MASTER LEASE
Dated as of November 13, 1995
Between
STATE STREET BANK AND TRUST COMPANY
(NOT INDIVIDUALLY BUT SOLELY AS TRUSTEE)
Lessor
and
THE PEP BOYS - MANNY, MOE & JACK
and Certain Subsidiaries Thereof
Lessee
THIS LEASE HAS BEEN MANUALLY EXECUTED IN COUNTERPARTS NUMBERED
CONSECUTIVELY FROM 1 TO 6. TO THE EXTENT, IF ANY, THAT THIS LEASE
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE TRANSFER
OR POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN
COUNTERPART NO. 1.
This is Counterpart No. ______ TABLE OF CONTENTS
(Not a part of the Lease)
Section Page
1. Lease of Property; Title and Condition. . . . . . . . . . . . . . . 2
2. Use; Quiet Enjoyment; Environmental Matters . . . . . . . . . . . . 5
3. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5. Net Lease; Non-Terminability. . . . . . . . . . . . . . . . . . . . 10
6. Taxes and Assessments; Compliance with Law; Certain Agreements. . . 12
7. Matters of Title; Assignability . . . . . . . . . . . . . . . . . . 15
8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. Maintenance and Repair. . . . . . . . . . . . . . . . . . . . . . . 19
10. Alterations; Additions. . . . . . . . . . . . . . . . . . . . . . . 19
11. Lessee's Right to Contest Real Property Taxes . . . . . . . . . . . 21
12. Condemnation and Casualty . . . . . . . . . . . . . . . . . . . . . 21
13. Early Termination Rights. . . . . . . . . . . . . . . . . . . . . . 25
14. Offer to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . 26
15. Procedure Upon Purchase . . . . . . . . . . . . . . . . . . . . . . 28
16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17. Assignment; Subletting. . . . . . . . . . . . . . . . . . . . . . . 32
18. Permitted Contests. . . . . . . . . . . . . . . . . . . . . . . . . 33
19. Default Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 34
20. Additional Rights . . . . . . . . . . . . . . . . . . . . . . . . . 39
21. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
22. No Default Certificate. . . . . . . . . . . . . . . . . . . . . . . 42
23. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
24. Separability; Binding Effect; Governing Law; Non-Recourse . . . . . 43
25. Headings and Table of Contents. . . . . . . . . . . . . . . . . . . 45
26. Waiver of Landlord's Lien . . . . . . . . . . . . . . . . . . . . . 45
2727. Lessee's Obligation at Expiration. . . . . . . . . . . . . . . 45
28. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
29. Short Form Lease. . . . . . . . . . . . . . . . . . . . . . . . . . 47
30. Protection of Instrument Holders. . . . . . . . . . . . . . . . . . 47
31. Additional Lessees. . . . . . . . . . . . . . . . . . . . . . . . . 48
32. Certain Representations and Covenants of Lessee . . . . . . . . . . 48
33. Waiver Of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . 55
34. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
35. Special Local Provisions. . . . . . . . . . . . . . . . . . . . . . 55
ANNEX I - Approved Self-Insurance Program
EXHIBIT A - Net Rent; Additional Rent
EXHIBIT B - Form of Supplement for Addition of Parcels
EXHIBIT C - Construction Addendum
EXHIBIT D - Form of Construction Supplement
EXHIBIT E - Form of SNDA
EXHIBIT F - Form of Supplement for Additional Lessee(s)
Table of Defined Terms
(Not a part of the Lease)
Term Section Where Defined
Acquisition Price Exhibit A
Additional Improvements Section 10.(a)
Additional Lessee Section 31.(a)
Additional Rent Section 4.(b)
Adjustment Date Exhibit A
Advances Preliminary Statement
Agent Preliminary Statement
Applicable Rate Exhibit A
Applicable Spread Exhibit A
Appraised Value Section 27.(b)
Break Costs Exhibit A
Business Day Exhibit A
Casualty Section 12.(a)
Change of Control Section 32.(c)
CLI Preliminary Statement
Closing Costs Section 15.(b)
Closing Date Section 15.(a)
Code Section 32.(a)
Commencement Date Section 3.(a)
Condemnation Section 12.(a)
Construction Advance Section 1.(d)
Construction Failure Payment Exhibit C
Construction Failure Exhibit C
Construction Supplement Section 1.(d)
Contingent Rent Payment Exhibit A
Declaration of Trust Preamble
Default Rate Section 4.(c)
Early Termination Fee Section 13.(a)
Early Termination Notice Section 13.(b)
Environmental Event Section 2.(c)
Environmental Indemnity Agreement Section 8.(e)
Environmental Laws Section 2.(c)
ERISA Section 32.(a)
Event of Default Section 19.(a)
Excess Funds Section 12.(c)
Expiration Date Section 3.(a)
Facility Agreements Section 6.(b)
GAAP Section 32.(c)
Hazardous Materials Section 2.(c)
Impositions Section 6.(a)
Improvements Preliminary Statement
Incipient Default Section 8.(b)
Increased Costs Exhibit A
Indemnified Party Section 8.(a)
Instrument Holders Preliminary Statement
Instruments Preliminary Statement
Insurance Requirements Section 16
Law Section 5.(a)
Lease Preamble
Lease Guarantee Preliminary Statement
Lease Guarantor Preliminary Statement
Legal Requirements Section 6.(b)
Lessee Preamble
Lessee Parent Preamble
Lessee's Equipment Preliminary Statement
Lessor Preamble
LIBO Business Day Exhibit A
LIBO Rate Reserve Percentage Exhibit A
LIBO Rate Exhibit A
Lien Section 7.(a)
Losses Section 8.(a)
Material Improvements Section 10.(a)
Minimum Price Section 27.(b)
Net Proceeds Section 12.(a)
Net Rent Section 4.(a)
New Improvements Preliminary Statement
Nominal Appraised Value Section 27.(b)
Non-Disturbance Agreement Section 30
Notice Date Section 19.(a)(viii)
Offer Purchase Price Section 15.(b)
Offer to Purchase Section 14.(a)
Parcel(s) Preliminary Statement
Partial Termination Notice Section 13.(a)
Payment Dates Section 4.(a)
PBGC Section 32.(a)
Pep Boys - Delaware Preamble
Pep Boys - California Preamble
Permitted Encumbrances Section 7.(a)
Person Section 32.(c)
Plans Exhibit C
Proceeds Section 12.(a)
Proceeds Trustee Section 12.(a)
Property Preliminary Statement
Required Completion Date Exhibit C
Reserve Costs Exhibit A
SNDA Section 30.(b)
Special Incipient Default Section 8.(b)
Special LIBO Rate Exhibit A
Special Minimum Price Exhibit C
Subsidiary Section 32.(c)
Supplement Section 1.(b)
Tenant Mortgage Section 20.(d)
Term Section 3.(a)
Termination Notice Section 12.(b)
Transaction Agreement Preliminary Statement
Transaction Documents Preliminary Statement
Transaction Mortgage Section 30.(b)
MASTER LEASE
MASTER LEASE dated as of November 13, 1995 ("Lease"), between STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not individually but
solely in its capacity as Trustee under that certain "Declaration of Trust"
(herein so called) dated of even date herewith (in such capacity, and not
individually, "Lessor"), having an address at Two International Place, Fourth
Floor, Boston, Massachusetts 02110, Attn: Corporate Trust Department, THE PEP
BOYS - MANNY, MOE & JACK, a Pennsylvania corporation ("Lessee Parent"), THE PEP
BOYS MANNY, MOE & JACK OF CALIFORNIA, a California corporation ("Pep Boys -
California"), and PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC., a Delaware
corporation ("Pep Boys - Delaware"). Lessee Parent, Pep Boys - California, Pep
Boys - Delaware, and such other Subsidiaries of the Lessee Parent as may become
"Additional Lessees" pursuant to Section 31 hereof are herein referred to,
either singly or collectively, as the context may require, as "Lessee". The
primary business address of Lessee for purposes of this Lease is at 3111
W. Allegheny Avenue, Philadelphia, Pennsylvania 19132.
Preliminary Statement
A. Simultaneously herewith Lessor, Lessee Parent, and Citicorp Leasing,
Inc., a Delaware corporation ("CLI") have entered into a certain Transaction
Agreement (herein so-called) pursuant to which Lessor will from time to time
purchase various parcels of real property (each a "Parcel") to be leased to one
of parties constituting the Lessee hereunder. In each case the term "Parcel"
will be deemed to include all agreements, easements, licenses, rights of way
or use, appurtenances, tenements, hereditaments, and other rights and benefits
belonging or pertaining to such parcels of property or any improvements thereon.
B. Any improvements from time to time located on the Parcels that are
subject to this Lease (including without limitation, New Improvements, as
hereinafter defined) are collectively referred to as the "Improvements", while
all Parcels and Improvements subject to this Lease at any relevant time are
collectively referred to as the "Property". It is acknowledged that for all
purposes of this Lease the term "Property" does not include any trade fixtures,
inventory, equipment, or other movable personal property owned or leased by
Lessee and used in the conduct of its business ("Lessee's Equipment"), but the
Property does include (and "Lessee's Equipment" does not include) all equipment
and fixtures that constitute a part of the plumbing, HVAC, or other operating
systems of the buildings and improvements themselves.
C. Lessor will acquire the Parcels from time to time using the proceeds
of Advances (as defined in the Transaction Agreement) under certain A-Notes,
B-Notes and Certificates (herein referred to as the "Advances") issued by Lessor
pursuant to the Transaction Agreement to CLI (as the initial "Purchaser") or to
such other financial institutions as may from time to time become "Purchasers"
under the Transaction Agreement.
D. Pursuant to the Transaction Agreement CLI has been appointed as the
initial administrative agent on behalf of itself and the other Instrument
Holders (as defined in the Transaction Agreement) and Purchasers for the
exercise of certain rights and privileges set out in the Transaction Agreement,
the Declaration of Trust, this Lease, and the other "Transaction Documents".
CLI, acting in such capacity, or any successor administrative agent hereafter
appointed by the Instrument Holders and the Purchasers pursuant to the
Transaction Agreement, is herein referred to as the "Agent".
E. The obligations of the Lessee under this Lease have been guaranteed by
Lessee Parent pursuant to that certain "Lease Guarantee" (herein so-called) of
even date herewith executed by Lessee Parent for the benefit of Lessor, Agent,
and the Instrument Holders. Lessee Parent, in its capacity as the guarantor of
the Lease under the Lease Guarantee, is sometimes herein referred to as the
"Lease Guarantor."
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
1. Lease of Property; Title and Condition.
(a) In consideration of the rents and covenants herein stipulated to
be paid and performed by the Lessee and upon the terms and conditions herein
specified, the Lessor hereby leases the Property to Lessee, and the Lessee
hereby leases the Property from the Lessor.
(b) If at any time Lessee Parent desires Lessor to acquire a Parcel,
together with any Improvements located thereon, for lease to a Lessee hereunder,
Lessee Parent may request that such Parcels and/or Improvements be acquired by
Lessor and subjected to this Lease, thereby becoming a part of the "Property"
covered hereby. The process for the addition of a Parcel to the Property is as
set out in the Transaction Agreement, and no Parcel shall be added to the
Property until the requirements for the addition of such Parcel to the Property
pursuant to the Transaction Agreement have been satisfied and Lessor has
received Advances under the Instruments pursuant to the Transaction Agreement to
provide Lessor with the necessary funds for such purpose. The addition of a
Parcel to the Property shall be effected by a "Supplement" (herein so called)
to this Lease executed by Lessor, Lessee Parent (solely in its capacity as
Lease Guarantor, if the Lessee Parent is not also the Lessee of the Parcel in
question) and the Lessee that will lease such Parcel hereunder (including any
new Additional Lessee, if applicable) in substantially the form attached hereto
as Exhibit "B". The Supplement shall, among other items included therein,
specify the adjustments to the Net Rent and Contingent Rent Payment payable
hereunder as a result of the addition of such Parcel and Improvements to the
Property. Without limitation of the other applicable provisions of the
Transaction Agreement, Lessee acknowledges that after December 31, 1996, Agent
is not required to approve a Supplement that would add an additional Parcel to
the Property, nor any Advance under the Transaction Agreement to provide Lessor
sums necessary to acquire such Parcel, if the Debt Rating (as defined in the
Transaction Agreement) of Lessee Parent is below BBB- (as rated by Standard &
Poor's Corporation) or is below Baa3 (as rated by Moody's Investors Service) or,
if such Debt Rating is at BBB- or Baa3, as applicable, but the Lessee Parent is
listed on "credit-watch" by the applicable rating service.
(c) The Property is leased to the Lessee by Lessor subject to (a)
all applicable Legal Requirements (as defined below); and (b) all Permitted
Encumbrances (as defined below). The execution of a Supplement adding a
Parcel to the Property shall constitute conclusive evidence that the Lessee has
examined the Parcel in question (and any Improvements thereon), and the title
thereto, and has found the same satisfactory for all purposes of this Lease.
(d) If at any time Lessee desires to construct new improvements
("New Improvements") on any Parcel after such Parcel has been added to the
Property, and Lessee desires to receive a Construction Advance from Lessor to
reimburse Lessee for the costs of such construction, Lessee may do so upon
compliance with the provisions set out below. Any such New Improvements shall
be constructed by Lessee in accordance with the terms and conditions contained
in that certain Construction Addendum (herein so called) attached hereto as
Exhibit "C". Upon completion of any such New Improvements in accordance with
the terms and conditions of the Construction Addendum and satisfaction of all
requirements for the Lessor to receive an Advance (herein referred to as a
"Construction Advance") under the Transaction Agreement in the amount needed to
fund such Construction Advance, Lessor and Lessee shall execute a "Construction
Supplement" (herein so called) to this Lease in substantially the form attached
hereto as Exhibit "D". The Construction Supplement shall, among other items
included therein, specify the adjustments to the Net Rent and the Contingent
Rent Payment which result from the applicable Construction Advance. Lessor
shall have no obligation to (i) make a Construction Advance to Lessee in
respect of any New Improvements or (ii) execute the necessary Construction
Supplement with respect to such New Improvements, unless an Advance therefor
has been made to Lessor in accordance with Article I of the Transaction
Agreement. Any New Improvements which are constructed by Lessee, and for which
Lessee receives reimbursement from Lessor pursuant to the Construction Addendum,
shall not be treated as "Additional Improvements" (as defined in Section 10 of
this Lease) for purposes hereof; but rather the construction of such New
Improvements shall be governed by the Construction Addendum. In no event will
Lessee be entitled to receive any Construction Advance after December 31, 1997,
and further, in no event will Lessee be entitled to any such Construction
Advance after December 31, 1996, if, at the time such Construction Advance would
otherwise be made, the Debt Rating (as defined in the Transaction Agreement) of
Lessee Parent is not at least BBB- (as rated by Standard & Poor's Corporation)
and at least Baa3 (as rated by Moody's Investors Service).
(e) In connection with the construction of New Improvements on a
Parcel Lessee may demolish Improvements that were located on the Parcel in
question at the time such Parcel was acquired by Lessor so long as the value
of the Improvements to be demolished was not included in any appraised value
of the Parcel in question at the time such Parcel was acquired by Lessor and
the amount of the Advance made by the Purchaser(s) under the Transaction
Agreement in connection with such acquisition did not include any amount in
respect of the Improvements to be demolished. In the event Lessee is in doubt
as to whether the existing Improvements on any given Parcel are eligible for
demolition as aforesaid, Lessee may request confirmation thereof from Agent.
(f) THE LESSOR MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY OR ANY FIXTURE OR
OTHER ITEM CONSTITUTING A PORTION THEREOF, OR THE LOCATION, USE,
DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY
PARTICULAR PURPOSE, CONDITION, OR DURABILITY THEREOF OR AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, OR AS TO THE
LESSOR'S TITLE THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT BEING
AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE SOLELY BY THE
LESSEE. IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN
THE PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION
THEREOF, WHETHER PATENT OR LATENT, THE LESSOR SHALL HAVE NO
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO EXCEPT TO THE EXTENT
SET FORTH IN SECTION 8(a) BELOW. THE PROVISIONS OF THIS SUBSECTION 1(f)
HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION
AND NEGATION OF ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, BY THE
LESSOR WITH RESPECT TO THE PROPERTY OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANY OTHER LAW, NOW OR HEREAFTER IN
EFFECT. NOTHING IN THIS SECTION 1(e) SHALL BE DEEMED TO LIMIT LESSEE'S
CONTRACTUAL RIGHTS AGAINST LESSOR IN THE EVENT LESSOR VIOLATES ITS
SPECIFIC COVENANTS AND OBLIGATIONS TO LESSEE PURSUANT TO THE
TRANSACTION AGREEMENT OR THIS LEASE, BUT NO SUCH VIOLATION OF THE
TRANSACTION AGREEMENT BY LESSOR SHALL AFFECT LESSEE'S OBLIGATIONS
UNDER THIS LEASE.
2. Use; Quiet Enjoyment; Environmental Matters.
(a) Subject to the other specific terms and provisions hereof, the
Lessee may use the Property for any lawful purpose provided that the value of
the Property is not diminished by any such use. It is expressly agreed that
use of the Property for the operation of automobile parts and/or service centers
is a permitted use, subject to compliance with the other terms and conditions
hereunder, and such use will not be deemed to diminish the value of the
Property. Lessee shall not commit or suffer to be committed upon the Property
any acts or conditions that constitute a nuisance under applicable Law. Lessee
hereby agrees not to engage in any activity, or store upon the Property any
goods and equipment, which would render the property coverage insurance
described in Section 16 hereof void. During the Term the Lessor covenants that,
unless an Event of Default (as defined below) has occurred and is continuing,
Lessor will not, and will not permit any party claiming by, through or under
the Lessor to, interfere with the peaceful and quiet possession and enjoyment
of the Property by the Lessee; provided, however, that the Lessor, the Agent,
or their respective successors, assigns and agents may, upon at least ten (10)
days prior written notice to the Lessee (unless an emergency exists, in which
case only such written notice as shall be reasonably practicable under the
circumstances shall be necessary), enter upon and examine the Property or any
part thereof. Lessee will always be permitted to have a representative of
Lessee accompany the representative or agent of Lessor or Agent in question in
any inspection if Lessee desires to do so. It is expressly acknowledged
that, as provided in Section 5 hereof, violation of the foregoing covenant shall
not permit Lessee to withhold rent or terminate this Lease.
(b) The Lessee shall, and it shall require and ensure that any and
all sublessees, employees, contractors, subcontractors, agents, representatives,
affiliates, consultants and any and all other Persons, use, employ, emit, store,
handle, transport, dispose of and/or arrange for the disposal of, any and all
Hazardous Materials (as defined below) in, on or, directly or indirectly,
related to or in connection with the Property in compliance with all
Environmental Laws (as defined below) applicable thereto. Without limitation of
the inspection rights as elsewhere set out herein, if Lessor or Agent at any
time believes that an Environmental Event may have occurred, Lessor or Agent
may, at Lessee's expense, conduct tests of the Property or portions thereof;
provided, however, that in connection therewith: (i) so long as no Event of
Default pursuant to Sections 19(a)(i), (vii), (x), (xi), (xii) or (xiv) hereof
exists, no Event of Default under Section 19(a)(iv) relating to the failure to
have required insurance coverage in place (as opposed to a failure to satisfy
any other Insurance Requirement) exists, and Lessor or Agent have not taken
remedial actions relating to the possession or ownership of such Parcel as a
result of any other Event of Default that may then exist, Lessor or Agent will
first notify Lessee of its desire for tests to be conducted and request that
Lessee perform such tests and provide the results thereof to Lessor, and so
long as Lessee promptly carries out such tests Lessor or Agent will not perform
such tests directly, and (ii) in the conduct of any tests that Lessor or Agent
may conduct directly Lessor or Agent will take reasonable steps to interfere as
little as reasonably practicable with the conduct of Lessee's business within
the Property. Any failure by the Lessor or Agent or such other Person to comply
with the foregoing provisions of this Section 2 shall not give the Lessee any
right to cancel or terminate this Lease, or to abate, reduce or make deduction
from or offset against any Net Rent, Additional Rent or other sum payable under
this Lease, or to fail to perform or observe any other covenant, agreement or
obligation hereunder, but shall permit Lessee to prohibit Lessor or Agent from
conducting such tests until such requirements are satisfied. Lessee's
obligations hereunder with respect to Hazardous Materials and Environmental Laws
are intended to extend to and cover all matters and conditions in, on, under,
beneath, with respect to, affecting, related to, in connection with or
involving the Property or any part thereof, without regard to whether Lessee
has actually caused or participated in the event or circumstance giving rise to
the matter in question, and without regard to whether the matter in question
arose prior to or during the Term (as hereinafter defined) of this Lease.
(c) For purposes of the foregoing provisions (or where such terms are
used elsewhere in this Lease), the following terms shall have the meanings
specified below:
(A) "Environmental Laws" means any and all federal, state and
local Laws, including without limitation any and all requirements to register
underground storage tanks, relating to: (i) emissions, discharges, spills,
releases or threatened releases of pollutants, contaminants, Hazardous Materials
(as hereinafter defined), or hazardous or toxic materials or wastes into ambient
air, surface water, groundwater, watercourses, publicly or privately owned
treatment works, drains, sewer systems, wetlands, septic systems or onto land;
(ii) the use, treatment, storage, disposal, handling, manufacturing,
transportation, or shipment of Hazardous Materials (as defined below), materials
containing Hazardous Materials or hazardous and/or toxic wastes, material,
products or by-products (or of equipment or apparatus containing Hazardous
Materials), or (iii) pollution or the protection of the environment.
(B) "Hazardous Materials" means (i) hazardous materials,
hazardous wastes, and hazardous substances as those terms are defined under any
Environmental Laws, including, but not limited to, the following: the Hazardous
Materials Transportation Act, 49 U.S.C. 1801 et seq., as amended from time to
time ("HMTA"), the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et
seq., as amended from time to time ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act, 42 U.S.C. 9601 et seq., and as further
amended from time to time ("CERCLA"), the Clean Water Act, 33 U.S.C. 1251
et seq., as amended from time to time ("CWA"), the Clean Air Act, 42 U.S.C.
7401 et seq., as amended from time to time ("CAA") and/or the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq., as amended from time to time
("TSCA"); (ii) petroleum and petroleum products including crude oil and any
fractions thereof; (iii) natural gas, synthetic gas, and any mixtures thereof;
(iv) asbestos and/or any material which contains any hydrated mineral silicate,
including, but not limited to, chrysotile, amosite, crocidolite, tremolite,
anthophylite and/or actinolite, whether friable or non-friable; (v) PCBs, or
PCB- containing materials, or fluids; (vi) radon; (vii) any other hazardous or
radioactive substance, material, contaminant, pollutant, or waste; and (viii)
any substance with respect to which any federal, state or local Environmental
Law or governmental agency requires environmental investigation, monitoring or
remediation.
(C) "Environmental Event" shall mean any environmental event or
the discovery of any environmental condition in, on, beneath or involving the
Property or any portion thereof (including, but not limited to, the presence,
emission or release of Hazardous Materials and the violation of any applicable
Environmental Law) that in the sole but reasonable judgment of Agent, if not
properly mitigated or remediated, might have a material adverse effect on the
use, occupancy, possession, value or condition of the Property or any portion
thereof.
3. Term.
(a) Base Term. The term of this Lease ("Term") shall commence on the
date hereof ("Commencement Date") and continue until December 31, 2002 (the
"Expiration Date").
(b) Extension Provisions. (i) If Lessee desires to extend the Term
of this Lease for an additional three (3) years beyond the original Expiration
Date, Lessee shall have the right, during the period beginning fifteen (15)
months prior to the Expiration Date and ending fourteen (14) months prior to the
Expiration Date, to advise Lessor and Agent of its desire to so extend the Term.
If Lessee expresses such a desire then during the period ending twelve (12)
months prior to Expiration Date Lessor and Lessee shall negotiate in good faith
toward a mutually acceptable extension of the Term. All terms and conditions of
any such extension (other than the length of the extension), including, without
limitation, the Net Rent and other amounts to be paid by Lessee during such
extended term, shall be subject to negotiation and the mutual agreement of
Lessor and Lessee and approved by Agent on behalf of the Instrument Holders
(unless the Instruments are discharged in full prior to the contemplated
Expiration Date), it being acknowledged and agreed that neither Lessor nor any
Instrument Holder shall be obligated to approve any extension, and their
approval of any requested extension and/or the terms thereof shall be at the
sole discretion of Lessor and such Instrument Holders. If any extension of the
Term is agreed upon then the parties hereto shall execute an amendment to this
Lease setting out the new Expiration Date and all appropriate revisions to this
Lease applicable during such extended period.
(ii) Notwithstanding the foregoing, if Lessee and Agent desire
to extend the Term of the Lease but one or more Instrument Holders is unwilling
to approve such extension, Lessee and Agent shall make reasonable efforts to
find a replacement party willing to purchase the Instruments held by the
Instrument Holders that do not desire to extend the Term, and otherwise to
cooperate reasonably at Lessee's expense to effect the mutually desirable
extension.
(c) Keys and Locks. On the Expiration Date, Lessee shall surrender
to Lessor all keys to all doors of the Property, and give the Lessor or Agent
an explanation of the combination of all safes or safecabinets, if any, which
are to remain in the Property.
(d) Holdover Rent. Upon the termination of this Lease (whether by
the expiration of the Term of the Lease or otherwise) Lessee must immediately
vacate the Property. If Lessee fails to do so then at the option of Lessor,
but without the execution of a new lease by Lessor and Lessee, Lessee shall
immediately become a tenant from month-to-month of the Property, or any part
thereof, at a Net Rent (as hereinafter defined) equal to the greater of two
hundred percent (200%) of the Net Rent effective in the month immediately
preceding termination of this Lease or one hundred fifty percent (150%) of the
then applicable fair market rental value of the Property, and under all other
terms, conditions, provisions, and obligations of this Lease insofar as the
same are applicable to a tenancy from month-to-month.
4. Rent.
(a) Throughout the Term, Lessee shall pay to the Lessor as net rental
(the "Net Rent") the amounts determined in accordance with, and on the "Payment
Dates" (herein so called) described on Exhibit "A" attached hereto. During the
Term, Lessee shall also pay to Lessor the items of Additional Rent (as
hereinafter defined) set out on Exhibit "A". At such time as Improvements or
Parcels are added to the Property, or construction advances are made to Lessee
by Lessor in respect of New Improvements constructed by Lessee on any Parcel,
the Net Rent and Additional Rent payments shall be adjusted as contemplated on
Exhibit "A" and/or on the Supplement by which such Improvements or Parcels are
added to the Property, and/or the Construction Supplement evidencing the
construction advance in question, as applicable.
(b) All amounts that the Lessee is required to pay to the Lessor
pursuant to this Lease (other than Net Rent), including, but not limited to, any
and all amounts payable upon expiration of the Lease Term and/or upon transfer
or purchase of the Property, together with amounts specifically denominated as
such on Exhibit "A" as well as every fine, penalty, interest and cost that may
be added for non-payment or late payment thereof, shall constitute "Additional
Rent". Lessor shall give Lessee notice of any Additional Rent due hereunder
promptly after it has knowledge of such Additional Rent, and shall use its best
efforts to notify Lessee in advance of the due date and amount of such
Additional Rent; provided that failure to give such prompt notice shall not
relieve the Lessee of its obligation to pay such Additional Rent, subject to,
as applicable, the Lessee's rights, if any, under Section 18 hereof.
(c) The Lessee shall pay on demand to the Lessor interest at a rate
(the "Default Rate") equal to the lesser of (i) a rate that is 200 basis points
(2%) in excess of the rate quoted from time to time by Citibank, N.A., New York,
as its "prime" or "base reference" rate for short-term floating rate commercial
loans (whether or not such rate is actually charged in any particular instance),
adjusted daily, or (ii) the highest lawful rate, on all amounts payable by it
the Lessor hereunder from the due date thereof until paid in full, subject
to Section 4(g) below. Any such interest at the Default Rate shall be paid at
the same place and in the same manner as Net Rent (as hereinafter provided).
(d) All amounts payable by the Lessee hereunder shall be paid in
lawful money of the United States of America. All Net Rent payments shall be
made to Lessor by 11:00 A.M. (New York City Time) on the applicable Payment
Date. All Additional Rent or other sums due hereunder shall also be paid by
1:00 p.m. (New York City Time) on the applicable due date. All payments shall
be made by wire transfer or other immediately available funds. Unless and
until Lessee is otherwise notified in writing by Agent and Lessor, all payments
of Net Rent or Additional Rent hereunder shall be paid to Lessor as follows:
State Street Bank and Trust Company
c/o Citibank, N.A.
New York, New York
Account #40685147
ABA #021000089
Re: Pep Boys November/95
Operating Lease
Any payments of rental or other amounts hereunder by Lessee made other than in
accordance with the foregoing requirements shall be at Lessee's peril and shall
not be credited for the benefit of Lessee hereunder unless and until such funds
are actually received by Lessor. If any payment of Net Rent, Additional Rent,
or other sum due hereunder is timely made by Lessee but Lessor, as Trustee
under the Declaration, fails to make timely distribution of the amounts in
question to the Instrument Holder(s) entitled to receive such amounts, Lessee
shall have no responsibility for any late fees or other compensatory payments
due to the Instrument Holders in respect of such late payment by the Trustee,
nor subject to any other consequences arising therefrom.
(e) Agent shall endeavor to send to Lessee on a monthly basis an
invoice stating the amount of Net Rent due for the month in question. While
the delivery of such an invoice is not a condition precedent to Lessee's
obligation to pay the Net Rent due hereunder, if Agent fails to sent an invoice
Lessee shall not be deemed to be in default of its obligations to pay Net Rent
hereunder if, on the date the Net Rent is due hereunder Lessee (i) pays to
Lessor an amount equal to the amount of Net Rent that was due and payable for
the preceding month hereunder, (ii) delivers to Agent a written notice that
Lessee did not receive an invoice for the month in question and is therefore
unable to compute the exact amount due for the month in question, and (iii)
Lessee makes any reconciliation payments necessary such that Lessee pays the
correct amount of Net Rent hereunder for the month in question within five (5)
Business Days after Lessee receives a reconciliation invoice. If the amount
actually paid by Lessee is more than the Net Rent due for the month, Lessor
shall refund the overage to Lessee within five (5) Business Days after the
reconciliation invoice is produced by Agent. Any positive difference between
the amount of Net Rent due to Lessor and the actual amount paid by Lessee
pursuant to the foregoing provision shall bear interest at the Applicable Rate
for the period between the date the Net Rent payment is due hereunder and the
date such reconciliation payment is actually made by Lessee, and in the event
the actual payment of Net Rent made by Lessee as aforesaid is more than the
amount of Net Rent due for the month in question, any credit or refund to
Lessee shall likewise bear interest at the Applicable Rate from the date the
Net Rent was paid by Lessee until such refund payment is made.
(f) The Lessee shall perform all of its obligations under this Lease
at its sole cost and expense and shall pay, when due and without notice or
demand (except as otherwise provided in this Lease), all amounts due hereunder.
The Lessee agrees to pay on demand (i) all Impositions (as defined in Section 6)
(subject to Lessee's rights pursuant to paragraph 6) and (ii) all reasonable
fees and expenses of the counsel to each of Lessor and Agent, in connection
with the preparation, execution, delivery, modification and amendment of this
Lease and any other documents to be delivered in connection herewith or
therewith or in connection with or arising out of any refinancing or refunding
thereof requested or consented to by Lessee.
(g) In the event that Lessee shall fail to pay any portion of any
installment of Net Rent on the day on which such installment is due, to the
extent permitted by applicable law there shall be added to such unpaid amount a
late charge of two percent (2%) of the amount owed in order to compensate Lessor
and Agent for the extra administrative expenses incurred. Any such late charges
shall be paid by Lessee in the same manner as hereinabove provided for the
payment of Net Rent. The foregoing provision shall not be deemed to limit
Lessor's right to receive interest at the Default Rate with respect to such
payment as provided in subsection 4(c) above.
(h) Notwithstanding the foregoing Lessor shall waive any late charges
and/or any extra amounts due by Lessee as a result of the application of the
Default Rate to late payments made by Lessee hereunder on up to three (3)
occasions during the Term so long as the payment in question is made during the
applicable grace or cure period such that the late payment in question does not
become an Event of Default hereunder.
5. Net Lease; Non-Terminability.
(a) This Lease is a net lease and, except as otherwise expressly
provided in this Lease, any present or future Law (as defined below) to the
contrary notwithstanding, shall not terminate, nor shall the Lessee be entitled
to any abatement, reduction, set-off, counterclaim, defense or deduction with
respect to any Net Rent, Additional Rent or other sum payable hereunder.
Without limitation of the generality of the foregoing, except as otherwise
expressly provided in this Lease, the obligations of the Lessee shall not be
affected by reason of: (i) any damage to or destruction of the Property or
any part thereof by any cause whatsoever (including, without limitation, fire,
Casualty (as defined in Section 12) or act of God or enemy or any other force
majeure event); (ii) any Condemnation (as defined in Section 12), including,
without limitation, a temporary Condemnation of the Property or any part
thereof; (iii) any prohibition, limitation, restriction or prevention of the
Lessee's use, occupancy or enjoyment of the Property by any person; (iv) any
matter affecting title to the Property or any part thereof; (v) any eviction
of the Lessee from, or loss of possession by the Lessee of, the Property or any
part thereof, by reason of paramount title or otherwise; (vi) any default by the
Lessor hereunder or under any other agreement; (vii) the invalidity or
unenforceability of any provision hereof or the impossibility or illegality of
performance by the Lessor or the Lessee or both; (viii) any action of any
federal, state or local governmental authority; or (ix) any other cause or
occurrence whatsoever, whether similar or dissimilar to the foregoing. The
partiesintend that the obligations of the Lessee hereunder shall continue
unaffected unless such obligations shall have been modified or terminated
pursuant to an express provision of this Lease. For purposes hereof "Law" means
all statutes, laws, ordinances, rules, regulations, orders, writs, injunctions,
or decrees of any municipal, state, federal, foreign, or territorial government,
or any court, governmental body, subdivision, agency, department, commission,
board, bureau, or instrumentality thereof.
