 8k., 8l., 8m. OR 8o., and failure
continues for ten (10) days after the first to occur of (i) Guarantor
knows of or (ii) Guarantor receives notice from Lessor of, such
failure; or
iii. Any other covenant or agreement contained in any Lease
Document (other than the covenants to pay the Liabilities and the
covenants in CLAUSES (a) AND (b) preceding), and failure continues for
thirty (30) days after the first to occur of (i) Guarantor knows of or
(ii) Guarantor receives notice from Lessor of, such failure.
c DEBTOR RELIEF. Guarantor or Lessee (a) is not Solvent, (b) fails to
pay its Debts generally as they become due, (c) voluntarily seeks, consents to,
or acquiesces in the benefit of any Debtor Relief Law, or (d) becomes a party to
or is made the subject of any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise adversely
affect the Rights of Lessor granted in the Lease Documents (unless, if the
proceeding is involuntary, the applicable petition is dismissed within sixty
(60) days after its filing).
d JUDGMENTS AND ATTACHMENTS. Guarantor or Lessee fails, within sixty
(60) days after entry, to pay, bond or otherwise discharge any judgment or order
for the payment of money in excess of $1,000,000 (individually or collectively)
or any warrant of attachment, sequestration or similar proceeding against any of
Guarantor's or Lessee's assets having a value (individually or collectively) of
$1,000,000, which is neither (a) stayed on appeal nor (b) diligently contested
in good faith by appropriate proceedings and adequate reserves have been set
aside on its books in accordance with GAAP.
e GOVERNMENT ACTION. (a) A final non-appealable order is issued by any
Tribunal (including, but not limited to, the United States Justice Department)
seeking to cause Guarantor or Lessee to divest a significant portion of its
assets under any antitrust, restraint of trade, unfair competition, industry
regulation or similar Laws, or (b) any Tribunal condemns, seizes or otherwise
appropriates, or takes custody or control of all or any substantial portion of
the assets of Guarantor or Lessee.
f MISREPRESENTATION. Any material representation or warranty made by
Guarantor or Lessee contained herein or in any Lease Document at any time proves
to have been materially incorrect when made.
g CHANGE OF CONTROL. A Change of Control occurs and the Guarantor's
obligations under the Senior Secured Credit Facility dated as of September 15,
1998 among Guarantor as Borrower, the lenders named therein and Chase as Agent
for the lenders, shall have been accelerated as a result of such Change of
Control.
h MATERIAL ADVERSE EVENT. A Material Adverse Event occurs.
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<PAGE> 17
i DEFAULT UNDER OTHER AGREEMENTS. (a) Guarantor or Lessee fails to pay
when due (after lapse of any applicable grace period) any Debt in excess
(individually or collectively) of $1,000,000; (b) any default exists under any
agreement to which Guarantor or Lessee is a party, the effect of which is to
cause, or to permit any Person (other than a Company) to cause, an amount in
excess (individually or collectively) of $1,000,000 to become due and payable by
Guarantor or Lessee before its stated maturity; or (c) any Debt in excess
(individually or collectively) of $1,000,000 is declared to be due and payable
or required to be prepaid by Guarantor or Lessee before its stated maturity.
j VALIDITY AND ENFORCEABILITY OF LEASE DOCUMENTS. Except in accordance
with its terms or as otherwise expressly permitted by this Guaranty, any Lease
Document at any time after its execution and delivery ceases to be in full force
and effect in any material respect or is declared by a Tribunal to be null and
void or its validity or enforceability is contested in writing by Guarantor or
Lessee, or Lessee denies in writing that it has any further liability or
obligations under any Lease Document.
k EMPLOYEE BENEFIT PLANS. Any of the following exists with respect to
any Employee Plan of any Company: (a) a Reportable Event; (b) disqualification
or involuntary termination proceedings; (c) voluntary termination proceedings
are initiated while a funding deficiency (as determined under section 412 of the
Code) exists; (d) withdrawal liability exists with respect to a Multiemployer
Plan; (e) a trustee is appointed by any federal district court or the PBGC to
administer an Employee Plan; (f) termination proceedings are initiated by the
PBGC; (g) failure by any Company to promptly notify Lessor upon its receipt of
notice of any proceeding or other actions that may result in termination of an
Employee Plan if the proceeding or termination would constitute a Material
Adverse Event.
11 RIGHTS AND REMEDIES.
(a) Upon the occurrence and during the continuance of any
Default, the Lessor may without any notice to (except as expressly provided
herein or in any Lease Document) or demand upon Guarantor, which are expressly
waived by Guarantor (except as to notices expressly provided for herein or in
any Lease Document), proceed to protect, exercise and enforce the rights and
remedies of the Lessor against Guarantor hereunder or under the Lease Documents
and such other rights and remedies as are provided by requirement of Law or
equity.
(b) The rights provided for in this Guaranty and the Lease
Documents are cumulative and are not exclusive of any other rights, powers,
privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
(c) The order and manner in which the Lessor's rights and
remedies and during the continuance of a Default are to be exercised shall be
determined by the Lessor in its sole discretion, and all payments received by
the Lessor shall be applied first to the costs and expenses (including
reasonable attorney's fees incurred by the Lessor) of the Lessor, then to the
payment of all accrued and unpaid amounts due under any Lease Documents to and
including the date of such application. To the extent permitted by applicable
law, no application of payments will cure any Default, or prevent acceleration,
or continued acceleration, of amounts payable under the Lease Documents, or
prevent the exercise, or continued exercise, of rights or remedies of the Lessor
hereunder or thereunder or under any requirement of Law or in equity.
12 PAYMENTS. Each payment by the Guarantor to you under this Guaranty
shall be made by transferring the amount thereof in immediately available funds
without set-off or counterclaim.
13 COSTS, EXPENSES AND TAXES. The Guarantor agrees to pay on demand
(except to the extent paid by Lessee): (i) all reasonable out-of-pocket costs
and expenses of the Lessor in connection with the preparation, execution and
delivery of this Guaranty and the Lease Documents and the other documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for the Lessor with respect thereto and with respect to advising the
Lessor as to its rights and responsibilities under this Guaranty and the Lease
Documents, and any modification, supplement or waiver of any of the terms of
this Guaranty or any Lease Document, (ii) all reasonable costs and expenses of
the Lessor hereunder and under the Lease Documents, including reasonable legal
fees and expenses, in connection with a default or the enforcement of this
Guaranty and the Lease Documents and (iii) reasonable costs and expenses
incurred in connection with third party professional services required by the
Lessor pursuant to the Lease Documents such as appraisers,
17
<PAGE> 18
environmental consultants, accountants or similar Persons; provided that except
during the continuance of any Default hereunder, the Lessor will first obtain
the consent of the Guarantor to such expense, which consent shall not be
unreasonably withheld. Without prejudice to the survival of any other
obligations of the Guarantor hereunder, the obligations of the Guarantor under
this Section shall survive the termination of this Guaranty.