(b) The Lessee shall remain obligated under this Lease in accordance
with its terms and shall not take any action to terminate, rescind or avoid this
Lease notwithstanding any bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting the Lessor or any action with respect
to this Lease which may be taken by any trustee, receiver or liquidator or by
any court. Except as expressly permitted in this Lease, the Lessee waives all
rights to terminate or surrender this Lease, or to any abatement or deferment of
Net Rent, Additional Rent or other sums payable hereunder. The Lessee shall
remain obliged under this Lease in accordance with its terms and the Lessee
hereby waives any and all rights now or hereafter conferred by Law or otherwise
to modify or to avoid strict compliance with its obligations under this Lease.
All payments made to the Lessor hereunder as required hereby shall be final and
the Lessee shall not seek recovery of, nor shall Lessee be entitled to recover,
any such payment or any part thereof for any reason whatsoever, absent manifest
error.
(c) Lessee shall be entitled to bring a separate action against
Lessor, Agent, or the Purchasers, as applicable, to enforce their respective
obligations to Lessee hereunder or under the other Transaction Documents, but
no such action (including any judgment received by Lessee in connection
therewith) shall ever permit or grant Lessee the right to terminate this
Lease or create any right of abatement, set-off, or other reduction or
suspension of the payments due by Lessee hereunder.
6. Taxes and Assessments; Compliance with Law; Certain Agreements.
(a) The Lessee shall pay or cause to be paid, subject to Section 18,
all Impositions before any fine, penalty, interest or cost may be added or any
default may be claimed or any termination or foreclosure or forfeiture
procedures for nonpayment may be commenced. If any Imposition may legally be
paid in installments, such Imposition may be so paid in installments provided
that the Lessee shall pay all such installments due and payable on or prior to
the Expiration Date or earlier termination of this Lease. "Impositions" means
(i) all taxes, assessments, levies, fees, water and sewer rents and charges,
inspection fees and other authorization fees and all other governmental charges,
general and special, ordinary and extraordinary, foreseen and unforeseen, of
every character (including all penalties or interest thereon) which, at any time
prior to or during the Term, may be imposed or levied upon or assessed against
or be a Lien (as defined in Section 7) upon (A) the Property or any part
thereof, or (B) this Lease or the leasehold estate hereby created, or which
arise in respect of the ownership, operation, occupancy, possession, use,
non-use or condition of the Property or any part thereof; (ii) all gross
receipts or similar taxes imposed or levied upon, assessed against or measured
by any Net Rent, Additional Rent or other sum payable hereunder; (iii) all
sales, value added, use and similar taxes at any time levied, assessed or
payable on account of the ownership, operation, occupancy, use, leasing, or
subleasing of the Property or any part thereof; (iv) all charges, levies, fees,
rents or assessments for or in respect of utilities, communications and other
services rendered or used on or about the Property or any part thereof; and
(v) payments in lieu of each of the foregoing. "Impositions" shall not be
deemed to include any taxes or charges imposed upon any sale or transfer of
ownership interests in the Lessor, nor any "Excluded Charges" (as defined in
the Transaction Agreement).
(b) Subject to Section 18, the Lessee shall comply with, and cause
the Property to comply with, all Legal Requirements. "Legal Requirements" means
(i) all Laws, foreseen or unforeseen, ordinary or extraordinary, or arising from
any restriction of record or otherwise, which now or at any time hereafter may
be applicable to the Lessor, as owner of the Property, the Lessee, as lessee
hereunder, or the Property or any part thereof, or any of the adjoining
sidewalks or vaults, if any, or the ownership, operation, occupancy, use,
non-use or condition of the Property or any part thereof and any other
governmental rules, orders and determinations now or hereafter enacted, made or
issued, and applicable to the Lessor, as owner of the Property, the Lessee, as
lessee hereunder, or the Property or any part thereof or the ownership,
construction, operation, mortgaging, occupancy, possession, use, non-use or
condition thereof whether or not presently contemplated; and (ii) all
agreements, permits, covenants, conditions, and restrictions applicable to the
Property or any part thereof or the ownership, operation, mortgaging, occupancy,
use, non-use, or condition thereof, including but not limited to, all Facility
Agreements (as defined below) and all such Laws (including, without limitation,
carrying out all necessary or appropriate remediation or other response to any
Environmental Event in accordance with all applicable Environmental Laws),
contracts, agreements, covenants, conditions and restrictions which require
structural, unforeseen or extraordinary changes in the Property or any part
thereof and all matters of public record. Without limitation, to the extent that
any portion of the Property currently is included in the same subdivision lot or
tax parcel with other property that is not included in the Property, Lessee
shall proceed to promptly cause such portions of the Property to be replatted
and/or to effect such other legal or administrative actions as may be required
to cause each portion of the Property to be in a legal subdivision lot and tax
parcel that does not include any property that is not a part of the Property;
provided, however, that in isolated cases Lessee may, in lieu of any such
replat or other proceedings, provide title insurance endorsements, bonds,
indemnification or other assurances satisfactory, in Agent's reasonable
discretion, to assure that neither Lessor nor any successor-in-title thereto
shall bear any risk of cost or loss as a result of any such subdivision lot or
tax lot discrepancy. For purposes hereof "Facility Agreements" mean all
contracts or agreements relating to or affecting the Property or the operation
thereof or any portion thereof, including, without limitation, any easements,
declarations, covenants, or restrictions affecting the Property, and any other
agreement or arrangement that constitutes a Permitted Encumbrance.
(c) The Lessee shall fully and promptly keep, observe, perform and
satisfy, on behalf of Lessor, any and all obligations, conditions, covenants
and restrictions of or on the Lessor under any and all Facility Agreements, or
contest any obligations or alleged obligations thereunder, so that there will
be no default thereunder (other than a default as to which remedial actions are
stayed or suspended pending a contest of the obligations in question pursuant to
Section 18 hereof) and so that the other parties thereunder shall be and remain
at all times obliged to perform their obligations thereunder. To the extent
within its control Lessee shall not permit to exist any condition, event or fact
that could allow or serve as a basis or justification for any such person to
avoid such performance or to impose or enforce a Lien on the Property or any
portion thereof as a result of the non-performance by Lessee under any Facility
Agreement. Lessor agrees that without Lessee's consent, which consent shall
not be unreasonably withheld, Lessor shall not terminate or modify any Facility
Agreement. Further, at the request and expense of Lessee, Lessor agrees to
reasonably cooperate with Lessee in connection with the creation of additional
Facility Agreements and/or with any amendment or modification of any existing
Facility Agreement that Lessee may deem desirable; provided, that no Facility
Agreement shall be created or amended without the prior written consent of
Agent, which consent shall not be unreasonably withheld. Lessor hereby further
authorizes Lessee to act on Lessor's behalf pursuant to the Facilities
Agreements in the ordinary course of business related to the routine daily
operation of the Property; provided, that (i) prompt written notice of any
material action taken or notice received by Lessee with respect to any Facility
Agreement shall be given by Lessee to Agent, (ii) no consent, approval,
modification, amendment, or waiver under any Facility Agreement nor any status
report, estoppel certificate, or similar statement or certification with respect
to any Facility Agreement may be given by Lessee on Lessor's behalf without the
prior written approval of Agent (which approval shall not be unreasonably
withheld) unless the Facility Agreement in question has been approved (or deemed
approved) by Agent and either the Facility Agreement in question or another
instrument approved by the Agent contains an express delegation to Lessee
(in its capacity as such) of the right to issue the item in question or of the
right to provide such consent or approval on behalf of Lessor.
(d) Lessee's execution of a Supplement adding any Parcel or
Improvements to the Property shall constitute Lessee's representation and
warranty to Lessor, Agent, and to each of the Instrument Holders that as of the
date of such Supplement, to Lessee's knowledge: (i) there is no default, or
event or circumstance which, with notice and/or the passage of time could result
in a default, by Lessee or, to Lessee's knowledge, any other party under any
Facility Agreement applicable to such Parcel or Improvements, (ii) Lessee has
paid all amounts currently due and payable with respect to the Property or any
portion thereof under the terms of any Facility Agreement, and (iii) Lessee has
received no notice of, nor does Lessee have any other knowledge of, any events,
circumstances, or facts that have resulted in, or could result in, the loss or
material reduction or interruption of any of the services, easements, rights-
of-way, or other benefits inuring to the applicable Parcel under any of the
Facility Agreements, and/or the imposition of any Lien or charge of any kind
upon the applicable Parcel or any portion thereof pursuant to any Facility
Agreement. Without limitation of any other indemnifications or other rights
granted for the benefit of Lessor, Agent, and/or the Instrument Holders herein,
Lessee expressly agrees to indemnify, save, and hold harmless Lessor, Agent,
each Instrument Holder, and their respective successors and assigns from and
against any breach of any of the representations, warranties, or covenants
regarding the Facility Agreements contained in this Section 6.
(e) If any Improvements situated on any Parcels at any time during
the Term shall encroach upon any property, street or right-of-way adjoining or
adjacent to such Parcel, or shall violate the agreements or conditions contained
in any Facility Agreements affecting such Parcel or any part thereof, or shall
impair the rights of others under or hinder or obstruct any easement or right-
of-way to which such Parcel is subject, then, promptly after the written
request of Lessor or Agent, or any person affected by any such encroachment,
violation, impairment, hindrance or obstruction, Lessee shall, at its expense,
either (i) contest such matter in accordance with Section 18, (ii) obtain
effective waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation, impairment, hindrance or
obstruction whether the same shall affect Lessor, Lessee or both, (iii) make
such changes in the Improvements and take such other action as shall be
necessary to remove such encroachments, hindrances or obstructions and to end
such violations or impairments, including, if necessary, the alteration or
removal of any Improvement (subject to Lessor's and Agent's consent if required
by Section 10(a) hereof), or (iv) provide to Lessor affirmative title insurance
endorsements, bonds, or other assurances satisfactory to Agent, in its
discretion, to assure that neither Lessor nor any successor-in-title thereto
shall bear any risk of cost or loss as a result of the existence of such
encroachment. Lessor and Agent will not make request for correction of any
minor encroachments or similar minor matters unless either (A) a governmental
entity or a person or entity having an interest (which need not be an ownership
interest) in the property affected by such matter requests correction thereof,
or (B) in Lessor's or Agent's good faith judgment the existence of such
encroachment has a materially adverse effect upon the ownership, marketability,
and/or financeability of the Parcel or portion of the Property to which such
encroachment or other matter relates.
(f) In those circumstances set out in this Section in which Lessee
is authorized or permitted to take an action only after the consent or approval
of the Agent or Lessor is authorized or permitted to execute Facility Agreements
or other agreements requested by Lessee only after the consent or approval of
Agent, Agent shall be deemed to have approved the action, or execution by Lessor
of the document, in question if no disapproval is given to Lessee by Agent
within ten (10) Business Days after Lessee's written request for approval where
such request for approval (A) contains a reasonably detailed description of the
actions which Lessee proposes to take if the request is approved (including
copies of documents proposed to be executed or delivered) and (B) contains a
specific notice to Agent that the request will be deemed approved if not
disapproved within such period. If Agent disapproves any request, Agent shall
state its reasons for disapproval (which may include lack of sufficient
information regarding the request or, in any appropriate case, insufficient time
to fully evaluate the request). If Agent fails to notify Lessee within such ten
(10) Business Day period that the information provided by Lessee regarding the
requested approval is inadequate for Agent's needs Agent shall be deemed to have
waived any right to refuse a requested approval on the basis of inadequate
information (but the foregoing shall not be deemed to limit any rights or claims
that the Lessor or Agent may have if the description or other information
provided by Lessee in connection with a requested approval is inaccurate,
misleading, or fraudulent). Agent shall deliver to Lessor written
authorizations or directions to evidence Agent's approval of actions or
documents that have been approved (or deemed approved) by Agent as aforesaid.
Following any such approval or deemed approval by Agent, and receipt by Lessor
of the aforesaid authorizations or directions, Lessor shall execute any approved
Facility Agreement or other approved agreements as requested by Lessee.
(g) Within five (5) Business Days after receipt thereof by Lessor,
unless it is apparent that such materials have independently been received by
Lessee or Agent, as applicable, Lessor shall deliver to Lessee, with a copy to
Agent, any tax bills, condemnation notices, mechanics' lien claims, legal
pleadings, notices relating to Facility Agreements or Permitted Encumbrances,
or other material communications relating to the Property.
7. Matters of Title; Assignability.
(a) Subject to Section 18, and except for the Permitted Encumbrances,
the Lessee shall not create or permit to exist, and shall promptly remove and
discharge, any mortgage, charge, lien, security interest, encumbrance, right or
claim (each, a "Lien") upon this Lease or the Property or any part thereof or
interest therein, or upon any Net Rent, Additional Rent or other sum payable
hereunder, which Lien arises for any reason, including, without limitation, any
and all Liens which arise out of the use, condition, occupancy, construction,
possession, repair or rebuilding of the Property or any part thereof (including,
without limitation, by reason of a default under any Facility Agreement) or by
reason of labor or materials furnished or claimed to have been furnished to the
Lessee or for the Property or any part thereof. "Permitted Encumbrances" means,
with respect to the Property but only to the extent applicable thereto (i)
rights reserved to or vested in any municipality or public authority by the
terms of any right, power, franchise, grant, license, permit or provision of
Law affecting the Property to (A) terminate such right, power, franchise, grant,
license or permit, provided that the exercise of such right would not materially
impair the use of the Property or materially and adversely affect the value
thereof, or (B) purchase, condemn, appropriate or recapture, or designate a
purchaser of, the Property; (ii) any liens thereon for Impositions and any liens
of mechanics, materialmen and laborers for work or services performed or
materials furnished in connection with the Property, which are not due and
payable or which are not delinquent to the extent that penalties for nonpayment
may be assessed (or with respect to which title insurance endorsements, bonds,
or other security and assurances reasonably satisfactory to Agent have been
provided); (iii) easements, rights-of-way, servitudes, restrictions and other
minor defects, encumbrances, and irregularities in the title to the Property
approved by Agent as of the date the Parcel in question is added to the
Property and described in the owner's policies of title insurance issued to
Lessor, as owner of the Parcels, in connection with Lessor's acquisition of
the Parcels; (iv) rights reserved to or vested in any municipality or public
authority to control or regulate use of the Property or to use the Property in
any manner; (v) this Lease; and (vi) any Transaction Documents.
(b) The Lessor shall not create any Lien upon this Lease, the
Property, or any part thereof except this Lease, the Liens securing the
obligations of Lessor and/or Lessee under the Transaction Documents, and any
Liens that may arise in respect of any action taken by the Lessor, Agent or
the Instrument Holders from time to time in connection with the enforcement
of any rights under this Lease or the Transaction Documents.
8. Indemnification.
(a) The Lessee shall pay, protect, indemnify and hold harmless each
Indemnified Party (as defined below) from and against, and shall defend all
actions against any Indemnified Party with respect to, any and all liabilities
(including, but not limited to, liability in tort (whether strict liability or
otherwise)), losses, damages, costs, expenses (including, but not limited to,
reasonable attorneys' fees and expenses), causes of action, suits, claims,
demands or judgments of any nature whatsoever (collectively, "Losses") arising
from (i) any injury to or death of any person, or damage to or loss of property,
or any other event or circumstance occurring on or resulting from activities on
the Property, or resulting from or in connection with the ownership, leasing,
subleasing, operation, occupancy, possession, use, non-use or condition of the
Property, (ii) any Environmental Event, Incipient Default or Event of Default
hereunder, (iii) any act or omission of the Lessee or its agents, contractors,
licensees, sublessees, invitees, representatives or any Person for whose
conduct the Lessee is legally responsible on or relating to or in connection
with the ownership, leasing, subleasing, operation, management,
maintenance, occupancy, possession, use, non-use or condition of the Property;
6iv) performance of any labor or services or furnishing of any materials or
other property in respect of the Property or any part thereof; (v) any permitted
contest referred to in Section 18, provided, that no Indemnified Party shall be
entitled to payment or indemnification with respect to any amounts voluntarily
paid by such Indemnified Party in respect of matters being properly contested by
Lessee under such Section 18; or (vi) any violation by the Lessee of any
contract or agreement to which the Lessee is a party or of any Legal
Requirement or Insurance Requirement, in each case affecting any Indemnified
Party or the Property, or any part thereof or the ownership, operation,
occupancy, possession, use, non-use or condition thereof and in each case
regardless of the acts, omissions or negligence of any Indemnified Party
(except as otherwise set forth in the following proviso); provided, however,
that the Lessee shall not be required to indemnify any Indemnified Party
hereunder against any such claims to the extent arising solely as a result
of the fraud, gross negligence or willful misconduct of the Indemnified Party
in question. IT IS THE EXPRESS INTENT AND UNDERSTANDING OF THE PARTIES THAT
THE FOREGOING PROVISION DOES CONSTITUTE AN INDEMNIFICATION BY THE LESSEE
OF THE INDEMNIFIED PARTIES OF AND FROM LOSSES ARISING OUT OF THE
NEGLIGENCE OF THE RESPECTIVE INDEMNIFIED PARTIES OR ANY OF THEM;
PROVIDED, HOWEVER, THAT THE PARTIES AGREE AND ACKNOWLEDGE THAT NO
INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER
FOR DAMAGES OR LOSSES TO THE EXTENT CAUSED BY THE FRAUD,GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY IN
QUESTION. In connection with any such defense by Lessee, Lessee may file
answers and pleadings in the name of and on behalf of the applicable Indemnified
Party(ies) where necessary. For purposes of this Section 8, "Indemnified Party"
means the Lessor (in both its capacity as Trustee under the Declaration of Trust
and in its individual capacity), each Instrument Holder, Agent (and any
successor agent), and any officer, director, employee or agent of any of the
above. "Incipient Default" means the occurrence of any event or the existence
of any circumstance that would entitle Agent or Lessor to send a notice
requiring remedial action by Lessee which, if not carried out by Lessee within
the applicable grace or cure period as provided in the applicable subsection of
Section 19(a) hereof, would result in the existence of an Event of Default
hereunder.
(b) The obligations of the Lessee under this Section 8 shall survive
the expiration or any termination of this Lease (whether by operation of Law or
otherwise) for all matters described in this Section 8 which occur or arise
prior to such expiration or termination or arise out of or result from facts,
events, claims, liabilities, actions or conditions occurring, arising or
existing on or before such expiration or termination; provided, that the
foregoing shall not be construed to extend or toll any applicable statute of
limitations with respect to the obligations of Lessee hereunder. In case any
action shall be brought against any Indemnified Party in respect of which
indemnity may be sought against the Lessee, such Indemnified Party shall
promptly notify the Lessee in writing, but failure to give such prompt notice
shall not relieve the Lessee from any liability hereunder except to the extent
Lessee is actually prejudiced by such failure to give prompt notice. So long
as no Event of Default exists, and no Incipient Default exists with respect to
the matters covered in Sections 19(a)(i), (iv), (vii), (x), (xi), or (xiv) (any
such Incipient Default being referred to as a "Special Incipient Default") has
occurred and is continuing hereunder, the Lessee, at its own expense, may defend
any action brought against an Indemnified Party, including the employment of
counsel reasonably satisfactory to such Indemnified Party and the payment of all
reasonable expenses thereof. Any Indemnified Party shall have the right to
employ separate counsel in any such action and to consult with the Lessee
regarding the defense thereof, provided that, except in the circumstances
described below any such separate counsel shall be employed at the sole cost
and expense of the Indemnified Party, and provided, further, that, except as
provided below, the Lessee shall at all times control such defense. If the
Lessee shall have failed to employ counsel reasonably satisfactory to such
Indemnified Party (or, upon notice from the Indemnified Party that the counsel
employed by Lessee is not satisfactory, if Lessee has failed to discharge
counsel previously employed and to retain new counsel that both Lessee and
the Indemnified Party agree upon), the fees and expenses of counsel to each
Indemnified Party shall be paid by the Lessee. Further Lessee shall pay all of
the Losses of such Indemnified Party incurred in respect of such defense if
either (i) the Lessee shall elect in writing not to assume the defense or,
having assumed such defense, shall thereafter fail to prosecute diligently such
defense thereof, or (ii) if any Special Incipient Default or Event of Default
has occurred and is continuing hereunder. Further, if any Indemnified Party
shall have been advised by counsel chosen by it that there may be one or more
legal defenses available to such Indemnified Party that are different from or
additional to those available to Lessee and the relief sought against the
Indemnified Party is other than payment of monetary damages, the Indemnified
Party may assume the defense of such loss or action once tendered and Lessee
will reimburse such Indemnified Party for the reasonable fees and expenses of
any counsel retained by the Indemnified Party. So long as Lessee is diligently
defending the claim in question as aforesaid or, if the Indemnified Party has
assumed defense thereof, so long as Lessee is paying the costs of such separate
defense in accordance herewith, the Lessee shall not be liable for any
settlement of any action without its consent. No settlement of any such action
may be made by the Lessee without the Indemnified Party's consent; provided,
however, such consent shall not be necessary if the settlement results in an
unconditional and final release of the Indemnified Party without the admission
by the Indemnified Party of guilt, complicity or culpability.
(c) Upon demand for payment by any Indemnified Party of any Losses
incurred by it for which indemnification is sought, along with a brief
description of the nature and extent of the Losses as well as the circumstances
under which indemnification is sought, Lessee shall pay when due and payable the
full amount of such Losses to the appropriate party, unless the Lessee shall
have assumed the defense of such Loss or action once tendered and is diligently
prosecuting the same and Lessee has taken all action as may be reasonably
necessary to prevent (i) the collection of such Losses from the Indemnified
Party; (ii) the sale, forfeiture or loss of the Property or any part thereof
during such defense of such action; and (iii) the imposition of any civil or
criminal liability for failure to pay such Losses when due and payable.
(d) Notwithstanding the foregoing, if a claim that is subject to the
indemnification provisions set out above is made seeking monetary damages only
and the maximum exposure of the Indemnified Party is less than $1,000,000.00,
then so long as the Lease Guarantor is in compliance with the financial
covenants set out in the Lease Guarantee, Lessee may defend or settle such
matter at its discretion and in the name of the Indemnified Party without
involvement of the Indemnified Party in the defense or settlement thereof.
(e) Lessee acknowledges the execution, of even date herewith, of the
"Environmental Indemnity Agreement" (herein so-called) wherein Lessee has
indemnified Lessor, Agent and the Instrument Holders for various matters
relating to Hazardous Substances and Environmental Laws relating to the
Property. The indemnification rights provided for herein are in addition to,
and not in lieu of, indemnification rights granted in the Environmental
Indemnity Agreement.
9. Maintenance and Repair. The Lessee, at its own expense, will manage
and maintain the Property in good repair and condition, subject to normal wear
and tear. Further, Lessee will take all action, and will make all changes and
repairs, structural and nonstructural, foreseen and unforeseen, ordinary and
extraordinary, to the Property from time to time as may be required to keep the
Property in compliance with any Legal Requirement or Insurance Requirement at
any time in effect. The Lessor shall not be required to, and Lessee hereby
waives any right to require the Lessor to, manage, maintain, repair or rebuild
the Property or any part thereof and the Lessee waives any and all rights it may
now or hereafter have to make any repairs at the expense of the Lessor pursuant
to any Legal Requirement, Insurance Requirement, or otherwise, at any time in
effect. All repairs, replacements and rebuilding by the Lessee hereunder shall
immediately become and shall remain part of the Property, subject to this Lease.
10. Alterations; Additions.
(a) At any time, so long as no Event of Default has occurred, and no
Special Incipient Default then exists, the Lessee may, at its own expense, make
Additional Improvements to the Property; provided, however, that (i) the fair
market value of the Property shall not be lessened thereby, and (ii) such work
shall be completed in a good and workmanlike manner free and clear of any Liens
for labor, services or materials (subject to Section 18 hereof) and in
compliance with all applicable Legal Requirements and Insurance Requirements,
(iii) the structural integrity of the Improvements shall not be impaired
thereby, and (iv) any "Material Improvements" (as defined below) shall have been
approved in writing by Agent prior to commencement thereof (which approval shall
not be unreasonably withheld or delayed). "Additional Improvements" means
additions or alterations of the Improvements made by or for the Lessee and\
"Material Improvements" means Additional Improvements which have a cost in
excess of $350,000.00 (for this purpose related segments of Additional
Improvements on any given Parcel (but not similar activities occurring on
separate Parcels) shall be aggregated). The installation or modification of
Lessee's Equipment inside any Improvements will not be treated as Additional
Improvements for purposes hereof. The Lessee shall be permitted, with the
consent of the Agent (which consent shall not be unreasonably withheld), at any
time during, or upon the expiration or termination of, the Term, and at its
sole cost and expense, to remove any such Additional Improvements to the
Property; provided, however, that, in the reasonable discretion of Agent, such
removal shall not impair the use or reduce the fair market value of the Property
below its fair market value on commencement of the Term and that such removal
shall not cause a violation of any Legal Requirement or Insurance Requirement.
Any damage to the Property or any part thereof caused by such removal shall
promptly be repaired by the Lessee and the Property or part thereof shall be
restored to its condition (or the reasonable equivalent thereof) as it existed
immediately prior to the construction of such Additional Improvements, at the
Lessee's sole cost and expense. The Lessee may place upon the Property or any
part thereof any inventory, fixtures, machinery, equipment or other property
belonging to the Lessee or third parties and remove the same at any time during
the Term and at the request of the Lessor or Agent shall remove the same at the
expiration or termination hereof unless the Lessee shall have purchased the
Property pursuant to the terms hereof; provided that any damage to the Property
or any part thereof caused by such removal shall promptly be repaired by the
Lessee and the Property or such part thereof shall be restored to its condition
(or the reasonable equivalent thereof) as it existed immediately prior to the
placement of any such property upon the Property, all at the Lessee's sole cost
and expense.
(b) If any request is made by Lessee for approval by Agent of the
construction of proposed Additional Improvement and/or the removal thereof by
Lessee where such approval is required, the request in question shall be
deemed approved if Agent has not given Lessee notice of disapproval within ten
(10) Business Days after Lessee's written request for approval where such
request for approval (A) contains a reasonably detailed description of the
action which Lessee proposes to take (including the Additional Improvements to
be constructed or demolished, and the effect thereof upon the value and utility
of the affected Parcel and the Improvements thereon), and (B) contains a
specific notice to Agent that the request will be deemed approved if not
disapproved within such period. If Agent disapproves any request, Agent shall
state its reasons for disapproval (which may include lack of sufficient
information regarding the request or, in an appropriate case, insufficient time
to fully evaluate the request). If Agent fails to notify Lessee within such ten
(10) Business Day period that the information provided by Lessee regarding the
requested approval is inadequate for Agent's needs Agent shall be deemed to
have waived any right to refuse a requested approval on the basis of inadequate
information (but the foregoing shall not be deemed to limit any rights or claims
that the Lessor or Agent may have if the description or other information
provided by Lessee in connection with a requested approval is inaccurate,
misleading, or fraudulent).
(c) All Additional Improvements shall become and remain part of the
Property and shall be subject to this Lease, unless and until removed by the
Lessee in accordance with subsection 10(a).
11. Lessee's Right to Contest Real Property Taxes. The Lessee, at its own
cost and expense, shall have the sole right, at any time, to seek a reduction in
the assessed valuation of the Property or to contest any real property taxes for
the Property as provided for in Section 18 hereof. If required by any
applicable Legal Requirement the proceeding or contest may be brought by Agent
in the name of Lessor as the owner of the Property but Lessee shall pay any
and all costs and expenses incurred by, or that become the obligation of, the
owner of the Property in connection therewith. Lessee, on final determination
of the proceeding or contest, shall, subject to Section 18 hereof, immediately
pay, discharge and satisfy any decision or judgment rendered, together with all
costs, interest, and penalties incidental to the decision or judgment. Any tax
refund or similar amount received by Lessor as a result of any such contest
by Lessee and attributable to periods when the tax in question was paid by
Lessee shall be received for the benefit of Lessee and promptly paid over to
Lessee by Lessor.
12. Condemnation and Casualty.
(a) General.
(i) Subject to the provisions of this Section 12 Lessee hereby
irrevocably assigns to the Lessor any award or compensation or insurance
payment to which the Lessee may become entitled (i) if the Property or any part
thereof is damaged or destroyed by fire or other casualty (such an occurrence
being herein called a "Casualty") or (ii) if the use, occupancy or title of the
Property or any part thereof is taken or requisitioned or sold in, or on
account of any actual or threatened condemnation or eminent domain proceedings,
or other action by any Person having the power of eminent domain (such an
occurrence being herein called a "Condemnation").
(ii) The Lessee shall promptly notify the Lessor in writing of
any Casualty or Condemnation and shall appear in any proceeding or action to
defend, negotiate, prosecute or adjust any claim for any award or compensation
or insurance payment on account thereof. The Lessee shall take all appropriate
action in connection therewith, including the employment of counsel reasonably
satisfactory to the Lessor and Agent. The Lessor and Agent shall have the
right to appear and participate and to employ separate counsel in any such
proceeding or action, and the fees and expenses of such counsel shall be paid
by the Lessee if the Lessee shall have failed to employ counsel reasonably
satisfactory to the Lessor and Agent (or, upon notice from Lessor or Lessee of
their dissatisfaction with the counsel employed by Lessee, Lessee shall have
failed to discharge counsel previously employed and to retain new counsel that
Lessee and the Agent and Lessor may agree upon). If the Lessee shall elect not
to enter an appearance in any such proceeding or action or shall fail to
prosecute any such proceeding or action diligently, or if any Special
Incipient Default or Event of Default has occurred and is continuing hereunder,
the Lessor and/or Agent may assume the prosecution thereof and the Lessee shall
pay all of the reasonable fees and expenses of Lessor's and/or Agent's counsel.
No settlement of any such proceeding or action shall be made by the Lessee
without the written consent of the Lessor and the Agent, which consent shall
not unreasonably be withheld.
(iii) All awards and proceeds attributable to Lessee's
Equipment, Lessee's moving and other expenses, and other losses incurred by
Lessee and all proceeds of Lessee's business interruption insurance shall be
paid to Lessee, and Lessor shall not have any rights therein, so long as the
award or insurance proceeds payable in respect of the Parcel and/or the
Improvements themselves are not reduced as a result of any such payments to
Lessee. In no event shall Lessee make any claim in any Condemnation proceeding
in respect of the loss or value of the leasehold estate in the Property created
hereby, and Lessee hereby assigns to Lessor any rights it may have to any award
based on the value of the leasehold estate; provided, however, that (i) the
foregoing shall not preclude Lessee from bringing a separate action for damage
to its leasehold estate if, and only if, the award to the Lessor is not reduced
as a result thereof, and further provided that (ii) if Lessee purchases the
Property (or applicable portion thereof) in connection with any such
Condemnation under any applicable provision of this Lease, Lessee shall be
entitled to any Net Proceeds arising therefrom and may prosecute or dispose of
any Condemnation action as it deems appropriate.
(iv) Except as otherwise set out below, any and all amounts
representing proceeds paid in connection with any such Condemnation or Casualty
(other than proceeds of rental loss insurance and proceeds attributable to
Lessee's personal property, Lessee's moving or other expenses, and business
interruption insurance), as the case may be (collectively, the "Proceeds"),
shall be paid over to the Proceeds Trustee (as defined below) to be held in
trust by such Proceeds Trustee and distributed pursuant to paragraph 12 or 15
of this Lease, as appropriate, (all such Proceeds, less the reasonable expenses
incurred by the Lessor and the Lessee in collecting such amounts, but including
any reimbursement by the Lessee for reasonable costs and expenses in connection
therewith to which the Lessor and the Agent are entitled pursuant to this Lease,
are the "Net Proceeds"). Except as otherwise provided below, any and all
Proceeds received by the Lessee in connection with any such proceeding or action
shall be received and held in trust for the benefit of the Lessor, shall be
segregated from other funds of the Lessee and shall be forthwith paid over to
the Proceeds Trustee. The Lessee and Lessor agree that this Lease shall control
the rights of the Lessor and the Lessee in any such Proceeds, and any present or
future Law to the contrary is hereby waived. Any and all reasonable charges,
fees and expenses of the Proceeds Trustee shall be paid from the Net Proceeds.
"Proceeds Trustee" shall mean Agent, if Agent elects to perform such functions
or, if Agent elects not to perform such functions, such title company or other
independent bank or trust company as may be designated by the Lessor with the
approval of Agent.
(v) Notwithstanding the foregoing, however, if the total amount
of Proceeds attributable to a Casualty or Condemnation is less than or equal to
$350,000.00 with respect to any one Parcel, and no Special Incipient Default and
no Event of Default of any kind then exists, then Lessee may settle the claim in
question on behalf of Lessee and any and all Proceeds received by Lessee in
connection with any such proceeding or action may be retained by Lessee (rather
than being paid over to the Proceeds Trustee), and this Lease shall continue
in full force and effect, and the Lessee shall, at its expense, promptly
commence and diligently pursue to completion the rebuilding, replacement or
repair of any damage to such portion of the Property caused by such event in
conformity with the requirements of Sections 9 or 10, as applicable, in order
to restore such portion of the Property (in the case of a Condemnation, as
nearly as practicable) to the condition and fair market value thereof
immediately prior to such event.
(b) Condemnation with Termination. (i) If a Condemnation shall in
the good faith opinion of an authorized officer of Lessee affect the
Improvements on a given Parcel in such manner as to render it unsuitable for
restoration or for continued use and occupancy by the Lessee, then the Lessee
may deliver, not later than sixty (60) days after such occurrence, or (ii) if
a Condemnation shall affect the entirety of a Parcel and the Improvements
thereon, then the Lessee shall be deemed to have delivered as of such
occurrence, to the Lessor a written notice (herein called a "Termination
Notice") containing (A) notice of the Lessee's intention to terminate this
Lease with respect to the affected Parcel and the Improvements thereon, and
(B) a certificate of an officer of the Lessee describing the Condemnation giving
rise to such termination and certifying as to clause (i) or (ii) above, as
appropriate. In such event this Lease shall remain in full force and effect as
to the Parcels (and the Improvements thereon) not affected by the Condemnation
in question, and as to the affected Parcel and Improvements the Lessee shall
have the same options available to it that would be available to Lessee at the
Expiration Date with respect to the entire Property. Accordingly, Lessee may
either purchase the remainder of the Parcel and Improvements in question, if
any, plus the Net Proceeds attributable thereto for the Offer Purchase Price as
provided for in Section 15 below, or terminate this Lease as to the Parcel and
Improvements in question upon payment of a Contingent Rent Payment in respect
of the Parcel and Improvements in question in an amount equal to 84% of the
amount that would be the applicable Offer Purchase Price for the Parcel and
Improvements in question pursuant to Section 15. (If Lessee pays the Contingent
Rent Payment in respect of a portion of the Property pursuant to this provision,
such amount shall be credited, without interest, against the Contingent Rent
Payment payable hereunder at the Expiration Date.) If Lessee fails to elect
which of the foregoing options it requests at the time of delivery of the
Termination Notice, it shall be deemed to have elected to purchase the affected
portion of the Property for the applicable Offer Purchase Price.