14 SUBROGATION. The Guarantor shall not be subrogated to, in whole or
in part, and agrees not to exercise any rights of subrogation, with respect to
your rights or those of any subsequent assignee or transferee of any of the
Liabilities until all the Liabilities to you and every such subsequent assignee
or transferee shall have been paid in full. The provisions of this SECTION 14
shall survive the termination of this Guaranty and any satisfaction and
discharge of Lessee by virtue of any payment, court order, or law.
15 NO WAIVER; REMEDIES. No failure on the part of the Lessor to
exercise, and no delay in exercising, any right hereunder or under any Lease
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, or any abandonment or discontinuance of any steps to
enforce such right, preclude any other or further exercise thereof or the
exercise of any other right. No notice to or demand on the Guarantor in any case
shall entitle the Guarantor to any other or further notice or demand in similar
or other circumstances. The remedies herein are cumulative and not exclusive of
any other remedies provided by law, at equity or in any other agreement.
16 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants contained herein or made in writing by the Guarantor in
connection herewith shall survive the execution and delivery of this Guaranty
and the termination of the Lease Documents and will bind and inure to the
benefit of the respective successors and assigns of the parties hereto, whether
so expressed or not.
17 CONFIDENTIALITY. The Lessor agrees to keep any information delivered
or made available by the Guarantor to it which is clearly indicated to be
confidential information, confidential from anyone other than Persons employed
or retained by the Lessor who are or are expected to become engaged in
evaluating, approving, structuring or administering the Lease Documents;
provided that nothing herein shall prevent the Lessor from disclosing such
information (a) pursuant to subpoena or upon the order of any court or
administrative agency, (b) upon the request or demand of any regulatory agency
or authority having jurisdiction over Lessor, (c) which has been publicly
disclosed, (d) to the extent reasonably required in connection with any
litigation to which the Lessor, the Guarantor or its respective Affiliates may
be a party, (e) to the extent reasonably required in connection with the
exercise of any remedy hereunder, (f) to Lessor's legal counsel and independent
auditors. The Lessor will promptly notify the Guarantor of any information that
it is required or requested to deliver pursuant to clause (b) or (c) of this
SECTION 17 and, if the Guarantor is a party to any such litigation, clause (e)
of this SECTION 17.
18 SEPARABILITY. Should any clause, sentence, paragraph or Section of
this Guaranty be judicially declared to be invalid, unenforceable or void, such
decision will not have the effect of invalidating or voiding the remainder of
this Guaranty, and the parties hereto agree that the part or parts of this
Guaranty so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
19 EXECUTION IN COUNTERPARTS. This Guaranty may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
20 INTERPRETATION.
(a) In this Guaranty, unless a clear contrary intention appears:
(i) the singular number includes the plural
number and vice versa;
(ii) reference to any gender includes each
other gender;
(iii) the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this
Guaranty as a whole and not to any particular Article, Section
or other subdivision;
18
<PAGE> 19
(iv) reference to any Person includes such
Person's successors and assigns but, if applicable, only if
such successors and assigns are not prohibited by this
Guaranty, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
provided that nothing in this clause is intended to authorize
any assignment not otherwise permitted by this Guaranty;
(v) except as expressly provided to the
contrary herein, reference to any agreement, document or
instrument (including this Guaranty) means such agreement,
document or instrument as amended, supplemented or modified
and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms hereof;
(vi) unless the context indicates otherwise,
reference to any Article, Section, Schedule or Exhibit means
such Article or Section hereof or such Schedule or Exhibit
hereto;
(vii) the word "including" (and with
correlative meaning "include") means including, without
limiting the generality of any description preceding such
term;
(viii) with respect to the determination of
any period of time, except as expressly provided to the
contrary, the word "from" means "from and including" and the
word "to" means "to but excluding"; and
(ix) reference to any law, rule or
regulation means such as amended, modified, codified or
reenacted, in whole or in part, and in effect from time to
time.
(b) The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
(c) No provision of this Guaranty shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
21 SUBMISSION TO JURISDICTION. The Guarantor, to the extent permitted
by applicable law, hereby agrees as follows:
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY MAY BE BROUGHT IN THE DISTRICT COURTS OF NEW YORK, NEW YORK OR OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY
EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR
PROCEEDING. THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
IT AT ITS ADDRESS PROVIDED IN SECTION 24, SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE LESSOR TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER
JURISDICTION.
(b) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
GUARANTY BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
22 WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND AGREES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
19
<PAGE> 20
23 PARTIES. This Guaranty shall inure to the benefit of you and your
successors, assigns or transferees, and shall be binding upon the Guarantor and
its successors and assigns. The Guarantor may not assign any of its duties under
this Guaranty without the prior written consent of Lessor. You may assign your
rights and benefits under this Guaranty or the Lease Documents to any financial
institution providing financing to you in connection with the Lease Documents.
24 NOTICES. All notices, consents, requests, approvals, demands and
other communications provided for herein shall be in writing (including telecopy
communications) and mailed, telecopied, sent by overnight courier or delivered:
(a) If to the Guarantor:
Monro Muffler Brake, Inc.
200 Holleder Parkway
Rochester, New York 14615
Attention: Catherine D'Amico, Senior Vice President and
Chief Financial Officer
telephone: (716) 647-6400
telecopy: (716) 627-0941
(b) If to the Lessor:
Brazos Automotive Properties, L.P.
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Gregory C. Greene
telephone: (214) 522-7296
telecopy: (214) 520-2009
with a copy to
Robert R. Veach, Jr.
2911 Turtle Creek Blvd., Suite 1240A
Dallas, Texas 75219
telephone: (214) 522-7544
telecopy: (214) 520-2009
and a copy to
Heller Financial, Inc.
500 West Monro Street
Chicago, Illinois 60661
Attention: Michael G. Nawara
telephone: (312) 441-6902
telecopy: (312) 441-7519
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other parties
given in accordance with the provisions of this SECTION 24.
Other than the service of process set forth in SECTION 21(A) above, all
communications shall be effective three Business Days after the date when mailed
by certified mail, return receipt requested postage prepaid to any party at its
address specified above, or upon receipt if telecopied to any party to the
telecopy number set forth above, or upon receipt if delivered personally to any
party at its address specified above.