(c) Condemnation Without Termination; Casualty.
(i) If, after a Condemnation, the Lessee has not given a
Termination Notice in accordance with subsection 12(b) with respect to the
affected Parcel and the Improvements thereon, or in any event after a Casualty
(unless, in the case of Casualty, Lessee elects to proceed pursuant to Section
13 below, if applicable), then this Lease shall continue in full force and
effect with respect to the affected Parcel and the remainder of the Property,
and the Lessee shall, at its expense, promptly commence and diligently pursue
to completion the rebuilding, replacement or repair of any damage to such
portion of the Property caused by such event in conformity with the requirements
of Section 9 or 10, as applicable, in order to restore such portion of the
Property (in the case of a Condemnation, as nearly as practicable) to the
condition and fair market value thereof immediately prior to such event.
(ii) In circumstances where the Net Proceeds are to be
administered by the Proceeds Trustee, the Lessee shall be entitled to receive
payment from the Net Proceeds from time to time as such work of rebuilding,
replacement or repair progresses, but only after presentation of certificates
of a licensed architect chosen by the Lessee and subject to the approval of the
Agent (which approval shall not be unreasonably withheld or delayed), delivered
by the Lessee to the Proceeds Trustee (with a copy to the Agent) from time to
time as such work of rebuilding, replacement or repair progresses. Each such
architect's certificate shall describe the work for which the Lessee is
requesting permission to pay or requesting payment and the cost incurred by the
Lessee in connection therewith and shall state that such work has been
properly completed and that the Lessee has not theretofore received payment for
such work, and shall be accompanied by an officer's certificate of the Lessee
certifying that no Special Incipient Default or Event of Default has occurred
and is continuing and that the amounts held by the Proceeds Trustee are
adequate to complete such rebuilding, replacement or repair. The Proceeds
Trustee shall deliver, or cause to be delivered, payment within ten (10)
Business Days after its receipt of the certificates required above. Upon
receipt by the Proceeds Trustee (with a copy to the Agent) of an officer's
certificate from the Lessee to the effect that final payment has been made for
any such work and stating that the rebuilding, replacement or repair has been
completed, the remaining amount of such Net Proceeds shall be paid to the
Lessee. The Lessee shall be responsible for the cost of any such repair,
rebuilding or restoration in excess of such Net Proceeds, for which cost the
Lessee shall make adequate provision acceptable to the Lessor and Agent.
(d) Temporary Condemnation or Lease Termination. Notwithstanding
any other provision to the contrary contained in this Section 12, in the event
of any temporary Condemnation, this Lease shall remain in full force and effect,
and provided no Special Incipient Default or Event of Default has occurred and
is continuing, the Lessee shall be entitled to receive the Net Proceeds
allocable to such temporary Condemnation, except that if this Lease shall expire
or terminate during such temporary Condemnation, then Lessee shall only be
entitled to the Net Proceeds allocable to the period after the termination or
expiration of this Lease if it has purchased the Property pursuant to Section
14 hereof.
(e) Notwithstanding the foregoing provisions, in the event a material
Condemnation or Casualty with respect to a Parcel occurs during the last twelve
(12) months of the Term, Lessee may issue a Partial Termination Notice with
respect to the Parcel in question in the manner contemplated in Section 13(a)
hereof, but without satisfying the requirements set out in Section 13(a)(i)(3)
regarding the Parcel in question. No Early Termination Fee shall be
payable in the event Lessee exercises such option.
13. Early Termination Rights.
(a) Partial Termination.
(i) Subject to the provisions of subsections (a)(ii) and (a)
(iii) below, the Lessee may at any time deliver to the Lessor a written notice
signed by an authorized officer of the Lessee (herein called a "Partial
Termination Notice") containing (1) notice of the Lessee's intention to
terminate this Lease with respect to a specific Parcel and the Improvements
located thereon as of a Payment Date no earlier than thirty (30) days after
the delivery of such notice, (2) an Offer to Purchase with respect to such
Parcel and the Improvements located thereon pursuant to Section 14, and (3) a
certification of an authorized officer of Lessee to the effect that either (A)
the Parcel in question has become obsolete and is no longer needed by Lessee for
its operation; or (B) if an Event of Default, or any Incipient Default, exists
which in either case arises out of an Environmental Event relating solely to the
Parcel in question and Lessee elects to cure the Event of Default in question,
or to cure the Incipient Default before it becomes an Event of Default, by
purchasing the affected Parcel in lieu of taking the curative action required
by Lessor or Agent.
(ii) Specific Limitation. In no event shall Lessee have the
right to give a Partial Termination Notice with respect to any Parcel(s)
pursuant to subsection (a)(i)(A) above prior to the first anniversary of the
foregoing one (1) year limitation will not apply to the exercise of Lessee's
purchase option pursuant to subsection (a)(i)(B) above. It is acknowledged
that the option of the Lessee to give a Partial Termination Notice pursuant to
subsection (a)(i)(B) above is a right granted to Lessee that is separate from
the obligation of Lessee to purchase a Parcel at the option of Lessor if the
Environmental Event in question ripens into an Event of Default, as provided
in Section 14(a)(v).
(iii) In addition to any other amounts included within the
Offer Purchase Price, Lessee shall pay to Lessor an "Early Termination Fee"
(herein so-called) in an amount equal to one percent (1%) of the Acquisition
Price of the Parcel(s) in question, at the time the Lease is terminated as to
any Parcel(s) pursuant to this Section 13(a).
(b) Material Changes in Treatment of Transaction.
(i) The Lessee at any time may deliver to the Lessor a written
notice signed by an authorized officer of the Lessee (herein called an
"Early Termination Notice") upon the occurrence of any of the following:
(A) A ruling by the Internal Revenue Service which results
in the loss of MACRS (as defined in the Internal Revenue Code of 1986)
deductions relating to the Property by Lessee for federal income tax
purposes; or
(B) A change in GAAP or the interpretive rulings applicable
thereto which requires recharacterization of this Lease as a "capital
lease" rather than an "operating lease";
(C) Issuance of any rulings or requirements by the
Securities and Exchange Commission ("SEC") that would require that
this Lease be accounted for as a "capital lease" rather than as an
"operating lease" in any financial statements of Lessee used in any
public SEC filings.
The Early Termination Notice shall contain notice of the Lessee's intention
to terminate this Lease as of a Payment Date no earlier than thirty (30)
days after the delivery of such notice, and (ii) an Offer to Purchase all
of the Property pursuant to paragraph 14.
(ii) No Early Termination Fee shall be due in the event of a
purchase of the Property pursuant to this Section 13(b).
14. Offer to Purchase.
(a) Lessee shall have the right, or obligation, as applicable, to
deliver an "Offer to Purchase" (herein so-called) for the Property or an
applicable portion thereof from Lessor under the following circumstances:
(i) On the date that is six (6) months prior to the Expiration
Date (as extended, if applicable), Lessee shall be deemed to have delivered
to Lessor an Offer to Purchase the entire Property unless, on or before
such date, Lessee has given notice to Lessor of Lessee's election to pay
the Contingent Rent Payment pursuant to Section 27 hereof. Any such
purchase of the entire Property may be closed at any time during the last
six (6) months of the Term and no Early Termination Fee shall be applicable
thereto. The exercise by Lessee of its rights on one or more occasions
under Sections 12(b) or 13(a)(i) or 13(b) shall not limit or otherwise
affect Lessee's right to elect either to deliver an Offer to Purchase or
to pay the Contingent Rent Payment hereunder with respect to the portions
of the Property that remain subject to this Lease at the time the
provisions of Section 27 become applicable.
(ii) Simultaneously with the delivery of Partial Termination
Notice pursuant to Section 13(a)(i) above with respect to any applicable
portion of the Property, Lessee shall be obligated to deliver an Offer to
Purchase such portion of the Property and the delivery of such Offer to
Purchase shall be a condition precedent to the effectiveness of such
Partial Termination Notice.
(iii) Simultaneously with the delivery of any Early
Termination Notice pursuant to Section 13(b) above, Lessee shall be
obligated to deliver an Offer to Purchase the entire Property and the
delivery of such Offer to Purchase shall be a condition precedent to the
effectiveness of such Early Termination Notice.
(iv) Simultaneously with the delivery of any Termination Notice
with respect to an applicable portion of the Property pursuant to Section
12(b) hereof in connection with any Condemnation, Lessee shall be
obligated to deliver an Offer to Purchase such portion of the Property and
the delivery of such Offer to Purchase shall be a condition precedent to
the effectiveness of such Termination Notice.
(v) Upon the occurrence of an Event of Default, Lessee shall, at
the option of Lessor or Agent, be deemed to have delivered an Offer to
Purchase covering the entire Property (unless the Event of Default in
question is one that arises solely out of facts or conditions applicable to
one or more particular Parcel(c) [as opposed to the Property as a whole, or
the condition of Lessee or Lessee Parent] such that if the Parcel(s) in
question were not part of the Property the Event of Default in question
would not exist, in which case the Offer to Purchase shall be applicable
only to the Parcel(s) as to which such Event of Default relates) effective
as of the date on which such Event of Default is declared by Lessor or
Agent; provided, however, that in the case of any Event of Default as
defined in subsection 19(a)(xi) or 19(a)(xii), the Offer to Purchase
shall be deemed to have been given immediately upon the occurrence of the
Event of Default in question and without the necessity or requirement of
any notice or request from Lessor or Agent. An Early Termination Fee in
an amount equal to one percent (1%) of the applicable Acquisition Price
shall be due and payable with respect to any purchase of one or more
Parcel(s) pursuant to this subsection (v).
(vi) If a Construction Failure (as defined in Section 3 of the
Construction Addendum) shall occur with respect to the construction of New
Improvements on any one or more Parcel(s), then unless Lessee elects in
writing within fifteen (15) days thereafter to terminate the Lease with
respect to the Parcel as to which the Construction Failure has occurred
pursuant to Section 3.1 of the Construction Addendum, Lessee shall be
deemed to have delivered an Offer to Purchase the Parcel with respect to
which such Construction Failure has occurred upon the earlier of the
Required Completion Date (as defined in the Construction Addendum) or the
date on which such Construction Failure occurs for the New Improvements in
question. No Early Termination Fee shall be payable with respect to any
such purchase.
(b) Any Offer to Purchase delivered by the Lessee shall be
irrevocable, except as otherwise provided herein.
(c) The Lessor shall promptly accept any Offer to Purchase
delivered by Lessee in accordance with the foregoing provisions and the
procedure for the purchase of the Property or applicable portion thereof and
the purchase price therefor shall be governed by Section 15 hereof.
15. Procedure Upon Purchase.
(a) If the Lessee shall deliver (or is deemed to have delivered) an
Offer to Purchase under Section 14(a)(i), the closing of the Lessee's purchase
of the Property (the "Closing Date") shall be on the Expiration Date (or such
earlier date during the last six (6) months of the Term as may be designated by
Lessee). Otherwise, the Closing Date shall be: (1) in the case of an Offer to
Purchase covering all or a portion of the Property given pursuant to subsection
14(a)(ii), (iii), or (iv), on the Payment Date specified in the Partial
Termination Notice, Early Termination Notice, or Termination Notice, as
applicable; (2) in the case of an Offer to Purchase (covering either all of the
Property or an applicable portion thereof) delivered pursuant to subsection
14(a)(v) or (vi) on the first Payment Date that is at least thirty (30) days
after delivery (or deemed delivery) of the Offer to Purchase to Lessor by
Lessee. In any case the Closing Date may be on such other date as may be
mutually agreed upon by the Lessor and the Lessee. On the Closing Date, upon
receipt of the Offer Purchase Price, the Lessor shall convey, or cause to be
conveyed, the Property or applicable portion thereof (or, in the case of
Condemnation, the remaining portion thereof) to the Lessee or its designee by
an appropriate recordable limited or special warranty deed and other appropriate
conveyance documents containing no representation or warranty (expressed or
implied) except that the Property or applicable portion thereof is free and
clear of any conveyance, mortgage, lease, or Lien or other adverse interest of
any kind created or caused by the Lessor or any person claiming by, through
or under the Lessor but not otherwise (except as consented to by the Lessee).
(b) On the Closing Date, the Lessee shall pay, or cause to be paid,
to the Lessor the "Acquisition Price" for the Property or the portion(s) thereof
covered by the Offer to Purchase in question as defined in Exhibit "A", together
with all Net Rent, Additional Rent and other sums then due and payable hereunder
relating to the Property (including, in the case of a transfer of less than all
of the Property, all such sums attributable both to the portions of the Property
being transferred and the remaining portions of the Property) up to and
including such Closing Date, plus the Early Termination Fee (if applicable)
(such amounts, plus all amounts payable by Lessee pursuant to the following
sentence, are herein referred to as the "Offer Purchase Price"), and the Lessor
shall simultaneously (i) deliver to the Lessee or its designee the instruments
referred to in this Section 15 with respect to the Property or the applicable
portions thereof and any other instruments reasonably necessary to convey to
Lessee or its designee the Property or the applicable portions thereof and
assign any other property then required to be assigned pursuant hereto, and
(ii) convey, or cause to be conveyed, to the Lessee or its designee any Net
Proceeds and/or the right to receive the same attributable to the portions
of the Property being transferred that have not theretofore been disbursed.
The Transaction Mortgage granted by Lessor on the Property pursuant to the
Transaction Agreement shall be released from the Property (or applicable portion
thereof) purchased by Lessee, by the Agent, by appropriate recordable
instrument. The Lessee shall also pay, or cause to be paid, all charges
incident to such conveyance, including reasonable attorneys' fees of Lessor's
counsel and/or Agent's counsel, and escrow fees, recording fees, any fees,
costs or expenses incurred by the Lessor or Agent in connection with the same,
and all applicable transfer taxes which may be imposed by reason of such
conveyance and the delivery of said instruments (collectively, the "Closing
Costs"). Upon the completion of any purchase of the Property pursuant to this
Section 15, but not prior thereto, this Lease shall terminate with respect to
the Property or the applicable portions thereof affected by such transaction
except with respect to obligations and liabilities of the Lessee (actual or
contingent) (i) under Section 8 hereof, and (ii) which have arisen with respect
to the Property on or prior to such date of purchase, and except as elsewhere
provided herein.
(c) If less than all of the Property is purchased, this Lease shall
remain in full force and effect as to the remaining portions of the Property,
and the Net Rent shall be adjusted as provided for on Exhibit "A".
16. Insurance. Throughout the Term of the Lease (including any extension
thereof), Lessee shall comply with the following "Insurance Requirements"
(herein so-called):
(a) The Lessee will purchase and maintain, or cause to be purchased
and maintained, insurance with respect to the Property of the following types
and in the following amounts, or if greater, in sufficient amounts to prevent
the Lessor, the Lessee, the Agent and/or the Instrument Holders from becoming
co-insurers of any loss:
(i) Property Insurance: Insurance against physical damage to
the Property caused by "all risks" perils (subject to certain commercially
customary exclusions such as earthquake damage), as well as broad form
boiler and machinery coverage.
(ii) Commercial General Liability Insurance: Insurance (issued
on an "occurrence" rather than "claims made" basis) against claims for
bodily injury (including death) and property damage occurring on, in or
about the Property or resulting from activities on the Property, in the
minimum combined single limit amount of $50,000,000 in the aggregate and
and $25,000,000 for each occurrence for bodily injury (or death) and/or
property damage. Such coverage may be provided either by a primary policy
having such limits or by a primary policy with lower limits and one or
more secondary or "umbrella" policies, so long as in the aggregate the
required coverage is provided.
(iii) Other Insurance: Such other insurance, in such amounts
and against such risks, as is available from time to time and customarily
carried by companies owning, operating or leasing property or conducting
businesses similar and/or similarly situated to the Property and/or the
Lessee.
Such insurance shall be written by companies that are nationally recognized
(including Lloyd's of London or other recognized international insurers) and
primary insurance shall be written by companies with a Best's rating of at
least B+/VI for property insurance and B+/X or better for other insurance, and
in each case legally qualified to issue such insurance, selected by the Lessee
and shall name Lessor (in both its individual capacity and in its capacity as
Trustee under the Declaration of Trust, to the extent of its respective
interests under the Transaction Documents) and Agent (for the benefit of itself
and the Instrument Holders) as an additional insured and/or loss payee, as their
interests may appear. If the Property or any part thereof shall be damaged
or destroyed by fire or other insured peril, the Lessee shall promptly notify
the Lessor thereof and of the estimated cost of rebuilding, and of replacing
or repairing the same.
(b) The property insurance referred to in subsection 16(a)(i) for the
Property shall (i) at all times be in an amount at least equal to one hundred
percent (100%) of the replacement cost value (without depreciation), but
excluding the cost of footers, foundations, and site improvements not normally
insured, and (ii) include a lenders' loss payable endorsement in favor of the
Agent, as mortgagee under the Transaction Mortgage, and any loss or damage under
such property insurance policy other than proceeds representing compensation for
business interruption or damage to Lessee's personal property shall be paid to
the Proceeds Trustee (or, if received by any other party, shall be immediately
endorsed or paid over to the Proceeds Trustee) where required pursuant to
Section 12 of this Lease to be held and applied pursuant to the terms of this
Lease. Every policy required under Section 16(a) shall (i) expressly provide
that it will not be cancelled or terminated due to a lapse for non-payment of
premium or materially changed except upon fifteen (15) days' written notice to
the Lessor, Agent and the Lessee; (ii) provide that the interests of the Lessor
and the Agent shall be insured regardless of any breach or violation by the
Lessee of any warranties, declarations or conditions contained in such
insurance; (iii) provide that such insurance shall not be invalidated as to the
Lessor, the Agent, or any Instrument Holder by any act, omission or negligence
of the Lessee or any other of the Lessor, the Agent or any Instrument Holder,
nor by any foreclosure or other proceedings or notices thereof relating to the
Property or any part thereof, nor by legal title to, or ownership of the
Property or any part thereof becoming vested in the Agent or its agents, nor by
occupancy or use of the Property or any part thereof for purposes more hazardous
than permitted by such policy; (iv) provide that all insurance claims pertaining
to the Property or any part thereof shall be adjusted by the insurers thereunder
with the Lessee but that the Lessor and Agent must consent to any such adjusted
claim (which consent shall not be unreasonably withheld) except in those
circumstances where Lessee is authorized to adjust the insurance claim in
question pursuant to Section 12 hereof; and (v) include a waiver of all rights
of subrogation against the Lessor, the Agent and/or the Instrument Holders and
any recourse against the Lessor, the Agent and/or the Instrument Holders for
payment of any premiums or assessments under any policy. The Lessee shall
advise the Lessor promptly of any policy cancellation or any change adversely
affecting the coverage provided thereby.
(c) The Lessee shall deliver to the Lessor and Agent the certificates
of insurance in form and substance reasonably acceptable to Lessor and Agent
evidencing the existence of all insurance which is required to be maintained by
the Lessee hereunder including descriptions of the previously mentioned
Insurance Requirements not normally found in a standard insurance policy as well
as descriptions of the exclusions from coverage under such policies, such
delivery to be made (i) on or before the Commencement Date, (ii) within thirty
(30) days of the issuance of any additional policies or amendments or
supplements to any of such insurance, and (iii) on or before the expiration date
of any such insurance; provided, however, that Lessee may deliver the necessary
certificate for a renewal or replacement policy within five (5) days after the
expiration date of the policy being renewed or replaced so long as Lessee
provides Lessor and Agent with some reasonable evidence that the required
coverage is in fact in place on or before the expiration date of the expiring
policy. The Lessee shall not obtain or carry separate insurance concurrent in
form, or contributing in the event of loss, with that required by this Section
16 unless the Lessor, the Agent and/or the Instrument Holders, as applicable,
are named as additional insureds therein as their interests may appear, with
loss payable as provided in this Lease. The Lessee shall immediately notify
the Lessor and the Agent whenever any such separate insurance is obtained and
shall deliver to the Lessor and Agent the certificates of insurance evidencing
the same as is required hereunder. Any insurance required hereunder may be
provided under Lessee's blanket policies; provided that the coverage allocable
to the Property is not less than the coverage required by this Section 16 as
separately stated.
(d) The requirements of subsections (a) through (c) of this Section
16 shall not be construed to negate or modify the Lessee's obligations under
Section 8 hereof.
(e) From time to time Lessee may elect to satisfy all or certain of
the insurance requirements of this Section 16 through use of a self-insurance
program, subject to Lessor's and Agent's prior written reasonable approval of
the self-insurance program in question and after delivery to Lessor and Agent
of such assurances and undertakings as Lessor and Agent may reasonably require
to evidence that any loss or damage that would have been covered by third party
insurance policies hereunder in the absence of such a self-insurance program
will be paid or covered by Lessee pursuant to such self-insurance program. In
this regard Lessee's current self-insurance program (effective as of October
11, 1995) as described on Annex I attached hereto and made a part hereof for
all purposes is approved. Further, so long as no Event of Default exists
hereunder Lessee may from time to time increase the self-insurance retention
limits/deductibles for general liability, automobile liability, and/or property
damage losses, respectively, in its self-insurance program from the amounts set
out on such Annex I to amounts not in excess of $1,000,000.00 without the
consent of Lessor or Agent. Without limitations on any indemnification or other
obligations of Lessee hereunder Lessee hereby expressly acknowledges and agrees
that Lessee shall be fully responsible and liable to Lessor, Agent, and/or the
Instrument Holders, as applicable, from time to time for any loss or damage
that would have been covered by third party insurance policies hereunder in the
absence of such self-insurance program and any such loss or damage will be paid
or covered by Lessee on demand.
17. Assignment; Subletting.
(a) Sublease Requirements. The Lessee may sublet the Property or any
part thereof if, but only if, (i) at the time of execution of any such sublease,
no Event of Default shall have occurred and be continuing; (ii) any such
sublease shall by its terms be expressly made subject and subordinate to the
terms of this Lease and the Transaction Documents; and (iii) the Lessee shall
provide the Lessor, within ten (10) days prior to the effective date of such
sublease, with a conformed copy of the instrument creating such sublease.
Any sublease executed by Lessee and not in strict compliance with the foregoing
shall be null and void and of no force or effect.
(b) Assignment or Hypothecation. The Lessee shall not assign,
convey, or otherwise transfer, or mortgage, pledge or otherwise hypothecate or
encumber its interest in and to this Lease or in and to any sublease or the
rentals payable thereunder without the prior written consent of the Agent,
which consent may be conditioned or denied in Agent's sole discretion; Any
such assignment, conveyance, transfer, mortgage, pledge, hypothecation, or
encumbrance made without Agent's consent shall be null and void and of no force
or effect. The foregoing shall not prohibit Lessee from mortgaging or granting
a security interest in Lessee's Equipment. In addition, any Lessee may assign
its lease position with respect to a particular Parcel to any other Lessee
without the consent of the Agent, but in such instance the Lessees involved
shall notify Agent and Lessor of the assignment, which shall be effective upon
execution of a supplement to this Lease in form reasonably satisfactory to Agent
confirming the change of the Lessee applicable to the Parcel in question.
(c) Use By Affiliates. Notwithstanding anything herein to the
contrary, Lessee may from time to time during the Term permit Affiliates of the
Lessee to occupy portions of the Property and Lessor acknowledges and agrees to
the same.
(d) Lessee Remains Liable. No sublease pursuant to this Section 17
or any occupancy of the Property by any Affiliate of the Lessee, nor any
assignment or hypothecation that may be approved by Agent (but without implying
any obligation whatsoever on Agent to approve any proposed assignment or
hypothecation), shall modify or limit any right or power of the Lessor
hereunder or affect or reduce any obligation of the Lessee hereunder, and all
such obligations shall continue in full force and effect as obligations of a
principal and not of a guarantor or surety, as though no subletting, assignment,
or hypothecation had been made or occupancy permitted.
18. Permitted Contests.
(a) The Lessee shall not be required, nor shall the Lessor have the
right, to pay, discharge or remove any Imposition, to comply or cause the
Property or any part thereof to comply with any applicable Legal Requirement,
to pay any materialman's, laborer's or undischarged or unremoved Lien, to
perform any disputed obligations under any Facility Agreements, or to take
action to cure any alleged encroachment affecting a Parcel as long as no Special
Incipient Default, and no Event of Default of any kind, exists hereunder and so
long as the Lessee shall at its sole expense contest, or cause to be contested,
in good faith the existence, amount or validity thereof by appropriate
proceedings which shall (i) in the case of an unpaid Imposition or undischarged
or unremoved Lien, prevent the collection thereof from the Lessor, the Agent,
the Instrument Holders and/or against the Property, (ii) in all cases prevent
the sale, forfeiture, loss of the Property or any part thereof, and (iii) in
all cases not subject the Lessor, the Agent, and/or the Instrument Holders to
the risk of any civil or criminal liability for failure to comply therewith.
The Lessee shall give such security as may be reasonably demanded by the Lessor
or Agent to insure ultimate payment of such Imposition or the discharge or
removal of materialman's, laborer's or mechanic's Lien or to insure compliance
with such Legal Requirement or Facility Agreement and to prevent any sale or
forfeiture of the Property or any part thereof, or any interference with or
deductions from any Net Rent, Additional Rent or any other sum required to be
paid by the Lessee hereunder by reason of such non-payment, non-discharge,
non-removal or non-compliance; provided that no such security shall be required
so long as Lease Guarantor is in compliance with the financial covenants set
out in the Lease Guarantee.
(b) The Lessor shall cooperate with the Lessee in any contest and
shall allow the Lessee to conduct such contest (in the name of the Lessor, if
necessary) at the Lessee's sole cost and expense. The Lessee shall notify the
Lessor of each such proceeding within ten (10) days after the commencement
thereof, which notice shall describe such proceeding in reasonable detail.
(c) The Lessee shall, promptly after the final determination
(including appeals) of any contest brought by it pursuant to this Section 18,
pay and discharge all amounts which shall be determined to be payable therein
and shall be entitled to receive and retain for its own account all amounts
refunded and/or rebated as a result of any such contest and if the Lessor
receives any amount as a result of such contest to which it is not otherwise
entitled pursuant to this Lease, it shall promptly return such amount to the
Lessee.
19. Default Provisions.
(a) Any of the following occurrences or acts shall constitute an
event of default (each, an "Event of Default") under this Lease:
(i) if the Lessee shall fail to pay any Net Rent, Offer
Purchase Price or Contingent Rent Payment on the date on which payment is due;
provided, however, that with respect to Net Rent, Lessee shall be entitled to
notice of such non-payment and a five (5) Business Day cure period with respect
to the defaulted amount before such non-payment of Net Rent becomes an Event of
Default on up to two (2) occasions during any period of eighteen (18)
consecutive months during the Term (after such two (2) notices of non-payment of
Net Rent during any period of eighteen (18) consecutive months Lessee will not
be entitled to further notice of non-payment or grace or cure periods with
respect to Net Rent payments during the remainder of the eighteen (18)
month period in question (i.e. the period beginning with the first of such two
occasions) and an Event of Default shall exist if future Net Rent payments
during such period of eighteen (18) consecutive months are not made when due).
(ii) subject to the terms of Section 18 relating to permitted
contests, if the Lessee shall fail to pay any Imposition (including,
without limitation, any interest or penalties that may then be applicable
thereto) within five (5) Business Days after written demand by Lessor or
Agent.
(iii) if the Lessee shall fail to pay any Additional Rent or
other monetary payment due hereunder (other than the payment referred to
in subsections [i] or [ii] above) or due under the Transaction Agreement
or any Transaction Document on the date such payment is due and such
failure is not cured within five (5) Business Days after written notice of
such failure is given by either Lessor or Agent to Lessee;
(iv) if the Lessee shall fail to comply with any Insurance
Requirement (either by actual insurance or through the use of a
self-insurance program satisfying the requirements of Section 16(e) hereof)
and such failure is not cured within thirty (30) days after written notice
of such failure is given to Lessee (which cure period shall be ten (10)
days instead of thirty (30) days if the non-compliance in question is an
actual failure to have any required insurance in force); provided, that the
foregoing cure period shall not be deemed to limit Lessor's or Agent's
right to take action as deemed necessary to avoid lapse or termination of
coverage even during such cure period nor Lessee's obligations to
reimburse Lessor for any funds it may expend in connection therewith;
(v) if the Lessee shall voluntarily grant or create any Lien
(other than Permitted Encumbrances) upon the Property or any part thereof
interest therein or upon any Net Rent, Additional Rent or other sum
payable hereunder;
(vi) if Lessee shall fail to comply with any of the affirmative
or negative covenants set out in Section 32 hereof;
(vii) if any representation or warranty made by Lessee under
this Lease, any supplement hereto, the Transaction Agreement, or any other
Transaction Document proves to have been false or materially misleading at
the time made and the misrepresentation, in the reasonable judgment of
Lessor or Agent, as applicable, has a material adverse effect upon Lessor
or the Instrument Holders;
(viii) if the Lessee shall fail to observe or perform any
other provision hereof (except as provided in Section 18 hereof), or fail
to observe or perform Lessee's obligations under the Transaction Agreement
or any Transaction Document and, in either case, Lessee does not cure such
failure within thirty (30) days after receipt of written notice to the
Lessee of such failure;
(ix) if an Event of Default has occurred under the Environmental
Indemnity Agreement, or an Event of Default by Lessee has occurred under
the Transaction Agreement or any of the other Transaction Documents;
(x) Upon the occurrence of a payment default by Lessee with
respect to any other indebtedness in an amount in excess of $5 million
owed by Lessee to any person or entity as and when such payment is due,
which default continues beyond any grace or cure periods applicable
thereto under the terms of the instruments evidencing such indebtedness;
or
(xi) if a custodian, receiver, liquidator, or trustee of Lessee,
or of any of the property of Lessee, is appointed or takes possession, and
such appointment or possession remains in effect for more than sixty (60)
days; or Lessee generally fails to pay its debts as they become due or
admits in writing its inability to pay its debts as they mature; or Lessee
is adjudicated bankrupt or insolvent; or an order for relief is entered
under the Federal Bankruptcy Code against Lessee; or any of the property of
Lessee is sequestered by court order and the order remains in effect for
more than sixty (60) days; or a petition is filed against Lessee under the
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
subsequently in effect, and is not stayed or dismissed within sixty (60)
days after filing;
(xii) if Lessee files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
law of any jurisdiction, whether now or subsequently in effect; or consents
to the filing of any petition against it under any such law; or consents
to the appointment of or taking possession by a custodian, receiver,
trustee or liquidator of Lessee or of all or any part of the property of
Lessee;
(xiii) if the Property or any material portion thereof shall
be left vacant or unattended and without proper maintenance for a period
of thirty (30) days after notice from Lessor requesting maintenance or
other appropriate action. Nothing in the foregoing provision shall be
deemed to prohibit Lessee from ceasing retail operations at any Parcel so
long as the Improvements as to which retail operations have ceased
continue to be properly secured, maintained, and insured as required by
the terms of this Lease; or
(xiv) if an Event of Default by the Lease Guarantor has
occurred under the Lease Guarantee.
To the extent any provision of this Lease requires payment and/or performance
of any matter after written request or demand by Lessor, and Lessor gives such
written request or demand for the action in question to Lessee, such written
request or demand to Lessee specifically requesting or demanding payment or
performance of the matter in question, and specifying that if payment or
performance is not made an Event of Default may be declared by Lessor or Agent,
shall constitute the notice required to be given by Lessor under this Section
19(a) for purposes of beginning any applicable grace or cure period, and if the
action requested or demanded is not taken by Lessee within the applicable grace
or cure period in question, an Event of Default shall arise hereunder without
the necessity of any further notice or demand by Lessor or Agent.
It is expressly agreed that in all circumstances where Lessee is entitled
to receive notice of non-performance from Lessor pursuant to this Section 19(a)
the notice in question may be given on behalf of Lessor by Agent, and Lessor
hereby appoints Agent as its agent for purposes of giving such notices to
Lessee.
If at any time there is more than one entity that is a Lessee under the
terms of this Lease, then (A) any Event of Default by any Lessee (including,
but without limitation, an Event of Default pursuant to subsections 19(a)(xi)
and/or (xii) as to such Lessee, shall constitute an Event of Default for
purposes of all parties constituting "Lessee," and (B) where Lessor or Agent is
required to give notice of any default, non-payment, or non-performance
hereunder, notice shall be given to the Lessee Parent which shall be effective
as to all Lessees regardless of which Lessee actually uses or occupies the
portions of the Property in question.
If an Event of Default occurs (including the expiration of applicable
grace or cure periods), then the subsequent performance of the defaulted
obligation shall not be deemed to "cure" the Event of Default unless Lessor
(with the consent of Agent) agrees to accept such cure in writing, and absent
such agreement the Event of Default in question shall be deemed to "continue"
for all purposes of this Lease. However, the purchase by Lessee of an affected
portion of the Property pursuant to subsection 13(a)(i), 14(a)(v) or 14(a)(vi)
where no Event of Default exists with respect to the remaining portions of the
Property shall be deemed to "cure" the Event of Default in question, the Lease
shall remain in effect as to the remainder of the Property, and the Lessor and
Lessee shall be automatically restored to their former rights and positions
hereunder.
(b) The Lessor may take all steps to protect and enforce the rights
of the Lessor or obligations of the Lessee hereunder, whether by action, suit
or proceeding at law or in equity (for the specific performance of any covenant,
condition or agreement contained in this Lease, or in aid of the execution of
any power herein granted, or for the enforcement of any other appropriate legal
or equitable remedy) or otherwise as the Lessor shall deem necessary or
advisable.
(c) If an Event of Default shall have occurred and be continuing,
then:
(i) By written notice by the Lessor to the Lessee, the Lessor
may terminate this Lease; provided, that no such termination shall be effective
unless approval of such termination is given in writing by Agent to both Lessor
and Lessee. This Lease and the estate hereby granted shall expire and terminate
on the date specified in such notice (or, if later, the date on which approval
of such notice is given by Agent) as fully and completely and with the same
effect as if such date were the Expiration Date herein fixed for the expiration
of the Term and all rights of the Lessee hereunder shall expire and terminate,
but the Lessee shall remain liable as hereinafter provided.
(ii) Should the Lessor elect not to terminate this Lease after
the occurrence of an Event of Default, this Lease shall continue in effect and
Lessor may enforce all Lessor's rights and remedies under this Lease including
the right to recover the rent as it becomes due under this Lease. For the
purposes hereof, the following do not constitute a termination of this Lease:
(A) Acts of maintenance or preservation of the Property or
any part thereof or efforts to relet the Property or any part thereof,
including, without limitation, termination of any sublease of the Property
and removal of such subtenant from the Property; and/or
(B) The appointment of a receiver upon initiative of the
Lessor to protect the Lessor's interest under this Lease.
(d) If an Event of Default shall have occurred and be continuing,
the Lessor shall have (i) the right, whether or not this Lease shall have been
terminated pursuant to subsection 19(c) hereof, to re-enter and repossess the
Property or any part thereof, as the Lessor may elect, by summary proceedings,
ejectment, any other legal action or in any other lawful manner the Lessor
determines to be necessary or desirable and (ii) the right to remove all persons
and property therefrom. The Lessor shall be under no liability by reason of any
such re-entry, repossession or removal. No such re-entry or repossession of the
Property or any part thereof shall be construed as an election by the Lessor to
terminate this Lease unless a notice of such termination is given to the Lessee
pursuant to subsection 19(c) hereof, or unless such termination is decreed by a
court or other governmental tribunal of competent jurisdiction. Should the
Lessor elect to re-enter the Property as herein provided or should the Lessor
take possession pursuant to legal proceedings or pursuant to any notice provided
for by Law or upon termination of this Lease pursuant to subsection 19(c) hereof
or otherwise as permitted by Law, the Lessee shall peaceably quit and surrender
the Property or any part thereof to the Lessor. In any such event, neither the
Lessee nor any person claiming through or under the Lessee, by virtue of any
Law, shall be entitled to possession or to remain in possession of the Property,
but shall forthwith quit and surrender the Property to the Lessor.
(e) At any time or from time to time after the re-entry or
repossession of the Property or any part thereof pursuant to subsection 19(d)
hereof, whether or not this Lease shall have been terminated pursuant to
subsection 19(c) hereof, the Lessor may (but, except as otherwise required by
applicable Law, shall be under no obligation to) relet the Property or any
part thereof, for the account of the Lessee, without notice to the Lessee, for
such term or terms and on such conditions and for such uses as the Lessor, in
its discretion, may determine. The Lessor may collect and receive any rents
payable by reason of such reletting. The Lessor shall not be liable for any
failure to relet the Property or any part thereof or for any failure to collect
any rent due upon any such reletting.
(f) No termination of this Lease pursuant to subsection 19(c) hereof,
or by operation of Law, and no re-entry or repossession of the Property or any
part thereof, pursuant to subsection 19(d) hereof, and no reletting of the
Property or any part thereof pursuant to subsection 19(e) hereof, shall relieve
the Lessee of its liabilities and obligations hereunder, all of which shall
survive such termination, re-entry, repossession or reletting.
(g) Upon the occurrence of an Event of Default, the Lessor, without
waiving any Event of Default or releasing Lessee from any obligation, may (but
shall be under no obligation to) make any required payment or perform any
required act for the account and at the expense of the Lessee, and may enter
upon the Property for such purpose and take all such action thereon as, in the
Lessor's sole discretion, may be necessary or appropriate therefor. No such
entry shall be deemed an eviction of the Lessee or a termination of this Lease.
All sums so paid by the Lessor and all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses so incurred, together with
interest thereon to the extent permitted by Law) shall be paid by the Lessee to
the Lessor on demand as Additional Rent.
(h) In the event of any termination of this Lease or re-entry or
repossession of the Property or any part thereof by reason of the occurrence
of any Event of Default, the Lessee shall pay to the Lessor all Net Rent and
Additional Rent and other sums required to be paid to and including the date of
such termination, re-entry or repossession; and thereafter, until the end of
the Term, whether or not the Property or any part thereof shall have been relet,
the Lessee shall be liable to the Lessor for, and shall pay to the Lessor, on
the days on which such amounts would be payable under this Lease in the absence
of such termination, re-entry or repossession, as agreed current damages and
not as a penalty: all Net Rent, all Additional Rent and other sums which would
be payable under this Lease by the Lessee, in the absence of such termination,
re-entry or repossession, and all costs (including reasonable attorneys' fees
and expenses) incurred by the Lessor hereunder (payable on demand). At such
time after the termination or expiration of this Lease as the Lessee shall have
paid all amounts required to be paid by it under this Lease and the Lessor shall
have discharged any and all obligations to the Agent, then the Lessor shall pay
to the Lessee, within five (5) Business Days after its receipt thereof, the net
proceeds, if any, of any reletting effected for the account of the Lessee
pursuant to subsection 19(e), after deducting from such proceeds all the
Lessor's reasonable expenses in connection with such reletting (including,
but not limited to, all repossession costs, brokerage commissions, attorneys'
fees and expenses, employees' expenses, alteration costs and expenses of
preparation for such reletting), and the amounts to which Lessee may be entitled
hereunder shall be held by Lessor in trust for Lessee pending any such payment
to Lessee.
(i) Lessor may exercise its rights under this Section 19 either
directly or indirectly or through any agent (including, without limitation,
the Agent under the Transaction Agreement) as Lessor may from time to time
appoint to act on Lessor's behalf.
(j) It is acknowledged that if Lessee closes the purchase of the
Property pursuant to an Offer to Purchase properly given (or deemed given) by
Lessee hereunder and pays the Offer Purchase Price to Lessor therefor, this
Lease shall terminate as of the closing of such purchase and Lessor will have
no further remedial rights with respect to any then existing Event of Default,
but such purchase shall not extinguish any rights of indemnification or other
such rights of Lessor, Agent, or the Instrument Holders that, by the terms or
implications hereof, are intended to survive termination of this Lease.
20. Additional Rights.
(a) No right or remedy hereunder shall be exclusive of any other
right or remedy, but shall be cumulative and in addition to any other right or
remedy hereunder or now or hereafter existing by law or in equity and the
exercise by the Lessor of any one or more of such rights, powers or remedies
shall not preclude the simultaneous exercise of any or all of such other rights,
powers or remedies. Failure to insist upon the strict performance of any
provision hereof or to exercise any option, right, power or remedy contained
herein shall not constitute a waiver or relinquishment thereof for the future.
Receipt by the Lessor of any Net Rent, Additional Rent or other sum payable
hereunder with knowledge of the breach by Lessee of any provision hereof shall
not constitute waiver of such breach, and no waiver by the Lessor of any
provision hereof shall be deemed to have been made unless made in writing.
The Lessor shall be entitled to injunctive relief in case of the violation or
or threatened violation of any of the provisions hereof, a decree compelling
performance of any of the provisions hereof or any other remedy allowed to the
Lessor by law or in equity.
(b) The Lessee hereby waives and surrenders for itself and all those
claiming under it, including creditors of all kinds, any right and privilege
which they may have to redeem the Property or to have a continuance of this
Lease after termination of the Lessee's right of occupancy by Law or by any
legal process or writ, or under the terms of this Lease, or after the
termination of the term of this Lease as herein provided. Lessee also waives,
to the maximum extent permitted by law, any requirement that the Lessor re-let
the Property or otherwise mitigate or attempt to mitigate damages arising out
of any default by Lessee.
(c) If an Event of Default exists hereunder, the Lessee shall pay to
the Lessor on demand, all reasonable fees and expenses incurred by the Lessor
in enforcing its rights under this Lease, including reasonable attorneys' fees
and expenses, and expressly including any obligations or liabilities that
Lessor may incur to Agent or the Instrument Holders in respect of costs incurred
by Agent or the Instrument Holders as a result of such Event of Default.
(d) (i) Lessor and Lessee intend that this Lease be treated as an
operating lease. If, notwithstanding the intention of the parties, a court of
competent jurisdiction determines in a final judgment or order that the
transaction represented by this Lease will be treated as a financing transaction
under state law, then in such event it is the intention of the parties hereto
(1) that this Lease be treated as a mortgage and security agreement or other
similar instrument (the "Tenant Mortgage") from Lessee, as mortgagor, to Lessor,
as mortgagee, encumbering the Property, (2) that upon an Event of Default Lessor
shall have, as a result of such determination, all of the rights, powers and
remedies of a mortgagee available under applicable Law to take possession of
and sell (whether by foreclosure or otherwise) the Property, (3) that the
effective date of the Tenant Mortgage shall be the effective date of this
Lease, (4) that the recording of an instrument referencing this provision shall
be deemed to be the recording of the Tenant Mortgage, and (5) to conform
strictly to any applicable usury Laws (in such regard, if the Tenant Mortgage
would otherwise be usurious under applicable Law, then, notwithstanding anything
herein to the contrary, it is agreed as follows: (A) the aggregate of all
consideration that constitutes interest under applicable Law that is contracted
for, taken, reserved, charged or received shall under no circumstances exceed
the maximum amount allowed by such applicable Law, (B) in the event of
acceleration or any required or permitted prepayment, then such consideration
that constitutes interest under applicable Law may never include more than the
maximum amount allowed by such applicable Law, and (C) excess interest, if any,
provided for herein shall be cancelled automatically and if theretofore paid,
shall be credited to or refunded to Lessee. It is further agreed that sums
paid or agreed to be paid for the use, forbearance or detention of money
hereunder shall, to the extent permitted by applicable Law, be amortized,
prorated, allocated and spread throughout the full Term until payment in full
so that the rate or amount of interest does not exceed the applicable usury
ceiling, if any). Lessee hereby grants, bargains, sells, conveys, mortgages,
and hypothecates all of Lessee's right, title, and interest in the Property to
Lessor to the extent necessary to effect the foregoing provisions, and
appropriate words of conveyance shall be included in the recorded memorandum
of this Lease as necessary to give effect to such provisions under state law.
(ii) If this Lease is treated as a Mortgage then for purposes of
clause (i) above, the term "applicable Law" shall mean the Law of the State of
Pennsylvania (or the Law of any other jurisdiction whose Laws may be
mandatorily applicable notwithstanding other provisions of this Lease, or Law
of the United States of America applicable hereto which would permit the
parties to contract for, charge, take, reserve or receive a greater amount of
interest than under Pennsylvania (or such other jurisdiction's) Law.
(e) At all times during the Term of this Lease, and without regard
to the characterization of this Lease for state law or for financial accounting
purposes, the Lessor shall claim no depreciation deductions with respect to the
Property for federal income tax purposes. Further, to the extent Lessor is
required to file a tax return as a legal entity Lessor will treat all Net Rent
received as interest income for federal income tax purposes.
21. Notices. Any notice required to be delivered hereunder shall be
deemed delivered, whether actually received or not, one (1) Business Day after
deposit with a nationally recognized courier service for overnight delivery
addressed to the parties hereto or Agent, as applicable, at the respective
addresses specified below, or at such other address as they or the Agent may
have subsequently specified by written notice. The addresses for notices to
Lessor, Lessee, and Agent are as follows:
If to Lessor: State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Fourth Floor
Boston, MA 02110
Attention:Donald E. Smith
Vice-President
Fax No. 617/664-5371
with a copy to:Bingham, Dana & Gould
100 Pearl Street
Hartford, CT 06103
Attention: James G. Scantling, Esq.
Fax No. 860/527-5188
If to Lessee: The Pep Boys - Manny, Moe & Jack
(all Lessees shall 3111 W. Allegheny Avenue
be deemed notified Philadelphia, PA 19132
by notice to this Attention: Michael Holden
address) Senior Vice President-Finance
Fax No. 215/227-9533
with a copy to:The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention:Ronald M. Neifield
Real Estate Counsel
Fax No. 215/229-5076
If to Agent: Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, NY 10528
Attention: EFL/CBL Credit Head
Fax No. 914/899-7308
with a copy to:Brown McCarroll & Oaks Hartline
300 Crescent Court, Suite 1400
Dallas, Texas 75201
Attention: Charles W. Morris, Esq.
Fax No. 214/999-6170
Notices sent by any other method (including regular or certified mail, hand
delivery, or facsimile transmission) shall be deemed delivered when actually
received by the addressee. Any notice of change of address shall be effective
only upon actual receipt, regardless of delivery method, and such new address
shall be effective as to notices given by the other parties commencing ten
(10) days after such change of address notice is received by such parties.
No party may establish an official address for notice outside the continental
United States.
22. No Default Certificate. Each party hereby shall, at the reasonable
request of the other party hereto, deliver to such other party a certificate
stating whether such other party has knowledge of, or has received notice from
any person of, any Environmental Event, Casualty, Condemnation, Incipient
Default or Event of Default.
23. Surrender. If upon the expiration or termination of the Term of this
Lease, or upon any partial termination of the Lease as to a Parcel pursuant to
Section 12(b), Lessee or its designee has not purchased the Property or
applicable Parcel as provided hereunder, the Lessee shall surrender the Property
or applicable Parcel to the Lessor in the condition in which the Property or
applicable Parcel was upon the addition of the Parcel to the Property or, in the
case of a Parcel on which New Improvements have been added, the condition in
which such Parcel existed at the time the Construction Advance in respect of
such New Improvements was made, except as repaired, rebuilt, altered or added
to as permitted or required hereby and except for ordinary wear and tear.
In addition, simultaneously with the surrender of the Property or applicable
Parcel to Lessor, Lessee shall deliver to Lessor and Agent a current "Phase I"
Environmental Assessment Report covering all portions of the Property or
applicable Parcel evidencing that the Property or applicable Parcel does not
appear, based on the visual review of same, to be in violation of Environmental
Laws or contaminated with any Hazardous Substances and that the consultant
issuing such report (which consultant must be acceptable to Agent) based on
such consultant's review of the Hazardous Substances handling practices of
Lessee and review of all documents and records with respect thereto does not
recommend any further testing or environmental remediation work on the Property
or any portion thereof. To the extent that the Property or applicable Parcel
is not in such condition upon such expiration or termination, the Lessee shall
pay to the Lessor such additional amounts as are reasonably required to place
it in such condition. The Lessee shall also surrender the Property or
applicable Parcel to the Lessor free and clear of all Liens, easements,
consents and restrictive covenants and agreements affecting the Property or
applicable Parcel which the Lessee is obliged hereunder to remove but Lessee
shall not be required to remove any Permitted Encumbrance or any other matter
specifically approved for such purpose in writing by Agent. Nothing contained
in this Section 23 shall relieve or discharge or in any way affect the
obligation of the Lessee to cure promptly pursuant to this Lease any violations
of Legal Requirements referred to in this Lease, or to pay and discharge any
Liens and Impositions against the Property or applicable Parcel, subject,
however, to the right of the Lessee to contest the same pursuant to the
provisions of Section 18. The Lessee, at its sole cost and expense, shall
remove from the Property or applicable Parcel on or prior to expiration or
termination all property situated thereon which is not owned by the Lessor and
shall repair any damage caused by such removal and shall restore the Property
or applicable Parcel to the condition (or reasonable equivalent thereof) in
which they existed immediately prior to the installation of such property,
except for ordinary wear and tear. Lessee shall indemnify and hold harmless
the Lessor against any loss, liability or claim arising out of the Lessee's
removal of such property from the Property or applicable Parcel. Property not
so removed shall be deemed abandoned by Lessee, shall become the property of
the Lessor, and the Lessor may cause such property to be removed from the
Property or applicable Parcel and disposed of, but the reasonable cost of any
such removal and disposition and of repairing any damage caused by such removal
and of the restoration of the Property or applicable Parcel to the condition
(or reasonable equivalent thereof) in which it existed immediately prior to
the installation of such property, ordinary wear and tear excepted, shall be
borne by the Lessee. The obligations of the Lessee under this Section 23 shall
survive the expiration or any termination of this Lease (whether by operation of
Law or otherwise) for all matters described in this Section 23 which occur or
arise prior to such expiration or termination or arise out of or result from
facts, events, claims, liabilities, actions or conditions occurring, arising or
existing on or before such expiration or termination.
24. Separability; Binding Effect; Governing Law; Non-Recourse.
(a) Except as expressly provided otherwise in this Lease, each
provision hereof shall be separate and independent and the breach of any such
provision by the Lessor shall not discharge or relieve the Lessee from its
obligations to perform each and every covenant to be performed by the Lessee
hereunder. If any provision hereof or the application thereof to any Person or
circumstance shall be invalid or unenforceable, the remaining provisions hereof,
or the application of such provision to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby,
and each provision hereof shall be valid and shall be enforceable to the extent
permitted by Law. All provisions contained in this Lease shall be binding upon,
inure to the benefit of, and be enforceable by, the respective permitted
successors and assigns of the Lessor and the Lessee to the same extent as if
each successor and assignee were named as a party hereto. Further, all rights
of the Agent and/or Instrument Holders hereunder shall inure to the benefit of
each successor and assignee of Agent, in its capacity as such, or any successor
in writing by Agent. Any change, modification or discharge made otherwise than
as expressly permitted by this Section 24 shall be null and void. THIS LEASE
SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF PENNSYLVANIA, WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES;
PROVIDED THAT TO THE EXTENT THAT AT ANY TIME A PORTION OF THE
PROPERTY IS LOCATED IN A STATE OTHER THAN THE STATE OF PENNSYLVANIA
THE LAWS OF SUCH STATE SHALL GOVERN SUCH PROVISIONS, IF ANY, OF THIS
LEASE AS BY THEIR NATURE MUST BE INTERPRETED AND ENFORCED UNDER
THE LAWS OF SUCH OTHER STATE WITH RESPECT TO MATTERS OCCURRING IN
OR AFFECTING SUCH STATE. IT IS EXPRESSLY AGREED, HOWEVER, THAT IT IS
THE DESIRE AND INTENT OF THE PARTIES THAT THE LAW OF THE STATE OF
PENNSYLVANIA GOVERN ALL PORTIONS OF THIS LEASE TO THE EXTENT THAT
SUCH INTENT MAY BE HONORED WITHOUT VIOLATION OF THE LAW OR PUBLIC
POLICY OF THE STATE IN WHICH ANY PORTION OF THE PROPERTY IS LOCATED.
All references in this Lease to "applicable Law" or terms of similar import
shall be interpreted consistent with the foregoing. This Lease, when delivered,
shall constitute an original, fully enforceable counterpart for all purposes
except that only the counterpart stamped or marked "COUNTERPART NUMBER 1" shall
constitute, to the extent applicable, "chattel paper" or other "collateral"
within the meaning of the Uniform Commercial Code in effect in any
jurisdiction.
(b) No recourse shall be had against the Lessor, Agent, and/or any
Instrument Holder or their employees, agents or shareholders, for any claim
based on any failure by the Lessor in the performance or observance of any of
the agreements, covenants or provisions contained in this Lease and in the event
of any such failure, recourse shall be had solely against the Property.
(c) It is acknowledged that from time to time various Affiliates of
the Original Lessee may become a party to this Lease as an Additional Lessee as
provided in Section 31 hereof. Each entity that becomes a "Lessee" hereunder
shall be jointly and severally liable for the obligations of the "Lessee"
hereunder. It is acknowledged, however, that no employee, agent, director,
officer or shareholder of any Lessee or any Additional Lessee (except an agent
or shareholder that is itself a Lessee hereunder) shall be liable for the
obligations of Lessee.
25. Headings and Table of Contents. The table of contents and the
headings of the various Sections and Exhibits of this Lease are for convenience
only and shall not affect the meaning of the terms and conditions of this Lease.
26. Waiver of Landlord's Lien. Lessor hereby waives any right to distrain
Lessee's Equipment and any landlord's lien or similar lien upon, or security
interest in Lessee's Equipment, regardless of whether such lien is created by
statute or otherwise. Lessor agrees, at the request of Lessee, to execute a
waiver of any landlord's or similar lien for the benefit of any present or
future holder of a security interest in, or lessor of, any of Lessee's
Equipment, subject to the approval of the form and substance of such waiver by
Agent, which approval shall not be unreasonably withheld or delayed. Lessor
acknowledges, and agrees to acknowledge in the future (in a written form
reasonably satisfactory to Lessee and Agent), to such persons, at such times and
for such purposes as Lessee may reasonably request, that Lessee's Equipment
is Lessee's property and that Lessor has no right, title or interest in any of
Lessee's Equipment.
27. Lessee's Obligation at Expiration.
(a) In addition to its other rights and obligations under Section 14
hereof, Lessee shall, by notice given not less than six (6) months prior to the
Expiration Date, elect either to (i) purchase the Property as of the Expiration
Date (or such earlier date during the last six (6) months of the Term as may be
designated by Lessee) as provided for in Section 14(a)(i) for the applicable
Offer Purchase Price, in which case the transfer of the Property shall be
governed by the terms of Section 15; or (ii) terminate this Lease, abandon all
of the Property as of the Expiration Date and pay to the Lessor on the
Expiration Date, in addition to any Net Rent, Additional Rent or other sums that
may be then due and payable to the Lessor hereunder, a "Contingent Rent Payment"
in the amount determined at the applicable time as provided for on Exhibit "A"
(as amended from time to time). If Lessee fails to give the notice required in
this Section 27(a) on or before the date that is six (6) months prior to the
Expiration Date, then Lessee shall be irrevocably deemed to have elected the
option provided for in clause 27(a)(i) and on the Expiration Date (or such
earlier date during the six month period preceding the Expiration Date as Lessee
may designate by reasonable notice to Lessor and Agent) Lessee shall purchase
the Property for the Offer Purchase Price.
(b) If Lessee elects to terminate the Lease pursuant to Section
27(a)(ii) above, then Lessee, as agent for Lessor but at Lessee's sole cost and
expense, shall use its best efforts to sell the Property to a third party at the
maximum available market price not later than the date that is thirty (30) days
after the Expiration Date. Lessor shall join in any sale at or above the
Minimum Price and Agent's approval of such sale will not be required; however,
Lessee may not sell the Property without the consent of Agent, which consent may
be withheld at Agent's sole and absolute discretion, if the purchase price is
less than the Minimum Price. To the extent that the net sale proceeds of the
Property received by Lessor upon any such sale are more than the amounts
necessary to permit Lessor to discharge all amounts due to the Instrument
Holders and/or the Lessor under the Transaction Agreement and/or the
Transaction Documents (a sale price that will produce net sale proceeds, after
all transaction costs, in such amount being referred to as the "Minimum Price"),
then Lessor shall credit against the Contingent Rent Payment (or refund to
Lessee if the Contingent Rent Payment has theretofore been paid) all such
excess payments up to, but not in excess of, the full amount of the Contingent
Rent Payment. If Lessee has failed to cause the Property to be sold within such
period, Lessee's rights under this subsection (b) shall cease and Lessor shall
thereafter have the sole and exclusive right to sell or dispose of the Property
solely for the account of the Instrument Holders. If the net sale proceeds of
any such proposed sale arranged by Lessee are to be less than the Minimum Price
(or if Lessee does not propose a sale and Lessor or Agent is unable to sell the
Property prior to the Expiration Date for an amount to produce net sale proceeds
equal to or in excess of the Minimum Price), then Lessor or Agent may order an
MAI appraisal of the Property, at Lessee's sole cost and expense, prior to the
closing of any proposed sale by Lessee (or if Lessee does not propose such a
sale, after Lessor's or Agent's reasonable efforts to sell the Property for an
amount equal to or in excess of the Minimum Price) to determine the fair market
value of the Property at such time (the "Appraised Value") as well as what the
Appraised Value of the Property would have been if the Property has been
maintained in good repair and condition and otherwise in accordance with
Section 9 of this Lease, subject to normal wear and tear (the "Nominal Appraised
Value"). If such appraisal indicates a Nominal Appraised Value for the
Property that is greater than the price to be received in the sale proposed by
Lessee (or, if Lessee does not propose a sale, such appraisal indicates an
actual Appraised Value for the Property that is less than the Nominal Appraised
Value, or a Nominal Appraised Value that is greater than the price that would
have been received by Lessor or Agent had they accepted the best written bona
fide offer from a purchaser ready, willing and able to close), then Lessee shall
pay to Lessor a sum equal to the lesser of (A) the amount by which the actual
Appraised Value, or the proposed, actual or possible sale price, as applicable,
is less than the Minimum Price, or (B) the difference between the Nominal
Appraised Value and the proposed, actual or possible net sales proceeds or the
actual Appraised Value (whichever is applicable) as an additional "Contingent
Rent Payment" in order to compensate Lessor for extraordinary wear and tear on
the Property.
(c) If the mechanical provisions of Section 27(b) above are
applicable to a situation where the Lease has been terminated as to less than
the entire Property, then the "Minimum Price" for application of the foregoing
provisions shall be that amount which will produce net sale proceeds (after
applicable closing and transaction costs) sufficient to permit the Lessor
(or Agent on behalf of the Lessor) to pay to the applicable Instrument Holders
the amount that such Instrument Holders would have received if, in lieu of
terminating the Lease and making the Contingent Rent Payment, the Lessee had
purchased the Parcel(s) in question and paid the Offer Purchase Price therefor,
taking into account the additional interest or certificate yield, as applicable,
accrued on the Instruments in question with respect to the amount that would
have been paid on sale of the Property to Lessee at the Offer Purchase Price but
which remained unpaid on the date of such partial termination of the Lease as a
result of the Contingent Rent Payment being less than the Acquisition Price of
the Parcel(s) in question.
(d) Lessor shall reasonably cooperate in any sale of the Property by
Lessee (after approval of the sale by Agent, where required), but at Lessee's
sole cost and expense, such cooperation to include execution of contracts of
sale, closing documents, and related materials; provided that Lessor shall not
be required to incur any liability beyond its interest in the Property in
connection therewith.
28. No Merger. Unless and until execution of a written agreement to the
contrary by a single Person that at the time thereof holds all of the interests
of both Lessor and Lessee in the Property, and the full payment and discharge
of the Instruments and release of Transaction Mortgage held by Agent on the
Property, there shall be no merger of this Lease or of the leasehold estate
created by this Lease with the fee or any other estate or interest in or the
Property or any portion thereof by reason of the fact that the same person
owns or holds, directly or indirectly, all such estates and interests or
any combination thereof.
29. Short Form Lease. Lessee agrees not to record this Lease, but Lessor
and Lessee shall execute a memorandum or short-form of lease in form reasonably
satisfactory to Lessor and Lessee in each jurisdiction where any portion of the
Property is located. The memorandum of lease may be recorded by Lessee at any
time. Lessor agrees that it will not record a memorandum of this Lease if
requested not to do so by Lessee unless Lessor or Agent determines, based upon
written advice of counsel, that recordation of such memorandum of this Lease
is advisable for the protection of the interests of the Lessor or the
Instrument Holders.
30. Protection of Instrument Holders.
(a) Rights of Instrument Holders. Notwithstanding anything in this
Lease, so long as amounts owing under any of the Instruments, or any of the
Transaction Documents, remain unpaid, (i) Agent and each Purchaser and
Instrument Holder shall be third party beneficiaries of the provisions of
this Lease, including, without limitation, all provisions of this Section 30,
and Section 8 hereof, (ii) Lessor and Lessee acknowledge that each has been
sufficiently notified and apprised of the Purchasers and Instrument Holders, and
the mailing address of Agent, as the administrative agent acting on behalf of
and any other provision of this Lease, and (iii) this Lease shall not be
amended, modified or assigned (collaterally or directly), in any
respect without the prior written consent of Agent.
(b) Subordination and Non-Disturbance. Simultaneously with the
addition of a Parcel to the Property, Lessor will execute and record a mortgage
or deed of trust (as applicable, the "Transaction Mortgage") on the Property to
Agent for the benefit of the Noteholders as povided for in the Transaction
Agreement, and Lessor, Lessee, and Agent (on behalf of the Noteholders) shall
enter into a Subordination, Non-Disturbance, and Attornment Agreement (the
"SNDA") covering this Lease with respect to the Parcel in question and relating
to the Transaction Mortgage in substantially the form attached hereto as
Exhibit "E". In the event of any default by Lessor hereunder, Lessee shall
notify Agent of such default in accordance with Section 21 hereof. Agent, on
behalf of the Noteholders, shall thereafter have a reasonable opportunity
(but no obligation) to cure Lessor's default, including time to obtain
possession of the Property by power of sale or judicial foreclosure of the
Transaction Mortgage, if same should prove necessary to effect a cure, before
Lessee may take any action against Lessor. Lessee shall accept a cure of
Lessor's default from Agent in the event that Agent tenders such cure on
behalf of the Noteholders.
31. Additional Lessees.
(a) From time to time Lessee Parent may request that one or more
wholly-owned Subsidiaries of the Lessee Parent be approved by Agent to become
a Lessee under this Lease, which approval shall not be unreasonably withheld.
Any such Person approved by Agent shall be referred to as an "Additional
Lessee", and from and after the date of execution of a Supplement to this
Lease in substantially the form attached hereto as Exhibit "F" such
Additional Lessee shall be a party to this Lease in the same manner as if
such Additional Lessee had been an original Lessee hereunder.
(b) From and after the date on which an Additional Lessee becomes a
party hereto, such Additional Lessee shall be jointly and severally liable for
any and all obligations of the "Lessee" hereunder, whether accruing or arising
before or after the date such Additional Lessee becomes a party hereto. The
assumption of liability hereunder by any Additional Lessee shall not reduce or
limit the obligations of any other Person that is or becomes a party hereto
as a Lessee.
(c) Agent may, as a condition to its approval of the Supplement
making one of the Additional Lessees a party hereto, require legal opinions,
review of corporate authorizations and other corporate documents, and similar
matters comparable to those required by Lessor and Agent with respect to the
Lessee Parent and the other original Lessees in connection with the original
execution hereof.
32. Certain Representations and Covenants of Lessee. The terms of this
Section 32 shall, as of the date hereof, be binding upon each Lessee. At such
time as any Additional Lessee becomes a party to this Lease pursuant to Section
31 above, each such Additional Lessee will be required to make similar
representations and warranties and assume comparable obligations pursuant to
the instrument by which they become a party to this Lease.
(a) Representations and Warranties. The Lessees jointly and
severally represent and warrant to Lessor, Agent, and each Instrument Holder
that, as to each Lessee:
(i) Lessee (A) is duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of its
incorporation, (B) has full corporate power and authority to own and
operate its properties and to conduct its business as presently conducted,
and full corporate power, authority and legal right to execute, deliver
and perform its obligations under this Lease, (C) is duly qualified to do
business as a foreign corporation in good standing in each jurisdiction
in which its ownership or leasing of properties or the conduct of its
business requires such qualification.
(ii) This Lease has been duly authorized, executed and delivered
by Lessee and is a legal, valid and binding obligation of Lessee,
enforceable according to its terms (subject as to enforcement of remedies
to any applicable bankruptcy, reorganization, moratorium, or other Laws or
principles of equity affecting the enforcement of creditors' rights
generally).
(iii) The execution, delivery and performance by Lessee of
this Lease will not result in any violation of any term of the certificate
of incorporation or the by-laws of Lessee, does not require stockholder
approval or the approval or consent of any trustee or holders of debt of
Lessee except such as have been obtained prior to the date hereof, and
will not conflict with or result in a breach of any terms or provisions of,
or constitute a default under, or result in the creation or imposition of
any lien upon, any property or assets of Lessee under, any indenture,
mortgage or other agreement or instrument to which Lessee is a party or
by which it or any of its property is bound, or any existing applicable
law, rule, regulation, license, judgment, order or decree of any
government, governmental body or court having jurisdiction over
Lessee or any of its activities or properties, including, without
limitation, any rule or order of any public utility commission or other
governmental body.
(iv) There are no consents, licenses, orders, authorizations
or approvals of, or notices to or registrations with any governmental or
public body or authority which are required in connection with the valid
execution, delivery and performance of this Lease by Lessee that have not
been obtained or made, and any such consents, licenses, orders,
authorizations, approvals, notices and registrations that have been
obtained or made are in full force and effect.
(v) Except as disclosed in writing to Agent by Lessee
concurrently herewith or publicly disclosed in Lessee Parent's 10-Q
and/or 10-K filings with the Securities and Exchange Commission, if any,
(A) there is no action, suit, proceeding or investigation at law or in
equity by or before any court, governmental body, agency, commission or
other tribunal now pending or, to the best knowledge of Lessee after due
inquiry, threatened against or affecting Lessee or any property or rights
of Lessee as to which there is a significant possibility of an adverse
determination, and which if adversely determined, may have a material
adverse effect on the financial condition or business of Lessee or which,
if adversely determined could materially impair the ability of Lessee to
perform its obligations under this Lease, and (B) there is no action, suit,
proceeding or investigation at law or in equity by or before any court,
governmental body, agency, commission or other tribunal now pending or,
to the best knowledge of Lessee after due inquiry, threatened which
questions or would question the validity of this Lease.
(vi) Lessee is not in default under or with respect to any
agreement or other instrument to which it is party or by which it or
its assets may be bound which would have a material adverse effect on
the financial condition of Lessee or the ability of Lessee to perform its
obligations under this Lease. Lessee is not subject to or in default
under any order, award or decree of any court, arbitrator, or other
governmental authority binding upon or affecting it or by which any of its
assets may be bound or affected which would have a material adverse effect
on the ability of Lessee to carry on its business as presently conducted
or to perform its obligations under this Lease.
(vii) Lessee has filed or caused to be filed all tax returns
which to the knowledge of Lessee are required to be filed, and has paid
all taxes shown to be due and payable on said returns or on any assessments
made against it, except for (i) returns which have been appropriately
extended and (ii) taxes, fees, assessments or other charges, the amount
or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity
with GAAP have been provided on the books of Lessee.