25 TERM. This Guaranty is not limited to any particular period of time,
but shall continue in full force and effect until all of the Liabilities have
been fully and finally paid or have been otherwise discharged by you, and the
20
<PAGE> 21
Guarantor shall not be released from any obligation or liability hereunder until
such full payment or discharge shall have occurred.
26 GOVERNING LAW. This Guaranty and all other documents executed in
connection herewith shall be deemed to be contracts and agreements executed by
the Guarantor and Lessor under the laws of the State of New York and of the
United States of America and for all purposes shall be construed in accordance
with, and governed by, the laws of said state and of the United States of
America.
27 INDEMNITY.
(a) The Guarantor shall indemnify the Lessor and each
Affiliate thereof and their respective directors, officers, employees and agents
(each, an "INDEMNIFIED PERSON") from, and hold each of them harmless against,
any and all losses, liabilities, claims or damages (including reasonable legal
fees and expenses) to which any of them may become subject, insofar as such
losses, liabilities, claims or damages arise out of or result from any actual or
proposed use by the Lessee of the proceeds of any extension of credit or any
investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to the foregoing or any of the Lease
Documents, and the Guarantor shall assume the defense thereof, including the
employment of counsel at Guarantor's expense; provided that Guarantor shall not
have such right, to the extent that such Indemnified Person shall deliver to
Guarantor a written notice waiving the benefits of the indemnification of such
Indemnified Person provided by this SECTION 27(A) in connection with such claim,
action, proceeding or suit. Notwithstanding the foregoing, if independent
counsel to such Indemnified Person shall conclude that there may be defenses
available to such Indemnified Person which may conflict with those available to
Guarantor, Guarantor shall not have the right to assume the defense of any such
claim, action, proceeding or suit on behalf of such Indemnified Person if such
Indemnified Person chooses to defend such claim, action, proceeding or suit
(with counsel reasonably acceptable to Guarantor), and all reasonable costs,
expenses and attorneys' fees incurred by the Indemnified Person in defending
such claim, action, proceeding or suit shall be borne by Guarantor; provided
however, if there is more than one (1) Indemnified Person having a right to
defend such claim, action, proceeding or suit as aforesaid, the obligation of
Guarantor to pay the fees and expenses of such Indemnified Person shall be
limited to one (1) firm of attorneys. Any Indemnified Person shall also have the
right to employ separate counsel and to participate in its defense, but the fees
and expenses of such counsel shall be borne by such Indemnified Person. Any
decision by an Indemnified Person to employ its own counsel selected by
Guarantor shall in no way affect any rights of such Indemnified Person otherwise
arising under this SECTION 27(A). In addition, Guarantor will not be liable for
any settlement of any claim, action, proceeding or suit unless Guarantor has
consented thereto in writing. The foregoing indemnity and agreement to hold
harmless shall not in any event apply to any losses, liabilities, claims,
damages or expenses incurred by reason of (i) gross negligence or willful
misconduct of the Person to be indemnified or (ii) any Material default by
Lessor that is not cured within any applicable cure period, if any, under any of
the Lease Documents.
(b WITHOUT LIMITING ANY PROVISION OF THIS GUARANTY, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
HEREUNDER OR THEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND
ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES: (i) ARISING OUT OF OR RESULTING FROM
THE ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON OR (ii) IMPOSED UPON
SAID PARTY UNDER ANY THEORY OR STRICT LIABILITY. Without prejudice to the
survival of any other obligations of the Guarantor hereunder and under the Lease
Documents, the obligations of the Guarantor under this Section shall survive the
termination of this Guaranty and the Lease Documents and the payment of the
Liabilities.
21
<PAGE> 22
28. NEW GUARANTY.
(a In the event that (i) any Lease Document is rejected by a
trustee or debtor-in-possession in any bankruptcy or insolvency proceeding
involving the Lessee or (ii) any Lease Document is terminated as a result of any
bankruptcy or insolvency proceeding involving the Lessee and, if within sixty
(60) days after such rejection or termination, the Lessor or its designee shall
so request and shall certify in writing to the Lessee that it intends to perform
the obligations of the Lessor as and to the extent required under such Lease
Document, the Guarantor will, unless prohibited by bankruptcy or other
applicable law, execute and deliver to the Lessor or such designee, concurrently
with the delivery by Lessor or such designee of a new Lease Document that
contains the same conditions, agreements, terms, provisions and limitations as
such original Lease Document, a new Guaranty that shall contain the same
conditions, agreements, terms, provisions and limitations as such original
Guaranty (except for any requirements which have been fulfilled by the Lessee
and the Guarantor prior to such rejection or termination). References in this
Guaranty to such "LEASE DOCUMENT" shall be deemed also to refer to such new
Lease Document.
(b In the event that upon written request by the Lessor to the
Lessee given on or after any foreclosure, trustee sale or conveyance in lieu
thereof of a Property (as defined in the Lease Documents), the owner of the
Property, as landlord, and the Lessee, as tenant, execute a lease of the
Property containing all of the same terms, provisions, options and conditions as
are contained in the Lease Documents, which lease shall be for the unexpired
portion of the term of the Lease Documents, as to such Property, then upon
written request by Lessor to Guarantor relating to the execution by Lessee of a
new Ground Lease or Facilities Lease (as those terms are defined in the Lease
Documents), the Guarantor hereby agrees to execute a new Guaranty that shall
contain the same conditions, agreements, terms, provisions and limitations as
this Guaranty (except for any requirements which have been fulfilled by the
Lessee and the Guarantor prior to such rejection or termination) in form and
substance substantially equivalent to this Guaranty which shall relate to such
new lease.
29. CERTAIN AMENDMENTS TO THIS GUARANTY.
(a If at any time on or after the date hereof, (i) Guarantor
(either acting alone or together with any one or more Subsidiaries or
affiliates) enters into any loan or other credit agreement in replacement of or
substitution for the Credit Agreement (a "REPLACEMENT CREDIT AGREEMENT") and
(ii) Chase (A) is, or at any time, becomes, a party to such Replacement Credit
Agreement or (B) has, or at any time acquires, a participation in any of the
facilities governed thereby, then, upon written notice by Guarantor to Lessor,
Lessor agrees to enter into an amendment or an amendment and restatement of this
Guaranty so that, to the extent elected by Guarantor and Lessee, the provisions
hereof will be the same (to the extent permitted by accounting rules for
operating leases) as the provisions applicable to Guarantor and set forth in the
Replacement Credit Agreement or any guarantee agreement executed by Guarantor
pursuant thereto, such amendment or amendment and restatement of this Guaranty
to be effective on the earlier to occur of (x) the effective date of the
Replacement Credit Agreement (without regard to when such amendment or amendment
or restatement is actually executed), and (y) the acquisition of a participation
in such Replacement Credit Agreement by Chase, and Lessor hereby agrees to
cooperate fully with Guarantor in the preparation and execution of the
appropriate amendment or amendment and restatement, as the case may be, and all
other appropriate documentation, as Guarantor may request and at Guarantor's
expense to effect the foregoing; and
(b if at any time on or after the date hereof, (i) any waiver
of any provision under the Credit Agreement or any Replacement Credit Agreement,
which provision or the substantial equivalent thereof (the "CORRESPONDING
PROVISION") is also included in this Guaranty, is granted, and (ii) at such time
or at any time thereafter, Chase (A) is or becomes a party to the Credit
Agreement or any Replacement Credit Facility, or (B) has or acquires a
participation in any of the facilities governed by the Credit Agreement or any
Replacement Credit Agreement, as the case may be, then such Corresponding
Provision, ipso facto upon the granting of the waiver referred to in the
immediately foregoing CLAUSE (I) and without the necessity of any further action
of any kind by Guarantor or any other Person, shall be deemed, for all purposes,
to have been immediately thereupon waived by Lessor.
Sincerely yours,
MONRO MUFFLER BRAKE, INC.,
a New York corporation
22
<PAGE> 23
<TABLE>
<S> <C>
By: /s/ Catherine D'Amico
-----------------------------------------------------
Catherine D'Amico, Senior Vice President
and Chief Financial Officer
</TABLE>
ACCEPTED AND AGREED as of the date first above written:
<TABLE>
<S> <C>
BRAZOS AUTOMOTIVE PROPERTIES, L.P.,
a Delaware limited partnership
By: BRAZOS AUTOMOTIVE PROPERTIES MANAGEMENT,
INC., a Delaware corporation, its General Partner
By: /s/ Daniel D. Boeckman
------------------------------------------------
Daniel D. Boeckman, Executive Vice President
</TABLE>
23
<PAGE> 24
EXHIBIT A TO GUARANTY
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date: ____________, __
To: Brazos Automotive Properties, L.P. and
The Chase Manhattan Bank, as Agent
Ladies and Gentlemen:
Reference is made to that certain Guaranty dated as of September *,
1998 (as amended or restated from time to time, with terms herein as therein
defined, the "GUARANTY") by Monro Muffler Brake, Inc., a New York corporation
(the "GUARANTOR") in favor of Brazos Automotive Properties, L.P., a Delaware
limited partnership (the "LESSOR").
The undersigned Responsible Officer hereby certifies as of the date
hereof that he/she is the __________________________ of Guarantor, and that, as
such, he/she is authorized to execute and deliver this Certificate to the Lessor
and Agent on behalf of Lessor, and that:
The financial covenant analysis and information set forth on SCHEDULE 1
attached hereto are true and accurate on and as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of_______________, ____.
MONRO MUFFLER BRAKE, INC.,
a New York corporation
By:__________________________________
Name:________________________________
Title:_______________________________
24
<PAGE> 25
ANNEX I
FINANCIAL COVENANTS CALCULATION WORKSHEET
25
<PAGE> 26
Date: _______________, __
For the Fiscal Quarter/Year
ended ___________, __
SCHEDULE 1
to the Compliance Certificate
($ in 000's)
(all calculations are for Guarantor and its Subsidiaries
on a consolidated basis)
26
<PAGE> 27
SCHEDULE 6(a)
JURISDICTIONS OF INCORPORATION AND BUSINESS
-------------------------------------------
<TABLE>
<CAPTION>
INCORPORATED
COMPANY OR ORGANIZED IN: DOES BUSINESS IN:
- ------- ---------------- -----------------
<S> <C> <C>
Monro Muffler Brake, Inc. NY CT
DE
District of Columbia*
IN
MA
MD
MI
NH
NJ
NY** ***
NC
OH
PA
RI
SC
VA
VT
WV
Monro Service Corporation DE NY** ***
Speedy Holding Corp. DE NY** ***
Monro Leasing, LLC DE NY** ***
- ----------------------------
* The Company is qualified to do business in the District of Columbia but does not
presently conduct business in that jurisdiction. The Company may choose to withdraw
its qualification in that jurisdiction at a future date.
** Indicates state in which principal place of business is located.
*** Indicates state in which chief executive office is located.
**** Speedy Holding Corp. will be merged into the Guarantor on or prior to the Closing
Date.
</TABLE>
27
<PAGE> 28
SCHEDULE 6(b)
CORPORATE STRUCTURE
-------------------
<TABLE>
<CAPTION>
PARENT SUBSIDIARY % OWNERSHIP
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Monro Muffler Brake, Inc. Monro Service Corporation 100%
Monro Leasing, LLC 100%
</TABLE>
28
<PAGE> 29
SCHEDULE 6(f)
LITIGATION
----------
[NONE]
29
<PAGE> 30
SCHEDULE 6(h)
ENVIRONMENTAL MATTERS
[NONE]
30
<PAGE> 31
SCHEDULE 6(j)
PERMITTED LIENS
---------------
1. Liens now or hereafter securing the Obligation.
2. Any Lien securing Debt permitted in ITEMS 3 OR 5 of SCHEDULE 6(n)
incurred for the purchase or capital lease of one or more fixed or
capital assets if such Lien encumbers only the assets so purchased or
leased.
3. Pledges or deposits made to secure payment of workers' compensation,
unemployment insurance, or other forms of governmental insurance or
benefits or to participate in any fund in connection with workers'
compensation, unemployment insurance, pensions, or other social
security programs.
4. Good-faith pledges or deposits made to secure performance of bids,
tenders, contracts (other than for the repayment of borrowed money), or
leases, or to secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds in the ordinary course
of business.
5. The following, if (a) no amounts are due and payable and no Lien has
been filed (or agreed to), (b) (i) the validity or amount secured
thereby is being contested in good faith by lawful proceedings
diligently conducted, (ii) reserve or other provision required by GAAP
has been made, and (iii) levy and execution thereon have been (and
continue to be) stayed or payment thereof is covered in full (subject
to the customary deductible) by insurance, or (c) with respect to
CLAUSES a., b. AND c. below, such Liens secure amounts which, in the
aggregate, do not exceed $1,000,000 at any time, and neither the value
nor use of the property in the Company's business in question are
materially affected:
a. Liens for Taxes;
b. Liens upon property, including any attachment of property or
other legal process prior to adjudication of a dispute on the
merits; and
c. Liens imposed by operation of law (including, without
limitation, Liens of mechanics, materialmen, warehousemen,
carriers and landlords and similar Liens).
6. Any interest or title of a lessor in assets being leased to a Company.
7. Liens arising from UCC-1 financing statements in respect of leases
permitted under this Agreement.
8. Easements, zoning restrictions and rights-of-way on real property that
do not secure any obligations for borrowed money.
9. The Financing Statements listed on attached EXHIBIT A.
10. Liens in favor of Brazos Automotive Properties, L.P. ("Lessor")
securing obligations under the Guaranty dated as of September 15, 1998
of Borrower in favor of Lessor.
31
<PAGE> 32
EXHIBIT A
---------
MONRO MUFFLER BRAKE, INC.
UCC FILINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
STATE FILING DATE FILE NUMBER SECURED PARTY
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York 10/6/93 211239 Central Trust Company
- ------------------------------------------------------------------------------------------------------
New York 1/29/93 020976 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 3/30/93 066592 Chase Equipment Leasing, Inc.
- ------------------------------------------------------------------------------------------------------
New York 4/8/93 075797 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 4/9/93 076671 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 4/13/93 079233 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 4/12/94 070847 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 10/2/95 198583 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/17/98 177075 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/17/98 177080 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/28/98 186037 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/28/98 186043 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
New York 1/3/84 1559 Central Trust Company
- ------------------------------------------------------------------------------------------------------
New York 1/29/93 020976 The Chase Manhattan
- ------------------------------------------------------------------------------------------------------
New York 3/30/93 066592 Chase Equipment Leasing Inc.
- ------------------------------------------------------------------------------------------------------
New York 4/8/93 075797 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 4/9/93 076671 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 4/13/93 079233 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 4/12/94 070847 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 10/2/95 198583 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/17/98 177075 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/17/98 177080 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/28/98 186037 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 33
<TABLE>
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rhode Island 8/28/98 186043 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
New York 10/14/87 15670762 Chase Lincoln First Bank
- ------------------------------------------------------------------------------------------------------
New York 10/14/87 1567066 Chase Lincoln First Bank
- ------------------------------------------------------------------------------------------------------
New York 10/14/87 1567066 Chase Lincoln First Bank
- ------------------------------------------------------------------------------------------------------
New York 8/31/92 21150244 Chase Lincoln First Bank
- ------------------------------------------------------------------------------------------------------
New York 3/24/93 21771365 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 3/24/93 21771369 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 3/24/93 21771373 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 10/23/95 24790120 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 3/24/93 1002886 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 4/12/94 1053129 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 10/2/95 1648425 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 10/10/95 1653901 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 10/23/95 1653394 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 10/23/95 1653399 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 1/29/93 139360 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
New York 4/14/93 139360 The Chase Manhattan Bank
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/21/98 518658 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/21/98 518659 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
Rhode Island 8/21/98 518660 Fleet Capital Corporation
- ------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 34
SCHEDULE 6(l)
TRANSACTIONS WITH AFFILIATES
----------------------------
Certain (a) principal shareholders/directors of the Guarantor, (b) partnerships
in which such persons have interests or (c) trusts of which members of their
facilities are beneficiaries are lessors of certain facilities to the Guarantor.
Payments under such operating and capital leases amounted to $1,786,000,
$1,828,000 and $1,688,000 for the years ended March 31, 1998, 1997 and 1996,
respectively. Amounts payable under these lease agreements totaled $82,000 and
$88,000, respectively, at March 31, 1998 and 1997.
No related party leases, other than renewals or modifications of leases on
existing stores, have been entered into since May 1989 and no new leases are
contemplated.
In June 1991, the Guarantor entered into a management agreement effective July
1, 1991, with Peter J. Solomon Company Limited ("PJSC") pursuant to which PJSC
provides to the Guarantor strategic and financial advice relating to financing,
capital structure, mergers and acquisitions and offensive/defensive positioning
for a fee of $160,000 per year (plus reimbursement of out-of-pocket expenses).
Pursuant to such agreement, the Guarantor has agreed to indemnify PJSC against
certain liabilities. In addition, PJSC, from time to time, provides additional
investment banking services to the Guarantor for customary fees. The firm is
providing financial advisory services to the Guarantor in connection with the
acquisition of and financing for the Speedy Stores. Peter J. Solomon, Chairman
of the Board and principal shareholder of the Guarantor, is Chairman of PJSC.
34
<PAGE> 35
SCHEDULE 6(n)
PERMITTED DEBT
--------------
30. The Obligation under the Chase Credit Agreement.
31. Debt arising from endorsing negotiable instruments for collection in
the ordinary course of business.
32. Capital Leases.
33. Current liabilities incurred in the ordinary course of business.
34. Purchase money Debt limited to fixed or capital assets.
35. Trade payables that are for goods furnished or services rendered in the
ordinary course of business and that are payable in accordance with
customary trade terms.
36. Debt of the Guarantor issued after the Closing Date and made
subordinate to the Obligation in terms reasonably satisfactory to the
Agent; provided however, that at the time of and after giving effect to
the issuance thereof, no Default or Potential Default shall have
occurred and be continuing and the proceeds will be applied to the
Facilities to the extent required under SECTION 3.2.
37. Debt listed below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
AMOUNT INTEREST
Q/3 % MATURITY
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CHASE MTG-STORE 120 154,282 LIBOR+100BP Sep-98
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 124 154,733 LIBOR+100BP Sep-98
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 126 160,125 LIBOR+100BP Sep-98
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 137 229,547 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 140 200,380 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 143 273,797 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 146 246,116 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 160 531,563 LIBOR+100BP Apr-01
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 162 278,593 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 164 287,969 LIBOR+100BP Feb-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 168 237,890 LIBOR+100BP Feb-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 168 240,906 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 172 243,375 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 36
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
AMOUNT INTEREST
Q/3 % MATURITY
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CHASE MTG-STORE 177 234,140 LIBOR+100BP Feb-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 179 251,582 LIBOR+100BP Feb-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 183 339,809 LIBOR+100BP Apr-01
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 184 314,453 LIBOR+100BP Feb-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 185 318,047 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 186 221,250 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 190 253,969 LIBOR+100BP Apr-01
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 191 198,125 LIBOR+100BP Apr-00
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 192 285,313 LIBOR+100BP Apr-01
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 193 313,031 LIBOR+100BP Apr-01
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 205 310,500 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 207 352,547 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 210 323,438 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 212 371,053 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 216 316,080 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 226 404,297 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 229 388,125 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 230 462,808 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
CHASE MTG-STORE 236 323,438 LIBOR+100BP Sep-02
- -------------------------------------------------------------------------------------------------------
TERM NOTE R MORTLAND 138,107 0 Mar-08
- -------------------------------------------------------------------------------------------------------
D'ANDREA TIRE 228,376 8.00 FIXED Feb-03
- -------------------------------------------------------------------------------------------------------
MASS MUTUAL 1,833,334 10.55 FIXED Apr-99
- -------------------------------------------------------------------------------------------------------
CITY OF ROCHESTER 660,000 0 Oct-14
- -------------------------------------------------------------------------------------------------------
CHASE MTG HQ 2,557,312 LIBOR+100BP Sep-05
- -------------------------------------------------------------------------------------------------------
CHASE TERM LOAN-HQ 486,281 LIBOR+100BP Sep-03
- -------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 37
SCHEDULE 8(h)
EXISTING SALE\LEASEBACK PROPERTIES
----------------------------------
<TABLE>
<CAPTION>
Shop Address City County State Zip
- ---- ------- ---- ------ ----- ---
<C> <S> <C> <C> <C> <C>
173 2196 W. Union Blvd. Bethlehem Northhampton PA 18018
208 3702 Franklin Road SW South Roanoke Botetourt VA 24014
214 2055 Queen Street York York PA 17403
238 1014 Coshocton Avenue Mount Vernon Knox OH 43050
244 5200 Library Road (Route 88) Bethel Park Allegheny PA 15102
249 190 Milan Avenue Norwalk Hurron OH 44857
259 3010 Easton Avenue Bethlehem Northhampton PA 18017
108 4248 Sunset Blvd. Steubenville Jefferson OH 43052
278 3411 Milan Road Sandusky Erie OH 44870
283 5021 Scatterfield Road Anderson Madison IN 46013
107 512 Columbia Turnpike East Greenbush Rensselaer NY 12144
109 174 Market Street Potsdam St. Lawrence NY 13676
112 923 7th Avenue/corner 10th St. Beaver Falls Beaver PA 15010
113 16032 State Route 170 E. Liverpool Columbiana OH 43920
114 730 Canton Street Ogdensburg St. Lawrence NY 12901
116 37 Smithfield Blvd. Plattsburgh Clinton NY 12901
117 9435 Lincoln Highway, Route 30 Irwin Westmoreland PA 15642
</TABLE>
37
<PAGE> 1
EXHIBIT 10.9
AGREEMENT OF SUBLEASE
AGREEMENT OF SUBLEASE (this "Sublease"), made as of September 15, 1998,
by and between MONRO LEASING, LLC, a Delaware limited liability company, having
an address at 200 Holleder Parkway, Rochester, New York 14615 ("Sublandlord"),
and MONRO MUFFLER BRAKE, INC., a New York corporation, having an address at 200
Holleder Parkway, Rochester, New York 14615 ("Subtenant").
W I T N E S S E T H:
WHEREAS:
A. Pursuant to (i) the Agreement for Ground Lease, (ii) the Agreement
for Facilities Lease, (iii) the Ground Lease Agreement and (iv) the Facilities
Lease Agreement, each of even date herewith, each between Brazos Automotive
Properties, L.P. ("Landlord"), as landlord, and Sublandlord, as lessee (together
with all amendments and modifications thereto, collectively, the "Lease", a copy
of each of which is annexed hereto as Exhibit A), Landlord has leased or
subleased to Sublandlord (a) the properties described in the Property Leasing
Record, executed by the Landlord and Sublandlord pursuant to the Ground Lease
Agreement and (b) the facilities described in the Facility Leasing Record
executed by Landlord and Sublandlord pursuant to the Facilities Lease Agreement
(as such properties and facilities may be added to or subtracted from, from time
to time, as reflected in one or more modifications to or replacements of such
Leasing Records, each such modification or replacement being deemed an amendment
hereto, collectively, the "Subleased Property").
B. Subtenant desires to sublease (or sub-sublease, as applicable,) from
Sublandlord, and Sublandlord is willing to sublease (or sub-sublease, as
applicable,) to Subtenant, the Subleased Property, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Sublandlord and Subtenant agree as follows:
1. SUBLEASING OF SUBLEASED PROPERTY; CONDITION OF SUBLEASED PROPERTY.
(a) Sublandlord hereby subleases (or sub-sublease, as applicable,) to
Subtenant, and Subtenant hereby hires from Sublandlord, the Subleased Property,
upon and subject to all of the terms, covenants, rentals and conditions
hereinafter set forth. Capitalized terms not otherwise defined in this Sublease
shall have the meanings ascribed to them in the Lease.
(b) Subtenant shall accept the Subleased Property in its condition and
state of repair on the date hereof, or such later date on which any Subleased
Property becomes subject to the Lease, "as is", and Subtenant expressly
acknowledges and agrees that neither Landlord nor Sublandlord has made any
representations with respect to the Subleased Property.
<PAGE> 2
2. TERM. The term (the "Term") of this Sublease shall commence on the
date hereof, or such later date on which Landlord shall consent in writing to
this Sublease (the "Commencement Date") and shall expire upon the termination of
the Lease Term (the "Expiration Date"), unless sooner terminated as hereinafter
provided.
3. RENT.
(a) Subtenant shall pay to Sublandlord, when due and in the manner
required by the Lease, all amounts payable by Sublandlord to Landlord pursuant
to the Lease, including, without limitation, Basic Rent and Additional Rent,
which amounts shall be deemed to be and shall constitute rent for all purposes
hereunder and, in the event of any non-payment thereof, Sublandlord shall have
all of the rights and remedies provided to Landlord in the Lease for such
non-payment; provided that Subtenant shall provide to Sublandlord a copy of each
notice or demand received from Landlord within the applicable time periods
provided by Section 14 hereof.
4. CARE, SURRENDER AND RESTORATION OF THE SUBLEASED PROPERTY.
(a) Without limiting any other provision of this Sublease or the Lease,
Subtenant shall operate and maintain the Subleased Property in the manner
required by the Lease, and shall comply with all legal requirements and
insurance requirements applicable to the Subleased Property and Subtenant's use
or manner of use thereof which are imposed on Sublandlord as tenant under the
Lease.
(b) Upon the Expiration Date or earlier termination of the Term,
Subtenant shall quit and surrender the Subleased Property to Sublandlord, in the
same order and condition in which Subtenant is required to surrender the
Subleased Property to Landlord pursuant to the provisions of the Lease.
Subtenant shall observe and perform each of the covenants contained in this
Sublease and Subtenant's obligations hereunder shall survive the Expiration Date
or earlier termination of this Sublease.
5. USE. Subtenant shall use and occupy the Subleased Property for the
purposes for which, and in the manner in which, Subtenant is permitted to use
and occupy the Subleased Property pursuant to the provisions of the Lease, and
for no other purpose.
6. SUBORDINATION TO AND INCORPORATION OF TERMS OF THE LEASE.
(a) This Sublease is in all respects subject and subordinate to all of
the terms, provisions, covenants, stipulations, conditions and agreements of the
Lease, and, except as otherwise expressly provided in this Sublease, all of the
terms, provisions, covenants, stipulations, conditions, rights, obligations,
remedies and agreements of the Lease are incorporated in this Sublease by
reference and made a part hereof as if herein set forth at length, and shall, as
between Sublandlord and Subtenant (as if they were the Landlord and Tenant,
respectively, under the Lease, and as if the word "Facilities Lease" or "Ground
Lease", as the case may be, were "Sublease"), constitute the terms of this
Sublease, except for the recitals of the Lease and Sections 2.5, 2.6, 2.8, 3.3
and 3.5 of the Ground Lease Agreement and the Facilities Lease Agreement. In
furtherance of the foregoing, Subtenant shall not take any action or do or
permit to be done anything which (i) is or may be prohibited to Sublandlord, as
tenant under the Lease, (ii) might
2
<PAGE> 3
result in a violation of or default under any of the terms, covenants,
conditions or provisions of the Lease or any other instrument to which this
Sublease is subordinate, or (iii) would result in any additional cost or other
liability to Sublandlord. This clause shall be self-operative and no further
instrument of subordination shall be required, but Subtenant shall execute
promptly any certificate confirming such subordination that Sublandlord may
request. In the event of any inconsistency between this Sublease and the Lease,
such inconsistency shall be resolved in favor of that obligation which is more
onerous to Subtenant or that restriction which is more restrictive of Subtenant,
as the case may be.
(b) In the event that the Lease is canceled or terminated, Landlord may
at its option take over all of the right, title and interest of Sublandlord
under this Sublease, and Subtenant shall, at the option of Landlord, attorn to
and recognize Landlord, as Sublandlord pursuant to the then executory provisions
of this Sublease. Subtenant shall, promptly upon Landlord's request, execute and
deliver all instruments necessary or appropriate to confirm such attornment and
recognition.
(c) This Sublease, and all rights of Subtenant hereunder, are and shall
be subject and subordinate in all respects to the Credit Agreement, the Chase
Credit Agreement, each Property Leasing Record, each Facility Leasing Record,
the Facilities Lease, the Ground Lease, the Agreement for Facilities Lease, the
Agreement for Ground Lease, any security agreement executed in connection with
the foregoing, all Assignments, and any other instrument, mortgage, encumbrance
or lien pursuant to any of the foregoing, and to all renewals, extensions,
supplements, amendments, modifications, consolidations and replacements thereof
or thereto, substitutions therefor, and advances made thereunder. This Section
6(c) shall be self-operative and no further instrument of subordination shall be
required. In confirmation of such subordination, however, Subtenant shall
promptly execute and deliver any instrument that Landlord or any holder of a
Lien pursuant to any of the foregoing may request to evidence such
subordination.
7. SUBTENANT'S OBLIGATIONS. Except as specifically set forth herein to
the contrary, all acts to be performed by, and all of the terms, provisions,
covenants, stipulations, conditions, obligations and agreements to be observed
by, Sublandlord, as tenant under the Lease, shall, to the extent that the same
relate to the Subleased Property, be performed and observed by Subtenant, and
Subtenant's obligations in respect thereof shall run to Sublandlord or Landlord,
as Sublandlord may determine to be appropriate or as may be required by the
respective interests of Sublandlord and Landlord. Subtenant shall indemnify
Sublandlord against, and hold Sublandlord harmless from, all liabilities,
losses, obligations, damages, penalties, claims, costs and expenses (including,
without limitation, attorneys' fees and other costs) which are paid, suffered or
incurred by Sublandlord as a result of the nonperformance or nonobservance of
any such terms, provisions, covenants, stipulations, conditions, obligations or
agreements by Subtenant.
8. SUBLANDLORD'S OBLIGATIONS. Notwithstanding anything contained in
this Sublease to the contrary, Sublandlord shall have no responsibility to
Subtenant for, and shall not be required to provide, any of the services or make
any of the repairs or restorations which Landlord has agreed to make or provide,
or cause to be made or provided, under the Lease, if any, and Subtenant shall
rely upon, and look solely to, Landlord for the provision of such services and
the performance of such repairs and restorations. Subtenant shall not make any
claim against
3
<PAGE> 4
Sublandlord for any damage which may result from, nor shall Subtenant's
obligations hereunder, including, without limitation, Subtenant's obligation to
pay all Fixed Rent, Additional Rent and other sums when due, be impaired by
reason of, (a) the failure of Landlord to keep, observe or perform any of its
obligations under the Lease, or (b) the acts or omissions of Landlord or any of
its agents, contractors, servants, employees, invitees or licensees.
9. COVENANTS WITH RESPECT TO THE LEASE. In the event that Subtenant
shall be in default of any term, provision, covenant, stipulation, condition,
obligation or agreement of, or shall fail to honor any obligation under, this
Sublease, Sublandlord, on giving the notice required hereunder, and subject to
the right, if any, of Subtenant to cure any such default within any applicable
grace period provided hereunder, shall have available to it all of the remedies
available to Landlord under the Lease in the event of a like default or failure
on the part of Sublandlord, as tenant thereunder. Such remedies shall be in
addition to all other remedies available to Sublandlord at law or in equity.
10. BROKER. Each party represents and warrants to the other that it has
not dealt with any broker or finder in connection with this Sublease, and each
party hereby agrees to indemnify and hold harmless the other from and against
any and all liabilities, losses, obligations, damages, penalties, claims, costs
and expenses (including, without limitation, attorneys' fees and other charges)
arising out of any claim, demand or proceeding for a real estate brokerage
commission, finder's fee or other compensation made by any person or entity in
connection with this Sublease claiming to have dealt with such indemnifying
party.
11. INDEMNIFICATION OF SUBLANDLORD. Subtenant agrees to indemnify
Sublandlord against and hold Sublandlord harmless from, any and all liabilities,
losses, obligations, damages, penalties, claims, costs and expenses (including,
without limitation, attorneys' fees and other charges) which are paid, suffered
or incurred by Sublandlord as a result of (a) any personal injuries or property
damage occurring in, on or about the Subleased Property during the Term, (b) any
work or thing done, or any condition created, by Subtenant in, on or about the
Subleased Property during the Term, or (c) any act or omission of Subtenant or
Subtenant's agents, contractors, servants, employees, invitees or licensees
during the Term.
12. TERMINATION OF THE LEASE. If the term of the Lease is terminated
prior to the Expiration Date, then this Sublease shall immediately terminate and
Sublandlord shall not be liable to Subtenant by reason thereof.
13. APPROVALS OR CONSENTS. Anything to the contrary herein
notwithstanding, in the event any consent by Sublandlord is required for any
action by Subtenant hereunder, such consent shall be deemed granted upon the
granting of Landlord's consent to such action. If Sublandlord shall receive any
request for consent or approval made by Subtenant for which Landlord's consent
or approval is required, then Sublandlord hereby agrees to promptly furnish to
Landlord a copy of such request.
14. TIME LIMITS. The parties agree that unless otherwise expressly
modified herein, the time limits set forth in the Lease for the giving of
notices, making demands, payment of any sum, the performance of any act,
condition or covenant, or the exercise of any right, remedy or option, are
modified for the purpose of this Sublease by shortening the same in each
instance
4
<PAGE> 5
by three (3) Business Days so that notices may be given, demands made, any act,
condition or covenant performed and any right or remedy hereunder exercised, by
Sublandlord or Subtenant, as the case may be, within the time limits relating
thereto contained in the Lease. Sublandlord and Subtenant shall, promptly after
receipt thereof, furnish to each other a copy of each notice, demand or other
communication received from Landlord with respect to the Subleased Property.
15. NOTICES. Any notice, request or demand (each, a "Notice") permitted
or required to be given by the terms and provisions of this Sublease, or by any
law or governmental regulation, either by Sublandlord or Subtenant, shall be in
writing. Unless otherwise required by law or regulation, all Notices shall be
given and shall be deemed to have been served and given by either of the parties
hereto and received by the other party, on the date when the party giving the
Notice (a) shall have delivered the Notice by hand or (b) shall have mailed the
Notice by registered or certified mail, return receipt requested, addressed to
the other party, at the address of the other party first set forth above. Either
party hereto may designate different or additional addresses for Notices to such
party by serving notice of such change in accordance with this Paragraph 15.
16. MISCELLANEOUS.
(a) This Sublease may not be amended, extended, renewed, terminated or
otherwise modified except by a written instrument signed by the parties.
(b) The provisions of this Sublease shall be governed and interpreted
in accordance with the laws of the State of New York.
(c) The obligations of Sublandlord under this Sublease shall not be
binding upon Sublandlord named herein after the assignment or transfer of its
interest in and to the Lease, and in the event of any such assignment or
transfer, Sublandlord shall be and hereby is entirely freed and relieved of all
covenants and obligations of Sublandlord hereunder. Subtenant and Sublandlord
shall each look solely to the other party hereto to enforce such other party's
obligations hereunder and no partner, shareholder, director, officer, principal,
employee or agent, directly and indirectly, of such other party (collectively,
the "Exculpated Parties") shall be personally liable for the performance of such
other party's obligations under this Sublease, and neither Subtenant nor
Sublandlord shall seek any damages or other legal or equitable remedy against
any of the Exculpated Parties.
(d) All understandings and agreements heretofore had between
Sublandlord and Subtenant are merged in this Sublease, which alone fully and
completely expresses their agreement with respect to the subject matter hereof.
This Sublease has been executed and delivered after full investigation by each
of the parties hereto, and neither party hereto has relied upon any statement,
representation or warranty which is not specifically set forth in this Sublease.
(e) This Sublease does not constitute an offer by Sublandlord to
sublease the Subleased Property to Subtenant, and Subtenant shall have no rights
with respect to the subleasing of the Subleased Property unless and until
Sublandlord, in its sole and absolute discretion, elects to be bound hereby by
executing and unconditionally delivering to Subtenant an original counterpart of
this Sublease.
5
<PAGE> 6
IN WITNESS WHEREOF, this Sublease has been duly executed as of the day
and year first above written.
Sublandlord:
MONRO LEASING, LLC
By Monro Muffler Brake, Inc.,
its Sole Member
By: /s/ Catherine D'Amico
---------------------------------------
Name: Catherine D'Amico
Title: Senior Vice President and Chief
Financial Officer
Subtenant:
MONRO MUFFLER BRAKE, INC.
By: /s/ Catherine D'Amico
--------------------------------------
Name: Catherine D'Amico
Title: Senior Vice President and Chief
Financial Officer
Brazos Automotive Properties, L.P.,
as Landlord, has executed the foregoing
Sublease below solely for the
purpose of consenting thereto:
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
By Brazos Automotive Properties Management, Inc.
its General Partner
By: /s/ Daniel D. Boeckman
----------------------------------
Name: Daniel D. Boeckman
Title: Executive Vice President
6
<PAGE> 1
MONRO MUFFLER BRAKE, INC. Exhibit 11
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
Earnings per share for each period was computed by dividing net income
for such period by the weighted average number of shares of Common Stock and
common stock equivalents outstanding during such period. All share data have
been restated to reflect the 5% stock dividend paid June 18, 1998.
(See Note 2 of Notes to Consolidated Financial Statements).
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
DILUTED
- -------
EARNINGS
Net Income $ 2,411 $ 3,352 $ 6,268 $ 6,769
========== ========== ========== ==========
SHARES
Weighted average number of common shares 8,277 8,260 8,291 8,251
Assuming conversion of Class C Convertible
Preferred Stock 636 636 636 636
Dilutive effect of outstanding options 34 142 66 150
---------- ---------- ---------- ----------
Total common and common equivalent shares 8,947 9,038 8,993 9,037
========== ========== ========== ==========
DILUTED EARNINGS PER SHARE $ .27 $ .37 $ .70 $ .75
========== ========== ========== ==========
BASIC
- -----
EARNINGS
Net Income $ 2,411 $ 3,352 $ 6,268 $ 6,769
========== ========== ========== ==========
SHARES
Weighted average number of common shares 8,277 8,260 8,291 8,251
========== ========== ========== ==========
EARNINGS PER SHARE $ .29 $ .41 $ .76 $ .82
========== ========== ========== ==========
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,454
<SECURITIES> 0
<RECEIVABLES> 960
<ALLOWANCES> 0
<INVENTORY> 39,199
<CURRENT-ASSETS> 53,327
<PP&E> 189,846
<DEPRECIATION> 53,590
<TOTAL-ASSETS> 199,846
<CURRENT-LIABILITIES> 36,439
<BONDS> 0
0
138
<COMMON> 83
<OTHER-SE> 83,065
<TOTAL-LIABILITY-AND-EQUITY> 199,846
<SALES> 90,498
<TOTAL-REVENUES> 90,498
<CGS> 51,090
<TOTAL-COSTS> 51,090
<OTHER-EXPENSES> 26,720
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,982
<INCOME-PRETAX> 10,404
<INCOME-TAX> 4,136
<INCOME-CONTINUING> 6,268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,268
<EPS-PRIMARY> .76
<EPS-DILUTED> .70
</TABLE>