(viii) Lessee and each of its Subsidiaries are in compliance
in all material respects with the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") and the Internal Revenue Code of 1986, as
amended (the "Code"), and the rules and regulations thereunder insofar as
ERISA, the Code and such rules and regulations relate to any employee
benefit plan as defined in Section 3(3) of ERISA. No employee pension
benefit plan (as defined in Section 3[2] of ERISA) maintained by Lessee
or any of its Subsidiaries for its employees and covered by ERISA (a
"Plan") had an "accumulated funding deficiency", within the meaning of
said term under Section 302 of ERISA, as of the last day of the most
recent fiscal year of such Plan, and neither Lessee nor any of its
Subsidiaries has incurred with respect to any Plan any liability to the
Pension Benefit Guaranty Corporation ("PBGC") which is material to the
consolidated financial condition of Lessee or any of its Subsidiaries.
For the purpose of this subsection (viii), the term "Subsidiary" shall
include a Controlled Group of Corporations as that term is defined in
Section 1563 of the Code or Section 4.001 of ERISA.
(ix) The consolidated financial statements of Lessee Parent
furnished to Lessor and Agent on or before the date hereof have been
prepared in accordance with GAAP and fairly present the financial
condition of Lessee Parent as of the date thereof. Since the date of
such financial statements there has been no material adverse change in
the financial condition or business of Lessee Parent which would impair
the ability of Lessee Parent to perform its obligations hereunder.
(b) Affirmative Covenants. Lessee covenants and agrees with Lessor,
Agent and the Instrument olders that, so long as this Lease shall remain in
effect each Lessee will, unless Lessor and Agent shall otherwise consent in
writing:
(i) Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable Laws,
for which the failure to so comply could have a material adverse effect on
the operations of Lessee as a whole so as to adversely affect its capacity
to perform its obligations under this Lease, and such compliance shall
include, without limitation, paying before the same become delinquent all
taxes imposed upon it or its property, except to the extent contested
diligently and in good faith, and for which adequate reserves are
established.
(ii) Maintenance of Existence; Licenses and Franchises.
Maintain, and cause each of its Subsidiaries that is a Lessee or an
approved Additional Lessee to maintain, its existence, and preserve and
maintain, and shall cause each of its Subsidiaries that is a Lessee or an
approved Additional Lessee to preserve and maintain, all material licenses,
privileges, franchises, certificates, authorizations and other permits
and agreements necessary for the operation of its business in the
respective jurisdictions in which any Property leased by Lessee or such
Additional Lessee, as applicable, is located, and in its jurisdiction of
origin.
(iii) Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance policies with respect to its property
and business in such amounts and against such casualties and contingencies
as is customary in its industry; provided that nothing herein shall
prejudice the right of Lessee or any Subsidiary thereof to self-insure
for certain risks in accordance with customary procedures.
(iv) Additional Information. Lessee shall furnish to Agent: (1)
within sixty (60) days of the end of each quarterly fiscal period during
the Term, unaudited quarterly financial statements for Lessee Parent (and
its consolidated Subsidiaries) (including a balance sheet, income
statement, and such other reports as Agent may reasonably request); (2)
within one hundred twenty (120) days of the end of each fiscal year during
the Term, annual financial statements for Lessee Parent (and its
consolidated Subsidiaries) audited by a nationally recognized public
accounting firm (including a balance sheet, income statement and such
other material reports as Agent may reasonably request); (3) when issued
or filed, copies of the most recent 10-K for Lessee Parent, proxy
statements, financial statements and other reports filed by Lessee Parent
with the Securities and Exchange Commission or any national securities
exchange or market on which any of Lessee Parent's securities are traded
or quoted; (4) from time to time upon Agent's request, an Officer's
Certificate stating that there exists no Event of Default (or event or
circumstance which with notice and or the passage of time could mature
into an Event of Default) under this Lease or, if any such event or
circumstances does exist, specifying the nature and period of existence
thereof and what action Lessee proposes to take with respect thereto; and
(5) from time to time at the request of Agent, and in any event
simultaneously with delivery of the annual consolidated financial
statements of the Lessee Parent, a statement certified by a senior
financial officer of the Lessee Parent (A) certifying that the Lessee
Parent is in compliance with all of the financial covenants (both
affirmative and negative) contained in the Lease Guarantee and (ii)
certifying the Leverage Ratio, Tangible Net Worth, Current Ratio, and
NOP/Interest Charges Ratio (as such terms are defined in the Lease
Guarantee) of the Lessee Parent as of the end of the preceding quarter
or fiscal year, or for the preceding quarter or fiscal year, as applicable.
The fiscal year of the Lessee Parent is the approximately fifty-two (52)
week period ending on the Saturday falling nearest to January 31.
(v) Review of Records. Further, Lessee will permit the duly
authorized representatives of Agent at all reasonable times upon at least
ten (10) days prior written notice to examine the books and records of
Lessee and its Subsidiaries, and take memoranda and extracts therefrom;
provided, that information, including financial information, which is
non-public and confidential or proprietary in nature disclosed to Agent
(as a result of any examination of the books and records of Lessee and its
Subsidiaries or pursuant to Section 32(b)(iv) or otherwise) will be kept
confidential and will not, without the prior written consent of Lessee,
be disclosed in any manner whatsoever, in whole or in part, except that
shall be permitted to disclose such information (A) to the Instrument
Holders (who shall be bound by the same confidentiality requirements upon
receipt of such information), (B) to any regulatory agencies having
jurisdiction over Agent or any Instrument Holder in connection with their
regulatory functions, and (C) as required by Law or court order, or in
connection with any investigation or proceeding arising out of the
transactions contemplated by this Lease.
(vi) Taxes, Charges, Etc. Duly pay and discharge, or cause to
be paid and discharged, when due, all taxes, assessments and other
governmental charges imposed upon it or any Subsidiary that is an approved
Additional Lessee and its and their properties, or any part thereof or
upon the income or profits therefrom, as well as all claims for labor,
materials or supplies which if unpaid could have a materially adverse
effect on the operations of Lessee as a whole so as to adversely affect
Lessee's capacity to perform its obligations under this Lease, except such
items as are being in good faith appropriately contested by Lessee or any
applicable Subsidiary and for which adequate reserves are being maintained
in accordance with GAAP.
(c) Negative Covenants. Lessee covenants and agrees with Lessor and
Agent that, so long as this Lease shall remain in effect Lessee will not, unless
Agent shall otherwise consent in writing:
(i) The Lessee will not, nor will it permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution). The Lessee will not make, and will not
permit any of its Subsidiaries to make, any acquisition (in one
transaction or a series of related transactions) in excess of $50,000,000.
The Lessee will not, and will not permit any of its Subsidiaries to,
convey, sell, lease, transfer or otherwise dispose of in one transaction
or a series of transactions, all or a substantial part of its business or
assets, whether now owned or hereafter acquired (including, without
limitation, receivables and leasehold interests, but excluding (i) any
inventory or other assets (including real property) sold or disposed of
in the ordinary course of business and (ii) obsolete or worn-out property,
tools or equipment no longer used or useful in its business).
Notwithstanding the foregoing provisions:
(1) any Subsidiary of the Lessee may be merged or consolidated
with or into: (i) the Lessee or another Lessee if the Lessee or another Lessee
shall be the continuing or surviving corporation or (ii) any other such
Subsidiary; provided that if any such transaction shall be between a Subsidiary
and a wholly-owned Subsidiary, the wholly-owned Subsidiary shall be the
continuing or surviving corporation;
(2) any such Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the Lessee or another Lessee or a wholly-owned Subsidiary of the Lessee or
another Lessee; and
(3) any Lessee may sell, lease, transfer or otherwise dispose of
all or any of its assets (upon voluntary liquidation or otherwise) to any other
Lessee.
(ii) Lines of Business. Engage or, in the case of Lessee Parent,
permit any of its Subsidiaries that are approved Additional Lessees to
engage, to any substantial extent in any line or lines of business
activity other than the business of owning and operating retail stores and
auto service centers (including functions that are directly related
thereto and supportive thereof).
(iii) Change of Control. Permit the occurrence of any Change
of Control with respect to Lessee Parent or any approved Additional Lessee;
provided, however, that a Change of Control as to the Lessee Parent shall
not constitute a violation of this Lease if, as of the date that such
Change of Control occurs, the senior unsecured debt of the Lessee Parent
is rated BBB or better by Standard & Poors and/or Baa2 or better by
Moody's Investors Services, and the Lessee Parent or its securities are
not in a "credit watch" status with either such rating service.
(iv) Judgments. Permit or acquiesce in the entry of any final
unappealable judgment or order for the payment of money in excess of
$1,000,000.00 against Lessee or any of its Subsidiaries; provided,
however, that any such judgment or order shall not be an Event of
Default if and for so long as (x) the entire amount of such judgment or
order is covered (subject to customary deductibles) by a valid and binding
policy of insurance between the defendant and the insurer covering payment
thereof and (y) such insurer, which shall be rated at least "B+/X" by A. M.
Best Company, has been notified of, and has not disputed the claim made
for payment of the amount of such judgment or order;
As used in this Section 32(c), the following terms have the meanings indicated
below:
"Change of Control" means, after the date hereof, (A) as to Lessee Parent, any
event or circumstance that results in a majority of the individuals comprising
the board of directors of the Lessee Parent as of any date to consist of
individuals that were not members of the board of directors of the Lessee
Parent twelve (12) months previous to such date (other than by reason of
death), or (B) as to any other Lessee, any event or circumstance that results
in such Lessee not being a wholly owned Subsidiary of the Lessee Parent.
"GAAP" shall mean generally accepted accounting principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to
time, and (b) consistently applied with past financial statements of any
Person adopting the same principles.
"Lien" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Lease, Lessee or any of its Subsidiaries shall
be deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Person" shall mean any individual, corporation, company, voluntary association,
partnership, joint venture, trust, unincorporated organization or government
(or any agency, instrumentality or political subdivision thereof).
"Subsidiary" shall mean, as to any Person, any corporation of which at least a
majority (or in the case of a wholly-owned Subsidiary, 100%) of the outstanding
shares of stock having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening
of any contingency) is at the time directly or indirectly owned or controlled
by such Person or one or more of its Subsidiaries or by such Person and
one or more of its Subsidiaries.
33. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND FOR THE PURPOSE OF REDUCING THE TIME AND
EXPENSE OF LITIGATION, LESSOR AND LESSEE WAIVE TRIAL BY JURY IN ANY
ACTION BROUGHT ON, UNDER, OR BY VIRTUE OF THIS AGREEMENT.
34. Exhibits. The following Exhibits are attached hereto and made a part
hereof for all purposes.
Annex I - Approved Self-Insurance Program
Exhibit A - Net Rent; Additional Rent
Exhibit B - Form of Supplement for Addition of Parcels
Exhibit C - Construction Addendum
Exhibit D - Form of Construction Supplement
Exhibit E - Form of SNDA
Exhibit F - Form of Supplement for Additional Lessee(s)
35. Special Local Provisions. It is expressly agreed that this Lease may
be amended or supplemented, as necessary, with any special local provisions or
requirements deemed necessary by Lessor or Agent, which provisions shall be
included in the Supplement adding the portions of the Property to which such
special provisions shall be applicable to the coverage of this Lease.
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this Lease to be duly executed on the attached signature
pages by their respective officers thereunto duly authorized, to be effective
as of the day and year first above written.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO MASTER LEASE
Between
State Street Bank and Trust Company, Trustee, as Lessor
and
The Pep Boys - Manny, Moe & Jack, et. al. as Lessee
LESSOR:
STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company not in its individual
capacity but solely as Trustee under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO MASTER LEASE
Between
State Street Bank and Trust Company, Trustee, as Lessor
and
The Pep Boys - Manny, Moe & Jack, et.al. as Lessee
LESSEE:
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
THE PEP BOYS MANNY, MOE & JACK,
OF CALIFORNIA, a California corporation
By:
Name:
Title:
PEP BOYS - MANNY, MOE & JACK,
OF DELAWARE, a Delaware corporation
By:
Name:
Title:
ANNEX I
Approved Self-Insurance Program EXHIBIT "A"
Net Rent; Additional Rent and Related Definitions
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Lease to which this Exhibit "A" is
attached (including terms defined by reference in the Lease to other
instruments or documents).
A. Net Rent. Net Rent during the Term shall be due and payable monthly
in arrears on each Payment Date in an amount determined by multiplying (1) the
then applicable Acquisition Price for the Property times (2) the lesser of the
Applicable Rate for the LIBO Rate Period in which such month falls or the
Highest Lawful Rate times (3) a fraction, the numerator of which is the actual
number of days in the month in question, and the denominator of which is 360
(or if the Highest Lawful Rate is used in lieu of the Applicable Rate, 365
or 366, as applicable).
"Payment Date" means the first (1st) day of each calendar month to and
including the last day of the Term, as well as the last day of the Term itself;
provided, however, that if such Payment Date is not a Business Day, such
Payment Date shall be the next succeeding Business Day. It is acknowledged
that for the period between the date a Parcel is added to the Property or a
Construction Advance is made in respect of New Improvements and the next
Adjustment Date the Net Rent will be computed using multiple Applicable Rates
applied to the respective Acquisition Prices, as set forth in the next sentence,
and the payments shall be adjusted accordingly. In the event this Lease is
terminated as to a Parcel and the Improvements thereon pursuant to the terms
hereof, or a Parcel or Improvements thereon are added to the Property, or a
Construction Advance is made, the Net Rent shall be adjusted, as of the date
of such termination or addition, by eliminating from the aggregate Acquisition
Price (in the case of a partial termination) or adding to the aggregate
Acquisition Price (in the case of the addition of a Parcel and Improvements or
a Construction Advance in respect of New Improvements) the portion of the
aggregate Acquisition Price thereof attributable to the portion of the Property
so released or added.
If, at any time, the Applicable Rate then in effect shall exceed the
Highest Lawful Rate, then any subsequent reductions in the Applicable Rate
shall not reduce the Net Rent below the amount of Net Rent that would be
payable hereunder if the Applicable Rate were equal to the Highest Lawful Rate
until the total amount of Net Rent accrued hereunder equals the amount of Net
Rent that would have accrued hereunder if the Applicable Rate had at all times
been the Applicable Rate without the limitation of the Highest Lawful Rate.
In the event that at the Expiration Date (howsoever the Expiration Date
occurs) the total amount of Net Rent paid or accrued hereunder is less than
the total amount of Net Rent that would have accrued if the Applicable Rate had
at all times been in effect without the limitation of the Highest Lawful Rate,
then Lessee agrees, to the fullest extent permitted by Law, to pay to Lessor
on the Expiration Date an amount equal to the difference between (a) the lesser
of (i) the amount of Net Rent that would have accrued hereunder if the Highest
Lawful Rate had at all times been utilized to compute the Net Rent accruing
hereunder, or (ii) the amount of Net Rent that would have accrued hereunder if
the Applicable Rate had at all times been utilized to compute the Net Rent
without the limitation of the Highest Lawful Rate, and (b) the amount of Net
Rent otherwise accrued hereunder.
The parties agree to modify the Applicable Rate payable hereunder as
contemplated in the Transaction Agreement to provide to Lessee the financial
benefit of any interest or yield reductions on the Instruments.
B. Additional Rent. In addition to such Additional Rent as may otherwise
be payable under the Lease, Lessee shall pay, within thirty (30) days of a
demand therefor, as Additional Rent all Break Costs, Reserve Costs, Increased
Costs and/or all reasonable expenses as set forth elsewhere herein or in the
Transaction Documents of Lessor or Agent required to be paid by Lessee
pursuant to this Lease, the Transaction Agreement, or any Transaction Document.
C. Definitions. As used herein, the following terms have the following
meanings:
"Acquisition Price" means the amount attributable to the Property (in the
aggregate) or a particular Parcel, as applicable, as set out at the time in
question on the most recent Schedule "A-1" to the Lease. The Supplement by
which any Parcel is added to the Property and the Construction Supplement with
respect to the Construction Advance related to any Improvements shall designate
the increase in the Acquisition Price attributable thereto and any other agreed
adjustment to the Acquisition Price Schedule by the attachment of an updated
Schedule "A-1". At such time as this Lease is terminated as to any Parcel and
either the Offer Purchase Price, the Contingent Rent Payment, or the
Construction Failure Payment amount applicable thereto is paid under any
applicable provision of this Lease, the Parcel in question shall no longer be
part of the Property, the portion of the Acquisition Price previously
applicable to such Parcel shall no longer be a part of the Acquisition Price
of the Property for any purpose, and Schedule A-1 shall be adjusted to reflect
the exclusion of such Parcel from the Property.
"Adjustment Date" means the first day of each month throughout the Term.
"Applicable Rate" means, for any month, as applicable (A) the sum of (i) the
LIBO Rate for the LIBO Rate Period in which such month falls, plus (ii) the
Applicable Spread or (B) as to the portion of the Acquisition Price
attributable to a Parcel or a Construction Advance prior to the first
Adjustment Date after such Parcel is added to the Property or such Construction
Advance is made, the sum of the Special LIBO Rate applicable thereto plus the
Applicable Spread.
"Applicable Spread" means, as applicable, the amount based on the debt rating
most recently issued by Standard & Poor's for Lessee's senior unsecured debt
as of any Adjustment Date determined by reference to the following:
Lessee's Most
Recent Debt Rating Applicable Spread
BBB+ (or higher)
61.8 basis points (0.618%)
BBB
69 basis points (0.690%)
BBB-
81 basis points (0.810%)
less than BBB-
105 basis points (1.05%)
The Applicable Spread is subject to adjustment in connection with the Secondary
Transaction contemplated in the Transaction Agreement such that the amount of
Net Rent payable hereunder is at all times equal to the aggregate amounts of
interest and current yield, as applicable, payable under the Instruments.
"Break Costs" shall mean an amount equal to the amount (if any)
required to compensate any Instrument Holder for any additional losses
(including, without limitation, any loss, cost or expense incurred by reason
of the liquidation or reemployment of deposits or funds acquired by such
Instrument Holder to fund or maintain a Trust Instrument) it may reasonably
incur as a result of Lessee's payment of the Offer Purchase Price, or the
Contingent Rent Payment other than on an Adjustment Date or the Expiration Date.
"Business Day" means every day on which banks in the cities of New York, New
York, Boston, Massachusetts, and Philadelphia, Pennsylvania, are open for
business and not required to be closed.
"Contingent Rent Payment" means, as of any relevant time, an amount equal to
the lesser of (A) eighty-four percent (84%) of the aggregate of all Advances
theretofore made under the Transaction Agreement (less any amounts theretofore
paid by Lessee as Contingent Rent Payments or Construction Failure Payments),
or (B) 100% of the Acquisition Price of the Parcels remaining subject to this
Lease as of the date the Contingent Rent Payment is made. In the event that
any Parcel(s) are purchased by Lessee during the period ending on December 31,
1997, pursuant to any option or obligation of Lessee to make such purchase
hereunder, the Contingent Rent Payment computed under clause (A) above shall
be recomputed so as to equal eighty-four percent (84%) of the aggregate of all
Advances theretofore made under the Transaction Agreement excluding Advances
theretofore made in respect of the Parcel(s) purchased by Lessee during such
period. The parties acknowledge that the obligation for the payment of
Contingent Rent Payments is a rental obligation in consideration of the lease
of the Property to Lessee hereunder, and that Lessee has agreed to make the
Contingent Rent Payment when due hereunder in consideration of the Lessor's
agreement to accept Net Rent payments during the Term in a lower amount than
Lessor would otherwise be willing to accept.
"Increased Costs" means any additional amounts required to be paid to any
Instrument Holder by Lessor under the Transaction Agreement to compensate
such Instrument Holder for any increased costs of maintaining the Instruments
or the advances evidenced thereby (the effect of which was not included in the
applicable Instrument Holder's determination of such costs at the more recent
to occur of the original issuance of such Instrument or the date of adjustment
of the Note Rate or Certificate Rate applicable to such Instrument or applicable
interest therein in connection with the Secondary Transaction) as a result of
the implementation after the date hereof of any applicable Law regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by such Instrument Holder (or any office thereof) with any request
or directive regarding capital adequacy (whether or not having the force of
Law) of any such authority, central bank or comparable agency which has the
effect of increasing the amount of capital required or expected to be
maintained as a result of its maintaining the Instruments held by it.
"LIBO Business Day" means a day of the year on which dealings are carried on
in the London interbank market and banks are open for business in London and
not required or authorized to close in New York City.
"LIBO Rate" for the period commencing on the date hereof to the first Adjustment
Date and for each period commencing on any Adjustment Date to and until the next
succeeding Adjustment Date (each, a "LIBO Period") means an interest rate per
annum equal to the average (rounded, if necessary, to the next highest 1/16 of
1%) of the rates of interest per annum at which deposits in United States
dollars are offered to prime banks in the London interbank market at 11:00
a.m. (London time) two LIBO Business Days before the first day of such LIBO
Period (the "Interest Setting Date") for a period equal to such LIBO Period.
"LIBO Rate Reserve Percentage" for any LIBO Period means the reserve
percentage applicable to the Instrument Holders during such LIBO Period under
the regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or if more than one such percentage is so applicable,
the daily average for such percentages for those days in such LIBO Period
during which any such percentage shall be so applicable) for determining
the maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for the Instrument Holders
in respect of liabilities or assets consisting of or including Eurocurrency
Liabilities (as defined in Regulation D of the Board of Governors of Federal
Reserve System as in effect from time to time) having a term
equal to such LIBO Period.
"Reserve Costs" means, so long as any Instrument Holder hereafter shall be
required under regulations of the Board of Governors of the Federal Reserve
System to maintain reserves in excess of those maintained at the more recent
to occur of the original issuance of the applicable Instrument or the date of
adjustment of the Note Rate or Certificate Rate applicable to such Instrument
or applicable interest therein in connection with the Secondary Transaction
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional amounts equal to the product of (1) the outstanding
balance of the Instruments held by such Instrument Holder, multiplied by (2)
an interest rate per annum equal at all times during the period in which such
reserves were assessed to the remainder obtained by subtracting (a) the LIBO
Rate for the applicable period from (b) the rate obtained by dividing such LIBO
Rate applicable during such period by a percentage equal to 100% minus the then
applicable LIBO Rate Reserve Percentage, payable on each Payment Date.
Promptly after Lessor receives notice from Agent or any Instrument
Holder of any Reserve Costs or Increased Costs to be payable as Additional
Rent Lessor shall notify the Lessee of the same; provided, however, that the
failure to provide such notice as to Increased Costs shall not affect the
Lessor's right to recover Additional Rent for the same. A certificate in
reasonable detail (i) setting forth the basis for and the amount of such
costs submitted by the Lessor to the Lessee and (ii) in the case of Increased
Costs, setting forth in reasonable detail the calculation of the same and that
the Instrument Holder has certified to the Lessor that such Increased Costs are
generally being charged by the Instrument Holder to other similarly situated
persons under similar arrangements, which notice shall be conclusive and
binding for all purposes, absent manifest error, unless such notice fails to
set forth the information required above as to the Increased Costs.
"Special LIBO Rate" means, for any period commencing on the date any Parcel
is added to the Property or a Construction Advance is made, as applicable,
through the next Adjustment Date, an interest rate per annum equal to the rate
of interest per annum at which deposits in United States dollars are offered to
prime banks in the London interbank market at 11:00 a.m. (London time) two LIBO
Business Days before the date such Parcel is added to the Property, or the
Construction Advance is made, for a period equal to the period between such
date and the next Adjustment Date. The Special LIBO Rate shall be used to
determine the Applicable Rate only for that portion of the Acquisition Price
attributable to the Parcel in question and/or the construction advance in
question, but only through the next Adjustment Date.
FORM OF
SCHEDULE "A-1"
Schedule of Acquisition Prices
Date of Schedule:__________________. _______
Applicable Portion of
Parcel Acquisition Price
$
Total Acquisition Price $__________
Contingent Rent Payment $__________ EXHIBIT "B"
Form of Supplement for Addition of Parcels
SUPPLEMENT NO. _____ TO MASTER LEASE
(______________________, ________) [Location of Parcel]
This Supplement ("Supplement") is hereby added, as of the _____ day of
_________, _____, to that certain Master Lease (as heretofore amended and
supplemented, the "Lease"), dated as of _____________, 1995, by and between
State Street Bank and Trust Company, a Massachusetts trust company, as
Trustee under that certain Declaration of Trust of even date with the Lease
(in such capacity, and not individually, "Lessor"), and, among other Lessees
therein named, ________________________, a _________ corporation ("Lessee").
Upon execution hereof by Lessor and Lessee, and approval hereof by CITICORP
LEASING, INC., a Delaware corporation (as administrative agent for the
"Purchasers" [as defined in the Lease]) ("Agent"), this Supplement shall be
included in and shall be a part of the Lease for all purposes. Terms used but
not otherwise defined herein shall have the meanings given to such terms in the
Lease.
The parties hereto, intending to be legally bound hereby, acknowledge and
agree to the following:
Lessee is one of the parties to the Lease as a "Lessee" thereunder. [IF
LESSEE IS AN "ADDITIONAL LESSEE" REFERENCE SUPPLEMENT PURSUANT TO WHICH SUCH
ADDITIONAL LESSEE BECAME A PARTY TO THE LEASE.]
The parcel of land (the "Parcel") more fully described on Exhibit "A"
attached hereto and the improvements, if any, located thereon
(the Improvements") are hereby added by this Supplement to this Lease and
shall hereafter constitute a part of the "Property" for all purposes
of the Lease. Lessor hereby leases the Parcel and Improvements to Lessee,
and Lessee hereby leases the Parcel and Improvements from Lessor pursuant to
the Lease.
The "Permitted Encumbrances" with respect to the Parcel shall consist
of those items listed on Exhibit "B" attached hereto, which shall hereafter
constitute the "Permitted Encumbrances" applicable to the Parcel for all
purposes of the Lease.
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised
Schedule A-1 attached hereto, and all references to the "Acquisition Price"
of all or any Parcel(s) for any purpose shall be deemed to refer to the
Acquisition Price(s) referred to on such Revised Schedule A-1. [ATTACH
REVISED SCHEDULE A-1] From and after the date hereof the aggregate
Acquisition Price under the Lease is increased to $___________________
[Should Match New Schedule A-1 Total], which amount shall be used for
the computation of Net Rent under the Lease until further adjusted.
The Contingent Rent Payment shall be increased by $____________
[INSERT AMOUNT EQUAL TO 84% OF THE ADVANCE FOR THE PARCEL] as a
result of the addition to the Lease of the Parcel and Improvements,
resulting in a new Contingent Rent Payment in the amount of $_____________ .
Lessee hereby confirms, as of the date hereof, that all representations
and warranties made in the Lease with respect to the Property heretofore
covered by the Lease remain true and correct in all material respects; that all
representations and warranties included in the Lease with respect to the
"Property" are, as of the date hereof, true and correct as to the Parcel and
the Improvements as if such Parcel and Improvements had been originally
included within the term "Property"; and that no Event of Default and, to the
best of Lessee's knowledge, no event which with notice and/or the passage of
time might ripen into an Event of Default exists under the Lease.
Without limitation, Lessee confirms that all representations and warranties
set out in Section 6(d) of the Lease are, as of the date hereof, true and
correct as to the Parcel and Improvements hereby added to the Property.
Lessee hereby acknowledges and confirms that as of the date hereof,
Lessee has no defense to the payment or prformance of the Lessee's
obligations under the Lease and that, to the best of Lessee's knowledge,
,no claims, counterclaims, affirmative defenses, or other such
rights exist against Lessor, Agent, or any Purchaser or Instrument
Holders under the Lease.
Lessee acknowledges and confirms hereby that it has examined the Parcel
and the Improvements and title thereto, and that it accepts and approves the
Parcel and the Improvements and all matters relating thereto as suitable and
satisfactory for inclusion in the Lease [except that the improvements located
on the Parcel on the date hereof may be demolished, in whole or in part, as
provided below -- DELETE THIS PROVISION IF NOT APPLICABLE.
Lease Guarantor, as "Indemnitor" under that certain Environmental
Indemnity Agreement (the "Environmental Indemnity") of even date with the
Lease, executed by Lease Guarantor for the benefit of Lessor, Agent and the
Instrument Holders, hereby acknowledges that said Environmental Indemnity and
each and every representation, warranty, covenant, obligation, indemnity, or
other term thereof applies to, and applies with respect to, the Parcel and the
Improvements added to the Lease hereby and that from and after the date hereof
such Parcel and Improvements shall constitute part of the "Property" for all
purposes of the Environmental Indemnity.
Further, Lease Guarantor, as "Guarantor" under that certain Lease
Guarantee (the "Lease Guarantee") of even date with the Lease, executed by
Lease Guarantor and Lessor, hereby acknowledges that said Lease Guarantee and
each and every representation, warranty, covenant, obligation, indemnity, or
other term thereof applies to, and with respect to, the Parcel(s) and the
Improvements added to the Lease hereby and that from and after the date hereof
such Parcel(s) and Improvements (including any Improvements hereafter
constructed by Lessee on the Parcel) shall be covered by the Lease Guarantee,
and that the Lease Guarantee remains in full force and effect and continues to
apply to the Lease, as supplemented hereby.
It is expressly acknowledged and agreed that Agent and the Purchasers and
Instrument Holders are intended to be beneficiaries of this Supplement to the
same extent as Agent and the Purchasers and Instrument Holders are
beneficiaries of the Lease and the Environmental Indemnity.
[INSERT HERE ANY ADDITIONAL PROVISIONS APPLICABLE TO THE NEW
PROPERTY]
[The Improvements existing on the Parcel as of the date hereof are
approved for demolition pursuant to Section 1(d) of the Lease -- DELETE
OR MODIFY BASED ON FACTS AND UNDERWRITING.]
[INSERT ONLY IF APPLICABLE AND MODIFY TO REFLECT APPLICABLE
UNDERWRITING CRITERIA]
The Parcel contains [describe excess land by legal description, size
and location, or other available information] (the "Excess Land") which is
not needed for Lessee's purposes. Lessee shall have the right to subdivide
the Excess Land from the remainder of the Parcel and dispose of the Excess
Land, subject to satisfaction of the following requirements:
(i) the Excess Land and the remainder of the Parcel must be separately
platted legal lots, have adequate legal and physical access to publicly
dedicated streets or rights of way, be separate tax parcels, and (except
pursuant to approved Facility Agreements) otherwise not be dependent upon
each other for any legal or functional purpose whatsoever, and the
disposition of the Excess Land must not cause the remainder of the Parcel
(including any Improvements thereon or New Improvements contemplated to be
developed thereon) to violate any parking requirements, set-back lines,
zoning requirements, floor-area ratio requirements, or other legal or
applicable private restrictions, requirements or development standards.
(ii) the surveys, Title Policies, appraisals, and other underwriting
reports and materials provided to Agent in connection with the addition
of the Parcel to the Property must show (or be supplemented, endorsed,
and updated, as applicable, to show) the remainder of the Parcel
(exclusive of the Excess Land), and must satisfy all underwriting
requirements set out in the Transaction Agreement such that the Parcel,
without regard to the Excess Land, would be eligible for inclusion as a
part of the Property (with the applicable Acquisition Price) if it did
not already constitute a part of the Property.
(iii) any utility, access, or other rights across the Excess Land
necessary for the use and operation of the remainder of the Parcel shall
be documented into formal easements that are not subject or subordinate
to any mortgage or other lien affecting the Excess Land.
(iv) the remainder of the Parcel shall have a separate approved site
plan, final development plan, development plat, infrastructure plan, or
other applicable legal filings and approvals as may be necessary in the
applicable jurisdiction such that the Parcel and Improvements thereon are
entirely legally separate from any other property (including, without
limitation, being covered by separate certificates of occupancy or local
equivalent).
(v) all costs or expenses of Agent or Lessor in connection with the
release of the Excess Land shall be paid by Lessee.
If the Excess Land and the remainder of the Parcel satisfy the foregoing
requirements the Excess Land may be transferred to Lessee or its designee and
excluded from the coverage of this Lease without requirement for payment of
any Acquisition Price (but otherwise at the sole cost and expense of Lessee).
In such event the Agent shall also release the Transaction Mortgage from
the Excess Land. The release of the Excess Land shall not reduce the
Acquisition Price for the Parcel.]
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
LESSOR:
STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company, not in its individual
capacity but solely as Trustee under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
"LESSEE":
[ONLY SPECIFIC LESSEE LEASING PARCEL NEED SIGN]
__________________________________,
a _____________________corporation
By:
Name:
Title:
The undersigned, in its capacity as Lessee Parent, Lease Guarantor, and
party to the Environmental Indemnity Agreement joins in this Supplement for
the purposes therein stated.
LESSEE PARENT AND LEASE GUARANTOR:
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation
(as administrative agent on behalf of the Purchasers)
By:
Name:
Title:
EXHIBIT "C"
Construction Addendum
If Lessee elects to construct New Improvements on any Parcel and receive a
Construction Advance in respect thereof the New Improvements in question must
be constructed on such Parcel in accordance with the requirements of this
Construction Addendum. Any such New Improvements constructed upon the
Property shall be the property of Lessor from the date such New Improvements
(or any portions thereof) are placed on the Property.
Section 1. Construction of New Improvements.
1.1 If Lessee desires to construct New Improvements on any Parcel in
respect of which Lessee intends to seek a Construction Advance upon completion
thereof, then prior to commencing construction of such New Improvements Lessee
shall notify Agent of its intention to construct such New Improvements and its
desire to receive a Construction Advance for the costs thereof upon completion.
Such notice shall include (i) a description of the Parcel on which such
construction is to occur, (ii) a general description of the work to be
performed (which, in the case of New Improvements that are substantially
consistent with a "prototype" store or service center previously approved by
Agent, may consist merely of an indication that the New Improvements in
question are to be of such prototype, and (iii) a good faith (but non-binding)
estimate of the amount of the Construction Advance Lessee expects to seek upon
completion of construction of the New Improvements.
1.2 Lessee shall enter into such contracts and agreements as it
shall deem necessary or appropriate in order to cause completion of the New
Improvements on the Parcel in question. Such contracts and agreements shall
be in Lessee's name only and the obligations to be performed by Lessee
thereunder shall be the sole responsibility of Lessee.
1.3 If requested by Agent, Lessee shall deliver to Agent (i) copies
of all contracts and agreements relating to construction of the New
Improvements, (ii) the plans and any related specifications, working drawings
and construction schedules for the New Improvements (the "Plans"), (iii) all
governmental permits and licenses relating to or necessary for completion of
the New Improvements, and (iv) any other Documents which Lessor or Agent may
reasonably require with respect thereto. Delivery of such materials shall not
be a condition precedent to the addition of the Parcel to the Property or the
commencement of construction of the New Improvements, but Agent shall have the
right to review such materials in connection with its approval of the
Construction Advance. Agent's review and approval of such materials
shall be from the perspective of permitting it to assure itself that any
Construction Advance is made with respect to New Improvements that are
constructed in accordance with applicable legal requirements and sound
construction and development practices. Agent's approval shall not be based
upon cost, value, or market analyses or similar matters (except to the extent
that such matters influence the amount of the appraisal of the Parcel and New
Improvements). If Agent has previously been provided with Plans for a
prototype of New Improvements Agent shall not request Plans for specific New
Improvements that Lessee represents to Agent have been or are to be constructed
substantially in accordance with the prototype Plans. If Lessee makes any
material change mormodification in any documents or materials delivered to
Agent pursuant to this Section 1.3 Lessee shall provide Agent with a copy
of the modified version of such documents or other materials.
1.4 Lessee shall effect or cause to be effected the completion
of the New Improvements in a good and workmanlike manner, free of any patent
or latent defects, in substantial accordance with the Plans, and in accordance
with all laws, rules, regulations and ordinances applicable thereto (including,
without limitation, all Environmental Laws). Any New Improvements shall be
completed on or before earlier of (i) December 31, 1997, or (ii) the first
anniversary of the date on which the Parcel in question was added to the
Property (as applicable, the "Required Completion Date").
1.5 Lessee shall be solely responsible for, and shall pay or cause to
be paid in a timely manner, all costs of completion of the New Improvements,
including, without limitation, (a) amounts paid or to be paid to contractors
and other persons for work and services actually performed (including employees
of Lessee) and fees of architects, engineers and other consultants and
professionals, (b) all premiums for builder's risk, public liability, worker's
compensation and other insurance premiums pursuant to insurance policies
required hereby or by the Lease, and (c) survey costs. Lessee agrees to hold
Lessor, Agent and each Instrument Holder harmless from the payment of all costs
of completion of the New Improvements. Lessee also agrees to pay directly to
the party to whom such amounts are owed within thirty (30) days after demand
all reasonable out-of-pocket costs, charges, reasonable fees and expenses of the
Lessor and its counsel and the Agent and its counsel, related to the
preparation, evaluation (including related diligence activities), and execution
of any supplements to the Lease in connection therewith.
1.6 During the period when any construction activities are being
carried out by Lessee with respect to any of the New Improvements, Lessee shall
cause to be carried and to be in full force and effect (either directly or
pursuant to the self-insurance program permitted under the Lease) (a)
non-reporting builder's risk or all-risk property insurance insuring the Parcel
and New Improvements in the amount of the full replacement value thereof (on an
"as-built" basis), (b) insurance covering all materials stored at the
construction site (or off the construction site) that are intended to
be incorporated into the New Improvements in an amount not less than the full
insurable value of such materials from time to time, and (c) such other
insurance coverage as Lessee may be required to carry under the Lease. All
of such insurance coverage shall be carried in accordance with all applicable
provisions of the Lease.
1.7 Upon completion of the New Improvements for any Parcel, and as a
condition precedent to Lessee's right to receive a Construction Advance in
respect thereof, Lessee shall cause to be delivered to Agent (a) complete
as-built plans and specifications for the New Improvements (or, if the New
Improvements are constructed pursuant to prototype Plans previously provided
to Agent, a certification that the New Improvements have been so constructed),
(b) an "as-built" survey of the Parcel (in form reasonably satisfactory to
Lessor and Agent) updated to show the location of the New Improvements and
all easements or other Permitted Encumbrances affecting the Parcel, (c) copies
of books and records reflecting the cost of the New Improvements in such
detail as may be sufficient to enable Agent to substantiate the cost of the
New Improvements in question, (d) such lien waivers and contractor's affidavits
as may reasonably be required by Agent, (e) an endorsement to the mortgagee
title policy showing no exceptions for mechanic's and materialman's liens and
otherwise in form and substance reasonably satisfactory to Agent, and (f) such
other instruments, documents and/or materials which may be reasonably requested
by the Agent to evidence the completion of such New Improvements, the payment
of the costs thereof, and the satisfaction of the conditions to a Construction
Advance pursuant to the Transaction Agreement. The delivery of any such
materials or documents to Agent shall constitute a representation by Lessee to
Lessor and Agent that such materials are correct and complete in all material
respects.
1.8 Provided that all conditions have been timely satisfied by
Lessee, Agent will proceed to obtain the funding of the Construction Advance
by the Purchasers as provided in the Transaction Agreement.
Section 2. Funding of Construction Advance. Immediately upon receipt
of any funding of an Advance in respect of the New Improvements under the
Transaction Agreement, Lessor shall pay to Lessee, as a Construction Advance
for the New Improvements, the amount of such funding in consideration of the
performance by Lessee of its obligations hereunder. In connection with such
funding Lessee and Lessor shall execute such instruments or documents
(including, without limitation, a Construction Supplement) and do such things
as may be required to fulfill the provisions of the Lease relating to the
construction of the New Improvements and the provisions of the Transaction
Agreement relating to the funding of a Construction Advance thereunder.
Section 3. Construction Failure.
3.1 If the New Improvements on any Parcel are not completed and/or
the requirements hereof necessary to permit Lessee to obtain a Construction
Advance under the Transaction Agreement in respect of such New Improvements
are not satisfied prior to the Required Completion Date for that Parcel
(a "Construction Failure"), then Lessee shall, at its option, either (i) make
an Offer to Purchase the Parcel with respect to which such Construction Failure
has occurred pursuant to Section 14 of the Lease, or (ii) elect to terminate
this Lease as to the Parcel with respect to which the Construction Failure has
occurred. If Lessee fails to elect option (ii) within fifteen (15) days after
the Construction Failure occurs then Lessee shall irrevocably be deemed to have
elected option (i). In either event neither Agent, the Instrument Holders,
nor Lessor shall have any further obligation (other than with respect to the
effect upon the computation of the Construction Failure Payment payable under
Section 3.1.2 below, if applicable) to Lessee for the cost of constructing the
New Improvements.
3.1.1 If Lessee elects (or is deemed to have elected) to purchase
the Parcel with respect to which the Construction Failure has occurred
pursuant to option (i) above then the Offer Purchase Price for such Parcel as
provided in Section 15 of the Lease (which Offer Purchase Price will include
the Acquisition Price for the Parcel in question, as such Acquisition Price
shall theretofore have been increased as a result of any construction
allowance attributable to such Parcel that may theretofore have been advanced)
and the closing of Lessee's purchase of such Parcel from Lessor shall
otherwise be in accordance with Section 15 of the Lease.
3.1.2 If Lessee elects to terminate this Lease as to an affected
Parcel pursuant to option (ii) above as a result of a Construction Failure then
Lessee shall, on the date that is (15) days after Construction Failure occurs,
pay to Lessor a special termination payment (the "Construction Failure
Payment") in an amount (not to exceed the Acquisition Price for the Parcel in
question) determined by the application of the following formula:
3.1.2.1 First, determine the sum of (A) the Acquisition Price for the
Parcel in question plus (B) the aggregate amount of costs and expenses
incurred and paid for by Lessee in connection with the construction of the
New Improvements on the Parcel in question, as substantiated to Agent's
reasonable satisfaction, that have not been reimbursed to Lessee through
a Construction Advance ("Unadvanced Costs").
3.1.2.2 Second, multiply the sum obtained in 3.1.2.1 above by
eighty-nine percent (89%).
3.1.2.3 Finally, subtract the amount of Unadvanced Costs from the
product obtained in 3.1.2.2 above.
The Construction Failure Payment shall be treated and disposed of by
Lessor in the same manner as a Contingent Rent Payment
(notwithstanding that the Construction Failure Payment is computed
as a different percentage of the Acquisition Price than is used to
compute the regular Contingent Rent Payment hereunder) for all
purposes of this Lease and the other Transaction Documents.
3.2 If Lessee elects to terminate the Lease as to a Parcel with
respect to which a Construction Failure has occurred and has paid the
Construction Failure Payment in respect thereof, then Lessee, as agent for
Lessor but at Lessee's sole cost and expense, shall use its best efforts to
sell the Parcel in question to a third party at the maximum available market
price not later than the date that is thirty (30) days after the effective
date of such termination. Lessor shall join in any sale at or above the
Special Minimum Price (defined below) and Agent's approval of such sale will
not be required; however, Lessee may not sell the Parcel in question without
the consent of Agent, which consent may be withheld at Agent's sole and
absolute discretion, if the purchase price is less than that price that will
produce net sale proceeds of the Parcel received by Lessor upon any such sale
(after applicable closing and transaction costs) sufficient, together with the
Construction Failure Payment itself, to permit the Lessor (or Agent on behalf
of Lessor) to pay to the applicable Instrument Holders the amount that such
Instrument Holders would have received if, in lieu of terminating the Lease
and making the Construction Failure Payment, the Lessee had purchased the
Parcel(s) in question and paid the Offer Purchase Price therefor, taking into
account the additional interest or certificate yield, as applicable, accrued
on the Instruments in question with respect to the amount that would have been
paid on sale of the Property to Lessee at the Offer Purchase Price but which
remained unpaid on the date of such partial termination of the Lease as a
result of the Construction Failure Payment being less than the Acquisition
Price of the Parcel(s) in question (a sale price that will produce net sale
proceeds, after all transaction costs, in such amount being referred to as
the "Special Minimum Price"). To the extent the net sale proceeds exceed the
Special Minimum Price Lessor shall refund all such excess to Lessee. If
Lessee has failed to cause the Parcel to be sold within such period, Lessee's
rights under this subsection 3.2 shall cease and Lessor shall thereafter have
the sole and exclusive right to sell or dispose of the Parcel in question
solely for the account of the Instrument Holders. Lessor shall reasonably
cooperate in any sale of the Parcel in question by Lessee (after approval of
the sale by Agent, where required), but at Lessee's sole cost and expense,
such cooperation to include execution of contracts of sale, closing documents,
and related materials; provided that Lessor shall not be required to incur any
liability beyond its interest in the Parcel in question in connection therewith.
Section 4. Representations and Warranties of Lessee. Lessee represents
and warrants to Lessor with respect to each Parcel and the New Improvements
thereon, as of the date of funding of the Construction Advance as follows:
4.1 No violation of any Laws exists with respect to the Parcel and
New Improvements. The intended use and operation of the Parcel and New
Improvements complies with all Legal Requirements, including, without
limitation, building codes, zoning, and private covenants.
4.2 All streets, easements, utilities and related services necessary
for the construction of the New Improvements and the operation and use thereof
for its intended purposes are available, dedicated, and fully operational to
the boundaries of the Parcel, including, without limitation, reciprocal use
easements, potable water, electric, gas and telephone facilities, garbage
removal, and sewer services.
4.3 The Plans are adequate for construction of the New Improvements,
comply with all applicable Laws, building codes, covenants, conditions, or
restrictions applicable to the Parcel and New Improvements, and were prepared
in accordance with good commercial construction practices, and the New
Improvements have been constructed in substantial accordance with the Plans.
4.4 Lessee has obtained or caused to be obtained all requisite
building permits, licenses and approvals required by any governmental authority
with respect to construction of the New Improvements.
To the extent any of the foregoing representations is inaccurate in
any respect with regard to a specific Parcel at the time a Construction Advance
is requested for such Parcel, Lessee shall set forth the accurate representation
in writing, together with the status of such matters and the protections to be
afforded to Lessor, Agent and the Instrument Holders and, so long as the effect
of the facts as they exist, giving effect to such protections as are provided to
address such matters, do not reduce the value of the Parcel and New Improvements
relative to the value set out in the appraisal received by Agent, and Agent is
otherwise satisfied that neither Lessor, Agent, nor any Instrument Holder is
materially adversely affected by the existing facts and conditions, such
variance shall not delay, condition or serve as the basis for a refusal of the
Construction Advance requested by Lessee.
Section 5. Nature of Relationship. Nothing contained herein shall
create the relationship of partnership or of joint venture or of any
association between Lessor and Lessee.
EXHIBIT "D"
Form of Construction Supplement
CONSTRUCTION SUPPLEMENT TO MASTER LEASE
(_____________________, ___________) [Project Location]
This Construction Supplement ("Supplement") is hereby added, as of
the _____ day of _________, _____, to that certain Master Lease (as
heretofore amended or supplemented, the "Lease"), dated as of ________________,
1995 by and between State Street Bank and Trust Company, a Massachusetts trust
company, in its capacity as Trustee under that certain Declaration of Trust
dated of even date with the Lease (in such capacity, and not individually,
"Lessor"), and among other Lessees therein named, ________________________, a
________________ corporation ("Lessee"). Upon execution hereof by Lessor and
Lessee, and approval hereof by CITICORP LEASING, INC., a Delaware corporation
(as administrative agent for the Purchasers [as defined in the Lease])
("Agent"), this Supplement shall be included in and shall be a part of the
Lease for all purposes. Terms used but not otherwise defined herein
shall have the meanings given to such terms in the Lease.
The parties hereto, intending to be legally bound hereby, acknowledge
and agree to the following:
Lessee is one of the parties to the Lease as a "Lessee" thereunder.
[IF LESSEE IS AN "ADDITIONAL LESSEE" REFERENCE SUPPLEMENT PURSUANT TO
WHICH SUCH ADDITIONAL LESSEE BECAME A PARTY TO THE LEASE.]
The parcel of land (the "Parcel") more fully described on Exhibit "A"
attached hereto was added to the Lease by Supplement dated ______________,
and constitutes a part of the "Property" for all purposes of the Lease.
Lessee has elected to construct "New Improvements" (as defined in the Lease)
on the Parcel pursuant to Section 1(d) of the Lease and the Construction
Addendum attached thereto.
Lessee hereby represents and warrants to Lessor, Agent, and each Purchaser
and Instrument Holder that the construction of the New Improvements on the
Parcel has been completed in accordance with the terms and conditions of the
Construction Addendum. Based on such representation and warranty, Lessor and
Lessee desire to increase the Acquisition Price for the Parcel by the amount
of $__________, which amount is being simultaneously herewith advanced to
Lessee by Lessor as a Construction Advance in respect of the New Improvements.
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised
Schedule A-1 attached hereto, and all references to the "Acquisition Price" of
all or any Parcel(s) for any purpose shall be deemed to refer to the
Acquisition Price(s) referred to on such Revised Schedule A-1. [ATTACH
REVISED SCHEDULE A-1]
The Contingent Rent Payment is hereby increased by $____________ [insert
amount equal to 84% of the Construction Advance], resulting in a Contingent
Rent Payment in the amount of $_____________.
Lessee hereby confirms, as of the date hereof, that all representations and
warranties made in the Lease with respect to the Property heretofore covered by
the Lease remain true and correct in all material respects, that all
representations and warranties included in the Lease with respect to the
"Property" are, as of the date hereof, true and correct as to the Parcel
and the New Improvements; and that no Event of Default and, to the best of
Lessee's knowledge, no event which with notice and/or the passage of time
might ripen into an Event of Default, exists under the Lease.
Lessee hereby acknowledges and confirms that as of the date hereof,
Lessee has no defenses to the payment or performance of the Lessee's
obligations under the Lease and that, to the best of Lessee's knowledge, no
claims, counterclaims, affirmative defenses, or other such rights exist against
Lessor, Agent or any Purchaser or Instrument Holder under the Lease.
It is expressly acknowledged and agreed that Agent and the Purchasers
and Instrument Holders are intended to be beneficiaries of this Supplement to
the same extent as Agent and the Purchasers and Instrument Holders are
beneficiaries of the Lease and the Environmental Indemnity.
Lease Guarantor joins in the execution hereof for the purpose of
acknowledging the Construction Advance being made and the adjustments to the
Net Rent and Contingent Rent Payment to be affected thereby. Lease Guarantor
confirms that the Lease Guarantee dated as of even date with the Lease,
executed by Lease Guarantor remains in full force and effect and continues
to apply to the Lease, as supplemented hereby.
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO CONSTRUCTION SUPPLEMENT
LESSOR:
STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company, not in its individual
capacity but solely as Trustee under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO CONSTRUCTION SUPPLEMENT
"LESSEE":
[ONLY SPECIFIC LESSEE LEASING PARCEL NEED SIGN]
__________________________________,
a _____________________corporation
By:
Name:
Title:
The undersigned, in its capacity as Lessee Parent, Lease Guarantor, and
party to the Environmental Indemnity Agreement joins in this Supplement for
the purposes therein stated.
LESSEE PARENT AND LEASE GUARANTOR:
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO CONSTRUCTION SUPPLEMENT
Approved and Accepted as of the date first above written.
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation
(as administrative agent for itself
and the Purchasers)
By:
Name:
Title:
EXHIBIT "E"
Form of SNDA
EXHIBIT "F"
Form of Supplement for Additional Lessee
SUPPLEMENT NO. _____ TO MASTER LEASE
This Supplement ("Supplement") is hereby added, as of the _____ day of
_________, _____, to that certain Master Lease (as heretofore amended and
supplemented, the "Lease"), dated as of _____________, 1995, by and between
State Street Bank and Trust Company, a Massachusetts trust company, as Trustee
under that certain Declaration of Trust of even date with the Lease (in such
capacity, and not individually, "Lessor"), and THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation, THE PEP BOYS MANNY, MOE & JACK OF CALIFORNIA,
a California corporation, and PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC.,
a Delaware corporation ("Lessee"). Upon execution hereof by Lessor,
Lessee Parent, and Additional Lessee, and approval hereof by CITICORP LEASING,
INC., a Delaware corporation (as administrative agent for the "Purchasers"
[as defined in the Lease]) ("Agent"), this Supplement shall be included in
and shall be a part of the Lease for all purposes. Terms used but not
otherwise defined herein shall have the meanings given to such terms in the
Lease.
The parties hereto, intending to be legally bound hereby, acknowledge
and agree to the following:
___________________________, a _________ corporation ("Additional Lessee")
and Lessee Parent desire for the Additional Lessee to become a party to the
Lease as a Lessee as provided for in Section 31 of the Lease.
To induce approval of the acceptance of Additional Lessee as a party to
the Lease Lessee Parent and Additional Lessee hereby represent and warrant to
Agent and Lessor that, as of the date hereof:
a. Additional Lessee is a wholly-owned Subsidiary of Lessee Parent.
b. All representations and warranties made in the Lease with
respect to the "Lessee" are true and correct in all material
respects as to the Additional Lessee as of the date hereof.
c. Giving effect to the approval of Additional Lessee as a party to
the Lease, all representations and warranties made in the Lease and
in the Lease Guarantee as to Lessee Parent remain true and correct
in all material respects.
Lease Guarantor, as "Indemnitor" under that certain Environmental
Indemnity Agreement (the "Environmental Indemnity") of even date with the
Lease, executed by Lease Guarantor for the benefit of Lessor, Agent and
the Instrument Holders, hereby acknowledges that said Environmental Indemnity
and each and every representation, warranty, covenant, obligation, indemnity,
or other term thereof applies to, and applies with respect to, the Additional
Lessee and any Parcel and the Improvements that may ever be leased by the
Additional Lessee pursuant to the Lease.
Further, Lease Guarantor, as "Guarantor" under that certain Lease Guarantee
(the "Lease Guarantee") of even date with the Lease, executed by Lease Guarantor
and Lessor, hereby acknowledges that said Lease Guarantee and each and every
representation, warranty, covenant, obligation, indemnity, or other term
thereof applies to, and with respect to, the Additional Lessee and any
Parcel(s) and the Improvements that may ever be leased by the Additional
Lessee pursuant to the Lease and that from and after the date hereof the
Additional Lessee shall be covered by the Lease Guarantee as if the Additional
Lessee had been an original Lessee, and that the Lease Guarantee remains in
full force and effect.
Additional Lessee hereby assumes, jointly and severally, all obligations
of the Lessee under the Lease, whether arising prior to, or subsequent to,
the date of this Supplement.
It is expressly acknowledged and agreed that Agent and the Purchasers and
Instrument Holders are intended to be beneficiaries of this Supplement to the
same extent as Agent and the Purchasers and Instrument Holders are
beneficiaries of the Lease and the Environmental Indemnity.
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
LESSOR:
STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company, not in its individual
capacity but solely as Trustee under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
"ADDITIONAL LESSEE":
__________________________________,
a _____________________corporation
By:
Name:
Title:
The undersigned, in its capacity as Lessee Parent, Lease Guarantor, and
party to the Environmental Indemnity Agreement joins in this Supplement for
the purposes therein stated.
LESSEE PARENT AND LEASE GUARANTOR:
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation
(as administrative agent on behalf of the
Purchasers)
By:
Name:
Title:
RECORDING REQUESTED
BY AND AFTER RECORDING
SHOULD BE RETURNED TO:
CHARLES W. MORRIS, ESQ.
BROWN MCCARROLL & OAKS HARTLINE
300 CRESCENT COURT
SUITE 1400
DALLAS, TEXAS 75201-6929
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
AGREEMENT, dated as of , 199 (this "Agreement"), by and among STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its primary
business address at Two International Place, Fourth Floor, Boston, Massachusetts
02110 (Attn: Corporate Trust Department), not in its individual capacity but
solely as the Trustee under a certain Declaration of Trust (the "Declaration
of Trust") dated November ___, 1995, ("Lessor"), _______________, a
_____________ corporation, ("Lessee"), having its primary business address at
3111 W. Allegheny Avenue, Philadelphia, Pennsylvania 19132
(Attn: Michael Holden, Senior Vice-President-Finance, and CITICORP
LEASING, INC., a Delaware corporation having an office at 450 Mamaroneck
Avenue, Harrison, New York 10528 (Attn: EFL/CBL Credit Head), in its capacity
as the administrative agent ("Agent") for the benefit of the Noteholders under
that certain Transaction Agreement dated November ___, 1995 among Lessor, Agent,
and [Lessee/the corporation of which Lessee is a wholly-owned subsidiary].
Citicorp Leasing, Inc. is the initial Noteholder, but the term "Noteholder"
shall also include any person who may from time to time hereafter hold any Note
issued pursuant to the Declaration of Trust.
W I T N E S S E T H:
WHEREAS, Lessor is the owner of that certain parcel of real property
described in Exhibit "A" attached hereto (the "Parcel"), together with any
buildings and improvements hereafter located thereon (the "Improvements");
WHEREAS, Lessor and Lessee (along with certain other lessees) have
entered into a certain Master Lease dated November ___, 1995 (as amended and
supplemented from time to time, the "Lease"), wherein Lessor has agreed to let
and demise to Lessee (and certain other lessees) various properties to be added
to the coverage of the Lease from time to time (collectively, the "Property").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in the Lease;
WHEREAS, pursuant to Supplement No. ___ to Master Lease of even date
herewith between Lessor and Lessee the Parcel and Improvements have been
added to the Property covered by the Lease, and are now leased to Lessee
under the Lease;
WHEREAS, Agent, for the benefit of the Noteholders, is or will become a
secured party under one or more deeds of trust, mortgages, or other security
instruments as applicable to the Property (collectivly, the "Transaction
Mortgage") executed by Lessor, encumbering Lessor's fee simple estate in the
Property as security for certain obligations owed to the Noteholders.
The Transaction Mortgage covering the portions of the Property now subject
to the Lease is intended to be recorded immediately prior to the recording of
this Agreement;
WHEREAS, the parties hereto desire to make certain provisions concerning
the Lease and the Transaction Mortgage as hereinafter set forth;
NOW, THEREFORE, in consideration of One Dollar ($1) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby covenant and agree as follows:
1. Agent agrees with Lessee that, so long as the Lease remains in effect
and no Event of Default (as defined in the Lease) has occurred and is
continuing:
(a) Neither Lessee, nor any person claiming through or under Lessee,
shall be named or joined as a party defendant in any action, suit or
proceeding which may be instituted or taken by Agent for the purpose of
enforcing or foreclosing the Transaction Mortgage by reason of any default
or event of default under the Transaction Agreement or other Transaction
Documents;
(b) Enforcement of any provisions of the Transaction Mortgage shall
not terminate the Lease or disturb Lessee in the possession and use of
the Property;
(c) Except as otherwise provided in this Agreement, Lessee's
possession of the Property and Lessee's rights and privileges under the
Lease, including without limitation, Lessee's rights to purchase the
Property or applicable portions thereof pursuant to the terms of the
Lease shall not be disturbed, diminished or interfered with by Agent;
and
(d) The leasehold estates created by and under the Lease shall not
be affected in any manner by any proceeding instituted or action taken
under or in connection with the Transaction Mortgage or in case Agent or
any other Person takes possession of the Property pursuant to any
provision of the Transaction Mortgage.
2. Agent and Lessee agree that if at any time the interest of the Lessor
is terminated and Agent succeeds to such interest (whether as a result of
foreclosure of the Transaction Mortgage or otherwise), and/or if the Property
or any part thereof is at any time owned by Agent or any successor thereto or
any other party by reason of a judicial or non-judicial foreclosure, private
trustee sale, deed in lieu of foreclosure, or otherwise in connection with an
exercise of rights or remedies pursuant to the terms of the Transaction
Mortgage, and so long as no Event of Default (as defined in the Lease) has
occurred and is continuing, then (i) the Lease shall continue in effect and
shall not terminate, (ii) Lessee shall attorn to and recognize Agent (or such
other party) as the successor to the rights of Lessor, upon the then executory
terms and conditions of the Lease, (iii) Agent (or such other party) shall
accept such attornment and recognize Lessee as Agent's (or such other party's)
lessee under the Lease, (iv) Agent (or such other party) shall assume and
thereafter fulfill the obligations by the "Lessor" under the Lease, and (v)
where applicable, Agent (or such other party) shall take all actions required
of the "Lessor" under the Lease to transfer the Property to Lessee upon
Lessee's exercise of any applicable purchase option and Lessee's payment of
the Offer Purchase Price therefor. Notwithstanding any such "assumption" by
Agent (or such other party), Agent (or such other party) shall have no
personal liability or obligation for the performance of the obligations of
Lessor, and shall further have no liability or obligation of any kind in
respect of any obligations of the Lessor under the Lease arising subsequent to
any sale or transfer of the Property to a third party that "assumes" the
obligations of Lessor under the Lease arising after such transfer, (which
"assumption" shall be subject to the same limitations as the "assumption"
by the Agent (or such other party) as aforesaid). The provisions of this
Paragraph shall be self-operative and no further instrument of attornment
shall be required. In confirmation of such attornment, however, each party
hereto shall, at the request of any other party hereto (or such other party),
promptly execute and deliver an instrument, in recordable form, which confirms
such attornment, non-disturbance, and recognition, provided, however, that the
failure to execute any further instrument shall not detract from the
effectiveness of the provisions of this Paragraph. Upon such attornment,
non-disturbance, and recognition, the Lease shall continue in full force
and effect as, or as if it were, a direct lease between Agent (or such other
party) and Lessee upon all of the then exeutory terms, conditions and other
covenants thereof. In such event, Lessee agrees that Agent (or such other
party) shall not be (a) liable for any act or omission of the prior
lessor (other than acts or omissions taken at the direction of Agent);
(b) subject to any offsets, claims, defenses or counterclaims which Lessee
might have against the prior lessor (except such as are based on the prior
lessor's acts or omissions taken at the direction of Agent); (c) bound
by any advance rent paid by Lessee not paid by Lessee in accordance with the
terms of the Lease; or (d) bound by any amendment or modification of the Lease
made without Agent's consent.
3. Lessee hereby certifies to Agent and the Noteholders that, as of the
date hereof:
i) The Lease is in full force and effect and has not been amended or
modified;
ii) Neither Lessee nor, to the best of Lessee's knowledge, the Lessor
is in default in observing or performing the terms, covenants, provisions
or conditions on their respective parts to be observed or performed under
the Lease and, to the best of Lessee's knowledge, no condition exists,
and no event has occurred, which, with or without the passage of time or
the giving of notice or both, would constitute such a default; and
iii) All rent currently due and owing by Lessee to Lessor under the
Lease has been paid in full.
It is acknowledged that the provisions of this Paragraph are to be relied upon
by Agent and the Noteholders in inducing the Noteholders to make, or to commit
to make, certain Advances under the Transaction Agreement. Lessee agrees that
from time to time at the request of Agent, it will execute, acknowledge and
deliver to Agent a statement confirming that the certifications made by it
above remain true and correct as of such time (or if not true, specifying the
respects in which such certifications have become untrue).
4. Lessee hereby consents to the Transaction Mortgage and to any
consolidations, renewals, modifications, replacements, refinancings,
substitutions and extensions thereof, but only to the extent expressly
permitted under the Transaction Documents.
5. Subject to the terms of Paragraphs 1 and 2 of this Agreement, the
Lease and any other interest of Lessee in the Property which Lessee may now
hold or hereafter acquire or be deemed to hold are hereby made, and shall at
all times continue to be, subject and subordinate in each and every respect
to the provisions of the Transaction Mortgage and to any and all renewals,
modifications, extensions, substitutions, replacements and/or consolidations
of the Transaction Mortgage unless and until the Transaction Mortgage has been
released in whole or in applicable part with respect to the Property or the
portion thereof in question.
6. Agent shall endeavor to give Lessee notice (in accordance with the
notice provisions of the Lease) prior to any foreclosure of the Transaction
Mortgage, acceptance by Agent of a deed in lieu of foreclosure, or other
similar event but any failure by Agent to give such prior notice to Lessee
shall not affect the validity or effectiveness of any such action taken
by Agent.
7. This Agreement shall survive any termination of the Lease, whether
by operation of law or otherwise.
8. This Agreement (and any substantially similar agreements executed from
time to time with respect to the Lease and other portions of the Property) and
the Lease collectively contain the entire agreement between the parties
regarding (i) the non-disturbance of Lessee's possession of the Property
under the Lease, (ii) attornment and recognition between Lessee and Agent, and
(iii) subordination of the Lease to the Transaction Mortgage.
9. This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute but one and the same
instrument.
10. No waiver or modification by any party of any provision or covenant
of this Agreement shall be deemed to have been made unless such waiver is
expressed in writing and signed by the party against whom such waiver or
modification is charged.
11. This Agreement shall inure to the benefit of Lessor, Lessee, Agent,
and the Noteholders and be binding upon Lessor, Lessee, Agent, and the
Noteholders, and in each case their respective successors and assigns.
12. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF , WITHOUT
REGARD TO ITS CONFLICT OF LAWS PRINCIPLES.
13. Any notice, demand, consent, approval, direction, request, agreement
or other communication required or permitted hereunder shall be given in the
manner specified in the Lease.
14. If additional parcels or improvements are added to the Property, upon
request of any of the parties hereto the parties hereto shall execute and
record such supplements to this Agreement or other documents as may reasonably
be required to assure that the rights granted herein and the obligations of the
parties hereto are applicable to the additional parcels and improvements in
question; provided, however, that the execution and/or recordation of any such
supplement shall not be necessary for the effectiveness of this Agreement as
to the additional parcels and improvements.
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties have
duly executed and delivered this Agreement on the attached Signature Pages as
of the date first above written.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE FOR LESSOR
ON
SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT AGREEMENT
"LESSOR":
STATE STREET BANK AND TRUST
COMPANY,
a Massachusetts trust company
(acting in its capacity as Trustee under the
Declaration of Trust and not in its individual
capacity)
By:
Name:
Title:
[ADD WITNESS SIGNATURES, ATTESTATION, SEALS, OR OTHER NECESSARY
FORMALITIES AND REVISE ACKNOWLEDGMENT FORMS AS REQUIRED UNDER
APPLICABLE STATE LAW]
STATE OF
SS.
COUNTY OF
This instrument was acknowledged before me on this ____ day of , 199 by
, of STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company in its capacity as Trustee as aforesaid.
My commission expires: Notary Public in and for
_____________________
Printed Name of Notary Public
[Notarial Seal]
SIGNATURE PAGE FOR LESSEE
ATTACHED TO
SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT AGREEMENT
"LESSEE":
__________________________________
________, a ____________corporation
By:
Name:
Title:
[ADD WITNESS SIGNATURES, ATTESTATION, SEALS, OR OTHER NECESSARY
FORMALITIES AND REVISE ACKNOWLEDGMENT FORMS AS REQUIRED UNDER
APPLICABLE STATE LAW]
STATE OF
SS.
COUNTY OF
This instrument was acknowledged before me on this ____ day of , 199 by
, of ______________________________, a ___________________
corporation on behalf of said corporation.
My commission expires: Notary Public in and for
_____________________
Printed Name of Notary Public
[Notarial Seal]
SIGNATURE PAGE FOR AGENT
ATTACHED TO
SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT AGREEMENT
"AGENT":
CITICORP LEASING, INC.,
a Delaware corporation
(in its capacity as administrative agent for
itself and the other Noteholders)
By:
Name:
Title:
[ADD WITNESS SIGNATURES, ATTESTATION, SEALS, OR OTHER NECESSARY
FORMALITIES AND REVISE ACKNOWLEDGMENT FORMS AS REQUIRED UNDER
APPLICABLE STATE LAW]
STATE OF NEW YORK
SS.
COUNTY OF WESTCHESTER
This instrument was acknowledged before me on this ____ day of , 199 , by
the of Citicorp Leasing, Inc., a Delaware corporation,
on behalf of said corporation, in the foregoing capacity.
My commission expires: Notary Public in and for
_____________________ the State of New York
Printed Name of Notary Public
[Notarial Seal]
LEASE GUARANTEE
THIS LEASE GUARANTEE ("Guarantee") made and entered into as of this 13th
day of November, 1995, by and among THE PEP BOYS - MANNY, MOE & JACK, a
Pennsylvania corporation ("Guarantor"), STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company, in its individual capacity as its interest may
appear in the Transaction Documents, but otherwise not in its individual
capacity but solely in its capacity as Trustee under that certain Declaration
of Trust dated of even date herewith ("Lessor"), and CITICORP LEASING, INC.,
as administrative agent for itself and other Purchasers and Instrument Holders,
as defined in the Lease ("Agent");
W I T N E S S E T H:
A. Lessor has contemporaneously herewith entered into a certain Master
Lease (the "Lease") with Guarantor, The Pep Boys Manny, Moe & Jack of
California, a California corporation, and Pep Boys - Manny, Moe & Jack of
Delaware, Inc., a Delaware corporation (collectively, the "Lessee"), which
Lease is intended to cover certain real property to be added thereto from
time to time as provided for therein. As used in this Guarantee "Lessee"
means, collectively, the above-named parties that constitute the "Lessee" on
the date hereof as well as any Additional Lessees (as defined in the Lease)
that may hereafter become a party to the Lease.
B. The property to be covered by the Lease will be acquired by Lessor
with the proceeds of advances under certain A-Notes, B-Notes and Certificates
(herein referred to as the "Instruments") issued by Lessor to Purchasers
pursuant to the terms of a certain Transaction Agreement (herein so called)
of even date herewith by and among Lessor, Guarantor, and Agent, on behalf of
itself and such other financial institutions as may, from time to time, become
Purchasers or Instrument Holders thereunder.
C. In consideration of the execution and delivery of the Lease by Lessor
to Lessee, and in recognition that the favorable terms accruing to Lessee
through the rental terms of the Lease, all of which are contingent upon the
delivery of this Guarantee by Guarantor; and in recognition that Guarantor will
receive direct and material benefits from the delivery of the Lease and the
Transaction Agreement and the consummation of the transactions contemplated
thereby, Guarantor desires to deliver this Guarantee to Lessor.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Lessor and Guarantor hereby agree as follows:
1. Guarantee. For value received, and in consideration of Lessor
entering into the Lease with Lessee and in further consideration of the
agreement of the Purchasers to make Advances from time to time under the
Transaction Agreement, Guarantor hereby unconditionally guarantees the full
payment and performance when due, whether at the stated due date, by
acceleration or otherwise, of any and all rent, monetary or non-monetary
obligations and other amounts of every kind, howsoever created, arising, or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing or owing to Lessor by Lessee pursuant to the Lease, including, but
without limitation, the payment of Net Rent, Contingent Rent Payments (including
Construction Failure Payments), Offer Purchase Price, other Additional Rent and
including any attorneys fees, court costs or other enforcement costs of any
kind or nature, including those incurred during pre-trial, trial or appellate
levels (all such monetary and non-monetary obligations being hereinafter
collectively called the "Obligations"). Guarantor hereby agrees that upon any
default by Lessee in the payment or performance of any of the Obligations when
and as due, Guarantor will forthwith pay and/or perform the same immediately
upon demand and without further notice.
Guarantor acknowledges that at such time(s) as Parcels and/or
Improvements are added to the Lease each and every payment and performance
obligation (including increased rent) of Lessee under the Lease is
automatically guaranteed hereunder without the need of any confirmation and
without any notice to Guarantor. Upon request by Lessor or Agent, Guarantor
agrees to confirm by supplement this Guarantee with respect to addition of
Parcels and/or advances in respect of New Improvements. Such a supplement
would be executed by the Guarantor and would contain a reaffirmation of
representations and warranties contained herein. A supplement, however, is
not required for this Guarantee to cover the obligations of Lessee in
respect of Parcels and Improvements when added to the Lease.
2. Gurantee Continuing, Absolute, Unlimited. This Guarantee is a
continuing, absolute and unlimited guarantee of payment and performance as
primary obligor and not as surety. This Guarantee shall apply to all
Obligations pursuant to the Lease without limitation as to either amount or
period of time. The Obligations shall be conclusively presumed to have been
created in reliance on this Guarantee. Lessor shall not be required to
proceed first against Lessee or any other person, firm or corporation or
against any property securing any of the Obligations before resorting to
Guarantor for payment. This Guarantee shall be construed as a guarantee
of payment and performance without regard to the validity, regularity, or
enforceability of any of the Obligations as to Lessee or the rejection of
the Lease in bankruptcy, and notwithstanding any claim, defense (other than
irrevocable payment by Guarantor or another Lessee) or right of set-off which
Lessee or Guarantor may have against Lessor, including any such claim, defense
or right of set-off based on any present or future law or order of any
government (de jure or de facto), or of any agency thereof or court of law
purporting to reduce, amend or otherwise affect any obligations of Lessee,
or any other obligor, or to vary any terms of payments, and without regard
to any other circumstances which might otherwise constitute a legal or
equitable discharge of a surety or a guarantor. Guarantor agrees that this
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time payment to Lessor of the Obligations or any part thereof is
rescinded or must otherwise be returned by Lessor upon the insolvency,
bankruptcy or reorganization of Lessee, or otherwise, as though
such payment to Lessor had not been made.
3. Definitions. Unless otherwise indicated, capitalized terms used
herein and not defined below shall have the respective meanings given to them
in the Lease. In addition to the definitions provided in the Lease, the
following words and terms shall have the meanings indicated below:
(a) "Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real and/or personal
property which obligations are required to be classified and accounted for
as a capital lease on a balance sheet of such Person under GAAP (including
Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board) and, for purposes of this Lease, the amount of
such obligations shall be the capitalized amount thereof, determined in
according with GAAP (including such Statement No. 13).
(b) "Change of Control" means, as to Guarantor, any event or
circumstance that results in a majority of the individuals comprising the
board of directors of the Guarantor as of any date to consist of
individuals that were not members of the board of directors of the
Guarantor twelve (12) months previous to such date (other than by reason
of death).
(c) "Consolidated Subsidiary" shall mean, as to any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance
with GAAP.
(d) "GAAP" shall mean generally accepted accounting principles that
are (a) consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, as in effect
from time to time, and (b) consistently applied with past financial
statements of any Person adopting the same principles.
(e) "Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance
of, or otherwise to be or become contingently liable under or with respect
to, the Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock of any corporation, or an agreement to
purchase, sell or lease (as lessee or lessor) property, products,
materials, supplies or services primarily for the purpose of enabling a
debtor to make payment of his, her or its obligations or an agreement to
assure a creditor against loss, and including, without limitation, causing
a bank to open a letter of credit for the benefit of another Person, but
excluding endorsements for collection or deposit in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb shall
have a correlative meaning.
(f) "Indebtedness" shall mean, as to any Person: (i) indebtedness
created, issued or incurred by such Person for borrowed money (whether by
loan or the issuance and sale of debt securities); (ii) obligations of such
Person to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business
so long as such trade accounts payable are payable within 90 days of the
date the respective goods are delivered or respective services rendered;
(iii) Indebtedness of others secured by a Lien on the property of such
Person, whether or not the respective Indebtedness so secured has been
assumed by such Person; (iv) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by banks
and other institutions for the account of such Person; (v) Capital Lease
Obligations of such Person; and (vi) Indebtedness of others Guaranteed by
such Person.
(g) "Interest Expense" shall mean, for any period, the sum of the
following: (i) all interest in respect of Indebtedness accrued or
capitalized during such period (whether or not actually paid during such
period) plus (ii) the net amounts payable (or minus the net amounts
receivable) under interest rate protection agreements accrued during such
period (whether or not actually paid or received during such period).
Payments of Net Rent or other payments under the Lease will not be
treated as Interest Expense for purposes hereof.
(h) "Leverage Ratio" shall mean, at any time, the ratio of Total
Liabilities to Tangible Net Worth of Guarantor and its Consolidated
Subsidiaries at such time.
(i) "Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For purposes of this Lease, Guarantor or any of
its Subsidiaries shall be deemed to own subject to a Lien any asset which
it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
(j) "Net Earnings" shall mean, for any period, the net earnings of
Guarantor and its Consolidated Subsidiaries determined in accordance with
GAAP for such period; provided that, if for any fiscal quarterly period
such net earnings shall be negative (i.e.,a loss), "Net Earnings" for
such period shall be deemed to be zero.
(k) "Net Operating Profit" shall mean, for any period, for Guarantor
and its Consolidated Subsidiaries (i) net sales minus (ii) total costs and
expenses (excluding costs of income taxes and Interest Expense), in each
case determined in accordance with GAAP for such period.
(l) "NOP/Interest Charges Ratio" shall mean, as at any date of
determination thereof, the ratio of (i) Net Operating Profit for the
period of four consecutive fiscal quarters of Guarantor ending on or most
ended prior to such date of determination to (ii) Interest Expense for
such period.
(m) "Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
(n) "Subsidiary" shall mean, as to any Person, any corporation of
which at least a majority of the outstanding shares of stock having by
the terms thereof ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by such Person
or one or more of its Subsidiaries or by such Person and one or more of
its Subsidiaries.
(o) "Tangible Net Worth" shall mean, as at any date of determination
thereof, the sum of the following for any Person and its Consolidated
Subsidiaries determined (without duplication) in accordance with GAAP:
(i) the amount of capital stock, plus
(ii) the amount of surplus and retained earnings (or, in the
case of a surplus or retained earnings deficit, minus the amount of
such deficit), minus
(iii) the sum of the following: cost of treasury shares and
the book value of all assets of such Person and its Consolidated
Subsidiaries which should be classified as intangibles (without
duplication of deductions in respect of items already deducted in
arriving at surplus and retained earnings) but in any event including
goodwill, research and development costs, trademarks, trade names,
copyrights, patents and franchises, all reserves and any write-up in
the book value of assets resulting from a revaluation thereof
subsequent to January 28, 1989.
(p) "Total Liabilities" shall mean, as at any date of determination
thereof, the sum, for Guarantor and its Consolidated Subsidiaries
determined (without duplication) in accordance with GAAP, of all
Indebtedness of Guarantor and its Consolidated Subsidiaries (including
subordinated Indebtedness) and all other liabilities of Guarantor and its
Subsidiaries which should be classified as liabilities on a balance sheet
of Guarantor and its Consolidated Subsidiaries prepared in accordance
with GAAP and in any event including all reserves (other than general
contingency reserves) and all deferred taxes and other deferred items.
4. Guarantee Not Affected by Change in Security or Other Actions.
Lessor may, from time to time, without the consent of or notice to Guarantor,
take any or all of the following actions without impairing or affecting
Guarantor's obligations under this Guarantee or releasing or exonerating
Guarantor from any of its liabilities hereunder:
(a) retain or obtain a security interest in any property to secure
any of the Obligations or any obligation hereunder;
(b) retain or obtain the primary or secondary liability of any
party or parties, in addition to the Guarantor, with respect to any of
the Obligations;
(c) extend the time or change the manner, place or terms of payment
of, or renew or amend the Lease, or other instrument executed in
connection with or evidencing the Obligations or any part thereof, or
amend in any manner any agreement relating thereto;
(d) release or compromise, in whole or in part, or accept full or
partial payment for, any of the Obligations hereby guaranteed, or any
liability of any nature of any other party or parties with respect to the
Obligations or any security therefor;
(e) subordinate the payment of all or any part of the Obligations
to the payment of any liability of Lessee to creditors of Lessee other
than Lessor or Guarantor;
(f) enforce Lessor's security interest, if any, in all or any
properties securing any of the Obligations or any obligations hereunder
in order to obtain full or partial payment of the Obligations then
outstanding;
(g) release or fail to perfect, protect, or enforce Lessor's security
interest, if any, in all or any properties securing any of the Obligations
or any obligation hereunder, or permit any substitution or exchange for
any such property; and
(h) take or fail to take any other action of whatever kind or
character with respect to the Obligations, the Lease or any other
document or instrument, it being the intention of Guarantor that it shall
remain liable as primary obligor for the Obligations notwithstanding any
act, omission or thing which might, but for the provisions hereof,
otherwise operate as a legal or equitable discharge of any guarantor.
5. Waivers. Guarantor hereby expressly waives:
(a) notice of acceptance of this Guarantee;
(b) notice of the existence or incurrence of any or all of the
Obligations;
(c) presentment, demand, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest, and all other notices
whatsoever except as expressly provided herein;
(d) any requirement that proceedings first be instituted by Lessor
against Lessee;
(e) all diligence in collection or protection of or realization upon
the Obligations or any part thereof, or any obligation hereunder, or any
collateral for any of the foregoing;
(f) any rights or defenses based on Lessor's election of remedies,
including any defense to Lessor's action to recover any deficiency after
a non-judicial sale;
(g) the occurrence of every other condition precedent to which
Guarantor might otherwise be entitled; and
(h) any right to require Lessor to marshall assets.
6. Representations and Warranties of Guarantor. Guarantor represents
and warrants to Lessor that:
(a) Guarantor (i) is duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Pennsylvania,
(ii) has full corporate power and authority to own and operate its
properties and to conduct its business as presently conducted, and full
corporate power, authority and legal right to execute, deliver and perform
its obligations under this Guarantee, (iii) is duly qualified to do
business as a foreign corporation in good standing in each jurisdiction in
which its ownership or leasing of properties or the conduct of its business
requires such qualification, and (iv) all of the issued and outstanding
voting stock of Subsidiaries that are Lessees or are approved "Additional
Lessees" under the Lease is owned, directly or indirectly, by Guarantor.
(b) This Guarantee has been duly authorized, executed and delivered
by Guarantor and is a legal, valid and binding obligation of Guarantor,
enforceable according to its terms (subject as to enforcement of remedies
to any applicable bankruptcy, reorganization, moratorium, or other Laws or
principles of equity affecting the enforcement of creditors' rights
generally).
(c) The execution, delivery and performance by Guarantor of this
Guarantee will not result in any violation of any term of the articles of
incorporation or the by-laws of Guarantor, does not require stockholder
approval or the approval or consent of any trustee or holders of debt of
Guarantor except such as have been obtained prior to the date hereof, and
will not conflict with or result in a breach of any terms or provisions
of, or constitute a default under, or result in the creation or imposition
of any lien upon, any property or assets of Guarantor under, any indenture,
mortgage or other agreement or instrument to which Guarantor is a party or
by which it or any of its property is bound, or any existing applicable
law, rule, regulation, license, judgment, order or decree of any
government, governmental body or court having jurisdiction over Guarantor
or any of its activities or properties, including, without limitation, any
rule or order of any public utility commission or other governmental body.
(d) There are no consents, licenses, orders, authorizations or
approvals of, or notices to or registrations with any governmental or
public body or authority which are required in connection with the valid
execution, delivery and performance of, this Guarantee by Guarantor that
have not been obtained or made, and any such consents, licenses, orders,
authorizations, approvals, notices and registrations that have been
obtained or made are in full force and effect.
(e) Except as disclosed in writing to Agent by Guarantor
concurrently herewith or publicly disclosed in Guarantor's 10-Q and/or
10-K filings with the Securities and Exchange Commission, (i) there is
no action, suit, proceeding or investigation at law or in equity by or
before any court, governmental body, agency, commission or other tribunal
now pending or, to the best knowledge of Guarantor after due inquiry,
threatened against or affecting Guarantor or any property or rights of
Guarantor as to which there is a significant possibility of an adverse
determination, and which if adversely determined, may have a material
adverse effect on the financial condition or business of Guarantor or
which, if adversely determined could materially impair the ability of
Guarantor to perform its obligations under this Guarantee, and (ii)
there is no action, suit, proceeding or investigation at law or in equity
by or before any court, governmental body, agency, commission or other
tribunal now pending or, to the best knowledge of Guarantor after due
inquiry, threatened which questions or would question the validity of
this Guarantee.
(f) Guarantor is not in default under or with respect to any
agreement or other instrument to which it is party or by which it or its
assets may be bound which would have a material adverse effect on the
financial condition of Guarantor or the ability of Guarantor to perform
its obligations under this Guarantee. Guarantor is not subject to
or in default under any order, award or decree of any court, arbitrator,
or other governmental authority binding upon or affecting it or by which
any of its assets may be bound or affected which would have a material
adverse effect on the ability of Lessee to carry on its business as
presently conducted or to perform its obligations under this Guarantee.
(g) Guarantor has filed or caused to be filed all tax returns which
to the knowledge of Guarantor are required to be filed, and has paid all
taxes shown to be due and payable on said returns or on any assessments
made against it, except for (i) returns which have been appropriately
extended and (ii) taxes, fees, assessments or other charges, the amount
or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity
with GAAP have been provided on the books of Guarantor.
(h) Guarantor and each of its Subsidiaries are in compliance in all
material respects with the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") and the Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations thereunder insofar as ERISA,
the Code and such rules and regulations relate to any employee benefit
plan as defined in Section 3(3) of ERISA. No employee pension benefit plan
(as defined in Section 3[2] of ERISA) maintained by Guarantor or any of its
Subsidiaries for its employees and covered by ERISA (a "Plan") had an
"accumulated funding deficiency", within the meaning of said term under
Section 302 of ERISA, as of the last day of the most recent fiscal year
of such Plan, and neither Guarantor nor any of its Subsidiaries has
incurred with respect to any Plan any liability to the Pension Benefit
Guaranty Corporation ("PBGC") which is material to the consolidated
financial condition of Guarantor or any of its Subsidiaries. For the
purpose of this subsection (viii), the term "Subsidiary" shall include
a Controlled Group of Corporations as that term is defined in Section
1563 of the Code or Section 4.001 of ERISA.
(i) The financial statements of Guarantor furnished to Lessor and
Agent on or before the date hereof have been prepared in accordance with
GAAP and fairly present the financial condition of Guarantor as of the
date thereof. Since the date of such financial statements there has been
no material adverse change in the financial condition or business of
Guarantor which would impair the ability of Guarantor to perform its
obligations hereunder.
7. Affirmative Covenants. Guarantor covenants and agrees with Lessor,
Agent and the Instrument Holders that, so long as this Guarantee shall remain
in effect Lessee will, unless Lessor and Agent shall otherwise consent in
writing:
(a) Compliance with Laws. Comply, and cause each of its Subsidiaries
to comply, in all material respects with all applicable Laws, for which the
failure to so comply could have a material adverse effect on the operations
of Guarantor as a whole so as to adversely affect its capacity to perform
its obligations under this Guarantee, and such compliance shall include,
without limitation, paying before the same become delinquent all taxes
imposed upon it or its property, except to the extent contested diligently
and in good faith, and for which adequate reserves are established.
(b) Maintenance of Existence; Licenses and Franchises. Maintain its
existence, and preserve and maintain all material licenses, privileges,
franchises, certificates, authorizations and other permits and agreements
necessary for the operation of its business.
(c) Insurance. Maintain, and cause each of its Subsidiaries to
maintain, insurance policies with respect to its property and business in
such amounts and against such casualties and contingencies as is customary
in its industry; provided that nothing herein shall prejudice the right of
Guarantor or any Subsidiary thereof to self-insure for certain risks in
accordance with customary procedures.
(d) Additional Information. Guarantor shall furnish to Agent: (i)
within sixty (60) days of the end of each quarterly fiscal period during
the Term, unaudited quarterly financial statements for Guarantor
(including a balance sheet, income statement, and such other reports as
Agent may reasonably request); (ii) within one hundred twenty (120)
days of the end of each fiscal year during the Term, annual financial
statements for Guarantor (and its consolidated Subsidiaries) audited by a
nationally recognized public accounting firm (including a balance sheet,
income statement and such other reports as Agent may reasonably request);
(iii) when issued or filed, copies of the most recent 10-K for Guarantor,
proxy statements, financial statements and other reports filed by
Guarantor with the Securities and Exchange Commission or any national
securities exchange or market on which any of Guarantor's securities are
traded or quoted; (iv) from time to time upon Agent's request, an Officer's
Certificate stating that there exists no Event of Default (or event or
circumstance which with notice and or the passage of time could mature
into an Event of Default) under the Lease, this Guarantee, and/or the
Environmental Indemnity Agreement of even date herewith executed by
Guarantor or, if any such event or circumstances does exist, specifying
the nature and period of existence thereof and what action Guarantor
proposes to take with respect thereto; and (v) from time to time at the
request of Agent, and in any event simultaneously with delivery of the
annual financial statements of Guarantor, a statement certified by a
senior financial officer of Guarantor certifying (A) that Guarantor is in
compliance with all of the financial covenants (both affirmative and
negative) contained in this Guarantee, and (B) Leverage Ratio, Tangible
Net Worth, Current Ratio, and NOP/Interest Charges Ratio as of the end of
the preceding quarter or fiscal year, or for the preceding quarter or
fiscal year, as applicable. Guarantor's fiscal year is a period of
fifty-two (52) weeks ending on the Saturday falling nearest to
January 31.
(e) Review of Records. Further, Guarantor will permit the duly
authorized representatives of Agent at all reasonable times upon at
least ten (10) days notice to examine the books and records of Guarantor
and its Subsidiaries, and take memoranda and extracts therefrom; provided,
that information, including financial information, which is non-public and
confidential or proprietary in nature disclosed to Agent (as a result of
any examination of the books and records of Guarantor and its Subsidiaries
or pursuant to subsection (d) above or otherwise) will be kept
confidential and will not, without the prior written consent of Guarantor,
be disclosed in any manner whatsoever, in whole or in part, except that
Agent shall be permitted to disclose such information (i) to the
Instrument Holders (who shall be bound by the same confidentiality
requirements upon receipt of such information), (ii) to any regulatory
agencies having jurisdiction over Agent or any Instrument Holder in
connection with their regulatory functions, and (iii) as required by Law
or court order, or in connection with any investigation or proceeding
arising out of the transactions contemplated by this Guarantee.
(f) Taxes, Charges, Etc. Duly pay and discharge, or cause to be
paid and discharged, when due, all taxes, assessments and other
governmental charges imposed upon it or any Subsidiary that is an approved
Additional Lessee and its and their properties, or any part thereof or upon
the income or profits therefrom, as well as all claims for labor, materials
or supplies which if unpaid could have a material adverse effect of the
operations of Guarantor, as a whole, so as to adversely affect Guarantor's
capacity to perform its obligations under this Guarantee, except such items
as are being in good faith appropriately contested by Guarantor or any such
Subsidiary and for which adequate reserves are being maintained in
accordance with GAAP.
8. Negative Covenants. Guarantor covenants and agrees with Lessor and
Agent that, so long as this Guarantee shall remain in effect Guarantor will
not, unless Lessor and Agent shall otherwise consent in writing:
(a) The Guarantor will not, nor will it permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution). The Guarantor will not make, and will not
permit any of its Subsidiaries to make, any acquisition (in one
transaction or a series of related transactions) in excess of $50,000,000.
The Guarantor will not, and will not permit any of its Subsidiaries to,
convey, sell, lease, transfer or otherwise dispose of (in one transaction
or a series of transactions), all or a substantial part of its business or
assets, whether now owned or hereafter acquired (including, without
limitation, receivables and leasehold interests, but excluding (i) any
inventory or other assets (including real property) sold or disposed of
in the ordinary course of business and (ii) obsolete or worn-out property,
tools or equipment no longer used or useful in its business).
Notwithstanding the foregoing provisions:
(1) any Subsidiary of the Guarantor may be merged or
consolidated with or into: (i) the Guarantor if the Guarantor shall
be the continuing or surviving corporation or (ii) any other such
Subsidiary; provided that if any such transaction shall be between a
Subsidiary and a wholly-owned Subsidiary, the wholly-owned Subsidiary
shall be the continuing or surviving corporation;
(2) any such Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Guarantor or a wholly-owned Subsidiary of the
Guarantor; and
(3) Guarantor may sell, lease, transfer or otherwise dispose of
all or any of its assets to another Lessee.
(b) Leverage Ratio. Permit the Leverage Ratio to exceed 1.5 to 1.0.
(c) Tangible Net Worth. Permit its Tangible Net Worth, on any date
of determination thereof, to be less than the sum of (x) $520,000,000.00
plus (y) 25% of the aggregate amount of Net Earnings for each quarterly
period occurring during the period commencing January 29, 1995, and ending
on the date that is the last day of Guarantor's fiscal quarter next
preceding such date of determination.
(d) Current Ratio. Permit the ratio of consolidated current assets
of Guarantor and its Consolidated Subsidiaries over consolidated current
liabilities of Guarantor and its Consolidated Subsidiaries to be at any
time less than 1 to 1. For purposes hereof, the terms "current assets"
and "current liabilities" shall have the respective meanings assigned to
them by GAAP.
(e) NOP/Interest Charges Ratio. At any time permit the NOP/Interest
Charges Ratio to be less than 2.5 to 1.0.
(f) Lines of Business. Engage, or permit any of its Subsidiaries
that is a Lessee or an approved Additional Lessee to engage, to any
substantial extent in any line or lines of business activity other than
the business of owning and operating retail stores and auto service
centers (including functions that are directly related thereto and
supportive thereof).
(g) Change of Control. Permit the occurrence of any Change of
Control with respect to Guarantor; provided that a Change of Control as
to Guarantor shall not be a default hereunder if, as of the date such
Change of Control occurs, the senior unsecured debt of Guarantor is rated
BBB or better by Standard & Poors Corporation and/or Baa2 or better by
Moody's Investors Services, and the Guarantor or its securities are not
in a "credit watch" status with either such rating service.
(h) Judgments. Permit or acquiesce in the entry of any final
unappealable judgment or order for the payment of money in excess of
$1,000,000.00 against Guarantor or any of its Subsidiaries; provided,
however, that any such judgment or order shall not be an Event of
Default if and for so long as (x) the entire amount of such judgment
or order is covered (subject to customary deductibles) by a valid and
binding policy of insurance between the defendant and the insurer
covering payment thereof and (y) such insurer, which shall be rated
at least "B+/X" by A. M. Best Company, has been notified of, and has
not disputed the claim made for payment of the amount of such
judgment or order;
9. Payments. Each payment by Guarantor to Lessor under this
Guarantee shall be made by transferring the amount thereof in immediately
available U.S. funds, without set-off or counterclaim, to Lessor in the
same manner as rent is payable by Lessee under the Lease.
10. Costs and Expenses. Guarantor hereby agrees to pay all reasonable
legal and other costs and expenses incurred by Lessor and Agent or any
Instrument Holder in seeking to protect or enforce any of Lessor's, Agent's
or such Instrument Holder's rights or remedies with respect to the Obligations
and this Guarantee.
11. Subrogation and Other Rights. Guarantor shall not assert, enforce,
or otherwise exercise (a) any right of subrogation to any of the rights or
liens of Lessor or any other beneficiary against Lessee or any other obligor
on all or any part of the Obligations, or (b) any right of recourse,
reimbursement, contribution, indemnification, or similar right against Lessee
or any other obligor on all or any part of the Obligations or any guarantor
thereof, and Guarantor hereby irrevocably waives any and all of the foregoing
rights it may have against the Lessee by reason of Guarantor's performance
under this Guarantee until all amounts due hereunder have been paid.
12. No Waiver. No delay on Lessor's or Agent's part in the exercise of
any right or remedy shall operate as a waiver thereof, and no single or partial
exercise by Lessor or Agent of any right or remedy shall preclude the other or
further exercise thereof or the exercise of any other right or remedy.
13. Parties; Successors and Assigns. This Guarantee shall inure to the
benefit of Lessor, Agent, the Purchasers and Instrument Holders, and their
respective successors, assigns and transferees, and shall be binding upon
Guarantor and its respective successors and assigns. Guarantor may not delegate
any of its duties under this Guarantee without the prior written consent of
Lessor and Agent or any Person to whom Lessor has assigned this Guarantee.
Lessor may assign Lessor's rights and benefits under this Guarantee to any
Person, including, without limitation, to any Instrument Holder, but only in
connection with an assignment of Lessor's rights under the Lease. Upon any
assignment by Lessor of this Guarantee, and upon any subsequent assignment
or assignments by Lessor's assignee or future assignees, such assignee or
future assignee shall succeed to all of the rights, benefits, remedies and
privileges of this Guarantee and shall for all purposes hereof be deemed to
be "Lessor" hereunder to the exclusion of the assigning Lessor. Upon a
request therefor, accompanied by copies of documentation evidencing such
assignee's entitlement thereto, Guarantor agrees to make such disclosures and
to take such action and execute such instruments as any such assignee or
future assignee may reasonably require to more fully protect, preserve and
assure to such assignee or future assignee all of the rights, benefits,
remedies and privileges provided hereby.
14. Defaults.
(a) If any one or more of the following events shall occur:
(i) If an Event of Default (as defined in the Lease) shall
occur under the Lease; or
(ii) If Guarantor shall fail to pay any part of the Obligations
within five (5) Business Days after demand is made therefor
under this Guarantee;
(iii) If any representations or warranties made by Guarantor
herein shall be false or misleading in any material respect on
the date when made;
(iv) If there shall be a default in the performance or observance
of any other term, covenant or condition contained in this Guarantee
(other than a default described in subparagraph (ii) above), which
default shall continue for more than thirty (30) days after there has
been given to Guarantor by the Lessor or Agent a written notice
pursuant to Section 15 of such default or breach which cure period
shall be extended for such reasonable period as may be required to
afford Guarantor the opportunities to complete its cure of the
default or breach in question so long as Guarantor commences its
curative efforts within such thirty (30) day period and thereafter
diligently pursues such curative efforts to completion;
(v) If a custodian, receiver, liquidator, or trustee of
Guarantor or any Subsidiary, or of any of the property of either, is
appointed or takes possession, and such appointment or possession
remains in effect for more than sixty (60) days; or Guarantor or
any Subsidiary generally fails to pay its debts as they become due or
admits in writing its inability to pay its debts as they mature; or
Guarantor or any Subsidiary is adjudicated bankrupt or insolvent; or
an order for relief is entered under the Federal Bankruptcy Code
against Guarantor or any Subsidiary; or any of the property of
either is sequestered by court order and the order remains in effect
for more than sixty (60) days; or a petition is filed against
Guarantor or any Subsidiary under the bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently in
effect, and is not stayed or dismissed within sixty (60) days after
filing;
(vi) If Guarantor or any Subsidiary files a petition in voluntary
bankruptcy or seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
subsequently in effect; or consents to the filing of any petition
against it under any such law; or consents to the appointment of or
taking possession by a custodian, receiver, trustee or liquidator of
Guarantor, or a Subsidiary, or of all or any part of the property of
either;
(vii) The occurrence of an uncured event of default under
any instrument securing or evidencing any Indebtedness in excess of
$5,000,000 of the Guarantor or any of its Subsidiaries; then, a
"Default" shall be deemed to exist hereunder and an "Event of Default"
shall be deemed to exist under the Lease. In any such event, and in
addition to all other rights and remedies at law and in equity
available to Lessor as a result of such event, Guarantor shall
immediately pay or cause to be paid to Lessor, without notice or
demand, the amounts due and payable to Lessor by Lessee under the
Lease, either in respect of the Offer Purchase Price with respect
the "Property" covered thereby or as a Contingent Rent Payment.
It is understood that any payments made by Guarantor to Lessor under
this Guarantee shall not release or discharge Guarantor from its
obligations hereunder until all of the Obligations have been fully
and finally paid to Lessor. All amounts payable by Guarantor
hereunder shall be credited against corresponding amounts otherwise
payable by Lessee under the Lease for the remainder of its term if
the Lease remains in effect.
(b) Any payment made by Guarantor under this Section 14 shall be
deemed to be an agreed guarantee payment without regard to the status of
the Lease or Lessee's rights thereunder; and in no event and under no
circumstance shall any such payment be repayable or refundable to
Guarantor for any reason or under any circumstance exceptin the case of
duplicate payments.
(c) ALL AMOUNTS PAYABLE BY GUARANTOR UNDER THIS
GUARANTEE ARE PAYABLE WITHOUT OFFSET, COUNTERCLAIM OR
DEDUCTION OF WHATEVER KIND AND ARE NOT CONDITIONED UPON, AND
CANNOT BE AFFECTED IN ANY WAY BY, ANY FUTURE EVENT,
OCCURRENCE OR ACTION BY ANY PARTY, AND GUARANTOR
UNDERSTANDS AND AGREES THAT ALL SUCH AMOUNTS SHALL BE
PAYABLE NOTWITHSTANDING ANY FACT OR CIRCUMSTANCE (INCLUDING,
WITHOUT LIMITATION, THE BANKRUPTCY OF OR A SIMILAR EVENT
AFFECTING LESSEE) AT ANY TIME AFFECTING LESSEE OR THE LEASE,
WHETHER CAUSED OR CONTRIBUTED TO BY LESSEE, LESSOR OR ANY
OTHER PARTY.
15. Notices. Any notice required to be delivered hereunder shall be
deemed delivered, whether actually received or not, one (1) Business Day after
deposit with a nationally recognized, courier service for overnight delivery
addressed to the parties hereto at the respective addresses specified below,
or at such other address as they may have subsequently specified by written
notice. The addresses for notices to Guarantor, Lessor, and Agent are as
follows:
If to Lessor: State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Fourth Floor
Boston, MA 02110
Attention: Donald E. Smith
Vice-President
Fax No. (617) 664-5371
with a copy to: Bingham, Dana & Gould
100 Pearl Street
Hartford, CT 06103
Attention: James G. Scantling, Esq.
Fax No. (860) 527-5188
If to Guarantor: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention:Michael Holden
Senior Vice-President - Finance
Fax No. (215) 227-9533
with a copy to: The Pep Boys-Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention:Ronald M. Neifield
Real Estate Counsel
Fax No. (215) 229-5076
If to Agent: Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: EFL/CBL Credit Head
Fax No. (914) 899-7308
with a copy to: Brown McCarroll & Oaks Hartline
300 Crescent Court, Suite 1400
Dallas, Texas 75201
Attention: Charles W. Morris, Esq.
Fax No. (214) 999-6170
Notices sent by any other method (including personal delivery, certified mail,
and facsimile transmission)shall be deemed delivered when actually received by
the addressee. Any notice of change of address shall be effective only upon
actual receipt, regardless of delivery method, and such new address shall be
effective as to notices given by the other parties commencing ten (10) days
after such change of address notice is received by such parties. No party may
establish an official address for notice outside the continental United States.
16. Term. This Guarantee is not limited to any particular period of time
but shall continue in full force and effect until all of the Obligations have
been fully and finally paid or have been otherwise discharged by Lessee, and
Guarantor shall not be released from any obligations or liability hereunder
until such full payment or discharge shall have occurred, whereupon this
Guarantee shall terminate and be of no further force or effect; provided,
however, that if, pursuant to any bankruptcy, insolvency or other debtor
relief law or any order or decision thereunder any payment is rescinded or
Lessor is required to restore any payment or part thereof received in
satisfaction of the Obligations or any part thereof, the term "Obligations" as
used herein includes such payment to the extent rescinded or restored, and, to
the extent of the payment rescinded or restored, any prior release or
discharge of this Guarantee or of Guarantor shall be without effect and this
Guarantee shall remain in full force and effect notwithstanding such release
or discharge.
17. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
PENNSYLVANIA WITHOUT REFERENCE TO ITS CONFLICT OF LAWS RULES.
18. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND FOR THE PURPOSE OF REDUCING THE TIME AND
EXPENSE OF LITIGATION, GUARANTOR AND LESSOR WAIVE TRIAL BY JURY IN
ANY ACTION BROUGHT ON, UNDER, OR BY VIRTUE OF THIS GUARANTEE.
IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have
caused this Lease Guarantee to be executed by their respective officers
thereunder duly authorized, as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO LEASE GUARANTEE
GUARANTOR:
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO LEASE GUARANTEE
LESSOR:
STATE STREET BANK AND TRUST
COMPANY,
a Massachusetts trust company
(acting in its capacity as Trustee under the
Declaration of Trust and not in its individual
capacity)
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO LEASE GUARANTEE
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation, as administrative
agent for the Purchasers and Instrument Holders
By:
Name:
Title:
SCHEDULE 1
FORM OF SOLVENCY CERTIFICATE
The undersigned, the of THE PEP BOYS -
MANNY, MOE & JACK, a Pennsylvania corporation (the "Guarantor"), hereby
certifies in his capacity as such officer and not personally, that he has
reviewed the Lease Guarantee dated as of November, 1995, among Guarantor,
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as Trustee
and not individually, ("Lessor") and CITICORP LEASING, INC., a Delaware
corporation ("Agent"). The undersigned hereby further certifies to Lessor
and Agent (as defined in the Lease Guarantee) that:
1. There has been no material adverse change in the financial position
of the Guarantor since .
2. The Guarantor is solvent and able to pay its debts as they mature,
has capital sufficient to carry on its business and has assets having a
present fair saleable value greater than the amount of the Guarantor's total
liabilities (including known contingent liabilities).
3. The Guarantor does not contemplate filing a petition in bankruptcy
or for reorganization under the federal bankruptcy code, and there are (to
the knowledge of the undersigned) no bankruptcy or insolvency proceedings
threatened against the Guarantor.
IN WITNESS WHEREOF, the undersigned has executed this certificate
this _____ day of ____________, 19__.
Name:
Title:
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT ("Agreement"), made effective
as of the 13th day of November, 1995, by THE PEP BOYS - MANNY, MOE & JACK, a
Pennsylvania corporation, PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC., a
Delaware corporation, and THE PEP BOYS MANNY, MOE & JACK OF CALIFORNIA, a
California corporation (collectively, "Indemnitor") for the benefit of STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not individually
but solely in its capacity as Trustee under that certain Declaration of Trust
(herein so called) dated of even date herewith, ("Trustee"), STATE STREET BANK
AND TRUST COMPANY, a Massachusetts trust company (in its individual capacity,
"Trust Company"), CITICORP LEASING, INC., a Delaware corporation ("Agent"), and
those persons (including, without limitation, Citicorp Leasing, Inc.) who are
the "Instrument Holders" and/or "Purchasers" from time to time under that
certain Transaction Agreement of even date herewith among Indemnitor, Trustee,
Agent and Citicorp Leasing, Inc., as the initial "Instrument Holder" and
initial "Purchaser." (Trustee, Trust Company, Agent, Purchasers and the
Instrument Holders being referred to herein collectively as the "Indemnitees").
The term "Indemnitees" shall also include any successor or assign of Trustee or
Agent and any other Person that may from time to time be included within
the meaning of the term "Instrument Holder" or "Purchaser" as defined in the
Transaction Agreement, together with the partners, shareholders, officers,
directors, agents, representatives, attorneys, successors and assigns of any of
the foregoing, and the term "Indemnitor" shall also include any successor or
assign of Indemnitor.
Contemporaneously herewith, Trustee, as lessor, and Indemnitor, as lessee,
have entered into a certain Master Lease (as amended, supplemented or otherwise
modified from time to time, the "Lease"), which Lease is intended to cover
various properties and facilities to be added to the coverage of the Lease by
supplements executed from time to time. The properties and facilities
affected by the Lease from time to time are herein referred to collectively as
the "Property").
NOW, THEREFORE, in consideration of the premises and the sum of One Dollar
($1.00) in hand paid by Indemnitees to Indemnitor, receipt whereof is hereby
acknowledged and in order to induce Trustee to enter into the Lease with
Indemnitor, and to induce Trustee, Agent and Instrument Holders and Purchasers
to enter into and incur their obligations under the Transaction Agreement and
the other Transaction Documents, Indemnitor, intending to be legally
bound, hereby agrees as follows:
1. Definitions. For purposes hereof, the following terms shall have
The following meanings:
"Environmental Laws" means any and all federal, state and local Laws,
including, without limitation, any and all requirements to register
underground storage tanks, relating to: (i) emissions, discharges,
spills, releases or threatened releases of pollutants, contaminants,
Hazardous Materials (as hereinafter defined), or hazardous or toxic
materials or wastes into ambient air, surface water, groundwater,
watercourses, publicly or privately owned treatment works, drains,
sewer systems, wetlands, septic systems or onto land; (ii) the use,
treatment, storage, disposal, handling, manufacturing, transportation,
or shipment of Hazardous Materials (as defined below), materials
containing Hazardous Materials or hazardous and/or toxic wastes,
material, products or by-products (or of equipment or apparatus
containing Hazardous Materials), or (iii) pollution or the protection of
the environment;
"Hazardous Materials" means (1) hazardous materials, hazardous wastes, and
hazardous substances as those terms are defined under any Environmental
Laws, including, but not limited to, the following: the Hazardous
Materials Transportation Act, 49 U.S.C. 1801 et seq., as amended from
time to time ("HMTA"), the Resource Conservation and Recovery Act, 42
U.S.C. 6901 et seq., as amended from time to time ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act,
as amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C.
9601 et seq., and as further amended from time to time ("CERCLA"), the
Clean Water Act, 33 U.S.C. 1251 et seq., as amended from time to time
("CWA"), the Clean Air Act, 42 U.S.C. 7401 et seq., as amended from
time to time ("CAA") and/or the Toxic Substances Control Act, 15 U.S.C.
2601 et seq., as amended from time to time ("TSCA"); (2) petroleum and
petroleum products including crude oil and any fractions thereof;
(3) natural gas, synthetic gas, and any mixtures thereof; (4) asbestos
and/or any material which contains any hydrated mineral silicate,
including, but not limited to, chrysotile, amosite, crocidolite,
tremolite, anthophylite and/or actinolite, whether friable or non-friable;
(5) PCBs, or PCB-containing materials, or fluids; (6) radon; (7) any other
hazardous or radioactive substance, material, pollutant, contaminant, or
waste; and (8) any substance with respect to which any federal, state or
local Environmental Law or governmental agency requires environmental
investigation, monitoring or remediation.
"Event of Default" means any default, failure, or refusal by Indemnitor to
pay any amount and/or perform any obligation under this Agreement, which
default, failure, or refusal remains uncured (i) in the case of matters
that can be cured solely by the payment of money, five (5) Business Days
after written notice of such failure to pay is given to Indemnitor by one
or more of the Indemnitees, and (ii) in the case of any other matter,
thirty (30) days after written notice of such failure to perform is given
to Indemnitor by one or more Indemnitees; provided, that in the case of
matters covered by clause (ii) above such cure period will be extended,
so long as Indemnitor has commenced curative efforts within such thirty
(30) day period and is diligently pursuing such efforts, Indemnitor
delivers periodic progress reports on such curative efforts to the
Indemnitees, and Agent determines that the interests of the Indemnitees
will not be materially adversely affected by such extension.
"Environmental Event" shall mean any environmental event or the discovery
of any environmental condition in, on, beneath or involving the Property
or any portion thereof (including, but not limited to, the presence,
emission or release of Hazardous Materials and the violation of any
applicable Environmental Law) that in the sole but reasonable judgment of
Agent, if not properly mitigated or remediated, might have a material
adverse effect on the use, occupancy, possession, value or condition of
the Property or any portion thereof.
Any other capitalized terms used but not defined in this Agreement shall have
the meanings assigned thereto in the Transaction Agreement or the Lease, as
the case may be.
2. Basic Covenants.
(a) Indemnitor shall cause the Property and every portion thereof at
all times to be operated, used, and maintained in compliance with all applicable
Environmental Laws. Further, Indemnitor shall not conduct, permit, or authorize,
or permit to be conducted, permitted, or authorized, the manufacturing,
emission, generation, transportation, treatment, storage, or disposal on the
Property or any part thereof of any Hazardous Materials without the prior
written consent of Agent. Agent shall have the right to withhold consent
thereto for any reason, or without cause, in its discretion. The foregoing
provisions shall not, however, be deemed to prohibit, or to require Agent's
consent for, the storage, holding for sale, or use on the Property of Hazardous
Materials in the ordinary course of business of retail sales of automobile
parts and supplies, as well as the business of operating automotive service
centers, so long as such use is at all times carried out in conformity with
all Environmental Laws, but the indemnification obligations of Indemnitor
hereunder shall apply to all such materials.
(b) Indemnitor acknowledges and agrees that its obligations
hereunder with respect to Hazardous Materials and Environmental Laws are
intended to extend to and cover all matters and conditions in, on, under,
beneath, with respect to, affecting, related to, in connection with or
involving the Property or any part thereof, without regard to whether
Indemnitor has actually caused or participated in the event or circumstance
giving rise to the matter in question, and without regard to whether the matter
in question arose prior to or during the Term of the Lease; provided, however,
that the Indemnitor shall not be required to indemnify any Indemnitee hereunder
against any such claims to the extent arising solely as a result of the fraud,
gross negligence or willful misconduct of the Indemnitee in question. IT IS
THE EXPRESS INTENT AND UNDERSTANDING OF THE PARTIES THAT THE
FOREGOING PROVISION DOES CONSTITUTE AN INDEMNIFICATION BY THE
INDEMNITOR OF THE INDEMNITEES OF AND FROM LOSSES ARISING OUT OF
THE NEGLIGENCE OF THE RESPECTIVE INDEMNITEES OR ANY OF THEM;
PROVIDED, HOWEVER, THAT THE PARTIES AGREE AND ACKNOWLEDGE THAT
NO INDEMNITEE SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER FOR
DAMAGES OR LOSSES TO THE EXTENT CAUSED BY THE FRAUD, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNITEE IN QUESTION.
(c) Nothing in this Agreement shall be deemed to preclude
Indemnitor from contesting by appropriate proceedings, (i) the validity of any
order or directive issued by any governmental authority, (ii) the application of
any Environmental Law to a particular factual situation, or (iii) the accuracy
or validity of any allegation relating to the matters covered hereby; provided
that any such proceedings (A) prevent the sale, forfeiture, or the loss of the
Property or any part thereof during the pendency of such contest, (B) do not
subject any Indemnitee to the risk of civil or criminal liability for failure
to comply with the matter being contested during the pendency or such contest,
and (c) Indemnitor provides Indemnitees with such further information regarding
the matter being contested and/or assurances against loss, liability, or damage
as may be reasonably required by Indemnitees under the circumstances.
3. Indemnity. Indemnitor undertakes to protect, indemnify, and save
harmless each of the Indemnitees from any and all liability, loss, cost or
damage that Indemnitees or any of them may suffer as a result of claims,
demands, liabilities, costs or judgments against any or all of them (including,
without limitation, claims of contribution from any other person or entity
that has or might have joint and several liability therefor) as a result of a
claim, demand, liability, cost or judgment made against Indemnitees or any of
them by any third party, including, without limitation, a governmental
authority, arising from (i) any violation of any Environmental Law relating to
or affecting the Property or any part thereof, (ii) the depositing, storing,
disposing, transporting, emitting, burying, dumping, injecting, using, testing,
spilling, leaking or other placing or releasing in or on the Property or any
part thereof, or in or on any other property in the vicinity of the Property,
to the extent such actions on or in other property in the vicinity has an
adverse impact upon the Property itself or to the extent that any such
actions on or in the Property has an adverse impact upon other property in the
vicinity of the Property, of Hazardous Materials, and/or (iii) reasonable costs
incurred in connection with settlement or attempted settlement in lieu of
litigation or other proceedings with respect to any such matters (subject to
paragraph 7 below), including, but not limited to:
(a) Liability for costs of removal or remedial action, incurred by the
United States Government or any state or local government, or response
costs incurred by any other person, or damages from injury to, destruction
of, or loss of natural resources, including the reasonable costs of
assessing such injury, destruction or loss, incurred pursuant to the
CERCLA or any comparable federal, state, or local statute;
(b) Liability for cost and expenses of site assessment, testing,
laboratory fees, monitoring, abatement, correction or clean-up, fines,
damages, response costs or penalties which arise from the provisions of
any other Environmental Law, whether state, federal, local, or otherwise;
and
(c) Liability for personal injury or property damage arising under
any statutory or common-law theory, including damages assessed for the
maintenance of the public or private nuisance, response costs or for the
carrying on of an abnormally dangerous activity.
Nothing in this Agreement shall be deemed or construed as an admission by
Indemnitor of liability or responsibility hereunder for any violation or
alleged violations of Environmental Laws as between Indemnitor and any
governmental agency or other third party, notwithstanding that, as between
Indemnitor and the Indemnitees, Indemnitor has responsibility hereunder for
such matter and for indemnifying the Indemnitees from the consequences thereof.
4. Costs. Indemnitor's liability hereunder shall, without however
limiting the indemnity provide in the preceding paragraph, extend to and
include all reasonable costs, expenses and attorneys' fees incurred or
sustained by Indemnitees or their respective successors or assigns in making
any investigation on account of any such claim, demand, loss, liability,
cost, charge, suit, order, judgment or adjudication, in prosecuting or
defending any action brought in connection therewith, in obtaining or
seeking to obtain a release therefrom and in enforcing any of the agreements
herein contained.
5. Delivery of Information. Indemnitor shall promptly provide
Indemnitees with copies that it receives of all communications, permits or
agreements with any governmental authority or agency (federal, state or local)
or any private entity relating in any way to the presence, release, threat of
release, placement on or in the Property or any portion thereof or the
manufacturing, emission, generation, transportation, storage, treatment, or
disposal at the Property, of any Hazardous Materials and/or the violation,
alleged violation, or potential violation of any Environmental Law, except
for the presence and proper use of those Hazardous Materials specifically
permitted on the Property pursuant to Paragraph 2 hereof. Indemnitees shall
also use reasonable efforts to provide Indemnitor with copies of all
communications from any governmental authority or private entity with respect
to the Property and relating to Hazardous Materials or Environmental Laws
(unless it is apparent that Indemnitor or an affiliate thereof has
independently received such communication); provided that the failure of any
Indemnitee to do so shall not adversely effect Indemnitees' rights and
protections hereunder.
6. Test Results. Without limitation of the inspection rights as
elsewhere set out herein, if an Indemnitee at any time reasonably believes that
an Environmental Event may have occurred, the Indemnitee may, at Lessee's
expense, conduct tests of the Property or portions thereof; provided, however,
that in connection therewith: (i) so long as no Event of Default pursuant to
Sections 19(a)(i), (vii), (x), (xi), (xii) or (xiv) of the Lease exists, no
Event of Default under Secton 19(a)(iv) of the Lease relating to the failure
to have required insurance coverage in place (as opposed to a failure to
satisfy any other Insurance Requirement) exists, and Lessor or Agent have not
taken remedial actions relating to the possession or ownership of such
Parcel as a result of any other Event of Default that may then exist under the
Lease, the applicable Indemnitee will first notify Indemnitor of its desire for
tests to be conducted and request that Lessee perform such tests and provide
the results thereof to Indemnitees, and so long as Indemnitor promptly causes
such tests to be conducted, the Indemnitees will not perform such tests
directly, and (ii) in the conduct of any tests that any Indemnitee may conduct
directly such Indemnitee will take reasonable steps to interfere as little as
reasonably practicable with the conduct of Lessee's business within the
Property.
7. Procedural Matters. The procedural provisions of Sections 8(b)-(d)
of the Lease are incorporated herein by this reference, and shall govern the
obligations of the Indemnitor and Indemnitees with respect to matters of
notice of indemnified claims, defense of actions, appointment of counsel, and
similar matters. Such provisions shall remain applicable to this Agreement
whether or not the Lease is then in effect. For purposes thereof the term
"Indemnified Party" in such Section 8(b)-(d) shall be deemed to mean
"Indemnitee" hereunder and references to "Lessee" in such Section 8(b)-(d)
shall be deemed to mean "Indemnitor" hereunder.
8. Remediation.
(a) Indemnitees (or any of them) shall have the right, but not the
obligation, subsequent to any Event of Default by Indemnitor hereunder,
without in any manner limiting Indemnitees' other rights and remedies under
this Agreement, to enter onto the Property or to take such other actions as
Indemnitees deem necessary or advisable to clean up, remove, resolve or
minimize the impact of, or otherwise deal with, any Hazardous Materials or a
violation of Environmental Laws at the Property upon at least ten (10) days
prior written notice to the Lessee (unless an emergency exists, in which case
only such written notice as shall be reasonably practicable under the
circumstances shall be necessary). Lessee will always be permitted to have
a representative of Lessee accompany the representative or agent of the
Indemnitees in question in any inspection if Lessee desires to do so.
All reasonable costs and expenses paid or incurred by Indemnitees in the
exercise of any such rights shall be payable by Indemnitor thirty (30) days
after demand.
(b) In the event that Indemnitor is engaged in the remediation of
any violation of Environmental Laws and/or presence of Hazardous Materials at
the Property at the time an Event of Default occurs under the Transaction
Agreement, the Declaration of Trust, and/or the Lease, and the Event of
Default in question does not arise out of such violation of Environmental
Laws and/or presence of Hazardous Materials or the remediation actions or
inactions of Indemnitor with respect thereto, then Indemnitees agree that
Indemnitor shall be permitted to control the completion of such remediation
activities so long as Indemnitor diligently proceeds therewith in a manner
reasonably satisfactory to Indemnitees and Indemnitor keeps Indemnitees
reasonably informed as to the progress of such remediation efforts. In any
such event, however, this Agreement and the indemnification rights provided
for herein shall remain in full force and effect.
9. Independent Obligation. As to the Purchasers, Instrument Holders
and the Agent, this Agreement is given solely to protect such parties against
environmental matters, and not as additional security for, or as a means of
repayment of, the amounts owed to the Instrument Holders, and as to Lessor
this Agreement is given to protect Lessor against environmental matters and
not as security for Indemnitor's obligations under the Lease. The obligations
of the Indemnitor to Indemnities under this Agreement are independent of, and
shall not be measured or affected by (i) any amounts at any time owing under
the Transaction Documents, (ii) the sufficiency or insufficiency of any
collateral (including, without limitation, the Property) given to secure
repayment of the amounts due to the Instrument Holders, (iii) the consideration
given any party in order to acquire the Property, or any portion thereof,
in any foreclosure or other sale, (iv) the modification, expiration, release
or termination of the transactions contemplated by the Transaction Agreement
or any document or instrument relating thereto, (v) the discharge or repayment
in full of amounts due under the Transaction Agreement (including, without
limitation, by amounts paid or credit bid at a foreclosure sale or by discharge
in connection with a deed in lieu of foreclosure under the Transaction
Mortgage), or (vi) the expiration or termination of the Lease or the performance
by Indemnitor of its obligations thereunder. Notwithstanding anything herein to
the contrary, Indemnitor shall not be liable to Indemnitees hereunder in
respect of any Hazardous Materials that are first manufactured, emitted,
generated, treated, stored, or disposed of on the Property, or any violation of
Environmental Laws that first occurred on or with respect to the Property after
the date on which the Lease is terminated and Lessee surrenders possession of
the Property in accordance with the terms of the Lease (including, without
limitation, the obligation to deliver an acceptable environmental assessment
of the Property upon surrender) except to the extent such manufacture, emission,
generation, treatment, storage, disposal, or violation is actually caused by
Indemnitor or those for whose actions Indemnitor is legally responsible.
10. Payment on Demand. All obligations of the Indemnitor hereunder shall
be payable on demand, and any amount due and payable hereunder to Indemnitees
by Indemnitor which is not paid within thirty (30) days after written demand
therefor from Indemnitee with an explanation of the amounts demanded shall,
to the extent permitted by applicable law, bear interest from the date of such
demand at the Default Rate (as defined in the Lease).
11. Subrogation. If Indemnitor fails to perform its obligations under
this Agreement (after expiration of all applicable grace, notice, and/or cure
periods), Indemnitees shall be subrogated to, and Indemnitor hereby assigns to
Indemnitees any indemnification or contributions rights Indemnitor may have
from or against any present, future or former owners, tenants, or other
occupants or users of the Property (or any portion thereof), including,
without limitation, any subsidiary or affiliate of Indemnitor; provided,
that such assignment shall not be deemed to exclude Indemnitor from the
direct enforcement of such rights for its own benefit, either concurrently
with or separate from the enforcement thereof by Indemnitees.
12. Inspections Shall Not Affect Liability. Neither any environmental
audits nor assessments, nor any inspections conducted by Indemnitees or their
representatives, nor the consummation of the Lease and/or the related
transactions in light of the matters disclosed as a result of these
inspections, nor any other term or provision of this Agreement shall effect,
modify, or constitute a waiver of, the rights and obligations of the parties to
this Agreement under applicable Environmental Laws and the rights and remedies
of Indemnitees under this Agreement shall be cumulative of and not modify the
rights and remedies that Indemnitees would have in the absence of this
Agreement. Indemnitor hereby expressly releases any contribution or other
claims or rights it now or may hereafter have against Indemnitees under
applicable Environmental Laws, excepting only contribution rights or other
claims against any particular Indemnitee with respect to matters for which
such Indemnitee is not entitled to indemnification hereunder as a result of
the fraud, gross negligence or intentional misconduct of the particular
Indemnitee in question.
13. Survival. This Agreement shall survive the transfer of any or
all of the Property, including, but not limited to, any foreclosure sale or
deed in lieu of foreclosure transaction with respect to the Mortgage.
14. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND FOR THE PURPOSE OF REDUCING THE TIME AND
EXPENSE OF LITIGATION, INDEMNITOR AND INDEMNITEES WAIVE TRIAL BY
JURY IN ANY ACTION BROUGHT ON, UNDER OR BY VIRTUE OF THIS
AGREEMENT.
15. Specific Enforcement. Indemnitor acknowledges that it may be
impossible to measure accurately the damages to Indemnitees resulting from a
breach of Indemnitor's covenants under this Agreement, that such a breach will
cause irreparable injury to Indemnitees, and that Indemnitees may not have an
adequate remedy at law in respect of such breach. Therefore, such covenants
shall be specifically enforceable against Indemnitor. This clause shall not
prejudice Indemnitees' rights to assert any and all claims for damages incurred
as a result of Indemnitor's breach hereof or for equitable relief.
16. Joint and Several Liability. The liability of Indemnitor (if more
than one) is joint and several. A separate action or actions may be brought
and prosecuted against any Indemnitor, whether or not action is brought
against any other person or whether or not any other person is joined in
such action or actions.
17. Notice. All notices, demands, requests and other communications
required hereunder shall be in writing and shall be deemed to have been
properly given and received, whether actually received or not, one (1)
Business Day after deposit with a nationally recognized courier service for
overnight delivery addressed to the party for whom it is intended at its
address hereinafter set forth:
If to Indemnitor: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention:Michael Holden
Senior Vice-President - Finance
Fax No. (215) 227-9533
with a copy to: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 191332
Attention:Ronald M. Neifield
Real Estate Counsel
Fax No. (215) 229-5076
If to Agent: Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, New York 10528
Attention:EFL/CBL Credit Head
Fax No. (914) 899-7308
with a copy to: Charles W. Morris, Esq.
Brown McCarroll & Oaks Hartline
300 Crescent Court
Suite 1400
Dallas, Texas 75201-6929
Fax No. (214) 999-6170
If to Trustee: State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Fourth Floor
Boston, MA 02110
Attention:Donald E. Smith
Vice-President
Fax No. (617) 664-5371
with a copy to: Bingham, Dana & Gould
100 Pearl Street
Hartford, CT 06103
Attention:James G. Scantling, Esq.
Fax No. (860) 527-5188
Notices sent by any other method (including regular or certified mail,
hand delivery, or facsimile transmission) shall be deemed delivered when
actually received by the addressee. Any notice of change of address shall
be effective only upon actual receipt, regardless of delivery method, and
such new address shall be effective as to notices given by the other parties
commencing ten (10) days after such change of address notice is received by
such parties. No party may establish an official address for notice outside
the continental United States.
18. Attorney's Fees. In the event any party files a suit in connection
with this Agreement or any provisions contained in this Agreement, then the
party which substantially prevails in such action shall be entitled to recover,
in addition to all other remedies or damages, reasonable attorney's fees and
costs of court incurred in such suit, including, without limitation, any such
fees and costs incurred in connection with any appellate proceedings.
19. No Third Party Beneficiaries. This Agreement is executed for the sole
use and benefit of the Indemnitor and Indemnitees, and no person or entity
other than the Indemnitor or Indemnitees is intended to be a beneficiary hereof
or otherwise to have any right to enforce the provisions hereof.
20. No Waiver. The failure of Indemnitees to insist upon strict
compliance with any of the terms hereof shall not be considered to be a waiver
of any of such terms nor shall it militate against the right of Indemnitees to
insist upon strict compliance herewith at any time thereafter.
21. Severability. If any provision of this Agreement shall be contrary
to the laws of the jurisdiction in which the same shall be sought to be
enforced, the illegality or unenforceability of any such provision shall not
affect the other terms, covenants or conditions thereof, and the same shall
be binding upon Indemnitor with the same force and effect as though such
illegal or unenforceable provision were not contained herein.
22. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
PENNSYLVANIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
[SEE ATTACHED SIGNATURE PAGE]
IN WITNESS WHEREOF, Indemnitor, intending
to be legally bound hereby, has caused this Agreement to be duly executed, to
be effective as of the day and year first above written.
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
THE PEP BOYS MANNY, MOE & JACK
OF CALIFORNIA, a California corporation
By:
Name:
Title:
PEP BOYS - MANNY, MOE & JACK
OF DELAWARE, INC., a Delaware corporation
By:
Name:
Title:
FIRST AMENDMENT TO MASTER LEASE
(Pep Boys Transaction)
THIS FIRST AMENDMENT TO MASTER LEASE dated as of July ___, 1996 (this
"Amendment") is entered into by and between STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, not individually but solely in its
capacity as Trustee under that certain "Declaration of Trust" (herein so
called) dated November 13, 1995, (in such capacity, and not individually,
"Lessor"), having an address at Two International Place, Fourth Floor,
Boston, Massachusetts 02110, Attn: Corporate Trust Department, THE PEP
BOYS - MANNY, MOE & JACK, a Pennsylvania corporation ("Lessee Parent"),
THE PEP BOYS MANNY, MOE & JACK of CALIFORNIA, a California corporation
("Pep Boys - California"), and PEP BOYS - MANNY, MOE & JACK of DELAWARE,
INC. ("Pep Boys - Delaware"). Lessee Parent, Pep Boys - California, and
Pep Boys - Delaware are herein referred to, singly or collectively as the
context may require, as the "Lessee."
RECITALS
On or about November 13, 1995, Lessor and Lessee entered into a certain
Master Lease (the "Master Lease") relating to certain real property to be
leased from time to time by Lessor to Lessee. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to such terms in
the Master Lease.
The Master Lease was executed in furtherance of certain transactions
contemplated by a Transaction Agreement of even date therewith among Lessor,
Lessee Parent, and Citicorp Leasing, Inc. (in various capacities). Of even
date herewith the Transaction Agreement has been amended and such amendment
requires a corresponding amendment to the Master Lease to fully effect the
intents and purposes of the parties.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, the parties hereto have agreed to amend, and
do hereby amend, the Master Lease in the following respects.
AGREEMENTS
1. Interim Supplement Form. At such time as Lessee desires to obtain
an Interim Advance (as such term is defined in the First Amendment to
Transaction Agreement of even date herewith) Lessor and Lessee shall execute
and submit to Agent an Interim Supplement (herein so-called) in substantially
the form attached hereto as Exhibit "G", which Exhibit "G" is hereby made a
part of the Master Lease as if originally attached thereto. The Interim
Supplement shall, among other items included therein, specify the adjustments
to the Net Rent and the Contingent Rent Payment which result from the
applicable Interim Advance. Lessor shall have no obligation to (i) make an
Interim Advance to Lessee in respect of any New Improvements or (ii) execute
the necessary Interim Supplement with respect to such New Improvements, unless
Lessee has satisfied all conditions to an Interim Advance under, and an Interim
Advance has been made to Lessor in accordance with, the provisions of Article I
of the Transaction Agreement (as amended by the First Amendment thereto of even
date herewith).
2. Treatment of Interim Advance. It is expressly agreed that any amounts
advanced to Lessee by Lessor hereunder as an Interim Advance shall be treated
as a "Construction Advance" for all purposes of this Lease, including, but
without limitation, for purposes of computing the amount of the Construction
Failure Payment under the Construction Addendum, when applicable.
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this Amendment to be duly executed on the attached Signature
Pages by their respective officers thereunto duly authorized, to be effective
as of the day and year first above written.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO FIRST AMENDMENT TO MASTER LEASE
Between
State Street Bank and Trust Company, Trustee, as Lessor
and
The Pep Boys - Manny, Moe & Jack, et. al. as Lessee
LESSOR:
STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company not in its individual
capacity but solely as Trustee under the Declaration
of Trust
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO FIRST AMENDMENT TO MASTER LEASE
Between
State Street Bank and Trust Company, Trustee, as Lessor
and
The Pep Boys - Manny, Moe & Jack, et.al. as Lessee
LESSEE:
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
THE PEP BOYS MANNY, MOE & JACK,
OF CALIFORNIA, a California corporation
By:
Name:
Title:
PEP BOYS - MANNY, MOE & JACK,
OF DELAWARE, INC., a Delaware corporation
By:
Name:
Title:
EXHIBIT "G"
FORM OF INTERIM SUPPLEMENT
INTERIM SUPPLEMENT
This Interim Supplement ("Supplement") is hereby added, as of the ____ day
of _____________, 199__, to that certain Master Lease (as amended, supplemented
or otherwise modified from time to time, the "Lease"), dated as of November 13,
1995, by and between STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, as Trustee under that certain Declaration of Trust of even date with
the Lease (in such capacity, and not individually, "Lessor"), and among other
lessees named therein, [NAME OF APPLICABLE LESSEE] , a _____________ corporation
("Lessee"). Upon execution hereof by Lessor and Lessee and approval hereof by
CITICORP LEASING, INC., a Delaware corporation (as administrative agent for the
"Purchasers" [as defined in the Lease]) ("Agent"), this Supplement shall be
included in and shall be a part of the Lease for all purposes. Terms used but
not otherwise defined herein shall have the meanings given to such terms in the
Lease.
The parties hereto, intending to be legally bound hereby, acknowledge and
agree to the following:
Lessee hereby represents and warrants to Lessor and Lender that New
Improvements (as defined in the Lease), have been constructed (but are not yet
completed), in accordance with the terms and conditions of the Construction
Addendum, upon the Parcel located in ______________, more particularly
described on Exhibit "A" attached hereto (the "_______ Parcel"), and the New
Improvements, or the portion thereof so completed, constitute a part of
the "Property" for all purposes of the Lease. Based on such representation
and warranty and in consideration of the advance by Lessor of even date
herewith of a reimbursement for construction costs incurred to date, Lessor
and Lessee desire to increase the Acquisition Price for the _________ Parcel
by the amount of $___________ [IF MORE THAN ONE PARCEL INVOLVED-ALLOCATE AMONG
APPLICABLE PARCELS]. The aggregate amount to date that has been paid to
Lessee in reimbursement for the costs of constructing the New
Improvements on the __________ Parcel is $_______________. [MODIFY AS
APPROPRIATE IF MORE THAN ONE PARCEL INVOLVED-FULL AMOUNT MUST
BE ALLOCATED AMONG PARCELS]
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised
Schedule A-1 attached hereto, and all references to the "Acquisition Price"
of all or any Parcel(s) for any purpose shall be deemed to refer to the
Acquisition Price(s) referred to on such Revised Schedule A-1. [ATTACH
REVISED SCHEDULE A-1----ACQUISITION PRICE OF EACH AFFECTED PARCEL
TO BE INCREASED BY THE PORTION OF THE INTERIM ADVANCE ALLOCABLE
TO SUCH PARCEL--AGGREGATE ACQUISITION PRICE MUST BE INCREASED BY
TOTAL AMOUNT OF INTERIM ADVANCE AND SHOULD EQUAL AMOUNT OF
AGGREGATE ADVANCES TO DATE (LESS PURCHASE PRICE OF PARCELS
REPURCHASED, IF APPLICABLE)]
Lessor and Lessee hereby confirm, as of the date hereof, that all
representations and warranties made in the Lease with respect to the Property
remain true and correct in all material respects; and that to the best of
Lessee's knowledge no Event of Default or event which with notice and/or the
passage of time might ripen into a Event of Default exists under the Lease.
Lessee hereby acknowledges and confirms that as of the date hereof,
Lessee has no defense to the payment or performance of the Lessee's obligations
under the Lease and that, to the best of Lessee's knowledge, no claims,
counterclaims, affirmative defenses, or other such rights exist against
Lessor, Agent, or any Purchaser or Instrument Holders under the Lease.
It is expressly acknowledged and agreed that Agent and the Purchasers
and Instrument Holders are intended to be beneficiaries of this Supplement to
the same extent as Agent and the Purchasers and Instrument Holders are
beneficiaries of the Lease and the Environmental Indemnity.
EXECUTED as of the date first above written.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
LESSOR:
STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company, not in its
individual capacity but solely as Trustee under
the Declaration of Trust
By:
Donald E. Smith, Vice President
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
LESSEE:
____[MAY BE MULTIPLE LESSEES]_____
By:
Name:
Title:
The undersigned, in its capacity as Lessee Parent, Lease Guarantor,
and party to the Environmental Indemnity Agreement joins in this Supplement
or the purposes therein stated.
LESSEE PARENT AND LEASE GUARANTOR:
THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation
By:
Name:
Title:
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
CITICORP LEASING, INC.,
a Delaware corporation
(as administrative agent on behalf of
the Purchasers)
By:
Name:
Title: