FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended February 27, 2001
Commission file number 1-11276
DISCOUNT AUTO PARTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-1447420
- ------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
4900 Frontage Road, South
Lakeland, Florida 33815
- ----------------------------- -----------------------------
(Address of principal executive offices) (zip code)
(863) 687-9226
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock $.01 Par Value - 16,703,022 shares as of February 27, 2001
Discount Auto Parts, Inc.
Index
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - February 27, 2001 and May 30, 2000 ... 3
Condensed Consolidated Statements of Income - for the thirteen weeks and
thirty-nine weeks ended February 27, 2001 and February 29, 2000 .............. 4
Condensed Consolidated Statements of Cash Flows - for the thirty-nine weeks
ended February 27, 2001 and February 29, 2000 ................................ 5
Notes to Condensed Consolidated Financial Statements ..........................6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations..................................................................7
Item 3. Quantitative and Qualitative Disclosures about Market Risk............10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.....................................................10
Item 6. Exhibits and Reports on Form 8-K .. .................................11
SIGNATURES ...................................................................12
Item 1. Financial Statements (Unaudited)
Discount Auto Parts, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
February 27 May 30
2001 2000
------------------- ------------------
ASSETS (In thousands)
Current assets:
Cash $ 6,698 $ 12,612
Inventories 242,635 253,113
Prepaid expenses and other current assets 19,005 14,455
------------------- -----------------
Total current assets 268,338 280,180
Property and equipment 492,760 524,053
Less allowances for depreciation and amortization (117,328) (104,771)
------------------- -----------------
375,432 419,282
Other assets 7,386 5,247
------------------- -----------------
Total assets $ 651,156 $ 704,709
=================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 67,808 $ 100,804
Other current liabilities 22,415 23,207
Current maturities of long-term debt 2,400 2,400
------------------- -----------------
Total current liabilities 92,623 126,411
Deferred gain on sale/leaseback 8,670 -
Deferred income taxes 7,848 10,494
Long-term debt 230,632 264,600
Stockholders' equity:
Preferred stock
- -
Common stock 167 167
Additional paid-in capital 142,399 142,379
Retained earnings 168,817 160,658
------------------- -----------------
Total stockholders' equity 311,383 303,204
------------------- -----------------
Total liabilities and stockholders' equity $ 651,156 $ 704,709
=================== =================
See accompanying notes.
Discount Auto Parts, Inc.
Condensed Consolidated Statements of Income (Unaudited)
Thirteen Thirteen Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended Weeks
Ended
--------------- -------------- -------------- ------------
February 27 February 29 February 27 February 29
2001 2000 2001 2000
--------------- -------------- -------------- ------------
(In thousands, except per share amounts)
Net sales $ 159,477 $ 147,374 $ 487,501 $ 433,642
Cost of sales, including distribution costs 97,883 88,691 298,619 257,985
--------------- -------------- -------------- ------------
Gross profit 61,594 58,683 188,882 175,657
Selling, general and administrative expenses 52,246 45,996 158,973 134,693
--------------- -------------- -------------- ------------
Income from operations 9,348 12,687 29,909 40,964
Other income, net 196 1,679 316 2,490
Interest expense (5,937) (5,143) (17,478) (12,951)
--------------- -------------- -------------- ------------
Income before income taxes 3,607 9,223 12,747 30,503
Income taxes 1,298 3,410 4,588 11,324
--------------- -------------- -------------- ------------
Net income $ 2,309 $ 5,813 $ 8,159 $ 19,179
=============== ============== ============== ============
Net income per share:
Basic net income per common share
$ 0.14 $ 0.35 $ 0.49 $ 1.15
=============== ============== ============== ============
Dilutive net income per common share
$ 0.14 $ 0.35 $ 0.49 $ 1.15
=============== ============== ============== ============
Average common shares outstanding
16,700 16,696 16,696 16,693
Dilutive effect of stock options
- 1 1 39
--------------- -------------- -------------- ------------
Average common shares outstanding - assuming dilution 16,700 16,697 16,697 16,732
=============== ============== ============== ============
See accompanying notes.
Discount Auto Parts, Inc.
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
--------------------------------------------
February 27 February 29
2001 2000
-------------------- -----------------
(In thousands)
Operating activities
Net income $ 8,159 $ 19,179
Adjustments to reconcile net income to net cash used in operating activities:
Deferred income taxes (2,646) 970
Depreciation and amortization 18,053 16,614
Loss (gain) on disposals of property and equipment 63 (2,342)
Changes in operating assets and liabilities:
Decrease (increase) in inventories 10,478 (37,338)
(Increase) decrease in prepaid expenses and other
current assets (4,550) 2,748
(Increase) in other assets (2,529) (692)
(Decrease) in trade accounts payable (32,996) (10,991)
(Decrease) in other current liabilities (792) (4,008)
-------------------- ----------------
Net cash used in operating activities (6,760) (15,860)
Investing activities
Proceeds from sale/leaseback 62,167 -
Proceeds from sales of property and equipment 1,226 4,654
Purchases of property and equipment (28,599) (52,887)
-------------------- ----------------
Net cash provided by (used in) investing activities 34,794 (48,233)
Financing activities
Proceeds from short-term borrowings and long-term debt 83,816 81,425
Payments of short-term borrowings and long-term debt (117,784) (19,740)
Proceeds from issuances of common stock 20 107
-------------------- ----------------
Net cash (used in) provided by financing activities (33,948) 61,792
Net decrease in cash (5,914) (2,301)
Cash at beginning of period 12,612 8,795
-------------------- ----------------
Cash at end of period $ 6,698 $ 6,494
==================== ================
See accompanying notes.
Discount Auto Parts, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
February 27, 2001
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
Discount Auto Parts, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended May 30,
2000.
Operating results for the thirteen and thirty-nine week periods ended February
27, 2001 are not necessarily indicative of the results that may be expected for
the entire fiscal year.
2. Sale/Leaseback Transaction
On February 27, 2001, the Company sold 101 retail stores for $62.2 million. The
stores were leased back from the purchaser over a period of 22.5 years. The
resulting lease is being accounted for as an operating lease, and the resulting
gain of $8.8 million has been deferred and is being amortized over the life of
the lease.
3. Long-Term Debt
Long-term debt consists of the following (in thousands):
February 27 May 30
2001 2000
---------------- -----------------
Revolving credit agreements $ 179,432 $ 211,000
Senior term notes 50,000 50,000
Senior secured notes 3,600 6,000
---------------- ----------------
233,032 267,000
Less current maturities (2,400) (2,400)
================ ================
$ 230,632 $ 264,600
================ ================
Effective July 29, 1999, the Company entered into a new five year $265 million
unsecured revolving credit agreement (the "Revolver"). The rate of interest
payable under the Revolver is a function of LIBOR or the prime rate of the lead
agent bank, at the option of the Company. During the term of the Revolver, the
Company is also obligated to pay a fee, which fluctuates based on the Company's
funded debt to EBITDAR ratio, for the unused portion of the Revolver.
Effective August 8, 1997, the Company issued $50 million senior term notes
facility (the "Notes"). The Notes provide for interest at a fixed rate of 7.46%,
payable semi-annually, with semi-annual principal payments of $7.1 million,
beginning on July 15, 2004.
At February 27, 2001 and May 30, 2000, the Company's weighted average interest
rate on its borrowing under its revolving lines of credit was 7.8% and 7.3%,
respectively.
As of February 27, 2001, the Company had approximately $85.6 million of
available borrowings.
The Company has issued one senior secured note for an original principal amount
of $12 million, to an insurance company. The note is collateralized by a first
mortgage on certain store properties, equipment and fixtures. The agreement
provided for interest at fixed rates of 9.8%, payable quarterly, with annual
principal payments of $1.2 million on each December 15 and May 31.
The Company's debt agreements contain various restrictions, including the
maintenance of certain financial ratios and restrictions on dividends, with
which the Company was in compliance.
4. Comprehensive Income
Comprehensive income for the periods presented equals net income.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Thirteen Weeks and Thirty-nine weeks Ended February 27, 2001 Compared to
Thirteen Weeks Thirty-nine weeks Ended February 29, 2000
Total sales for the third quarter of fiscal 2001 increased 8.2% to $159.5
million, as compared to $147.4 million for the third quarter a year earlier.
Comparable store sales increased 2.8% for the third quarter of fiscal 2001 as
compared to the third quarter of fiscal 2000. Total sales for the first nine
months of fiscal 2001 increased 12.4% to $487.5 million, from $433.6 million a
year earlier. Comparable store sales increased 4.5% for the first nine months of
fiscal 2001 as compared to the first nine months of fiscal 2000. Comparable
store sales results include sales from the Company's commercial delivery
program. The balance of the increase in total sales for the third quarter and
first nine months of fiscal 2001 were attributable to sales from new stores
opened since the beginning of fiscal 2000.
At February 27, 2001, the Company had 665 stores in operation, compared with 643
stores at May 30, 2000 and 621 stores at February 29, 2000.
Gross profit for the third quarter of fiscal 2001 was $61.6 million as compared
to $58.7 million for the third quarter of fiscal 2000. As a percentage of sales,
gross profit was 38.6% for the third quarter of fiscal 2001 as compared to 39.8%
for the third quarter of fiscal 2000. Gross profit for the first nine months of
fiscal 2001 was $188.9 million as compared to $175.7 million a year earlier. As
a percentage of sales, gross profit was 38.7% for the first nine months of
fiscal 2001 as compared to 40.5% a year earlier. Gross profit for the third
quarter and first nine months of fiscal 2001 was negatively impacted by overall
lower vendor incentives, higher inventory shrinkage expense and margin pressure
in commodity categories such as oil.
Selling, general and administrative (" SG&A") expenses increased as a percentage
of sales from 31.2% in the third quarter of fiscal 2000 to 32.8% in the third
quarter of fiscal 2001. SG&A expenses increased as a percentage of sales from
31.1% for the first nine months of fiscal 2000 to 32.6% for the first nine
months of fiscal 2001. The increase is due primarily to lower than anticipated
retail sales which resulted in a reduced ability to leverage certain store
related expenses.
Income from operations for the third quarter of fiscal 2001 was $9.3 million as
compared to $12.7 million for the third quarter of fiscal 2000. Income from
operations for the first nine months of fiscal 2001 was $29.9 million as
compared to $41.0 million for the first nine months of fiscal 2000.
Interest expense for the third quarter of fiscal 2001 was $5.9 million as
compared to $5.1 million for the third quarter of fiscal 2000. Interest expense
for the first nine months of fiscal 2001 was $17.5 million as compared to $13.0
million during the first nine months of fiscal 2000. The increase was the result
of increased borrowings primarily associated with new store growth and higher
interest rates on the Company's variable rate debt.
The Company's effective tax rate for the third quarter of fiscal 2001 was 36.0%
as compared to 37.0% for the third quarter of fiscal 2000. The Company's
effective tax rate for the first nine months of fiscal 2001 was 36.0% as
compared to 37.1% for the first nine months of fiscal 2000. The lower tax rate
primarily is the result of state planning and restructuring initiatives, which
were implemented as of the end of the second quarter of fiscal 2000.
Taking into account all of the above described factors, the Company reported net
income for the third quarter of fiscal 2001 of $2.3 million or $.14 per diluted
share as compared to net income of $5.8 million or $.35 per diluted share for
third quarter of fiscal 2000. Net income for the first nine months of fiscal
2001 was $8.2 million or $.49 per diluted share as compared to net income of
$19.2 million or $1.15 per diluted share for first nine months of fiscal 2000.
Liquidity and Capital Resources
For the thirty-nine weeks ended February 27, 2001, net cash of $6.8 million was
used in the Company's operations versus $15.9 million used in the Company's
operations for the comparable thirty-nine week period of fiscal 2000. This net
use of cash in the nine months ended February 27, 2001 was primarily due to an
overall reduction in trade accounts payable. A portion of the reduction
represents normal seasonality in the Company's trade relations with its vendors.
The larger than normal reduction in trade accounts payable for the fiscal 2001
period represents the Company's efforts to better manage its inventory. Such
efforts have included the Company's redistribution of excess quantities of
inventory among its own stores rather than making additional purchases from
vendors. On a year-to-date basis for fiscal 2001, the Company has been able to
reduce overall inventory levels by $10.5 million from its new programs versus
adding $37.3 million in the same period a year ago. These fiscal 2001
improvements were offset in part by reduced earnings in fiscal year 2001 (versus
fiscal year 2000).
As further discussed in Note 2 of the Notes to Consolidated Financial
Statements, effective February 27, 2001, the Company entered into a
sale/leaseback transaction. The proceeds from the sale/leaseback transaction
were used to reduce outstanding debt under the Company's revolving credit
agreement.
Capital expenditures for the thirty-nine weeks ended February 27, 2001 were
$28.6 million. The majority of the capital expenditures related to the 26 new
stores opened during that period. The Company also closed four stores during the
first nines months of fiscal 2001. For all of fiscal 2001, the Company expects
to open approximately 35 new stores.
In May 2000, the Company broke ground on a second distribution center in Copiah
County, Mississippi. The second distribution center is approximately 400,000
square feet and will be able to support approximately 450 stores. The new
distribution center began shipping to a limited number of stores on March 19,
2001. The Company expects to continue the shipping ramp up during the fourth
quarter of fiscal 2001. Expenditures associated with the construction of the
second distribution center are expected to be approximately $37 million. The
second distribution center is being leased under a new $34 million operating
lease agreement, which was consummated in May 2000. The lease will cover the
land, buildings and certain integrated operating equipment, such as conveyor
systems. Additional rolling stock, computer equipment, etc. will be funded
through other lease arrangements or the Company's existing revolving line of
credit.
The Company also continued the roll-out of its commercial delivery service,
which began in the third quarter of fiscal 1998. The Company's commercial
delivery service consists of a program whereby commercial customers (such as
auto service centers, commercial mechanics, garages and the like) establish
commercial accounts with the Company and order automotive parts from the
Company, with such parts being delivered by the Company or picked up by the
customer from nearby Discount Auto Parts stores. The commercial delivery program
requires the Company to extend trade credit to certain of the commercial account
customers as part of the ordinary course of business. The extension of such
trade credit increases the capital requirements associated with the roll-out of
the program and exposes the Company to credit risk from uncollectible accounts.
The Company has established systems to manage and control such credit risk. The
amount of capital that is needed to cover extension of trade credit will be
dependent in large part upon the success of the commercial delivery service
roll-out and how quickly the commercial business develops. To date, the
commercial delivery program has incurred operating losses of approximately $11.0
million, which have been funded by the Company's retail operations and its
revolving line of credit. Although there can be no assurances, management
expects the commercial delivery program to break even on a direct cost basis
during the fourth quarter of fiscal 2001.
The Company anticipates that total capital expenditures for fiscal 2001,
including the costs associated with the addition of approximately 35 new stores,
and the expenditures associated with the construction of the second distribution
center exclusive of the operating lease will be in the range of $35 to $40
million.
The Company has historically been able to finance most of its new store growth
through unsecured lines of credit and medium and longer-term mortgage financing
provided by banks and other institutional lenders, and through cash flow from
operations. As of February 27, 2001, the Company had $85.6 million of additional
availability under its existing financing agreements.
The Company is exposed to changes in interest rates, primarily from its
revolving credit agreement. The Company also has long-term debt that bears a
fixed rate. As to the fixed rate debt, there is a risk that market rates will
decline and the required payments will exceed those based on current market
rates on the long-term debt.
The Company believes that the expected cash flows from operations, available
bank borrowings and trade credit, will be sufficient to fund the capital and
liquidity needs of the Company for the next two to three years.
Inflation and Seasonality
The Company does not believe its operations have been materially affected by
inflation. The Company has been successful, in many cases, in reducing the
effects of merchandise cost increases principally by taking advantage of vendor
incentive programs, economies of scale resulting from increased volumes or
purchases, and selective forward buying.
Although sales have historically been somewhat higher in the Company's fourth
quarter (March through May), the Company does not consider its business to be
seasonal.
Forward Looking Statements
The Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this quarterly report contain forward looking
statements that are based on the current expectations, estimates and projections
about the industry in which the Company operates, management's beliefs and the
assumptions made by management. These statements include the words
"anticipates", "expects", "expected", "should", and "believes", variations of
such words, and similar expressions which are intended to identify such forward
looking statements. These forward looking statements are subject to potential
risks and uncertainties that could cause actual results to differ materially
from historical results or those currently anticipated.
These potential risks and uncertainties include, but are not limited to,
increased competition, extent of the market demand for auto parts, availability
of inventory supply, inventory shrinkage, propriety of inventory mix, adequacy
and perception of customer service, product quality and defect experience,
availability of and ability to take advantage of vendor pricing programs and
incentives, sourcing availability, rate of new store openings, cannibalization
of store sites, mix and types of merchandise sold, governmental regulation of
products, weather, new store development, performance of information systems,
effectiveness of deliveries from the distribution center, ability to hire, train
and retain qualified team members, availability of quality store sites, ability
to successfully implement the commercial delivery service, credit risk
associated with the commercial delivery service, environmental risks,
availability of expanded and extended credit facilities, and the ability to
successfully and efficiently establish and coordinate operations at the third
distribution center and other risks.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
No material changes have occurred in the quantitative and qualitative
market risk disclosure of the Company as presented in the Company's Annual
Report on Form 10-K for the year ended May 30, 2000.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Coalition for a Level Playing Field, et. al. V. AutoZone, Inc. et. al, Case No.
00-0953 in and for the United States District Court, Eastern District of New
York. In February 2000, the Coalition for a Level Playing Field ("Coalition")
and over one hundred independent automotive parts and accessories aftermarket
warehouse distributors and and/or jobbers filed a lawsuit in the United States
District Court for the Eastern District of New York against the Company. The
plaintiffs claim that the defendants have knowingly received volume discounts,
rebates, slotting and other allowances, fees, free inventory, sham advertising
and promotional payments, a share in the manufacturers' profits, and excessive
payments for services purportedly performed for the manufacturers in violation
of the Robinson-Patman Act. The complaint seeks injunctive and declaratory
relief, unspecified treble damages on behalf of each of the plaintiffs, as well
as attorneys' fees and costs. The defendants, including the Company, filed a
motion to dismiss in late October 2000. The plaintiff's filed their response to
such motion to dismiss January 2001 and the defendants recently filed a response
to the plaintiffs responsive pleadings. Any discovery would follow after
disposition by the court of such motion to dismiss. The Company believes the
claims to be without merit and intends to vigorously defend the action.
The Company is currently involved in litigation with its insurance carrier
pursuant to which the Company is seeking recovery under its insurance policy of
certain amounts incurred in connection with the previously reported Airgas, Inc.
litigation and the settlement thereof. The Company's motion for summary judgment
was granted. The Company then filed a motion requesting that the resulting
judgment be amended to reflect a monetary award in excess of $21 million. The
insurance carrier opposed the motion and, filed a notice of appeal to the United
States Court of Appeals for the Eleventh Circuit. On March 13, 2001, the appeal
was denied. The ultimate outcome of this matter or an estimate of the amount of
cash recovery, if any, cannot be determined at this time.
Discount Auto Parts is not a party to any other legal proceedings, other than
various claims and lawsuits arising in the normal course of the Company's
business. The Company does not believe that such claims and lawsuits,
individually or in the aggregate, will have a material adverse effect on its
financial condition or results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.28 Form of Master Lease dated February 27, 2001
10.29 Form of Sale-Leaseback Agreement dated February 27, 2001
10.30 Severance Agreement and General Release with William C.Perkins dated
January 17, 2001
10.31 First Amendment to Change of Control Employment Agreement with C.
Michael Moore dated March 19, 2001
10.32 Indemnification Agreement with Donald W. Olson dated
February 20, 2001
10.33 First Amendment to Master Agreement dated as of August 29, 2000
10.34 Second Amendment to Master Agreement dated as of February 16, 2001
27 Financial Data Schedule (For SEC Use Only)
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
thirteen-week period ended February 27, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DISCOUNT AUTO PARTS, INC.
Date: April 2, 2001 By: /s/ Peter J. Fontaine
Peter J. Fontaine
Chief Executive Officer
(Principal Executive Officer)
Date: April 2, 2001 By: /s/ C. Michael Moore
C. Michael Moore
Chief Financial Officer
(Principal Financial and
Accounting Officer)
EXHIBIT 10.28
FORM OF MASTER LEASE
THIS MASTER LEASE (this "Lease") is made as of February 27, 2001 (the "Effective
Date"), by and between DAPPER PROPERTIES [I] [II] [III], LLC, a Delaware limited
liability company ("Lessor"), whose address is c/o U.S. Realty Advisors, LLC,
1370 Avenue of the Americas, New York, New York 10019, and DISCOUNT AUTO PARTS,
INC., a Florida corporation ("Lessee"), whose address is 4900 Frontage Road
South, Lakeland, Florida 33815.
W I T N E S S E T H :
THAT, in consideration of the mutual covenants and agreements herein contained,
Lessor and Lessee hereby covenant and agree as follows: 1. Certain Defined
Terms. The following terms shall have the following meanings for all purposes of
this Lease: "Acknowledgement" means the Acknowledgement of Master Lease
Assignment and Subordination, Nondisturbance and Attornment Agreement dated as
of the date of this Lease among Lessor, Lessee, Lender and Remainderman. A
duplicate original Acknowledgement will be executed and recorded in the
applicable real property records for each Property. "ADA" has the meaning set
forth in Section 16.C.
"Additional Rental" has the meaning set forth in Section 5.C.
"Adjustment Date" means each of the following dates: March 1, 2006, March
1, 2011, and March 1, 2016.
"Affiliate" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes of
this definition, "controls", "under common control with" and "controlled by"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
"Aggregate Assumed Base Annual Rental" means the aggregate amount of Base
Annual Rental required to be paid by Lessee during the Assumed Base Annual
Rental Period.
"Aggregate Fixed Charge Coverage Ratio" shall have the meaning set forth in
Section 8.A.
"Aggregate Rent Refund" means the positive difference, if any, between the
Aggregate Assumed Base Annual Rental and the CPI-Adjusted Rent.
"Applicable Regulations" means all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders and approvals of each Governmental
Authority having jurisdiction over Lessee and/or any of the Properties,
including, without limitation, all health, building, fire, safety and other
codes, ordinances and requirements and all applicable standards of the National
Board of Fire Underwriters and the ADA, in each case, as amended, and any
judicial or administrative interpretation thereof, including any judicial order,
consent, decree or judgment applicable to Lessee.
"Applicable Rent Reduction Percentage" means, with respect to any Property,
a fraction, the numerator of which shall be the Purchase Price for such
Property, and the denominator of which shall be the sum of the Purchase Price
for all of the Properties then subject to this Lease, including such Property.
"Assumed Base Annual Rental Period" means the period commencing on March 1,
2001 and ending on August 31, 2023.
"Base Annual Rental" means $2,161,057.56, subject to the adjustments
provided in Section 5.B.
"Base Monthly Rental" means an amount equal to 1/12 of the applicable Base
Annual Rental.
"Business Day" means a day on which banks located in Phoenix, Arizona are
not required or authorized to remain closed.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et seq.,
as amended.
"Confidential Information" means, except as otherwise contemplated by
Section 31, (i) the Store Income Statements and (ii) any other proprietary or
confidential or nonpublic information relating to Lessee which is provided by
Lessee to Lessor or Lender pursuant to Section 8.C, provided that such
information is confidential and is stamped "CONFIDENTIAL" by Lessee.
"CPI" means the Consumer Price Index which is designated for the applicable
month of determination as the United States City Average for All Urban
Consumers, All Items, Not Seasonally Adjusted, with a base period equaling 100
in 1982-1984, as published by the United States Department of Labor's Bureau of
Labor Statistics or any successor agency.
"CPI Adjusted Rent" means the aggregate amount of Base Annual Rental that
would have been paid during the entire Assumed Base Annual Rental Period had the
Base Annual Rental on each Adjustment Date been increased over the Base Annual
Rental immediately preceding such Adjustment Date by the applicable CPI
Increase, provided that, with respect to the period commencing on March 1, 2021
and ending on August 31, 2023, the aggregate amount of Base Annual Rental
required to be paid by Lessee under this Lease for such period shall be used.
"CPI Increase" means the quotient (expressed as a percentage) of (a) the
positive difference, if any, between (i) the CPI for the month which is one
month prior to the month of the applicable Adjustment Date and (ii) the CPI for
the month which is sixty-one months prior to the month of such Adjustment Date
(the "Base CPI"), and (b) the Base CPI. In the event the statistics are not
available or in the event that publication of the CPI is modified or
discontinued in its entirety, the CPI Increase shall be determined on the basis
of an index chosen by Lessor as a comparable and recognized index of the
purchasing power of the United States consumer dollar published by the United
States Department of Labor or other governmental agency. In the event that the
CPI contemplated herein is not reported for the months required for the
calculation set forth above, the parties agree to utilize the CPI reported for
the month(s) nearest preceding the month(s) required for such calculation.
"De Minimis Amounts" shall mean, with respect to any given level of
Hazardous Materials, that level or quantity of Hazardous Materials in any form
or combination of forms, the use, storage or release of which does not
constitute a violation of, or require regulation or remediation under, any
Environmental Laws and is customarily employed in the ordinary course of, or
associated with, similar businesses located in the states in which the
Properties are located.
"Default Rate" means 14% per annum or the highest rate permitted by law,
whichever is less.
"Disclosures" has the meaning set forth in Section 8.C.
"Effective Date" has the meaning set forth in the Preamble.
"Environmental Insurer" means American International Specialty Lines
Insurance Company or such other insurer providing Environmental Policies
reasonably acceptable to Lessor. "Environmental Laws" means any present and
future federal, state and local laws, statutes, ordinances, rules, regulations
and the like, as well as common law, relating to Hazardous Materials and/or the
protection of human health or the environment, by reason of a Release or a
Threatened Release of Hazardous Materials or relating to liability for or costs
of Remediation or prevention of Releases. "Environmental Laws" includes, but is
not limited to, the following statutes, as amended, any successor thereto, and
any regulations, rulings, orders or decrees promulgated pursuant thereto, and
any state or local statutes, ordinances, rules, regulations and the like
addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to underground storage tanks); the Solid Waste Disposal Act; the Clean Water
Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking
Water Act; the Occupational Safety and Health Act; the Federal Water Pollution
Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the
Endangered Species Act; the National Environmental Policy Act; and the River and
Harbors Appropriation Act. "Environmental Laws" also includes, but is not
limited to, any present and future federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law: conditioning
transfer of property upon a negative declaration or other approval of a
Governmental Authority of the environmental condition of the property; requiring
notification or disclosure of Releases or other environmental condition of any
of the Properties to any Governmental Authority or other person or entity,
whether or not in connection with transfer of title to or interest in property;
imposing conditions or requirements relating to Hazardous Materials in
connection with permits or other authorization for lawful activity; relating to
nuisance, trespass or other causes of action related to Hazardous Materials; and
relating to wrongful death, personal injury, or property or other damage in
connection with the physical condition or use of any of the Properties by reason
of the presence of Hazardous Materials in, on, under or above any of the
Properties. "Environmental Liens" has the meaning set forth in Section 16.D(ix).
"Environmental Policies" means the environmental insurance policy or
policies, as applicable, issued by Environmental Insurer to Lessor with respect
to the Properties, which Environmental Policies shall be in form and substance
satisfactory to Lessor in its sole but reasonable discretion.
"Event of Default" has the meaning set forth in Section 23.
"Extended Term" means the period subsequent to the expiration of the
Primary Term which this Lease is actually in effect.
"FCCR Period" means the twelve month period of time immediately preceding
the date on which Lessee gives written notice to Lessor that Lessee is proposing
to substitute a Substitute Property as permitted by Section 57.A.
"Fiscal Year" means (i) the fifty-two or fifty-three week period, as
applicable, ending on the Tuesday closest to May 31 or (ii) such other fiscal
year which Lessee may adopt for financial reporting purposes, provided that
Lessee gives Lessor sixty (60) days prior written notice thereof.
"Fixed Charge Coverage Ratio" has the meaning set forth in Section 57.B
(i)(2).
"Franchise Finance" means Franchise Finance Corporation of America, a
Maryland corporation, and its successors and assigns.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority of the United States, the states in which the
Properties are located or any political subdivision thereof.
"Hazardous Materials" means(i) any toxic substance or hazardous waste,
substance, solid waste, or related material, orany pollutant or contaminant;
(ii) radon gas, asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which contains
dielectric fluid containing levels of polychlorinated biphenyls in excess of
federal, state or local safety guidelines, whichever are more stringent, or any
petroleum product; (iii) any substance, gas, material or chemical which is or
may be defined as or included in the definition of "hazardous substances,"
"toxic substances," "hazardous materials," "hazardous wastes," "regulated
substances" or words of similar import under any Environmental Laws; and (iv)
any other chemical, material, gas or substance the exposure to or release of
which is or may be prohibited, limited or regulated by any Governmental
Authority that asserts or may assert jurisdiction over any of the Properties or
the operations or activity at any of the Properties, or any chemical, material,
gas or substance that does or may pose a hazard to the health and/or safety of
the occupants of any of the Properties or the owners and/or occupants of
property adjacent to or surrounding any of the Properties. "Indemnified Parties"
means Lessor, Environmental Insurer, Remainderman, and Lender and their
directors, officers, shareholders, trustees, beneficial owners, partners,
members, and any directors, officers, shareholders, trustees, beneficial owners,
partners, members of any beneficial owners, partners or members of Lessor,
Environmental Insurer, Remainderman or Lender, and all employees, agents,
servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any of the foregoing,
including, but not limited to, any successors by merger, consolidation or
acquisition of all or a substantial portion of the assets and business of
Lessor, Environmental Insurer, Remainderman or Lender, as applicable.
"Knowledge" or "knowledge" means the actual knowledge of the person.
"Lease Term" shall have the meaning described in Section 4.
"Lender" means FFCA [Acquisition] [Finding] Corporation, a Delaware
corporation, its successors and assigns, any successor lender in connection with
any loan secured by Lessor's interest in any of the Properties, and any servicer
of any loan secured by Lessor's interest in any of the Properties, including,
without limitation, Franchise Finance Corporation of America, a Maryland
corporation. "Lessee Entities" means, collectively, Lessee and all Affiliates of
Lessee. "Loan Agreement" means the Loan Agreement dated as of the date of this
Lease in effect between Lessor and Lender, as such agreement may be amended from
time to time and any and all replacements or substitutions thereof. "Loan
Documents" means, collectively, the Loan Agreement, the Notes, the Mortgages and
all other documents, instruments and agreements executed in connection therewith
or contemplated thereby, all as amended and supplemented and any and all
replacements or substitutions thereof. "Losses" means any and all claims, suits,
liabilities (including, without limitation, strict liabilities), actions,
proceedings, obligations, debts, damages, losses, costs, expenses, diminutions
in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts
paid in settlement and damages of whatever kind or nature (including, without
limitation, attorneys' fees, court costs and other costs of defense). "Maturity
Date" means March 1, 2021.
"Memorandum" means the memorandum of master lease dated as of the date of
this Lease between Lessor and Lessee with respect to the Properties. A duplicate
original Memorandum will be executed and recorded in the applicable real
property records for each Property. Each Memorandum will contain exhibits with
the addresses and store identification numbers for all of the Properties and the
legal description for the applicable Property.
"Mortgages" means, collectively, the mortgages, deeds of trust or deeds to
secure debt, assignments of rents and leases, security agreements and fixture
filings dated as of even date herewith executed by Lessor for the benefit of
Lender with respect to the Properties, as such instruments may be amended,
restated and/or supplemented from time to time and any and all replacements or
substitutions thereof. "Net Income" means, for any period, Lessee's consolidated
net income (or loss) determined in accordance with GAAP, but excluding: (a) the
income of any Person (other than Lessee and its subsidiaries) in which Lessee or
any of its subsidiaries has an ownership interest, unless received by Lessee or
its subsidiaries in a cash distribution; (b) any after-tax gains or losses
attributable to an asset disposition; and (c) to the extent not included in
clauses (a) and (b) immediately above, any after-tax extraordinary, non-cash or
non-recurring gains or losses. "Notes" means, collectively, the promissory notes
dated as of the date of this Lease executed by Lessor and payable to Lender with
respect to the Properties, as such notes may be amended, restated and/or
substituted from time to time. "Other Agreements" means, collectively, all
agreements and instruments now or hereafter entered into between, among or by
(1) any of the Lessee Entities, and, or for the benefit of, (2) Lessor;
provided, however, the term Other Agreements shall not include this Lease and
the other Sale-Leaseback Documents. "Participation" means the granting of any
participations in any document evidencing loan obligations or any or all
servicing rights with respect thereto.
"Pending Actions" means the legal proceedings described in Lessee's
Quarterly Report on Form 10-Q with respect to its fiscal quarter ended November
28, 2000 filed with the United States Securities and Exchange Commission.
"Permitted Facility" means (i) a Discount Auto Parts store or (ii) such
other retail auto parts store or other concept as approved by Lessor and Lender,
such approval not to be unreasonably withheld, conditioned or delayed.
"Permitted Recipients" means, collectively, Lessor, Lender, their
respective successors and assigns, the authorized employees, agents and
representatives, lenders, purchasers, transferees, assignees, servicers,
participants, investors, analysts, attorneys and advisors of Lessor, Lender and
their respective successors and assigns, and Governmental Authorities with
regulatory authority over Lender and selected rating agencies with a need to
know. "Person" means any individual, corporation, partnership, limited liability
company, trust, unincorporated organization, Governmental Authority or any other
form of entity. "Personalty" means all machinery, appliances, furniture,
equipment, trade fixtures and other personal property of Lessee (excluding
inventory) from time to time situated on or used in connection with the
Properties; provided, however, the term "Personalty" shall not include the HVAC,
supply fans, exhaust fans, air ducts, vents, built-in sinks, built-in
countertops, plumbing and electrical fixtures, sign poles and lighting poles,
all of which items are intended to be fixtures as such term is used within the
definition of "Properties". "Prepayment Charges" means, for purposes of this
Lease, the lesser of (i) an amount equal to any prepayment premium or charge,
yield maintenance payment, or other cost or expense imposed on Lessor by the
applicable Lender in connection with the payment of the applicable Note(s) or
promissory note(s) prior to the Maturity Date, or (ii) the Yield Maintenance
Payment. "Primary Term" means the period commencing on the Effective Date and
expiring on August 31, 2023. "Properties" means, collectively, the parcels of
real estate described by address, Lessor Number and Unit Number in Exhibit A
attached hereto, as the same may be modified from time to time to reflect
removed and substituted Properties, and legally described in Exhibit A-1
attached hereto, as the same may be modified from time to time to reflect
removed and substituted Properties, all rights, privileges and appurtenances
associated therewith, and all buildings, structures, fixtures and other
improvements now or hereafter located on such real estate (excluding Personalty
and inventory).
"Property" means any one of the Properties.
"Purchase Price" means, with respect to any Property, the amount of the
purchase price corresponding to such Property as set forth on Exhibit A to the
Sale-Leaseback Agreement.
"Reinvestment Rate" means an interest rate equal to 50 basis points above
the then current yield of U.S. Treasury securities having a weighted average
life to maturity closest to the Maturity Date. "Rejectable Offer" has the
meaning set forth in Section 21.B. "Rejectable Purchase Offer" has the meaning
set forth in Section 58.A. "Rejectable Substitution Offer" has the meaning set
forth in Section 57.A. "Release" means any release, deposit, discharge,
emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring,
emptying, escaping, dumping, disposing or other movement of Hazardous Materials.
"Remainderman" means Autopar Remainder I, LLC, a Delaware limited liability
company, which owns a remainder interest in the land at the Properties, together
with its successors and assigns.
"Remediation" means any response, remedial, removal, or corrective action,
any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate
any Hazardous Materials, any actions to prevent, cure or mitigate any Release,
any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or any evaluation
relating to any Hazardous Materials. "Sale-Leaseback Agreement" means that
certain Sale-Leaseback Agreement dated as of the date hereof between Lessor and
Lessee with respect to the Properties.
"Sale-Leaseback Documents" means the Sale-Leaseback Agreement, this Lease,
the Memorandum, the Acknowledgement and all other documents executed in
connection therewith or contemplated thereby.
"Securitization" means one or more sales, dispositions, transfers or
assignments by Lender or any Affiliate of Lender to a special purpose
corporation, trust or other entity identified by Lender or any Affiliate of
Lender of notes evidencing obligations to repay secured or unsecured loans owned
by Lender or any Affiliate of Lender (and, to the extent applicable, the
subsequent sale, transfer or assignment of such notes to another special purpose
corporation, trust or other entity identified by Lender or any Affiliate of
Lender), and the issuance of bonds, certificates, notes or other instruments
evidencing interests in pools of such loans, whether in connection with a
permanent asset securitization or a sale of loans in anticipation of a permanent
asset securitization. Each Securitization shall be undertaken in accordance with
all requirements which may be imposed by the investors or the rating agencies
involved in each such sale, disposition, transfer or assignment or which may be
imposed by applicable securities, tax or other laws or regulations, including,
without limitation, laws relating to Lender's status as a real estate investment
trust.
"Store Income Statements" means income statements for the business at each
of the Properties. "Substitute Property" means one or more parcels of real
estate substituted for any of the Properties in accordance with the requirements
of Section 57, together with all rights, privileges and appurtenances associated
therewith, and all buildings, structures, fixtures and other improvements
located thereon. For purposes of clarity, where two or more parcels of real
property comprise a Substitute Property, such parcels shall be aggregated and
deemed to constitute the Substitute Property for all purposes of this Lease.
"Tax Contest Permitted Amount" means (i) prior to March 1, 2011, $25,000, and
(ii) from and after March 1, 2011, $50,000. "Threatened Release" means a
substantial likelihood of a Release which requires action to prevent or mitigate
damage to the soil, surface waters, groundwaters, land, stream sediments,
surface or subsurface strata, ambient air or any other environmental medium
comprising or surrounding any of the Properties which may result from such
Release. "Title Company" means LandAmerica Financial Group, or such other
nationally recognized title insurance company reasonably acceptable to Lessor.
"Transfer" means any sale, transfer or assignment of any document
evidencing loan obligations, or any or all servicing rights with respect
thereto.
"Yield Maintenance Payment" means an amount equal to the positive
difference between
(a) the lesser of (i) the present value, computed at the
Reinvestment Rate, of the stream of monthly principal and interest
payments in effect under the applicable Note(s) as of the Effective
Date from the date of prepayment through the Maturity Date, and (ii)
the present value, computed at the Reinvestment Rate, of the stream of
monthly principal and interest payments in effect under the applicable
Note(s) as of the date of prepayment from the date of prepayment
through the Maturity Date, and
(b) the outstanding principal balance of such Note(s) as of
the date of prepayment;
provided, however, if such difference is a negative number, the Yield
Maintenance Payment shall be zero.
2. Demise of Properties. In consideration of the rentals and other sums to
be paid by Lessee and of the other terms, covenants and conditions on Lessee's
part to be kept and performed, Lessor hereby leases to Lessee, and Lessee hereby
takes and hires, the Properties. The Properties are leased to Lessee "AS IS" and
"WHERE IS" without representation or warranty by Lessor and subject to the
rights of parties in possession, to the existing state of title, any state of
facts which an accurate survey or physical inspection might reveal, and all
Applicable Regulations now or hereafter in effect. Lessee has examined each of
the Properties and title to each of the Properties and has found all of the same
satisfactory for all of Lessee's purposes.
3. Characterization of Lease. A. Lessor and Lessee intend that:
(i) this Lease constitutes a single master lease of all, but
not less than all, of the Properties and that Lessor and Lessee have
executed and delivered this Lease with the understanding that this
Lease constitutes a unitary, unseverable instrument pertaining to all,
but not less than all, of the Properties, and that neither this Lease
nor the duties, obligations or rights of Lessee may be allocated or
otherwise divided among the Properties by Lessee;
(ii) this Lease is a "true lease" and not a financing lease,
capital lease, mortgage, equitable mortgage, deed of trust, trust
agreement, security agreement or other financing or trust arrangement,
and the economic realities of this Lease are those of a true lease; and
(iii) the business relationship created by this Lease and any
related documents is solely that of a long-term commercial lease
between landlord and tenant and has been entered into by both parties
in reliance upon the economic and legal bargains contained herein.
B. Lessor and Lessee acknowledge and agree that the Lease Term, including
any term extensions provided for in this Lease, is less than the remaining
economic life of each of the Properties.
C. Lessee and Lessor each waive any claim or defense based upon the
characterization of this Lease as anything other than a true lease and
irrevocably waive any claim or defense which asserts that this Lease is anything
other than a true lease. Lessee and Lessor each covenant and agree that it will
not assert that this Lease is anything but a true lease. Lessee and Lessor each
stipulate and agree not to challenge the validity, enforceability or
characterization of the lease of the Properties as a true lease and further
stipulate and agree that nothing contained in this Lease creates or is intended
to create a joint venture, partnership (either de jure or de facto), equitable
mortgage, trust, financing device or arrangement, security interest or the like.
Lessee and Lessor each shall support the intent of the parties that the lease of
the Properties pursuant to this Lease is a true lease and does not create a
joint venture, partnership (either de jure or de facto), equitable mortgage,
trust, financing device or arrangement, security interest or the like, if, and
to the extent that, any challenge occurs.
D. Lessee and Lessor each waive any claim or defense based upon the
characterization of this Lease as anything other than a master lease of all of
the Properties and irrevocably waive any claim or defense which asserts that
this Lease is anything other than a master lease. Lessee and Lessor each
covenant and agree that it will not assert that this Lease is anything but a
unitary, unseverable instrument pertaining to the lease of all, but not less
than all, of the Properties. Lessee and Lessor each stipulate and agree not to
challenge the validity, enforceability or characterization of the lease of the
Properties as a unitary, unseverable instrument pertaining to the lease of all,
but not less than all, of the Properties. Lessee and Lessor each shall take no
action or position inconsistent with, and upon the request of the other, shall
take such actions as are reasonably necessary to support the intent of the
parties that this Lease is a unitary, unseverable instrument pertaining to the
lease of all, but not less than all, of the Properties, if, and to the extent
that, any challenge occurs.
E. Lessee represents and warrants to Lessor that (i) the Base Annual Rental
is the fair market value for the use of the Properties and was agreed to by
Lessor and Lessee on that basis, and (ii) the execution, delivery and
performance by Lessee of this Lease does not constitute a transfer of all or any
part of the Properties, except for the leasehold interest and rights in and to
the Properties created by this Lease.
F. The expressions of intent, the waivers, the representations and
warranties, the covenants, the agreements and the stipulations set forth in this
Section are a material inducement to Lessor entering into this Lease.
4. Lease Term. The Lease Term for all of the Properties shall commence as
of the Effective Date and shall expire on August 31, 2023, unless terminated
sooner as provided in this Lease and as may be extended for four additional
successive periods of five years each as set forth in Section 27 below. The time
period during which this Lease shall actually be in effect is referred to herein
as the "Lease Term." 5. Rental and Other Payments. A. If the Effective Date is a
date other than the first day of the month, Lessee shall pay Lessor on the
Effective Date the Base Monthly Rental prorated on the basis of the ratio that
the number of days from the Effective Date through the last day in the month
containing the Effective Date bears to the number of days in such month.
Thereafter, on or before the first day of each succeeding calendar month, Lessee
shall pay Lessor in advance the Base Monthly Rental. B. Notwithstanding anything
to the contrary contained in this Lease but subject to the last sentence of this
Section 5.B, commencing on the first Adjustment Date and on each Adjustment Date
thereafter, the Base Annual Rental shall increase by an amount equal to the
product of the then-current Base Annual Rental multiplied by 7.50%, which
increase shall be compounded (e.g., the 7.50% increase on the second Adjustment
Date shall be computed based on the Base Annual Rental in effect for the month
immediately preceding the second Adjustment Date). The increased Base Annual
Rental shall constitute the Base Annual Rental due and payable until the next
Adjustment Date. Notwithstanding the foregoing, on March 1, 2021, the Base
Annual Rental shall be changed to an amount which is 80.49605% of the sum of (x)
the Base Annual Rental in effect immediately prior to such date, and (y) the sum
of all FCCR Rent Reduction Amounts (as defined in Section 23.A(ix)) and Subject
Transfer Rent Reduction Amounts (as defined in Section 26.(4)) paid by Lessee
prior to March 1, 2021. C. All sums of money required to be paid by Lessee under
this Lease which are not specifically referred to as rent ("Additional Rental")
shall be considered rent although not specifically designated as such. Lessor
shall have the same remedies for nonpayment of Additional Rental as those
provided herein for the nonpayment of Base Annual Rental. D. (i) Lessor hereby
agrees that, to the extent that the Aggregate Assumed Base Annual Rental exceeds
the CPI-Adjusted Rent, Lessor shall be required to pay Lessee the Aggregate Rent
Refund in accordance with the provisions of this Section 5.D. In no event shall
Base Annual Rental be deemed reduced as of any Adjustment Date from the Base
Annual Rental which would have been payable during the year immediately
preceding such Adjustment Date. In addition, if the Aggregate Assumed Base
Annual Rental is less than or equal to the aggregate CPI-Adjusted Rent, then no
additional amounts shall be payable by Lessee to Lessor and the payments of Base
Annual Rental otherwise contemplated by this Lease for the Primary Term shall
become the final amounts payable as Base Annual Rental for the Primary Term.
Anything contained herein to the contrary notwithstanding, in no event shall
Lessor be required to pay the Aggregate Rent Refund in the event of any
termination of this Lease resulting from the occurrence of an Event of Default
or a rejection of this Lease in a bankruptcy case involving Lessee.
(ii) Within thirty (30) days after the end of the Primary Term (other
than a termination resulting from the occurrence of an Event of Default or a
rejection of this Lease in a bankruptcy case involving Lessee), Lessor shall (x)
provide Lessee with a statement setting forth Lessor's calculation of the amount
of the Aggregate Rent Refund and each CPI Increase used in calculating the
Aggregate Rent Refund and (y) pay the Aggregate Rent Refund to Lessee; provided,
however, the obligation of Lessor to pay the Aggregate Rent Refund to Lessee
shall not excuse or reduce Lessee's obligation to pay any Base Annual Rental or
Additional Rental payable in respect of the Primary Term or, except as provided
in subsection (iii) below, the Extended Term, or any payment due in respect of
any termination of this Lease or as a result of the rejection of this Lease in a
bankruptcy case involving Lessee, or any other amount (including, without
limitation, indemnification payments or damages) payable hereunder during or
with respect to the Primary Term or the Extended Term, and Lessee shall not have
any right to set-off the Aggregate Rent Refund or any part thereof against its
obligation to pay any such Base Annual Rental, Additional Rental, any payment
due in respect of any termination of this Lease or as a result of the rejection
of this Lease in a bankruptcy case involving Lessee, or any such other amount,
except as provided in subsection (iii) below. If this Lease is terminated as a
result of an Event of Default or if this Lease is rejected in a bankruptcy case
involving Lessee, or if an Event of Default shall have occurred and be
continuing at the expiration of the Primary Term, Lessor may, but shall not be
required to, in exercising its rights hereunder, use, apply or retain the whole
or any part of the Aggregate Rent Refund for the payment of any rent or other
sum (including damages) to which Lessor may be entitled by reason of such Event
of Default or rejection.
(iii) In the event Lessee exercises its option to extend this Lease as
set forth in Section 27 below, Lessor may elect to apply the Aggregate Rent
Refund, if any, as a credit against the Base Annual Rental first accruing for
the Extended Term, until the balance of the Aggregate Rent Refund shall be
reduced to zero. Lessor shall evidence its election by giving notice thereof to
Lessee no later than the due date of the first installment of rent due in the
first Extended Term; provided, however, if Lessor fails to deliver such notice,
Lessor shall be deemed to have elected to so credit the Aggregate Rent Refund.
(iv) Notwithstanding anything contained herein to the contrary, the
obligation created by this Section 5.D shall be subordinate in all respects to
the loans secured by the Mortgages. Without limiting the generality of the
preceding sentence, in the event that Lender succeeds to the interest of Lessor
in this Lease whether by a foreclosure of the Mortgages or the delivery to
Lender of deeds-in-lieu of foreclosure, the preceding subsections of this
Section 5.D shall be of no force or effect, Lender shall have no obligation to
pay Lessee the Aggregate Rent Refund, and Lessee shall have no right to receive
a credit for the Aggregate Rent Refund against the Base Annual Rental due for
the Extended Term.
6. Representations and Warranties of Lessor. The representations and
warranties of Lessor contained in this Section are being made to induce Lessee
to enter into this Lease and Lessee has relied and will continue to rely upon
such representations and warranties. Lessor represents and warrants to Lessee as
of the Effective Date as follows:
A. Organization, Authority and Status of Lessor. (i) Lessor
has been duly organized and is validly existing and in good standing
under the laws of the State of Delaware. All necessary corporate action
has been taken to authorize the execution, delivery and performance by
Lessor of this Lease and the other documents, instruments and
agreements provided for herein.
(ii) The person who has executed this Lease on behalf of
Lessor is duly authorized so to do.
B. Enforceability. This Lease constitutes the legal, valid and
binding obligation of Lessor, enforceable against Lessor in accordance
with its terms.
C. Litigation. There are no suits, actions, proceedings or
investigations pending, or, to the best of its knowledge, threatened
against or involving Lessor before any arbitrator or Governmental
Authority which might reasonably result in any material adverse change
in the contemplated business, condition, worth or operations of Lessor.
D. Absence of Breaches or Defaults. Lessor is not in breach or
default under any document, instrument or agreement to which Lessor is
a party or by which Lessor or the Properties is subject or bound, which
breach or default could reasonably be expected to have a material
adverse effect on Lessor or any of the Properties. The authorization,
execution, delivery and performance of this Lease and the documents,
instruments and agreements provided for herein will not result in any
breach of or default under any document, instrument or agreement to
which Lessor is a party or by which Lessor or any of the Properties is
subject or bound, which breach or default could reasonably be expected
to have a material adverse effect on Lessor or any of the Properties.
The authorization, execution, delivery and performance of this Lease
and the documents, instruments and agreements provided for herein will
not violate any applicable law, statute, regulation, rule, ordinance,
code, rule or order known to Lessor, where such violation would have a
material adverse effect on Lessor or any of the Properties.
7. Representations and Warranties of Lessee. The representations and
warranties of Lessee contained in this Section are being made to induce Lessor
to enter into this Lease and Lessor has relied, and will continue to rely, upon
such representations and warranties. Lessee represents and warrants to Lessor as
of the Effective Date as follows: A. Organization, Authority and Status of
Lessee. (i) Lessee has been duly organized or formed, is validly existing and of
active status under the laws of its state of incorporation or formation and is
qualified to do business in (a) each of the states in which the Properties are
located and (b) any other state where such qualification is required except
where the failure to be so qualified would not have a material adverse effect on
Lessee. All necessary corporate action has been taken to authorize the
execution, delivery and performance by Lessee of this Lease and of the other
documents, instruments and agreements provided for herein. Lessee is not a
"foreign corporation", "foreign partnership", "foreign trust", "foreign limited
liability company" or "foreign estate", as those terms are defined in the
Internal Revenue Code and the regulations promulgated thereunder. Lessee's
United States tax identification number is correctly set forth on the signature
page of this Lease.
(ii) The person who has executed this Lease on behalf of
Lessee is duly authorized to do so.
B. Enforceability. This Lease constitutes the legal, valid and
binding obligation of Lessee, enforceable against Lessee in accordance
with its terms.
C. Litigation. There are no suits, actions, proceedings or
investigations pending, or, to the best of its knowledge, threatened
against or involving Lessee or any of the Properties before any
arbitrator or Governmental Authority, including, without limitation,
the Pending Actions, which might reasonably result in any material
adverse change in the contemplated business, condition, worth or
operations of Lessee or any of the Properties.
D. Absence of Breaches or Defaults. Lessee is not in breach or
default under any document, instrument or agreement to which Lessee is
a party or by which Lessee, any of the Properties or any of Lessee's
property is subject or bound, which breach or default could reasonably
be expected to have a material adverse effect on Lessee or any of the
Properties. The authorization, execution, delivery and performance of
this Lease and the documents, instruments and agreements provided for
herein will not result in any breach of or default under any document,
instrument or agreement to which Lessee is a party or by which Lessee,
any of the Properties or any of Lessee's property is subject or bound
which breach or default could reasonably be expected to have a material
adverse effect on Lessee or any of the Properties. The authorization,
execution, delivery and performance of this Lease and the documents,
instruments and agreements provided for herein will not violate any
applicable law, statute, regulation, rule, ordinance, code, rule or
order where the effect of such violation could reasonably be expected
to have a material adverse effect on Lessee or any of the Properties.
E. Liabilities of Lessor. Lessee is not liable for any
indebtedness for money borrowed by Lessor and has not guaranteed any of
the debts or obligations of Lessor.
8. Covenants. Lessee covenants to Lessor for so long as this Lease is in
effect as follows:
A. Aggregate Fixed Charge Coverage Ratio. Lessee shall maintain an
Aggregate Fixed Charge Coverage Ratio at all of the Properties, taken as a
whole, of at least 1.25:1, determined as of the last day of each Fiscal Year.
For purposes of this Lease, the term "Aggregate Fixed Charge Coverage Ratio"
shall mean with respect to the respective Fiscal Year for which the
determination is made, the ratio calculated for such Fiscal Year, each as
determined in accordance with GAAP, of (a) the sum of Store Operating
Contribution, Depreciation and Amortization, and Operating Lease Expense, less a
corporate overhead allocation in an amount equal to 4.5% of Gross Sales Less
Returns, to (b) the Operating Lease Expense; provided, however, that, with
respect to each of the Properties which are sublet pursuant to Section 26.C and
during the period of time in which the applicable sublease is in effect, the
amount of rent payable to Lessee under the applicable subleases during the
period of determination shall be used for purposes of clause (a) of the ratio
for such Properties in lieu of the amount which would otherwise have been
determined under clause (a) for such Properties.
For purposes of this Section, the following terms shall be defined as
set forth below:
"Depreciation and Amortization" shall mean with respect to all
of the Properties the depreciation and amortization accruing
during any period of determination with respect to Lessee as
determined in accordance with GAAP. The term "Depreciation and
Amortization" shall not include Lessor's depreciation and
amortization with respect to the Properties or otherwise.
"Gross Sales Less Returns" means (i) the sales or other income
arising from all business conducted at all of the Properties
by Lessee during the period of determination, less (ii) sales
tax paid by Lessee in connection with the business conducted
at each of the Properties during such period and product
returns with respect to such Properties during such period.
"Store Operating Contribution" shall mean with respect to the
period of determination, the store operating contribution or
loss of Lessee allocable to all of the Properties, taken as a
whole, computed by taking Gross Sales Less Returns and
deducting costs of sales, direct store expenses and Operating
Lease Expense. In determining the amount of Store Operating
Contribution, (i) adjustments shall be made for nonrecurring
gains and losses allocable to the period of determination,
(ii) deductions shall be made for, among other things,
Depreciation and Amortization, and Operating Lease Expense
allocable to the period of determination, and (iii) no
deductions shall be made for (x) income taxes or charges
equivalent to income taxes allocable to the period of
determination, as determined in accordance with GAAP, or (y)
corporate overhead expense allocable to the period of
determination.
"Operating Lease Expense" shall mean the expenses
incurred by Lessee under any operating leases with respect to
one or more of the Properties (including this Lease) during
the period of determination, as determined in accordance with
GAAP.
B. Nonconsolidation Covenants. (i) Lessee will not assume liability for any
indebtedness for money borrowed by Lessor and does not, and will not, guarantee
any of the debts or obligations of Lessor. Lessee will not hold itself out as
being liable for any obligations or indebtedness of Lessor.
(ii) Lessee shall not and shall use its best efforts to cause
its affiliates not to hold Lessor out to the public or to any
individual creditors as being a unified entity with assets and
liabilities in common with Lessee.
(iii) Lessee shall conduct its business so as not to mislead
others as to the separate identity of Lessor, and particularly will
avoid the appearance of conducting business on behalf of Lessor.
Without limiting the generality of the foregoing, no oral and written
communications of Lessee, including, without limitation, letters,
invoices, purchase orders, contracts, statements and loan applications,
will be made in the name of Lessor which to the extent that to do
otherwise would materially bear upon the maintenance of Lessor's
separate identity.
(iv) Lessee will not act in Lessor's name.
(v) Where necessary and appropriate, Lessee shall disclose the
independent business status of Lessor to creditors of Lessee, if any.
(vi) The resolutions, agreements and other instruments of
Lessee, if any, underlying the transactions described in this Lease
will be maintained by Lessee.
(vii) All transactions between Lessee and Lessor will be no
less fair to each party than they could obtain on an arm's-length
basis.
(viii) The books, records and accounts of Lessee shall at all
times be maintained in a manner permitting the assets and liabilities
of Lessor to be easily separated and readily ascertained from those of
Lessee.
(ix) Lessee will not direct, or otherwise control, the ongoing
business decisions of Lessor.
(x) Lessee will not file or cause to be filed a voluntary or
involuntary petition in bankruptcy on behalf of or against Lessor.
C. Transfer, Participation and Securitization Covenants. (i) Lessee agrees
to cooperate in good faith with Lessor and Lender in connection with any
Transfer, Participation and/or Securitization of any of the Notes, Mortgages
and/or any of the Loan Documents, or any or all servicing rights with respect
thereto, including, without limitation, (x) providing such documents, financial
and other data, and other information and materials (the "Disclosures") which
would typically be required with respect to Lessee by a purchaser, transferee,
assignee, servicer, participant, investor or rating agency involved with respect
to such Transfer, Participation and/or Securitization, as applicable; and (y)
amending the terms of this Lease to the extent necessary so as to satisfy the
requirements of purchasers, transferees, assignees, servicers, participants,
investors or selected rating agencies involved in any such Transfer,
Participation or Securitization, so long as such amendments would not increase
the Base Annual Rental or Additional Rental required to be paid under this Lease
or have a material adverse effect upon Lessee, the rights of and obligations on
Lessee under this Lease or the transactions contemplated by this Lease. Lessor
and Lender shall prepare, at the expense of Lessor and/or Lender, all documents
evidencing such amendments, provided that Lessee shall be responsible for the
payment of its own attorneys' fees incurred in connection with reviewing and
finalizing such documents.
(ii) Lessee consents to Lessor and Lender providing the
Disclosures, as well as any other information which Lessor and Lender
may now have or hereafter acquire with respect to the Properties or the
financial condition of Lessee to each purchaser, transferee, assignee,
servicer, participant, investor or rating agency involved with respect
to such Transfer, Participation and/or Securitization, as applicable.
Lessee shall pay its own attorneys' fees and other out-of-pocket
expenses incurred in connection with the performance of its obligations
under this Section 8.C.
D. Compliance Certificate. Within 120 days after the end of each fiscal
year of Lessee, Lessee shall deliver to Lessor such compliance certificates as
Lessor may reasonably require in order to establish that Lessee is in compliance
in all material respects with all of the obligations, duties and covenants
imposed on Lessee pursuant to this Lease.
9. Rentals To Be Net to Lessor. The Base Annual Rental payable hereunder
shall be net to Lessor, so that this Lease shall yield to Lessor the rentals
specified during the Lease Term, and that all costs, expenses and obligations of
every kind and nature whatsoever relating to the Properties shall be performed
and paid by Lessee.
10. Taxes and Assessments. Lessee shall pay, prior to the earlier of
delinquency or the accrual of interest on the unpaid balance, all taxes and
assessments of every type or nature assessed against, imposed upon or arising
with respect to Lessor (assuming that the Properties are the only real property
owned by Lessor and that Lessor is not engaged in any business other than the
ownership, leasing and financing of the Properties and any other matters
ancilliary thereto), any of the Properties, this Lease, the rental or other
payments due under this Lease or Lessee during the Lease Term which affect in
any manner the net return realized by Lessor under this Lease, including,
without limitation, the following:
A. All taxes and assessments upon any of the Properties or any part thereof
and upon any Personalty, whether belonging to Lessor or Lessee, or any tax or
charge levied in lieu of such taxes and assessments;
B. All taxes, charges, license fees and or similar fees imposed by reason
of the use of any of the Properties by Lessee; and
C. All excise, transaction, privilege, license, sales, use and other taxes
upon the rental or other payments due under this Lease, the leasehold estate of
either party or the activities of either party pursuant to this Lease.
Notwithstanding the foregoing, but without limiting the preceding
obligation of Lessee to pay all taxes which are imposed on the rental or other
payments due under this Lease, in no event will Lessee be required to pay any
net income taxes (i.e., taxes which are determined taking into account
deductions for depreciation, interest, taxes and ordinary and necessary business
expenses) or franchise taxes of Lessor (unless imposed in lieu of other taxes
that would otherwise be the obligation of Lessee under this Lease, including,
without limitation, any "gross receipts tax" or any similar tax based upon gross
income or receipts of Lessor with respect to this Lease which does not take into
account deductions from depreciation, interest, taxes and/or ordinary or
necessary business expenses), any transfer taxes of Lessor, or any tax imposed
with respect to the sale, exchange or other disposition by Lessor, in whole, of
the Properties or Lessor's interest in this Lease (other than transfer or
recordation taxes imposed in connection with the transfer of any of the
Properties to Lessee, the substitution of a Substitute Property or the
termination of this Lease pursuant to the provisions of this Lease).
All taxing authorities shall be instructed to send all tax and assessment
invoices to Lessee and Lessee shall promptly provide Lessor and Lender with
copies of all tax and assessment invoices received by Lessee. Upon request,
Lessee shall also provide Lessor and Lender with evidence that such invoices
were paid in a timely fashion. Lessee may, at its own expense, contest or cause
to be contested (in the case of any item involving more than the Tax Contest
Permitted Amount, after prior written notice to Lessor), by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any item specified in this
Section or any lien therefor, provided that (i) such proceeding shall suspend
the collection thereof from the applicable Properties or any interest therein,
(ii) neither such Properties nor any interest therein would be in any danger of
being sold, forfeited or lost by reason of such proceedings, (iii) no Event of
Default has occurred, and (iv) Lessee shall have deposited with Lessor adequate
reserves for the payment of the taxes, together with all interest and penalties
thereon, unless paid in full under protest, or Lessee shall have furnished the
security as may be required in the proceeding or as may be reasonably required
by Lessor to ensure payment of any contested taxes. So long as an Event of
Default shall not have occurred and be continuing, any amount recovered as a
result of retroactive tax contests with respect to taxes or assessments payable
during the Lease Term shall be paid to and may be retained by Lessee. Lessor
shall, at the request of Lessee, execute or join in the execution of any
instruments or documents reasonably requested by Lessee in connection with any
contest or proceeding contemplated by this Section, but Lessee shall be solely
responsible for the payment of all costs and expenses incurred by Lessor or
Lessee in connection with such contests and proceedings.
11. Utilities. Lessee shall contract, in its own name, for and pay when due
all charges for the connection and use of water, gas, electricity, telephone,
garbage collection, sewer use and other utility services supplied to the
Properties during the Lease Term. Under no circumstances shall Lessor be
responsible for any interruption of any utility service other than in
circumstances where such interruption occurs by virtue of an affirmative action
taken by Lessor to effectuate an interruption of such service.
12. Insurance. Throughout the Lease Term, Lessee shall maintain or cause to
be maintained with respect to each of the Properties, at its sole expense, the
following types and amounts of insurance (which may be included under a blanket
insurance policy if all the other terms hereof are satisfied):
A. Insurance against loss, damage or destruction by fire and other
casualty, including theft, vandalism and malicious mischief, flood (for each of
the Properties which is in a location designated by the Federal Emergency
Management Administration as a Special Flood Hazard Area), earthquake (for each
of the Properties which is in an area subject to destructive earthquakes within
recorded history), boiler explosion (for each of the Properties with a boiler),
plate glass breakage, sprinkler damage (for each of the Properties which has a
sprinkler system), all matters covered by a standard extended coverage
endorsement, all matters covered by a special coverage endorsement commonly
known as an "all-risk" endorsement and such other risks as Lessor may reasonably
require consistent with reasonably prudent business practices for similar types
of properties, insuring each of the Properties for not less than 100% of their
full insurable replacement cost.
B. Commercial general liability and property damage insurance, including a
products liability clause, covering Lessor, Remainderman and Lessee against
bodily injury liability, property damage liability and automobile bodily injury
and property damage liability, including without limitation any liability
arising out of the ownership, maintenance, repair, condition or operation of the
Properties or adjoining ways, streets or sidewalks and, if applicable, insurance
covering Lessor, Remainderman and Lessee against liability arising from the sale
of liquor, beer or wine on the Properties. Such insurance policy or policies
shall contain a broad form contractual liability endorsement under which the
insurer agrees to insure Lessee's obligations under Section 19 hereof to the
extent insurable, and a "severability of interest" clause or endorsement which
precludes the insurer from denying the claim of Lessee, Remainderman or Lessor
because of the negligence or other acts of the other, shall be in amounts of not
less than $1,000,000.00 per injury and occurrence with respect to any insured
liability, whether for personal injury or property damage, or such higher limits
as Lessor or Remainderman may reasonably require from time to time, and shall be
of form and substance satisfactory to Lessor and Remainderman.
C. Business income interruption insurance or rental interruption insurance,
when applicable, as requested by Lessor, equal to 100% of the Base Annual Rental
for a period of not less than 12 months.
D. State Worker's compensation insurance, or self insurance where permitted
by applicable law, in the statutorily mandated limits, employer's liability
insurance with limits not less than $500,000 or such greater amount as Lessor or
Remainderman may from time to time reasonably require and such other insurance
as may be necessary to comply with applicable laws.
E. Such other insurance as may from time to time be reasonably required by
Lessor, Remainderman or Lender consistent with prudent business practices for
similar types of properties in order to protect their respective interests with
respect to the Properties.
All insurance policies shall:
(i) Provide for a waiver of subrogation by the
insurer as to claims against Lessor, Remainderman, Lender and
their respective employees and agents;
(ii) Provide that any "no other insurance" clause in
the insurance policy shall exclude any policies of insurance
maintained by Lessor, Remainderman or Lender and that the
insurance policy shall not be brought into contribution with
insurance maintained by Lessor, Remainderman or Lender;
(iii) Contain a standard without contribution
mortgage clause endorsement in favor of Lender and any other
party reasonably designated by Lessor;
(iv) Provide that the policy of insurance shall not
be terminated, cancelled or substantially modified without at
least thirty (30) days' prior written notice (or ten (10)
days' prior written notice in the event of a nonpayment of
premium) to Lessor, Remainderman, Lender and to any other
party covered by any standard mortgage clause endorsement;
(v) Provide that the insurer shall not have the
option to restore the applicable Properties if Lessor or
Lessee elects to terminate this Lease in accordance with the
terms hereof;
(vi) Be issued by insurance companies licensed to do
business in the states in which the Properties are located and
which are rated A:VI or better by A.M. Best's Insurance Guide
or are otherwise approved by Lessor and Remainderman; and
(vii) Provide that the insurer shall not deny a claim
nor shall the insurance be cancelled, invalidated or suspended
by (1) any action, inaction, conduct or negligence of Lessor,
Remainderman, Lender or any other party covered by any
standard mortgage clause endorsement, Lessee, anyone acting
for Lessee or any subtenant or other occupant of any of the
Properties, (2) occupancy or use of any of the Properties for
purposes more hazardous than permitted by such policies, (3)
any foreclosure or other proceedings relating to any of the
Properties or change in title to or ownership of any of the
Properties, or (4) any breach or violation by Lessee or any
other person of any warranties, declarations or conditions
contained in such policies or the applications for such
policies.
It is expressly understood and agreed that the foregoing minimum limits
of insurance coverage shall not limit the liability of Lessee for its acts or
omissions as provided in this Lease. All insurance policies (with the exception
of worker's compensation insurance to the extent not available under statutory
law), shall designate Lessor, Remainderman and Lender as additional named
insureds as their interests may appear and shall be payable as set forth in
Section 21 hereof. All such policies shall be written as primary policies, with
deductibles not to exceed 10% of the amount of coverage. Any other policies,
including any policy now or hereafter carried by Lessor, Remainderman or Lender,
shall serve as excess coverage. Lessee shall procure policies for all insurance
for periods of not less than one year and shall provide to Lessor, Remainderman
and Lender certificates of insurance or, upon the request of Lessor,
Remainderman or Lender, duplicate originals of insurance policies evidencing
that insurance satisfying the requirements of this Lease is in effect at all
times. In the event of any transfer by Lessor of Lessor's interest in the
Properties or any financing or refinancing of Lessor's interest in the
Properties, or by Remainderman of Remainderman's interest in the Properties,
Lessee shall, upon not less than ten (10) days' prior written notice, deliver to
Lessor and Remainderman or any Lender providing such financing or refinancing,
as the case may be, certificates of all insurance required to be maintained by
Lessee hereunder naming such transferee or such Lender, as the case may be, as
an additional named insured to the extent required herein effective as of the
date of such transfer, financing or refinancing.
13. Tax and Insurance Impound. Upon the occurrence of an Event of Default,
Lessor may require Lessee to pay to Lessor sums which will provide an impound
account (which shall not be deemed a trust fund) for paying up to the next one
year of taxes, assessments and/or insurance premiums for each of the Properties.
Upon such requirement, Lessor will estimate the amounts needed for such purposes
and will notify Lessee to pay the same to Lessor in equal monthly installments,
as nearly as practicable, in addition to all other sums due under this Lease.
Should additional funds be required at any time, Lessee shall pay the same to
Lessor on demand. Lessee shall advise Lessor of all taxes and insurance bills
which are due and shall cooperate fully with Lessor in assuring that the same
are paid timely. Lessor may deposit all impounded funds in accounts insured by
any federal or state agency but may not commingle such funds with other funds
and accounts of Lessor. Interest or other gains from such funds, if any, shall
be added to the impound account. In the event of any default by Lessee, Lessor
may apply all impounded funds (including any interest added to the impound
account) against any sums due from Lessee to Lessor. Lessor shall give to Lessee
an annual accounting showing all credits and debits to and from such impounded
funds received from Lessee.
14. Payment of Rental and Other Sums. All rental and other sums which
Lessee is required to pay hereunder shall be the unconditional obligation of
Lessee and shall be payable in full when due without any setoff, abatement,
deferment, deduction or counterclaim whatsoever. Upon execution of this Lease,
Lessee shall establish arrangements whereby payments of the Base Monthly Rental
and impound payments, if any, are transferred by Automated Clearing House Debit
directly from Lessee's bank account to such account as Lessor may designate. Any
delinquent payment (that is, any payment not made within five calendar days
after the date when due) shall, in addition to any other remedy of Lessor, incur
a late charge of 5% (which late charge is intended to compensate Lessor for the
cost of handling and processing such delinquent payment and should not be
considered interest) and bear interest at the Default Rate, such interest to be
computed from and including the date such payment was due through and including
the date of the payment; provided, however, in no event shall Lessee be
obligated to pay a sum of late charge and interest higher than the maximum legal
rate then in effect.
15. Use. Except as set forth below, each of the Properties shall be used
solely for the operation of a Permitted Facility in accordance with the
standards of operations then in effect on a system-wide basis, and for no other
purpose. Lessee shall occupy the Properties promptly following the Effective
Date and, except as set forth below and except during periods when any of the
Properties is untenantable by reason of fire or other casualty or condemnation
(provided, however, during all such periods while any of the Properties is
untenantable, Lessee shall strictly comply with the terms and conditions of
Section 21 of this Lease), Lessee shall at all times during the Lease Term
occupy or sublease in accordance with the terms of Section 26.C each of the
Properties and shall diligently conduct its business on each of the Properties
as a Permitted Facility or cause any subtenant under a sublease pursuant to the
terms of Section 26.C to diligently conduct its business on each of the
Properties as a Permitted Facility. Lessee may cease diligent operation of
business at any of the Properties for a period not to exceed 180 days and may do
so only once with respect to each Property within any five-year period during
the Lease Term. If Lessee does discontinue operation as permitted by this
Section, Lessee shall (i) give written notice to Lessor within 15 days after
Lessee elects to cease operation, (ii) provide adequate protection and
maintenance of any such Properties during any period of vacancy, (iii) comply
with all Applicable Regulations and otherwise comply with the terms and
conditions of this Lease other than the continuous use covenant set forth in
this Section, and (iv) pay all costs necessary to restore such Properties to
their condition on the day operation of the business ceased at such time as such
Properties are reopened for Lessee's business operations or other substituted
use approved by Lessor as contemplated below. Notwithstanding anything herein to
the contrary, Lessee shall pay the Base Monthly Rental on the first day of each
month during any period in which Lessee discontinues operation.
16. Compliance with Laws, Restrictions, Covenants and Encumbrances.
A. Lessee's use and occupation of each of the Properties, and the condition
thereof, shall, at Lessee's sole cost and expense, comply in all material
respects with all Applicable Regulations and all restrictions, covenants and
encumbrances of record with respect to each of the Properties. In addition to
the other requirements of this Section, Lessee shall, at all times throughout
the Lease Term, comply with all Applicable Regulations, including, without
limitation, in connection with any maintenance, repairs and replacements of the
Properties undertaken by Lessee as required by Section 17 of this Lease.
B. Lessee will use its reasonable best efforts to not permit any act or
condition to exist on or about any of the Properties (excluding acts committed
by third parties not within the control of Lessee) which will increase any
insurance rate thereon, except when such acts are required in the normal course
of its business and Lessee shall pay for such increase.
C. Without limiting the generality of the other provisions of this Section,
Lessee agrees that it shall be responsible for ensuring that the Properties
comply in all material respects with the Americans with Disabilities Act of
1990, as such act may be amended from time to time, and all regulations
promulgated thereunder (collectively, the "ADA"), as it affects the Properties.
Lessee further agrees that any and all alterations made to the Properties during
the Lease Term will comply with the requirements of the ADA. All plans for
alterations which must be submitted to Lessor under the provisions of Section 18
must include a statement from a licensed architect or engineer certifying that
they have reviewed the plans, and that the plans comply in all material respects
with all applicable requirements of the ADA. Any subsequent approval or consent
to the plans by Lessor shall not be deemed to be a representation of Lessor's
part that the plans comply in all material respects with the requirements of the
ADA, which obligation shall remain with Lessee. Lessee agrees that it will
defend, indemnify and hold harmless the Indemnified Parties from and against any
and all Losses caused by, incurred or resulting from Lessee's failure to comply
in any respect (whether material or immaterial) with the ADA.
D. Lessee represents and warrants to Lessor and Environmental Insurer as
follows:
(i) To the knowledge of the officers of Lessee, none of the
Properties nor Lessee, in connection with its occupancy, use or
operation of the Properties, are in violation of, or subject to, any
pending or threatened investigation or inquiry by any Governmental
Authority or to any remedial obligations under any present
Environmental Laws that could reasonably be expected to have a material
adverse effect on Lessee, Lessor or any of the Properties, and this
representation and warranty would continue to be true and correct
following disclosure to the applicable Governmental Authorities of all
relevant facts, conditions and circumstances, if any, pertaining to the
Properties.
(ii) To the knowledge of the officers of Lessee, all permits,
licenses or similar authorizations to construct, occupy, operate or use
any buildings, improvements, fixtures and equipment forming a part of
any of the Properties required to be obtained by reason of any present
Environmental Laws have been obtained, except for such permits,
licenses or authorizations the failure of which to obtain could not
reasonably be expected to have a material adverse effect on Lessee,
Lessor or any of the Properties.
(iii) To the knowledge of the officers of Lessee, no Hazardous
Materials have been used, handled, manufactured, generated, produced,
stored, treated, processed, transferred, disposed of or otherwise
Released in, on, under, from or about any of the Properties, except in
De Minimis Amounts or in compliance with present Environmental Laws.
(iv) To the knowledge of the officers of Lessee, the
Properties do not contain Hazardous Materials, other than in De Minimis
Amounts or in compliance with present Environmental Laws, or
underground storage tanks.
(v) To the knowledge of the officers of Lessee, there is no
threat of any Release migrating to any of the Properties.
(vi) To the knowledge of the officers of Lessee, there is no
past or present non-compliance with present Environmental Laws, or with
permits issued pursuant thereto, in connection with any of the
Properties, except such non-compliance which could not reasonably be
expected to have a material adverse effect on Lessee, Lessor or any of
the Properties.
(vii) To the knowledge of the officers of Lessee, Lessee has
not received any written notice from any Governmental Authority
relating to Hazardous Materials or Remediation thereof, of possible
liability of any person or entity pursuant to any present Environmental
Law, other environmental conditions in connection with any of the
Properties, or any actual or potential administrative or judicial
proceedings in connection with any of the foregoing, which has not been
remedied in compliance with present Environmental Laws.
(viii) Lessee has truthfully and fully provided to Lessor, in
writing, any and all information relating to environmental conditions
in, on, under or from the Properties that is known to the officers of
Lessee and that is contained in Lessee's files and records, including
but not limited to any environmental investigations relating to
Hazardous Materials in, on, under or from any of the Properties.
(ix) To the knowledge of the officers of Lessee, (A) all uses
and operations on or of the Properties, whether by Lessee or any other
person or entity, have been in compliance with all present
Environmental Laws and permits issued pursuant thereto except for such
non-compliance which could not reasonably be expected to have a
material adverse effect on Lessee, Lessor or any of the Properties, (B)
there have been no Releases in, on, under or from any of the
Properties, except in De Minimis Amounts or in compliance with present
Environmental Laws, (C) there are no Hazardous Materials in, on, or
under any of the Properties, except in De Minimis Amounts or in
compliance with present Environmental Laws and (D) the Properties have
been kept free and clear of all liens and other encumbrances imposed
pursuant to any present Environmental Law (the "Environmental Liens").
Lessee has not allowed any tenant or other user of any of the
Properties to do any act on any of the Properties that materially
increased the dangers to human health or the environment, posed an
unreasonable risk of harm to any person or entity (whether on or off
the Properties), materially impaired the value of any of the
Properties, is contrary in any material respect to any requirement of
any insurer, constituted a public or private nuisance, constituted
waste, or violated any material covenant, condition, agreement or
easement applicable to any of the Properties.
E. Lessee covenants to Lessor and Environmental Insurer during the Lease
Term that: (i) the Properties shall not be in violation of or subject to any
investigation or inquiry by any Governmental Authority or to any remedial
obligations under any Environmental Laws, except for such violations or
investigations or inquiries which relate to Hazardous Materials in De Minimis
Amounts, and if any such investigation or inquiry is initiated, Lessee shall
promptly notify Lessor; (ii) all uses and operations on or of each of the
Properties, whether by Lessee or any other person or entity, shall be in
compliance with all applicable Environmental Laws and permits issued pursuant
thereto; (iii) there shall be no Releases in, on, under or from any of the
Properties, except in De Minimis Amounts or that do not violate any
Environmental Laws; (iv) there shall be no Hazardous Materials in, on, or under
any of the Properties, except in De Minimis Amounts or that do not violate any
Environmental Laws; (v) Lessee shall keep each of the Properties free and clear
of all Environmental Liens, whether due to any act or omission of Lessee or any
other person or entity; (vi) Lessee shall, at its sole cost and expense, fully
and expeditiously cooperate in all activities pursuant to subsection F below,
including but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (vii) in the event that Lessor
notifies Lessee that it has knowledge of a Release or a Threatened Release at
any of the Properties or has a reasonable basis to believe that a material
violation of Environmental Laws at any of the Properties may have occurred,
Lessee shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection with
any of the Properties as may be reasonably requested by Lessor (including but
not limited to sampling, testing and analysis of soil, water, air, building
materials and other materials and substances whether solid, liquid or gas), and
share with Lessor and Environmental Insurer the reports and other results
thereof, and Lessor, Environmental Insurer and the other Indemnified Parties
shall be entitled to rely on such reports and other results thereof; (viii)
Lessee shall, at its sole cost and expense, comply with all reasonable written
requests of Lessor to (1) reasonably effectuate Remediation of any condition
(including but not limited to a Release) in, on, under or from any of the
Properties; (2) comply with any Environmental Law; (3) comply with any
applicable directive from any Governmental Authority; and (4) take any other
reasonable action necessary or appropriate for protection of human health or the
environment; (ix) Lessee shall not do or allow any tenant or other user of any
of the Properties to do any act that materially increases the dangers to human
health or the environment, poses an unreasonable risk of harm to any person or
entity (whether on or off any of the Properties), impairs or may impair the
value of any of the Properties, is contrary to any requirement of any insurer,
constitutes a public or private nuisance, constitutes waste, or violates any
covenant, condition, agreement or easement applicable to any of the Properties,
in each case which could reasonably be expected to have a material adverse
effect on Lessee, Lessor or any of the Properties; and (x) Lessee shall, upon
obtaining such information, promptly notify Lessor in writing of (A) any
presence of Releases or Threatened Releases in, on, under, from or migrating
towards any of the Properties in violation of any applicable Environmental Laws;
(B) any non-compliance with any Environmental Laws related in any way to any of
the Properties; (C) any Environmental Lien; (D) any required Remediation of
environmental conditions relating to any of the Properties; and (E) any written
notice of which any officer of Lessee becomes aware from any Governmental
Authority relating in any way to liability of any person or entity pursuant to
any Environmental Law, or any administrative or judicial proceedings commenced
or overtly threatened in connection with any alleged violation of Environmental
Laws.
F. Lessor, Lender, Environmental Insurer and any other person or entity
designated by Lessor, including but not limited to any receiver, any
representative of a Governmental Authority, and any environmental consultant,
shall have the right, but not the obligation, to enter upon the Properties at
all reasonable times (including, without limitation, in connection with any
Securitization, Participation or Transfer or in connection with a proposed sale
or conveyance of any of the Properties or a proposed financing or refinancing
secured by any of the Properties or in connection with the exercise of any
remedies set forth in this Lease, the Mortgages or the other Loan Documents, as
applicable) to assess any and all aspects of the environmental condition of the
Properties and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in the
sole and absolute discretion of the party conducting the assessment) and taking
samples of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing; provided, however, that any such persons
(except in emergencies) shall use reasonable efforts to undertake any such
assessments or investigations so as to minimize the impact on Lessee's business
operations at the Properties. Lessee shall cooperate with and provide access to
Lessor, Lender, Environmental Insurer and any other person or entity designated
by Lessor. Any such assessment and investigation shall be at Lessor's sole cost
and expense unless at the time of any such assessment or investigation Lessor
has knowledge of a Release or a Threatened Release at any of the Properties or
has a reasonable basis to believe that a material violation of Environmental
Laws at any of the Properties may have occurred or an Event of Default has
occurred and is continuing, in which case Lessee shall be responsible for the
cost of any such assessment or investigation.
G. Lessee shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless each of the Indemnified Parties for, from and against
any and all Losses (excluding Losses suffered by an Indemnified Party directly
arising out of such Indemnified Party's gross negligence or willful misconduct;
provided, however, that the term "gross negligence" shall not include gross
negligence imputed as a matter of law to any of the Indemnified Parties solely
by reason of the Lessor's interest in any of the Properties or Lessor's failure
to act in respect of matters which are or were the obligation of Lessee under
this Lease) and costs of Remediation (whether or not performed voluntarily),
engineers' fees, environmental consultants' fees, and costs of investigation
(including but not limited to sampling, testing, and analysis of soil, water,
air, building materials and other materials and substances whether solid, liquid
or gas) imposed upon or incurred by or asserted against any Indemnified Parties,
and directly or indirectly arising out of or in any way relating to any one or
more of the following: (i) any presence of any Hazardous Materials in, on,
above, or under any of the Properties; (ii) any past or present Release or
Threatened Release in, on, above, under or from any of the Properties; (iii) any
activity by Lessee, any person or entity affiliated with Lessee or any other
tenant or other user of any of the Properties in connection with any actual,
proposed or threatened use, treatment, storage, holding, existence, disposition
or other Release, generation, production, manufacturing, processing, refining,
control, management, abatement, removal, handling, transfer or transportation to
or from any of the Properties of any Hazardous Materials at any time located in,
under, on or above any of the Properties; (iv) any activity by Lessee, any
person or entity affiliated with Lessee or any other tenant or other user of any
of the Properties in connection with any actual or proposed Remediation of any
Hazardous Materials at any time located in, under, on or above any of the
Properties, whether or not such Remediation is voluntary or pursuant to court or
administrative order, including but not limited to any removal, remedial or
corrective action; (v) any past, present or threatened non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with any of the Properties or operations
thereon, including but not limited to any failure by Lessee, any person or
entity affiliated with Lessee or any other tenant or other user of any of the
Properties to comply with any order of any Governmental Authority in connection
with any Environmental Laws; (vi) the imposition, recording or filing or the
threatened imposition, recording or filing of any Environmental Lien encumbering
any of the Properties; (vii) any administrative processes or proceedings or
judicial proceedings in any way connected with any matter addressed in this
Section; (viii) any past, present or threatened injury to, destruction of or
loss of natural resources in any way connected with any of the Properties,
including but not limited to costs to investigate and assess such injury,
destruction or loss; (ix) any acts of Lessee, any person or entity affiliated
with Lessee or any other tenant or user of any of the Properties in arranging
for disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Materials owned or possessed by Lessee, any
person or entity affiliated with Lessee or any other tenant or user of any of
the Properties, at any facility or incineration vessel owned or operated by
another person or entity and containing such or similar Hazardous Materials; (x)
any acts of Lessee, any person or entity affiliated with Lessee or any other
tenant or user of any of the Properties, in accepting any Hazardous Materials
for transport to disposal or treatment facilities, incineration vessels or sites
selected by Lessee, any person or entity affiliated with Lessee or any other
tenant or user of any of the Properties, from which there is a Release, or a
Threatened Release of any Hazardous Materials which causes the incurrence of
costs for Remediation; (xi) any personal injury, wrongful death, or property
damage arising under any statutory or common law or tort law theory, including
but not limited to damages assessed for the maintenance of a private or public
nuisance or for the conducting of an abnormally dangerous activity on or near
any of the Properties; and (xii) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Section.
H. The obligations of Lessee and the rights and remedies of the Indemnified
Parties under the foregoing subsections D through G shall survive the
termination, expiration and/or release of this Lease with respect to matters
arising or occurring prior to or during the Lease Term.
17. Condition of Properties; Maintenance. Lessee, at its own expense, will
maintain all parts of each of the Properties in good repair and sound condition,
except for ordinary wear and tear, and will take all action and will make all
structural and non-structural, foreseen and unforeseen and ordinary and
extraordinary changes and repairs or replacements which may be required to keep
all parts of each of the Properties in good repair and sound condition, ordinary
wear and tear excepted. Lessee waives any right to (i) require Lessor to
maintain, repair or rebuild all or any part of any of the Properties or (ii)
make repairs at the expense of Lessor, pursuant to any Applicable Regulations at
any time in effect except in each case for those necessitated by affirmative
acts of Lessor or its agents which constitute gross negligence or intentional
misconduct.
18. Waste; Alterations and Improvements. Lessee shall not commit actual or
constructive waste upon any of the Properties. Without the prior written consent
of Lessor, which consent shall not be unreasonably withheld, conditioned or
delayed (it being understood and agreed that to the extent Lessor is required to
obtain the approval of Lender with respect to any such alterations, Lessor shall
in no event be deemed to have unreasonably withheld Lessor's approval thereof if
Lender shall not have given its approval if required), Lessee shall not (a) make
any additions to or alter the structural elements of the improvements at any of
the Properties or the load-bearing walls, roof, foundation or "footprint" of any
building located at any of the Properties, (b) alter any material part of any
building system of any of the Properties in any manner, other than replacements
of parts of any building system with parts of like kind and of equal or greater
value, or (c) make any other change or related series of other changes to any
Property that is estimated to cost in excess of $100,000 (any of (a), (b) or (c)
being hereinafter referred to as a "Material Alteration" and any alteration that
does not constitute a Material Alteration is hereinafter referred to as a
"Non-Material Alteration"). Lessee may undertake a Non-Material Alteration to
any Property without first notifying Lessor. If Lessor's consent is required
hereunder and Lessor consents to the making of any such alterations, the same
shall be made according to plans and specifications approved by Lessor and
subject to such other conditions as Lessor shall require. All alterations shall
be made by Lessee at Lessee's sole expense by licensed contractors and in
accordance with all applicable laws governing such alterations. Any work at any
time commenced by Lessee on any of the Properties shall be prosecuted diligently
to completion, shall be of good workmanship and materials and shall comply fully
with all the terms of this Lease. Upon completion of any Material Alteration,
Lessee shall promptly provide Lessor with (i) evidence of full payment to all
laborers and materialmen contributing to the alterations, (ii) an architect's
certificate certifying the alterations to have been completed in conformity with
the plans and specifications, (iii) a certificate of occupancy (if the
alterations are of such a nature as would require the issuance of a certificate
of occupancy), and (iv) any other documents or information reasonably requested
by Lessor. Upon completion of any Non-Material Alteration for which a permit was
issued, Lessee shall promptly provide Lessor with a copy of such permit and
evidence that the Governmental Authority which issued the permit has signed off
on the work done pursuant to such permit (to the extent such sign off is
required by Applicable Regulations). Any addition to or alteration of any of the
Properties shall automatically be deemed a part of the Properties and belong to
Lessor, and Lessee shall execute and deliver to Lessor such instruments as
Lessor may require to evidence the ownership by Lessor of such addition or
alteration. Lessee shall execute and file or record, as appropriate, a "Notice
of Non-Responsibility," or any equivalent notice permitted under applicable law
in the states where the applicable Properties are located.
19. Indemnification. Lessee shall indemnify, protect, defend and hold
harmless each of the Indemnified Parties from and against any and all Losses
(excluding Losses suffered by an Indemnified Party arising out of the gross
negligence or willful misconduct of such Indemnified Party; provided, however,
that the term "gross negligence" shall not include gross negligence imputed as a
matter of law to any of the Indemnified Parties solely by reason of the Lessor's
interest in any of the Properties or Lessor's failure to act in respect of
matters which are or were the obligation of Lessee under this Lease) caused by,
incurred or resulting from Lessee's operations of or relating in any manner to
any of the Properties, whether relating to their original design or
construction, latent defects, alteration, maintenance, use by Lessee or any
person thereon, supervision or otherwise, or from any breach of, default under,
or failure to perform, any term or provision of this Lease by Lessee, its
officers, employees, agents or other persons, or to which any Indemnified Party
is subject because of Lessor's or Remainderman's interest in any of the
Properties, including, without limitation, Losses arising from (1) any accident,
injury to or death of any person or loss of or damage to property occurring in,
on or about any of the Properties or portion thereof or on the adjoining
sidewalks, curbs, parking areas, streets or ways, (2) any use, non-use or
condition in, on or about, or possession, alteration, repair, operation,
maintenance or management of, any of the Properties or any portion thereof or on
the adjoining sidewalks, curbs, parking areas, streets or ways, (3) any
representation or warranty made herein by Lessee, in any certificate delivered
in connection herewith or in any other agreement to which Lessee is a party or
pursuant thereto being false or misleading in any material respect as of the
date of such representation or warranty was made, (4) performance of any labor
or services or the furnishing of any materials or other property in respect to
any of the Properties or any portion thereof, (5) any taxes, assessments or
other charges which Lessee is required to pay under Section 10, (6) any lien,
encumbrance or claim arising on or against any of the Properties or any portion
thereof under any Applicable Regulation or otherwise which Lessee is obligated
hereunder to remove and discharge, or the failure to comply in any respect
(whether material or immaterial) with any Applicable Regulation, (7) the claims
of any invitees, patrons, licensees or subtenants of all or any portion of any
of the Properties or any Person acting through or under Lessee or otherwise
acting under or as a consequence of this Lease or any sublease, (8) any act or
omission of Lessee or its agents, contractors, licensees, subtenants or
invitees, and (9) any contest referred to in Section 10. It is expressly
understood and agreed that Lessee's obligations under this Section shall survive
the expiration or earlier termination of this Lease for any reason with respect
to matters arising or occurring prior to or during the Lease Term.
20. Quiet Enjoyment. So long as Lessee shall pay the rental and other sums
herein provided and no Event of Default shall have occurred and be continuing,
Lessee shall have, subject and subordinate to Lessor's rights herein, the right
to the peaceful and quiet occupancy of the Properties. Notwithstanding the
foregoing, however, in no event shall Lessee be entitled to bring any action
against Lessor to enforce its rights hereunder if an Event of Default shall have
occurred and be continuing.
21. Condemnation or Destruction. A. In the event of a taking of all or any
part of any of the Properties for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of condemnation or eminent
domain or by agreement between Lessor, Lessee and those authorized to exercise
such right ("Taking") or the commencement of any proceedings or negotiations
which might result in a Taking or any damage to or destruction of any of the
Properties or any part thereof as a result of a fire or other casualty (a
"Casualty"), Lessee will promptly give written notice thereof to Lessor,
generally describing the nature and extent of such Taking, proceedings,
negotiations or Casualty and including copies of any documents or notices
received in connection therewith. Thereafter, Lessee shall promptly send Lessor
copies of all material correspondence and pleadings relating to any such Taking,
proceedings, negotiations or Casualty. During all periods of time following a
Casualty, Lessee shall ensure that the subject Property is secure and does not
pose any substantial risk of material harm to adjoining property owners or
occupants or third-parties.
B. Except as set forth below, in the event of (i) a Taking of the whole of
any of the Properties, other than for temporary use, (ii) a Taking of
substantially all of any of the Properties (other than for temporary use) that
results in Lessee making a good faith determination that the restoration and
continued use of the remainder of such Property as a Permitted Facility would be
uneconomic (each of (i) and (ii), a "Total Taking"), or (iii) a Casualty of
substantially all of any of the Properties that results in Lessee making a good
faith determination that the restoration and continued use of such Property as a
Permitted Facility would be uneconomic (a "Total Casualty"), Lessor shall be
entitled to receive the entire award, insurance proceeds or payment in
connection therewith without deduction for any estate vested in Lessee by this
Lease. Lessee hereby expressly assigns to Lessor all of its right, title and
interest in and to every such award, insurance proceeds or payment and agrees
that Lessee shall not be entitled to any award, insurance proceeds or payment
for the value of Lessee's leasehold interest in this Lease. Lessee shall be
entitled to claim and receive any award or payment from the condemning authority
expressly granted for the taking of Personalty, the interruption of its
business, lost business and moving expenses, but only if such claim or award
does not materially and adversely affect or interfere with the prosecution of
Lessor's claim for the Total Taking or otherwise materially reduce the amount
recoverable by Lessor for the Total Taking. Lessee shall be entitled to claim
and receive any insurance proceeds with respect to the Personalty, the
interruption of its business, lost business and moving expenses, but only if
such claim or proceeds does not materially and adversely affect or interfere
with the prosecution of Lessor's claim for the Total Casualty or otherwise
materially reduce the amount recoverable by Lessor for the Total Casualty. In
the event of a Total Taking or Total Casualty, Lessee shall have the right to
terminate this Lease with respect to the applicable Property by notice (the
"Termination Notice") given to Lessor not later than 30 days after the Total
Taking or Total Casualty, as applicable. The Termination Notice must: (i)
specify a date on which this Lease with respect to such Property shall
terminate, which date shall be the last day of a calendar month occurring not
earlier than 120 days and not later than 150 days after the delivery of such
notice (the "Early Termination Date"); (ii) contain a certificate executed by
the president, chief financial officer or treasurer of Lessee which (X)
describes the Total Taking or Total Casualty, (Y) represents and warrants that
either the whole of such Property has been taken, or that substantially all of
such Property has been taken and Lessee has determined in good faith that the
restoration and continued use of the remainder of such Property as a Permitted
Facility would be uneconomic, or that substantially all of such Property has
been damaged or destroyed and Lessee has determined in good faith that the
restoration and continued use of such Property as a Permitted Facility would be
uneconomic, and (Z) contains a covenant by Lessee that neither Lessee or any
Affiliate of Lessee will use such Property for a period of 2 years following the
Early Termination Date; and (iii) if the Early Termination Date shall occur
prior to the commencement of any extension options which may be exercised
pursuant to Section 27, contain either (X) an irrevocable rejectable written
offer (the "Rejectable Offer") of Lessee to purchase Lessor's interest in such
Property and in the net award for such Total Taking or net insurance proceeds
for such Total Casualty, as applicable, after deducting all reasonable costs,
fees and expenses incident to the collection thereof, including all costs and
expenses reasonably incurred by Lessor and Lender in connection therewith (the
"Net Award") on the Early Termination Date for a purchase price equal to the
Stipulated Loss Value (as defined below) for such Property, or (Y) a Rejectable
Substitution Offer to substitute a Substitute Property satisfying the applicable
requirements of Section 57.A for such Property and Lessor's interest in the Net
Award. As used herein, the term "Stipulated Loss Value" shall mean the sum of
(a) the product of the percentage specified on Schedule I attached hereto which
corresponds to the Early Termination Date multiplied by the Purchase Price for
such Property, plus (b) all Base Annual Rental, Additional Rental and other sums
and obligations then due and payable under this Lease, plus (c) in the event of
a Total Casualty only, the Prepayment Charge corresponding to such Property. In
the event of a termination of this Lease with respect to a Property pursuant to
this Section 21.B which does not involve the acceptance (or deemed acceptance)
of a Rejectable Substitution Offer, the Base Annual Rental then in effect shall
be reduced by an amount equal to the product of (x) the Applicable Rent
Reduction Percentage for such Property, and (y) the Base Annual Rental then in
effect. If the Early Termination Date shall occur prior to the commencement of
any extension options which may be exercised pursuant to Section 27, Lessor
shall have 90 days from the delivery of the Termination Notice to deliver to
Lessee written notice of its election to either accept or reject any Rejectable
Offer or Rejectable Substitution Offer contained in the Termination Notice.
Lessor's failure to deliver such notice within such time period shall be deemed
to constitute Lessor's acceptance of the applicable Rejectable Offer or
Rejectable Substitution Offer. If the Mortgage corresponding to such Property is
still outstanding, any rejection of the Rejectable Offer or Rejectable
Substitution Offer by Lessor shall not be effective unless it is consented to in
writing by the Lender and such written consent is delivered to Lessee within
such 90-day period. If Lessor accepts the Rejectable Offer or is deemed to have
accepted the Rejectable Offer or if, while the Mortgage corresponding to such
Property is still outstanding, any rejection of the Rejectable Offer by Lessor
is not consented to in writing by the Lender, then, on the Early Termination
Date, Lessor shall sell and convey, and Lessee shall purchase for the purchase
price described above, Lessor's interest in such Property and the Net Award.
Lessee's obligations under this Lease with respect to such Property shall not be
terminated until the applicable Stipulated Loss Value is paid in full. Upon such
payment, (i) Lessor shall convey such Property to Lessee "as-is" by special
warranty deed, subject to all matters of record (except for the Mortgage
corresponding to such Property and any other consensual liens granted by Lessor
other than those granted by Lessor at the request of Lessee), and without
representation or warranty (except as otherwise contained in the special
warranty deed), and (ii) all obligations of either party hereunder with respect
to such Property shall cease as of the Early Termination Date, provided,
however, Lessee's obligations to the Indemnified Parties under any
indemnification provisions of this Lease with respect to such Property
(including, without limitation, Sections 16 and 19) and Lessee's obligations to
pay any sums (whether payable to Lessor or a third party) accruing under this
Lease with respect to such Property prior to the Early Termination Date shall
survive the termination of this Lease with respect to such Property. This Lease
shall, however, continue in full force and effect with respect to all other
Properties. If Lessor accepts the Rejectable Substitution Offer or is deemed to
have accepted the Rejectable Substitution Offer or if, while the Mortgage
corresponding to such Property is still outstanding, any rejection of the
Rejectable Substitution Offer by Lessor is not consented to in writing by the
Lender, then, on the Early Termination Date, Lessee shall complete such
substitution, subject, however, to the satisfaction of each of the applicable
terms and conditions set forth in Section 57. Upon such substitution (i) Lessee
shall be entitled to claim and receive the Net Award and (ii) all obligations of
either party hereunder with respect to the Property being replaced shall cease
as of the Early Termination Date, provided, however, Lessee's obligations to the
Indemnified Parties under any indemnification provisions of this Lease with
respect to such Property (including, without limitation, Sections 16 and 19) and
Lessee's obligations to pay any sums (whether payable to Lessor or a third
party) accruing under this Lease with respect to such Property prior to the
Early Termination Date shall survive the termination of this Lease with respect
to such Property. This Lease shall, however, continue in full force and effect
with respect to all other Properties. Lessee shall be solely responsible for the
payment of all costs and expenses incurred in connection with the conveyance of
a Property to Lessee pursuant to this Section 21, including, without limitation,
to the extent applicable, the cost of title insurance, survey charges, stamp
taxes, mortgage taxes, transfer fees, escrow and recording fees, Lessee's
attorneys' fees and the reasonable attorneys' fees and expenses of counsel to
Lessor and Lender, taxes, if any, imposed on the Lessee in connection with the
transfer of a Property to Lessee or the termination of this Lease with respect
to a Property pursuant to the provisions of this Section 21, and, if the
conveyance is in connection with the acceptance (or deemed acceptance) of a
Rejectable Substitution Offer, income taxes, if any, imposed on Lessor as a
result of such conveyance. If Lessor rejects the Rejectable Offer or Rejectable
Substitution Offer and, as long as the Mortgage corresponding to the Property
subject to such Rejectable Offer or Rejectable Substitution Offer is still
outstanding, such rejection is consented to in writing by Lender (and such
written consent delivered to Lessee within the applicable 90-day period), or if
the Early Termination Date shall occur after the commencement of any extension
options exercised pursuant to Section 27, then (i) the Net Award shall be paid
to and belong to Lessor, (ii) on the Early Termination Date, Lessee shall pay to
Lessor all Base Annual Rental, Additional Rental and other sums and obligations
then due and payable under this Lease, and (iii) all obligations of either party
hereunder shall cease as of the Early Termination Date with respect to the
applicable Property including the termination of the obligation to pay rent with
respect to such Property for the period from and after the Early Termination
Date, provided, however, Lessee's obligations to the Indemnified Parties with
respect to such Property under any indemnification provisions of this Lease with
respect to such Property (including, without limitation, Sections 16 and 19) and
Lessee's obligations to pay any sums (whether payable to Lessor or a third
party) accruing under this Lease with respect to such Property prior to the
Early Termination Date shall survive the termination of this Lease. This Lease
shall, however, continue in full force and effect with respect to all other
Properties.
C. In the event of a Taking of all or any part of any of the Properties for
a temporary use ("Temporary Taking"), this Lease shall remain in full force and
effect without any reduction of Base Annual Rental, Additional Rental or any
other sum payable hereunder. Except as provided below, Lessee shall be entitled
to the entire award for a Temporary Taking, whether paid by damages, rent or
otherwise, unless the period of occupation and use by the condemning authorities
shall extend beyond the date of expiration of this Lease, in which case the
award made for such Taking shall be apportioned between Lessor and Lessee as of
the date of such expiration. At the termination of any such Temporary Taking,
Lessee will, at its own cost and expense and pursuant to the terms of Section 18
above, promptly commence and complete the restoration of the Property affected
by such Temporary Taking; provided, however, Lessee shall not be required to
restore such Property if the Lease Term shall expire prior to, or within one
year after, the date of termination of such Temporary Taking, and in such event
Lessor shall be entitled to recover the entire award arising out of the failure
of the condemning authority to repair and restore such Property at the
expiration of the Temporary Taking.
D. In the event of a Taking which is not a Total Taking or a Temporary
Taking ("Partial Taking") or of a Casualty which is not a Total Casualty (a
"Partial Casualty") where the aggregate of the awards, compensation and damages
is $100,000 or less and no Event of Default has occurred and is continuing, this
Lease shall continue with respect to the Property affected without any reduction
of Base Annual Rental, Additional Rental or any other sum payable hereunder, all
such awards, compensation or damages shall be paid to and/or retained by Lessee
and Lessee shall promptly commence and diligently prosecute restoration of such
Property to the same condition, as nearly as practicable, as prior to such
Partial Taking or Partial Casualty as approved by Lessor. In the event of a
Taking which is a Partial Taking or a Casualty which is a Partial Casualty where
the aggregate of the awards, compensation and damages is greater than $100,000
or where an Event of Default has occurred and is continuing, all awards,
compensation or damages shall be paid to Lessor, and Lessor shall have the
option to (i) terminate this Lease with respect to the Property affected,
provided that, as long as the Mortgage corresponding to the applicable Property
is still outstanding, Lessor shall have obtained Lender's prior written consent,
by notifying Lessee within 60 days after Lessee gives Lessor notice of such
Partial Casualty or that title has vested in the taking authority which election
shall be evidenced by a notice from Lessor to Lessee specifying that Lessor is
electing to terminate and that Lessee has the right to elect to continue this
Lease with respect to such Property or (ii) continue this Lease in effect with
respect to the Property affected, which election may be evidenced by either a
notice from Lessor to Lessee specifying that Lessor is electing to continue this
Lease in effect with respect to the Property affected or Lessor's failure to
notify Lessee that Lessor has elected to terminate this Lease with respect to
such Property within such 60-day period. Lessee shall have a period of 60 days
after receipt of Lessor's notice that it has elected to terminate this Lease
with respect to such Property during which to elect to continue this Lease with
respect to such Property on the terms herein provided. If Lessor elects to
terminate this Lease with respect to such Property and Lessee does not elect to
continue this Lease with respect to such Property or shall fail during such
60-day period to notify Lessor of Lessee's intent to continue this Lease with
respect to such Property, then this Lease shall terminate with respect to such
Property as of the last day of the month during which such period expired.
Lessee shall then immediately vacate and surrender such Property, all
obligations of either party hereunder with respect to such Property shall cease
as of the date of termination (provided, however, Lessee's obligations to the
Indemnified Parties under any indemnification provisions of this Lease with
respect to such Property (including, without limitation, Sections 16 and 19) and
Lessee's obligations to pay Base Annual Rental, Additional Rental and all other
sums (whether payable to Lessor or a third party) accruing under this Lease with
respect to such Property prior to the date of termination shall survive such
termination) and Lessor may retain all such awards, compensation or damages. The
Lease shall continue in full force and effect with respect to all other
Properties. If Lessor elects not to terminate this Lease with respect to such
Property, or if Lessor elects to terminate this Lease with respect to such
Property but Lessee elects to continue this Lease with respect to such Property,
then this Lease shall continue in full force and effect on the following terms:
(i) all Base Annual Rental, Additional Rental and other sums and obligations due
under this Lease shall continue unabated, and (ii) Lessee shall promptly
commence and diligently prosecute restoration of such Property to the same
condition, as nearly as practicable, as prior to such Partial Taking or Partial
Casualty as approved by Lessor. Subject to reasonable conditions for
disbursement imposed by Lessor, Lessor shall promptly make available in
installments as restoration progresses an amount up to but not exceeding the
amount of any award, compensation or damages received by Lessor after deducting
all costs, fees and expenses incident to the collection thereof, including all
costs and expenses incurred by Lessor and Lender in connection therewith (the
"Net Restoration Amount"), upon request of Lessee accompanied by evidence
reasonably satisfactory to Lessor that such amount has been paid or is due and
payable and is properly a part of such costs and that Lessee has complied with
the terms of Section 18 above in connection with the restoration. Prior to the
disbursement of any portion of the Net Restoration Amount with respect to a
Partial Casualty, Lessee shall provide evidence reasonably satisfactory to
Lessor of the payment of restoration expenses by Lessee up to the amount of the
insurance deductible applicable to such Partial Casualty. Lessor shall pay over
to Lessee any portion of the Net Restoration Amount which may be in excess of
the cost of restoration, and Lessee shall bear all additional costs, fees and
expenses of such restoration in excess of the Net Restoration Amount. If this
Lease is terminated with respect to any Property as a result of a Partial
Casualty, simultaneously with such termination Lessee shall pay Lessor an amount
equal to the insurance deductible applicable to such Partial Casualty.
E. In the event of a termination of this Lease with respect to a Property
pursuant to Section 21.B which does not involve the acceptance (or deemed
acceptance) of a Rejectable Substitution Offer or a termination of this Lease
with respect to a Property pursuant to Section 21.D, the Base Annual Rental then
in effect shall be reduced by an amount equal to the product of (x) the
Applicable Rent Reduction Percentage for such Property, and (y) the Base Annual
Rental then in effect.
F. Any loss under any property damage insurance required to be maintained
by Lessee shall be adjusted by Lessee; provided that if the loss is reasonably
expected by Lessee to exceed $100,000, the consent of Lessor to such adjustment
shall be required, such consent not to be unreasonably withheld, conditioned or
delayed. Any award relating to a Total Taking or a Partial Taking shall be
adjusted by Lessee; provided that if the property taken is reasonably expected
by Lessee to have a value in excess of $100,000, the consent of Lessor to such
adjustment shall be required, such consent not to be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing or any other provisions of
this Section to the contrary, if at the time of any Taking or any Casualty or at
any time thereafter an Event of Default under this Lease shall have occurred and
be continuing, Lessor is hereby authorized and empowered but shall not be
obligated, in the name and on behalf of Lessee and otherwise, to file and
prosecute Lessee's claim, if any, for an award on account of such Taking or for
insurance proceeds on account of such Casualty and to collect such award or
proceeds and apply the same, after deducting all costs, fees and expenses
incident to the collection thereof, to the curing of such default and any other
then existing default under this Lease and/or to the payment of any amounts owed
by Lessee to Lessor under this Lease, in such order, priority and proportions as
Lessor in its discretion shall deem proper.
G. Notwithstanding the foregoing, nothing in this Section 21 shall be
construed as limiting or otherwise adversely affecting the representations,
warranties, covenants and characterizations set forth in Lease, including,
without limitation, those provisions set forth in Section 3 of this Lease.
22. Inspection. Lessor and its authorized representatives shall have the
right, upon giving not less than five Business Days' prior written notice to
Lessee (except that in the event of an emergency no such prior notice shall be
required), to enter any of the Properties or any part thereof at reasonable
times in order to inspect the same and make photographic or other evidence
concerning Lessee's compliance with the terms of this Lease or in order to show
the Properties to prospective purchasers and lenders. Lessee hereby waives any
claim for damages for any injury or inconvenience to or interference with
Lessee's business, any loss of occupancy or quiet enjoyment of any of the
Properties and any other loss occasioned by such entry so long as Lessor shall
have used reasonable efforts not to unreasonably interrupt Lessee's normal
business operations. Lessee shall keep and maintain at the Properties or
Lessee's corporate headquarters full, complete and appropriate books of account
and records of Lessee's business relating to the Properties in accordance with
GAAP. Lessee's books and records shall be open for inspection at reasonable
times and upon the giving of not less than five Business Days' prior written
notice to Lessee (except that in the event of an emergency no such prior notice
shall be required) by Lessor, Lender and their respective auditors or other
authorized representatives and shall show such information as is reasonably
necessary to determine compliance with Lessor's obligations under the Loan
Documents.
23. Default, Remedies and Measure of Damages. A. Each of the following
shall be an event of default under this Lease (each, an "Event of Default"):
(i) If any representation or warranty of Lessee set forth in
this Lease is false in any material respect as of the Effective Date,
or if Lessee knowingly renders any statement or account which is false
in any material respect as and when made;
(ii) If any rent or other monetary sum due under this Lease is
not paid within five Business Days from the date when due; provided,
however, notwithstanding the occurrence of such an Event of Default,
Lessor shall not be entitled to exercise its remedies set forth below
unless and until Lessor shall have given Lessee notice thereof and a
period of five Business Days from the delivery of such notice shall
have elapsed without such Event of Default being cured;
(iii) If Lessee fails to pay, prior to delinquency, any taxes,
assessments or other charges, the failure of which to pay will result
in the imposition of a lien against any of the Properties or the rental
or other payments due under this Lease or a claim against Lessor,
unless Lessee is contesting such taxes, assessments or other charges in
accordance with the provisions of Section 10 of this Lease; provided,
however, notwithstanding the occurrence of such an Event of Default,
Lessor shall not be entitled to exercise its remedies set forth below
unless and until Lessor shall have given Lessee notice thereof and a
period of five Business Days from the delivery of such notice shall
have elapsed without such Event of Default being cured;
(iv) If Lessee becomes insolvent within the meaning of the
Code, files or notifies Lessor that it intends to file a petition under
the Code, initiates a proceeding under any similar law or statute
relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts (collectively, hereinafter, an "Action"), becomes
the subject of either a petition under the Code or an Action which is
not dissolved within 90 days after filing, or is not generally paying
its debts as the same become due;
(v) If Lessee vacates or abandons any of the Properties other
than in accordance with the provisions of Section 15 of this Lease;
(vi) If Lessee fails to observe or perform any of the other
covenants, conditions or obligations of this Lease (except with respect
to a breach of the Aggregate Fixed Charge Coverage Ratio, which breach
is addressed in subitem (ix) below, breaches of Sections 24 and 25,
which breaches are addressed in subitem (x) below, and the failure to
maintain insurance, which breach is addressed in subitem (xi) below)
and such failure continues for a period of 30 days after Lessor shall
have given Lessee notice thereof; provided, however, if such failure
cannot reasonably be cured within such 30 day period and Lessee is
diligently pursuing a cure of such failure, then Lessee shall have a
reasonable period to cure such failure beyond such 30 day period, which
shall in no event exceed 90 days after receiving notice of such failure
from Lessor. If Lessee shall fail to correct or cure such failure
within such 90-day period, an Event of Default shall be deemed to have
occurred hereunder without further notice or demand of any kind being
required;
(vii) If there is an "Event of Default" or a breach or
default, after the passage of all applicable notice and cure or grace
periods, under any other Sale-Leaseback Document or any of the Other
Agreements;
(viii) If a final, nonappealable judgment is rendered by a
court against Lessee which has a material adverse effect on either the
ability to conduct business at any of the Properties for its intended
use or Lessee's ability to perform its obligations under this Lease, or
is in the amount of $5,000,000.00 or more (which is not covered by
insurance), and in either event is not discharged or provision made for
such discharge or bonded over within 60 days from the date of entry
thereof;
(ix) If there is a breach of the Aggregate Fixed Charge Coverage Ratio
requirement and Lessor shall have given Lessee notice thereof and
Lessee shall have failed within a period of 20 days from the delivery
of such notice to either:
(1) deliver a Rejectable Substitution Offer to Lessor for the
substitution of such Substitute Properties satisfying the
applicable requirements of Section 57.A for the Properties
(starting with the Property with the lowest "Fixed Charge
Coverage Ratio" (determined as contemplated in the following
sentence) and proceeding in ascending order to the Property
with the next lowest Fixed Charge Coverage Ratio) as is
necessary to cure the breach of the Aggregate Fixed Charge
Coverage Ratio requirement; (2) deliver a Rejectable Purchase
Offer to Lessor to purchase such of the Properties as is
necessary to cure the breach of the Aggregate Fixed Charge
Coverage Ratio requirement and for which the "Fixed Charge
Coverage Ratio" (determined as contemplated in the following
sentence) is less than 1.25:1; or (3) deliver notice to Lessor
that it has elected to pay the FCCR Rent Prepayment Amount (as
hereinafter defined) on the first day of the calendar month
immediately following the date such notice is delivered.
For purposes of the preceding subitems (1) and (2), the definitions set
forth in Section 8.A of this Lease with respect to the calculation of
the Aggregate Fixed Charge Coverage Ratio shall be deemed modified as
applicable to provide for the calculation of a Fixed Charge Coverage
Ratio for each Property on an individual basis rather than on an
aggregate basis with the other Properties. For purposes of such
calculation, the Operating Lease Expense with respect to this Lease for
each such Property shall equal the product of (x) the Applicable Rent
Reduction Percentage for such Property, and (y) the Base Annual Rental
then in effect. If Lessee makes a Rejectable Substitution Offer or
Rejectable Purchase Offer as contemplated by subitems (1) and (2)
above, unless Lessor rejects such Rejectable Substitution Offer or
Rejectable Purchase Offer as contemplated by Section 57 or 58, as
applicable, the failure of Lessee to complete such substitutions or
purchases within the time period contemplated by Section 57 or 58, as
applicable, shall be deemed an Event of Default without further notice
or demand of any kind being required. If Lessee delivers notice to
Lessor that it has elected to pay the FCCR Rent Prepayment Amount as
provided in subitem (3) above, the failure of Lessee to pay Lessor the
FCCR Rent Prepayment Amount on the first day of the calendar month
immediately following the date such notice is delivered shall be deemed
an Event of Default without further notice or demand of any kind being
required.
In the event Lessee pays Lessor the FCCR Rent Prepayment
Amount as provided in subitem (3) above, Base Monthly Rental beginning
with the calendar month in which such payment is made shall be equal to
the Base Monthly Rental then in effect reduced by the FCCR Rent
Reduction Amount (as hereinafter defined).
Notwithstanding the foregoing, if, within a 30 day period
after the delivery of Lessor's notice to Lessee of Lessee's breach of
the Aggregate Fixed Charge Coverage Ratio requirement, Lessee provides
evidence satisfactory to Lessor that the Aggregate Fixed Charge
Coverage Ratio is at least 1.25:1 for the twelve calendar month period
immediately preceding the delivery to Lessor of such evidence, no Event
of Default shall be deemed to have occurred as a result of such breach
of the Aggregate Fixed Charge Coverage Ratio requirement.
For purposes of this Section 23.A(ix), the following terms
shall be defined as set forth below:
"FCCR Rent Prepayment Amount" means the present value,
discounted on a monthly basis at 9.28%, of the FCCR Rent Reduction
Amount for each month beginning with the calendar month in which the
FCCR Rent Prepayment Amount is paid and ending with the calendar month
of February, 2021, inclusive.
"FCCR Rent Reduction Amount" the product of (x) the Base
Monthly Rental for the last month of the Fiscal Year for which the
breach of the Aggregate Fixed Charge Coverage Ratio requirement
occurred and (y) the Fixed Charge Coverage Shortfall Percentage. For
purposes of illustration and not limitation, if (i) Lessee's Aggregate
Fixed Charge Coverage Ratio for the Fiscal Year ending May 27, 2010 was
1.0 (which results in a Fixed Charge Coverage Shortfall Percentage of
20%), (ii) Lessee paid the FCCR Rent Prepayment Amount on September 1,
2010, and (iii) the Base Monthly Rental for August, 2010 was $100, then
the Base Monthly Rental payment beginning on September 1, 2010 shall be
equal to the Base Monthly Rental for August, 2010 reduced by the sum of
$20.
"Fixed Charge Coverage Shortfall Percentage" means the
percentage represented by (x) 1 minus (y) a fraction, the numerator of
which shall be the Aggregate Fixed Charge Coverage Ratio for the Fiscal
Year for which the breach of the Aggregate Fixed Charge Coverage Ratio
requirement occurred, and the denominator of which shall be 1.25.
(x) If Lessee shall fail to sign any instrument or certificate
in accordance with the provisions of Sections 24 or 25 of this Lease
and such failure shall not be cured within five Business Days following
notice from Lessor; or
(xi) If Lessee shall fail to maintain insurance in accordance
with the requirements of Section 12 of this Lease.
B. Upon the occurrence of an Event of Default, with or without notice
or demand, except the notice prior to default required under certain
circumstances by subsection A. above or such other notice as may be required by
statute and cannot be waived by Lessee (all other notices being hereby waived),
Lessor shall be entitled to exercise, at its option, concurrently, successively,
or in any combination, all remedies available at law or in equity, including
without limitation, any one or more of the following:
(i) To terminate this Lease, whereupon Lessee's right to
possession of the Properties shall cease and this Lease, except as to
Lessee's liability, shall be terminated.
(ii) To reenter and take possession of any or all of the
Properties and, to the extent permissible, all franchises, licenses,
area development agreements, permits and other rights or privileges of
Lessee pertaining to the use and operation of any or all of the
Properties and to expel Lessee and those claiming under or through
Lessee, without being deemed guilty in any manner of trespass or
becoming liable for any loss or damage resulting therefrom, without
resort to legal or judicial process, procedure or action. No notice
from Lessor hereunder or under a forcible entry and detainer statute or
similar law shall constitute an election by Lessor to terminate this
Lease unless such notice specifically so states. If Lessee shall, after
default, voluntarily give up possession of any of the Properties to
Lessor, deliver to Lessor or its agents the keys to any of the
Properties, or both, such actions shall be deemed to be in compliance
with Lessor's rights and the acceptance thereof by Lessor or its agents
shall not be deemed to constitute a termination of this Lease. Lessor
reserves the right following any reentry and/or reletting to exercise
its right to terminate this Lease by giving Lessee written notice
thereof, in which event this Lease will terminate as specified in said
notice.
(iii) If Lessee has not removed the Personalty within 20 days
after written notice from Lessor to Lessee and repaired all damage to
the Properties caused by such removal, Lessor shall have the immediate
right to seize and remove all Personalty located on or at any or all of
the Properties and cause the same to be stored in a public warehouse or
elsewhere at Lessee's sole expense, without becoming liable for any
loss or damage resulting therefrom and without resorting to legal or
judicial process, procedure or action.
(iv) To bring an action against Lessee for any damages
sustained by Lessor or any equitable relief available to Lessor.
(v) To relet any or all of the Properties or any part thereof
for such term or terms (including a term which extends beyond the
original Lease Term), at such rentals and upon such other terms as
Lessor, in its sole discretion, may determine, with all proceeds
received from such reletting being applied to the rental and other sums
due from Lessee in such order as Lessor may, in it sole discretion,
determine, which other sums include, without limitation, all reasonable
repossession costs, brokerage commissions, attorneys' fees and
expenses, employee expenses, alteration, remodeling and repair costs
and expenses of preparing for such reletting. Except to the extent
required by applicable law, Lessor shall have no obligation to relet
any of the Properties or any part thereof and shall in no event be
liable for refusal or failure to relet any of the Properties or any
part thereof, or, in the event of any such reletting, for refusal or
failure to collect any rent due upon such reletting, and no such
refusal or failure shall operate to relieve Lessee of any liability
under this Lease or otherwise to affect any such liability. Lessor
reserves the right following any reentry and/or reletting to exercise
its right to terminate this Lease by giving Lessee written notice
thereof, in which event this Lease will terminate as specified in said
notice.
(vi) (x) To recover from Lessee all rent and other monetary
sums then due and owing under this Lease; and (y) to accelerate and
recover from Lessee the present value (discounted at the rate of 6% per
annum) of all rent and other monetary sums scheduled to become due and
owing under this Lease after the date of such breach for the entire
original scheduled Lease Term, provided, however, in no event shall
such recovery be less than the sum of (i) the product of the percentage
specified on Schedule I attached hereto which corresponds to the month
in which such Event of Default first occurred multiplied by the sum of
the Purchase Price for all of the Properties which are then subject to
the Lease plus (ii) the sum of the Prepayment Charges corresponding to
all of the Properties which are then subject to this Lease.
(vii) To recover from Lessee all reasonable costs and
expenses, including reasonable attorneys' fees, court costs, expert
witness fees, costs of tests and analyses, travel and accommodation
expenses, deposition and trial transcripts, copies and other similar
costs and fees, paid or incurred by Lessor as a result of such breach,
regardless of whether or not legal proceedings are actually commenced.
(viii) To immediately or at any time thereafter, and with or
without notice, at Lessor's sole option but without any obligation to
do so, correct such breach or default and charge Lessee all costs and
expenses incurred by Lessor therein. Any sum or sums so paid by Lessor,
together with interest at the Default Rate, shall be deemed to be
Additional Rental hereunder and shall be immediately due from Lessee to
Lessor. Any such acts by Lessor in correcting Lessee's breaches or
defaults hereunder shall not be deemed to cure said breaches or
defaults or constitute any waiver of Lessor's right to exercise any or
all remedies set forth herein.
(ix) To immediately or at any time thereafter, and with or
without notice, except as required herein, set off any money of Lessee
held by Lessor under this Lease against any sum owing by Lessee
hereunder.
(x) To seek any equitable relief available to Lessor,
including, without limitation, the right of specific performance.
All powers and remedies given by this Section to Lessor, subject to
applicable law, shall be cumulative and not exclusive of one another or of any
other right or remedy or of any other powers and remedies available to Lessor
under this Lease, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements of Lessee contained in
this Lease, and no delay or omission of Lessor to exercise any right or power
accruing upon the occurrence of any Event of Default shall impair any other or
subsequent Event of Default or impair any rights or remedies consequent thereto.
Every power and remedy given by this Section or by law to Lessor may be
exercised from time to time, and as often as may be deemed expedient, by Lessor,
subject at all times to Lessor's right in its sole judgment to discontinue any
work commenced by Lessor or change any course of action undertaken by Lessor.
If Lessee shall fail to observe or perform any of its obligations under
this Lease or in the event of an emergency, then, without waiving any Event of
Default which may result from such failure or emergency, Lessor may, but without
any obligation to do so, take all actions, including, without limitation, entry
upon any or all of the Properties to perform Lessee's obligations, immediately
and without notice in the case of an emergency and upon five days written notice
to Lessee in all other cases. All expenses incurred by Lessor in connection with
performing such obligations, including, without limitation, reasonable
attorneys' fees and expenses, together with interest at the Default Rate from
the date any such expenses were incurred by Lessor until the date of payment by
Lessee, shall constitute Additional Rental and shall be paid by Lessee to Lessor
upon demand.
24. Liens; Mortgages, Subordination, Nondisturbance and Attornment.
Lessor's interest in this Lease and/or any of the Properties shall not be
subordinate to any liens or encumbrances placed upon any of the Properties by or
resulting from any act of Lessee, and nothing herein contained shall be
construed to require such subordination by Lessor. Lessee shall keep the
Properties free from any liens for work performed, materials furnished or
obligations incurred by Lessee (provided however it shall not be a default
hereunder (a) if any such lien is discharged or bonded over within 60 days after
Lessee has notice of such lien or (b) so long as such lien is being contested by
appropriate legal proceedings conducted in good faith and with due diligence,
under circumstances where (i) such proceeding shall suspend the collection of
the amount represented by such lien from the applicable Properties or any
interest therein, (ii) neither such Properties nor any interest therein would be
in any danger of being sold, forfeited or lost by reason of such proceedings,
(iii) no Event of Default has occurred, and (iv) Lessee shall have deposited
with Lessor adequate reserves for the payment of the amount represented by such
lien, together with all interest and penalties thereon, unless paid in full
under protest, or Lessee shall have furnished the security as may be required in
the proceeding or as may be reasonably required by Lessor to ensure payment of
any contested amount presented by such lien.). NOTICE IS HEREBY GIVEN THAT,
EXCEPT AS OTHERWISE CONSENTED TO BY LESSOR PURSUANT TO SECTION 26 OR PERMITTED
BY THIS SECTION 24, LESSEE IS NOT AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY
LIEN, MORTGAGE, DEED OF TRUST, SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND UPON
ALL OR ANY PART OF ANY OF THE PROPERTIES OR LESSEE'S LEASEHOLD INTEREST THEREIN,
AND ANY SUCH PURPORTED TRANSACTION WHICH IS NOT APPROVED BY LESSOR SHALL BE
VOID. FURTHERMORE, ANY SUCH PURPORTED TRANSACTION SHALL BE DEEMED A TORTIOUS
INTERFERENCE WITH LESSOR'S RELATIONSHIP WITH LESSEE AND LESSOR'S OWNERSHIP OF
THE PROPERTIES. This Lease at all times shall automatically be subordinate to
the Mortgages and to the lien of any and all ground leases, mortgages, trust
deeds and deeds to secure debt now or hereafter placed upon any of the
Properties by Lessor, and Lessee covenants and agrees to execute and deliver,
within 20 days following demand, such further instruments subordinating this
Lease to the lien of the Mortgages and any or all such ground leases, mortgages,
trust deeds or deeds to secure debt as shall be desired by Lessor, or any
present or proposed mortgagees or lenders under trust deeds or deeds to secure
debt, upon the condition that (a) Lessee shall have the right to remain in
possession of the Properties under the terms of this Lease, notwithstanding any
default in the Mortgages or any or all such ground leases, mortgages, trust
deeds or deeds to secure debt or after foreclosure of any or all such Mortgages,
mortgages, trust deeds or deeds to secure debt or termination of any or all such
ground leases, so long as no Event of Default has occurred and is continuing
under this Lease and (b) the holders of the Mortgages and any and all ground
leases, mortgages, deeds of trust, deeds to secure debt and trust deeds now or
hereafter placed upon any of the Properties by Lessor execute a nondisturbance
agreement in favor of Lessee in (x) substantially the form and substance of the
Acknowledgement or (y) such other form as may be reasonably requested by such
holders consistent with then customary lending practices and reasonably
acceptable to all parties thereto. If any landlord, mortgagee, receiver, Lender
or other secured party elects to have this Lease and the interest of Lessee
hereunder be superior to any of the Mortgages or any such ground lease,
mortgage, trust deed or deed to secure debt and evidences such election by
notice given to Lessee, then this Lease and the interest of Lessee hereunder
shall be deemed superior to any such Mortgage, ground lease, mortgage, trust
deed or deed to secure debt, whether this Lease was executed before or after
such Mortgage, ground lease, mortgage, trust deed or deed to secure debt and in
that event such landlord, mortgagee, receiver, Lender or other secured party
shall have the same rights with respect to this Lease as if it had been executed
and delivered prior to the execution and delivery of such Mortgage, ground
lease, mortgage, trust deed or deed to secure debt and had been assigned to such
landlord, mortgagee, receiver, Lender or other secured party. Although the
foregoing provisions shall be self-operative and no future instrument of
subordination shall be required, upon request by Lessor, Lessee shall execute
and deliver whatever instruments may be reasonably required for such purposes
within 20 days after demand. In the event any purchaser or assignee of Lender at
a foreclosure sale acquires title to the Properties (it being understood that so
long as no Event of Default under this Lease has occurred and is continuing and
there exists no default by Lessee in the payment of rent, taxes or insurance, no
such purchaser or assignee of Lender may acquire less than all of the Properties
without the written consent of Lessee), or in the event Lender or any assignee
otherwise succeeds to the rights of Lessor as landlord under this Lease, Lessee
shall attorn to Lender or such purchaser or assignee, as the case may be (a
"Successor Lessor"), and recognize the Successor Lessor as lessor under this
Lease, and this Lease shall continue in full force and effect as a direct lease
between the Successor Lessor and Lessee, provided that the Successor Lessor
shall only be liable for any obligations of the lessor under this Lease which
accrue after the date that such Successor Lessor acquires title. The foregoing
provision shall be self operative and effective without the execution of any
further instruments.
25. Estoppel Certificate. At any time, but not more often than twice every
12 months, Lessee shall, promptly and in no event later than 15 days after a
request from Lessor or Lender, execute, acknowledge and deliver to Lessor or
Lender a certificate in the form supplied by Lessor, Lender or any present or
proposed mortgagee or purchaser designated by Lessor, certifying the following:
(i) that Lessee has accepted the Properties (or, if Lessee has not done so, that
Lessee has not accepted the Properties, and specifying the reasons therefor);
(ii) that this Lease is in full force and effect and has not been modified (or
if modified, setting forth all modifications), or, if this Lease is not in full
force and effect, the certificate shall so specify the reasons therefor; (iii)
the commencement and expiration dates of the Lease Term, including the terms of
any extension options of Lessee; (iv) the date to which the rentals have been
paid under this Lease and the amount thereof then payable; (v) whether there are
then any existing defaults by Lessor in the performance of its obligations under
this Lease, and, if there are any such defaults, specifying the nature and
extent thereof; (vi) that no notice has been received by Lessee of any default
under this Lease which has not been cured, except as to defaults specified in
the certificate; (vii) the capacity of the person executing such certificate,
and that such person is duly authorized to execute the same on behalf of Lessee;
(viii) that neither Lessor nor Lender has actual involvement in the management
or control of decision making related to the operational aspects or the
day-to-day operations of the Properties; and (ix) any other information
reasonably requested by Lessor, Lender or such present or proposed mortgagee or
purchaser consistent with then customary leasing or lending practices.
26. Assignment; Subletting. A. Lessor shall have the right to sell or
convey all, but not less than all, of the Properties or to assign its right,
title and interest as Lessor under this Lease in whole, but not in part. In the
event of any such sale or assignment other than a security assignment, provided
Lessee receives written notice that such purchaser or assignee has assumed all
of Lessor's obligations under this Lease, Lessee shall attorn to such purchaser
or assignee and Lessor shall be relieved, from and after the date of such
transfer or conveyance, of liability for the performance of any obligation of
Lessor contained herein, except for obligations or liabilities accrued prior to
such assignment or sale. Notwithstanding the foregoing, during the Lease Term
and as long as no Event of Default has occurred, Lessor shall not sell its
interest in any or all of the Properties to any person or entity that is
actively engaged in the management, operation and/or franchising of fifty (50)
or more retail auto part stores (determined without regard to the Property or
Properties to be conveyed, assigned, sold or transferred by Lessor). The
provisions of this Section 26.A shall not (i) apply after August 31, 2019, if
Lessee has not exercised the first extension option in accordance with the terms
of Section 27, (ii) apply after August 31, 2027, if Lessee has exercised such
first extension option, but has not exercised the second extension option in
accordance with the terms of Section 27, (iii) apply after August 31, 2032, if
Lessee has exercised such first and second extension options, but has not
exercised the third extension option in accordance with the terms of Section 27,
and (iv) apply after August 31, 2037, if Lessee has exercised such first, second
and third extension options, but has not exercised the fourth extension option
in accordance with the terms of Section 27.
B. (i) Lessee acknowledges that Lessor has relied both on the business
experience and creditworthiness of Lessee and upon the particular purposes for
which Lessee intends to use the Properties in entering into this Lease. Without
the prior written consent of Lessor (which shall not be unreasonably withheld,
conditioned or delayed) and except as provided below, (x) Lessee shall not
assign, transfer or convey this Lease or any interest therein, whether by
operation of law or otherwise and (y) Lessee shall not sublet all or any part of
any of the Properties. It is expressly agreed that Lessor may withhold or
condition any such consent based upon such matters as Lessor may in its
reasonable discretion determine, including, without limitation, the experience
and creditworthiness of any assignee, the assumption by any assignee of all of
Lessee's obligations hereunder by undertakings enforceable by Lessor, the
transfer to any assignee of all necessary licenses and franchises to continue
operating the Properties for the purposes herein provided, receipt of such
representations and warranties from any assignee as Lessor may reasonably
request, including such matters as its organization, existence, good standing
and finances and other matters, whether or not similar in kind. At the time of
any assignment of this Lease which is approved by Lessor, the assignee shall
assume all of the obligations of Lessee under this Lease pursuant to Lessor's
standard form of assumption agreement. No such assignment nor any subletting of
any of the Properties shall relieve Lessee of its obligations respecting this
Lease. Any rentals owing under a sublease which are in excess of the rentals
owing hereunder may be retained by Lessee unless an Event of Default has
occurred, in which case, Lessor shall be entitled to receive such excess
rentals. Any assignment, transfer, conveyance, pledge, mortgage or subletting in
violation of this Section shall be voidable at the sole option of Lessor.
(ii) Without the prior written consent of Lessor and except as provided
below, no Subject Transfer shall occur. A "Subject Transfer" shall mean (x) the
acquisition by a Person or a "group" (as defined in Section 13(d) of the
Securities Exchange Act of 1934) of 50% or more of the voting power of Lessee
and such Person or group has made a filing under Section 13(d) of the Securities
Exchange Act of 1934 affirmatively stating such Person's or group's intent to
change control of the Lessee, (y) the consummation by the Lessee of a merger,
consolidation or other reorganization if the percentage of the voting common
stock of the surviving or resulting entity held or received by all persons who
were owners of common stock of the Lessee immediately prior to such merger,
consolidation or reorganization is less than 50.1% of the total voting common
stock of the surviving or resulting entity outstanding, on a fully diluted
basis, immediately after such merger, consolidation or reorganization and after
giving effect to any additional issuance of voting common stock contemplated by
the plan for such merger, consolidation or reorganization, or (z) Lessee
becoming a non-publicly traded company.
C. Notwithstanding the provisions of Section 26.B, but subject to the
conditions set forth in the following sentence, Lessee shall have the right to
sublease any of the Properties, without the prior written consent of Lessor if
the following conditions are satisfied:
(1) no Event of Default shall have occurred and be continuing
under this Lease as of the effective date of such sublease;
(2) any such sublease shall be subordinate to this Lease and
the Mortgage corresponding to the Property to which such sublease
relates;
(3) Lessee shall remain liable under this Lease
notwithstanding such sublease; and
(4) the Properties subject to such subleases shall be used as
Permitted Facilities and shall otherwise be operated and maintained in
accordance with the terms and conditions of this Lease.
Within 20 Business Days after the execution of each such sublease, Lessee shall
provide Lessor and Lender with a notice of such sublease and a photocopy of the
fully executed sublease.
D. Notwithstanding the provisions of Section 26.B, Lessee may complete a
Subject Transfer, and Lessor shall be deemed to have consented to such Subject
Transfer, provided that: (1) no Event of Default shall have occurred and be
continuing under this Lease as of the date on which Lessee gives Lessor notice
of the proposed Subject Transfer and as of the date on which the Subject
Transfer is consummated; (2) after giving effect to such Subject Transfer,
whether as a single transaction or as a series of transactions, Lessee,
including any surviving entity of such Subject Transfer and/or successor of
Lessee, has a net worth determined in accordance with GAAP of not less than the
sum of (1) $250,000,000, plus (2) fifty (50%) percent of Net Income, if
positive, for each Fiscal Year ending after the Effective Date (i.e., exclusive
of any negative Net Income for any such Fiscal Year) determined on a cumulative
basis subsequent to the Effective Date, plus (3) seventy-five (75%) percent of
the proceeds of any issuance of equity securities of Lessee or other
contributions to the capital of Lessee subsequent to the Effective Date; (3)
Lessee, including any surviving entity of such Subject Transfer and/or successor
of Lessee, shall not be released from any of its obligations under this Lease,
and such surviving entity or successor entity, as applicable, has assumed in
writing or by operation of law (provided Lessor has received a satisfactory
opinion of counsel to Lessee confirming that such assumption will occur by
operation of law) all of Lessee's obligations under this Lease; and
(4) either the FCCR Condition or the Rating Agency Condition
has been satisfied. As used herein, the term "FCCR Condition" shall
mean that the Aggregate Fixed Charge Coverage Ratio for all of the
Properties, taken as a whole, must be at least equal to 3.0:1 for the
twelve month period of time immediately preceding the end of the fiscal
quarter of Lessee which closed prior to the date on which Lessee gives
Lessor notice of the proposed Subject Transfer. As used herein, the
term "Rating Agency Condition" shall mean, if and to the extent that
the loans contemplated by the Loan Documents have been subject to a
Securitization, Lender shall have received a notice or confirmation of
the rating agencies which have issued ratings in connection with such
Securitization that such Subject Transfer will not cause any of such
rating agencies to downgrade, modify, withdraw or qualify any of such
ratings. Lessee shall have the right to satisfy the FCCR Condition by
(i) paying to Lessor the Subject Transfer Rent Prepayment Amount (as
hereinafter defined), and (ii) paying to Lessor the Prepayment Charges
payable by Lessor to Lender as a result of the payment by Lessee to
Lessor of the Subject Transfer Rent Prepayment Amount, provided that
the payment of the Subject Transfer Rent Prepayment Amount and such
Prepayment Charges shall be made by Lessee prior to or simultaneously
with the consummation of the Subject Transfer. Upon Lessee's payment of
the Subject Transfer Rent Prepayment Amount and Prepayment Charges as
contemplated by the preceding sentence, Lessor agrees that the Base
Monthly Rental beginning with the calendar month immediately following
the month in which such payment is made (or, if such payment is made on
the first day of a calendar month, beginning with the calendar month in
which such payment is made) shall be equal to the Base Monthly Rental
then in effect reduced by the Subject Transfer Rent Reduction Amount
(as hereinafter defined).
For purposes of this Section 26.D(4), the following terms
shall be defined as set forth below:
"Subject Transfer Rent Prepayment Amount" means the present
value, discounted on a monthly basis at 9.28%, of the Subject Transfer
Rent Reduction Amount for each month beginning with the calendar month
immediately following the month in which the Subject Transfer Rent
Prepayment Amount is paid (or, if the Subject Transfer Rent Prepayment
Amount is paid on the first day of a calendar month, beginning with the
calendar month in which the Subject Transfer Rent Prepayment Amount is
paid) and ending with the calendar month of February, 2021, inclusive.
"Subject Transfer Rent Reduction Amount" the product of (x)
the Base Monthly Rental for the last month of the fiscal quarter of
Lessee which ended prior to the date on which Lessee gives Lessor
notice of the proposed Subject Transfer and (y) the Subject Transfer
FCCR Shortfall Percentage. For purposes of illustration and not
limitation, if (i) Lessee's Aggregate Fixed Charge Coverage Ratio for
the Fiscal Year ending May 27, 2010 was 2.0 (which results in a Subject
Transfer FCCR Shortfall Percentage of 33%), (ii) Lessee paid the
Subject Transfer Rent Prepayment Amount on August 15, 2010, and (iii)
the Base Monthly Rental for August, 2010 was $100, then the Base
Monthly Rental payment beginning on September 1, 2010 shall be equal to
the Base Monthly Rental for August, 2010 reduced by the sum of $33.33.
"Subject Transfer FCCR Shortfall Percentage" means the
percentage represented by (x) 1 minus (y) a fraction, the numerator of
which shall be the Aggregate Fixed Charge Coverage Ratio for the twelve
month period of time immediately preceding the end of the fiscal
quarter of Lessee which closed prior to the date on which Lessee gives
Lessor notice of the proposed Subject Transfer, and the denominator of
which shall be 3.
E. Lessee shall notify Lessor and Lender at least 30 days but not more
than 90 days prior to the completion of any Subject Transfer, whether or not the
consent of Lessor to such Subject Transfer is deemed given under the terms of
Section 26.D (each, a "Subject Transfer Notice"). Lessee shall provide Lessor
and Lender with information reasonably sufficient to enable Lessor and Lender to
determine that Lessee has satisfied the conditions to any Subject Transfer,
including, without limitation, such financial information as Lessor and Lender
may reasonably require to enable them to determine that the net worth and/or
Aggregate Fixed Charge Coverage Ratio requirements set forth in Section 26.D
have been satisfied, or will be satisfied simultaneously with the completion of
the Subject Transfer. In addition, to the extent that the loans contemplated by
the Loan Documents have been subject to a Securitization, Lessee agrees to
cooperate in good faith in connection with providing such information as the
rating agencies may reasonably require to evaluate any such proposed Subject
Transfer.
27. Option To Extend; New Lease. A. Lessee shall have the option to
continue this Lease in effect for four additional successive periods of five
years each, provided that, at the time of exercise of such option or at the
expiration of the Lease Term or, if applicable, the preceding extension of the
Lease Term, no Event of Default shall have occurred and be continuing under this
Lease and no default with respect to the payment of rent, taxes or insurance
shall have occurred and be continuing under this Lease. If Lessee exercises such
option, this Lease shall continue for the applicable period in accordance with
the terms and provisions of this Lease then in effect, except that the Base
Annual Rental during the respective extension period shall be an amount equal to
95% of the annual fair market rental value of the Properties during such
extension period (to be determined as set forth below).
Lessee may only exercise the first extension option by giving notice to
Lessor of Lessee's intention to do so not later than August 31, 2019. If the
first extension option is exercised by Lessee, Lessee may only exercise the
second extension option by giving notice to Lessor of Lessee's intention to do
so not later than August 31, 2027. If the first two extension options are
exercised, Lessee may only exercise the third extension option by giving notice
to Lessor of Lessee's intention to do so not later than August 31, 2032. If the
first three extension options are exercised, Lessee may only exercise the fourth
extension option by giving notice to Lessor of Lessee's intention to do so not
later than August 31, 2037.
Lessor and Lessee shall exercise reasonable efforts to agree in good
faith on the annual fair market rental value of the Properties for the
applicable extension period within thirty (30) days after Lessor is notified of
the exercise of such option. If Lessor and Lessee shall agree upon the annual
fair market rental value of the Properties for such extension period, Lessor and
Lessee shall within five (5) days thereafter mutually execute and deliver an
acknowledgment of such fair market value which shall be binding upon Lessor and
Lessee and any persons claiming by or through any of them during such extension
period.
If Lessor and Lessee are unable to agree in writing upon the annual
fair market rental value of the Properties for such extension period within such
thirty (30) day period, then not later than forty-five (45) days following the
date Lessor is notified of the exercise of such option (the "Appraiser Selection
Date"), Lessor will select an independent MAI appraiser and Lessee will select
another independent MAI appraiser (each, a "Selected Appraiser"); and each of
Lessor and Lessee will notify the other in writing thereof on or prior to the
Appraiser Selection Date. If only Lessor shall designate a Selected Appraiser on
or before the Appraiser Selection Date, then the determination of the annual
fair market rental value of the Properties for such extension period shall be
made solely by such Selected Appraiser. If only Lessee shall designate a
Selected Appraiser on or before the Appraiser Selection Date, then the
determination of the annual fair market rental value of the Properties for such
extension period shall be made solely by such Selected Appraiser. If neither
Lessor nor Lessee shall designate a Selected Appraiser on or before the
Appraiser Selection Date, then, upon application of either Lessor or Lessee, the
determination of the annual fair market rental value of the Properties for such
extension period shall be made solely by an independent MAI appraiser selected
by the American Arbitration Association or any successor organization. Each
Selected Appraiser shall deliver a signed appraisal of the annual fair market
rental value of the Properties for such extension period (an "Appraisal") to
Lessee and Lessor on or before the date that is forty-five (45) days after the
Appraiser Selection Date or such later date that such Selected Appraiser is
designated pursuant to this Section 27.A. The annual fair market rental value of
the Properties for such extension period shall then be obtained by averaging the
values determined by each Appraisal delivered by the two Selected Appraisers if
the higher value determination of one of the Selected Appraisers is not more
than five percent (5%) in excess of the lower value determination of the other
Selected Appraiser and such annual fair market rental value shall be final and
binding on Lessor and Lessee and any persons claiming by or through any of them
during such extension period. If the higher value determination is more than
five percent (5%) in excess of the lower value determination, the two Selected
Appraisers shall appoint a third independent MAI appraiser within fifteen (15)
days after the date such Appraisals are delivered by the two Selected Appraisers
to Lessee and Lessor, provided that, if the two Selected Appraisers fail to
agree on the selection of a third independent MAI appraiser within such time
period, either Lessor or Lessee may petition the American Arbitration
Association, or any successor organization, for a determination of the third
appraiser. The annual fair market value of the Properties for such extension
period shall, in such case, be determined by the third appraiser selecting,
within thirty (30) days thereafter, which of the first two appraisals is closest
to the annual fair market rental value of the Properties for such extension
period as determined by such third appraiser, and such determination of the
annual fair market rental value by such third appraiser shall be binding on
Lessor and Lessee and any persons claiming by or through any of them during such
extension period. Lessee shall be obligated to pay the costs of all three
appraisers and the American Arbitration Association (to the extent applicable).
B. In addition and provided that Lessee shall not have exercised its option
for the first renewal term set forth in Section 27.A, Lessee shall also have the
right, by notice delivered to Lessor not later than August 31, 2019, to enter
into a new master lease with Lessor, to commence at the end of the Primary Term,
for not less than such number of Properties which is equal to 90% of the
Properties then subject to this Lease, rounded to the next higher whole integer
number, provided that, at the time of exercise of such option or at the
expiration of the Primary Term, no Event of Default shall have occurred and be
continuing under this Lease and no default with respect to the payment of rent,
taxes or insurance shall have occurred and be continuing under this Lease. In
the event Lessee elects to enter into such new master lease, the Base Annual
Rental under such new master lease shall be an amount equal to 95% of the annual
fair market rental value (to be determined as set forth in Section 27.A) of the
Properties which will be the subject of the new master lease for the primary
term of such new master lease. Such new master lease shall be for a five year
primary term, have three (3) five-year renewal options and otherwise be on the
same terms and conditions as this Lease, except that the Base Annual Rental
during each extension period shall be an amount equal to 95% of the annual fair
market rental value (to be determined as set forth in Section 27.A) of the
applicable Properties during such extension period. Lessee shall be solely
responsible for the payment of all costs and expenses incurred in connection
with the execution of such new master lease, including, without limitation,
Lessee's attorneys' fees and reasonable attorneys' fees and expenses of counsel
to Lessor and Lender.
C. Notwithstanding anything to the contrary contained in this Section,
Lessee's failure to deliver notice of the exercise of its options under either
Section 27.A or 27.B by the applicable outside dates under such Sections shall
not terminate the applicable option unless and until Lessor shall, following the
date which is not more than ten (10) Business Days before the applicable outside
date, give written notice of the applicable option(s) to Lessee, and Lessee
shall fail to exercise an applicable option within ten (10) Business Days after
such notice is given. Notwithstanding the foregoing, the options in Section 26.A
and Section 26.B shall be mutually exclusive and Lessee may only exercise
subsequent renewal options under those Sections if Lessee has exercised the
prior renewal options.
28. Right of First Offer to Purchase Properties. If, during the Lease Term,
Lessor desires to sell its interest in the Properties as a collective whole, as
a result of a third-party offer or expression of interest from a third party
(which may be solicited by Lessor and with no requirement that an offer actually
be made by such third party), then, provided no Event of Default has occurred
and is continuing, Lessor shall give Lessee the right to purchase such interest
(the "Interest") for a price and on terms and conditions, determined by Lessor
and set forth in a notice (the "ROFO Notice") given to Lessee. Lessee shall have
thirty (30) days to elect in writing to acquire such Interest at such price and
on such terms and conditions. Lessee's silence shall be deemed a rejection of
its right to acquire such Interest. Any such election by Lessee shall only be
effective if accompanied by Lessee's payment to Lessor of a cash down payment
equal to 2% of such price if such election occurs prior to March 1, 2019 and 10%
of such price if such election occurs after March 1, 2019. If Lessee timely and
properly elects to acquire such Interest, the closing shall take place within
one hundred and twenty (120) days after the ROFO Notice. The balance of the
purchase price shall be paid in cash at closing. If Lessee does not timely elect
to acquire such Interest, Lessor shall be free to sell the Interest to any other
Person within one (1) year of Lessee's rejection or deemed rejection without
being required to comply again with the foregoing provisions of this Section,
provided that, if Lessor intends to sell the Interest after such one (1) year
period or within such one (1) year period at a price less than 95% of the price
described in the ROFO Notice or on terms materially more favorable to a
purchaser than those set forth in the ROFO Notice, Lessor shall give Lessee
written notice, setting forth the applicable purchase price and terms and
conditions, and Lessee shall have thirty (30) days to elect in writing to
purchase the Interest at such purchase price and on such terms and conditions.
The right of first offer granted by this Section shall not survive the
expiration or earlier termination of this Lease or the purchase of the
Properties by a third party after Lessee's failure to exercise such right or
Lessee's waiver thereof. Furthermore, the right of first offer granted by this
Section shall not apply to a foreclosure of any of the Mortgages or the delivery
to Lender of a deed-in-lieu of foreclosure and shall not survive any such
foreclosure or delivery of a deed-in-lieu of foreclosure. Upon the termination
of this right of first offer, Lessee shall execute such instruments as may be
reasonably required by Lessor to provide constructive notice of the termination
thereof.
29. Notices. All notices, consents, approvals or other instruments required
or permitted to be given by either party pursuant to this Lease shall be in
writing and given by (i) hand delivery, (ii) facsimile, (iii) express overnight
delivery service or (iv) certified or registered mail, return receipt requested,
and shall be deemed to have been delivered upon (a) receipt, if hand delivered,
(b) transmission, if delivered by facsimile, (c) the next Business Day, if
delivered by express overnight delivery service, or (d) the third Business Day
following the day of deposit of such notice with the United States Postal
Service, if sent by certified or registered mail, return receipt requested.
Notices shall be provided to the parties and addresses (or facsimile numbers, as
applicable) specified below:
If to Lessee: Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, FL 33815
Attention: C. Michael Moore Executive
Vice President-Finance
and Chief Financial Officer
Telephone: (863) 284-2140
Telecopy: (863) 284-2063
With a copy to: Trenam Kemker
2700 Bank of America Plaza
Tampa, FL 33602
Attention: Gary I. Teblum, Esq.
Telephone: (813) 223-7474
Telecopy: (813) 229-6553
If to Lessor: Dapper Properties [I] [II] [III], LLC
c/o U.S. Realty Advisors LLC
1370 Avenue of the Americas
New York, NY 10019
Attention: Mr. David M. Ledy
Telephone: (212) 581-4540
Telecopy: (212) 581-4950
With a copy to: Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Attention: Kenneth S. Hilton, Esq.
Telephone: (212) 969-3000
Telecopy: (212) 969-2900
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. No such notices, consents, approvals or other communications
shall be valid unless Lender is provided a duplicate original thereof at the
following address:
Dennis L. Ruben, Esq.
Executive Vice President, General Counsel and Secretary
FFCA [Acquisition] [Funding] Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (480) 585-4500
Telecopy: (480) 585-2226
or to such other address or such other person as Lender may from time to time
specify to Lessor and Lessee in a notice delivered in the manner provided above.
30. Holding Over. If Lessee remains in possession of any of the Properties
after the expiration of the term hereof, Lessee, at Lessor's option and within
Lessor's sole discretion, may be deemed a tenant on a month-to-month basis and
shall continue to pay rentals and other sums in the amounts herein provided,
except that the Base Monthly Rental shall be 125% of the Base Monthly Rental in
effect at such expiration, and to comply with all the terms of this Lease;
provided that nothing herein nor the acceptance of rent by Lessor shall be
deemed a consent to such holding over. Lessee shall defend, indemnify, protect
and hold the Indemnified Parties harmless from and against any and all Losses
resulting from Lessee's failure to surrender possession upon the expiration of
the Lease Term, including, without limitation, any claims made by any succeeding
lessee. The terms of this Section 30 shall survive the expiration of the Lease
Term.
31. Confidentiality. (a) Confidential Information may be disclosed to the
Permitted Recipients, orally or in writing, by inspection or by permissive
observation, or in any other way, but no disclosure will allow the Permitted
Recipients to further disclose the Confidential Information or to use it except
as permitted by this Lease. Confidential Information does not include:
(i) information which was in the public domain, publicly
available and publicly known at the time of disclosure, including,
without limitation, reports filed by Lessee with the United States
Securities and Exchange Commission,
(ii) information which subsequently becomes public knowledge
as a result of a disclosure by Lessee, or in any way not involving any
breach of this Lease by Lessor, as of the date of its becoming public,
or
(iii) information which Lessor or Lender obtains from sources
other than Lessee or its Affiliates in any manner not involving any
breach of this Section by Lessor or Lender.
(b) Lessee grants to the Permitted Recipients the nonexclusive right to review
and use the Confidential Information in order to understand the operations of
Lessee and its Affiliates in connection with the transactions contemplated by
this Lease. Except as otherwise provided herein or contemplated by subsection
(c) below:
(i) the Confidential Information may not be used for any other purpose
or by any Person which is not a Permitted Recipient;
(ii) Lessor will
not release or disseminate the Confidential Information, or any part of
it, to any Person which is not a Permitted Recipient without specific
prior written consent from Lessee; and
(iii) Lessor agrees that in the event it is requested by a
judicial, administrative or governmental body or an agency thereof to
disclose any of the Confidential Information, it will promptly, insofar
as it is practicable to do so, notify Lessee so that Lessee may seek a
protective order or other appropriate remedy.
Lessor will in good faith treat the Confidential Information with at least the
same care that Lessor and other similar businesses use in the protection of
their own undisclosed and proprietary information. Lessor will, and will direct
Lender to, advise its Permitted Recipients of the confidential and proprietary
nature of the Confidential Information and use reasonable efforts to protect the
secrecy of such Confidential Information in accordance with the terms of this
Lease. Except as otherwise provided in this Section 31, upon any termination of
this Lease, Lessor will immediately cease all use of the Confidential
Information. Except as otherwise provided in this Section 31, upon any sale or
transfer of the Properties, the seller or transferor, as applicable, will
immediately cease all use of the Confidential Information and the purchaser or
transferee shall succeed to all of the rights and obligations of Lessor under
this Section 31. (c) Notwithstanding the foregoing, nothing in this Section 31
shall limit or prevent:
(i) Any Permitted Recipient from utilizing Confidential Information
delivered by Lessee pursuant to the Sale-Leaseback Agreement or this
Lease, including, without limitation, Store Income Statements delivered
to Lessor or Lender pursuant to the Sale-Leaseback Agreement or Section
33 of this Lease, for the purposes expressly contemplated by this
Section 31; (ii) Lender and its Permitted Recipients from disclosing,
distributing and/or making Confidential Information available to any
Permitted Recipient as necessary in connection with any Transfer,
Participation and/or Securitization as contemplated by Section 8.C of
this Lease provided that Lender (1) advises such Permitted Recipients
of the confidential nature of such Confidential Information, and (2)
requests, to the extent reasonably practicable, that each Permitted
Recipient (other than rating agencies) of Confidential Information
enter into a customary and commercially reasonable written
confidentiality agreement pursuant to which such Permitted Recipient
will agree not to disclose such Confidential Information in violation
of the provisions of this Section 31; (iii) Any Permitted Recipient
from utilizing Confidential Information in connection with the exercise
of Lessor's rights and remedies under this Lease; (v) Lender from
reporting the Fixed Charge Coverage Ratio for each of the Properties to
investors in connection with the servicing of the loans evidenced by
the Loan Documents; (v) Any Permitted Recipient from disclosing
Confidential Information as required by court order or subpoena or as
otherwise required by any Governmental Authority under applicable law;
and/or
(vi) Lessor and its Permitted Recipients from delivering any
Confidential Information to prospective purchasers or mortgagees of
Lessor's interest in the Properties or in Lessor, and their respective
attorneys, consultants, representatives or agents, provided that (x) in
the case of prospective purchasers, Lessor shall obtain a commercially
reasonable written confidentiality agreement from any such prospective
purchaser pursuant to which such prospective purchaser will agree not
to disclose any such Confidential Information in violation of the
provisions of this Section 31, and (y) in the case of prospective
mortgagees, Lessor shall advise such mortgagees of the confidential
nature of such Confidential Information and shall request that such
mortgagee enter into a commercially reasonable written confidentiality
agreement pursuant to which such mortgagee will agree not to disclose
such Confidential Information in violation of the provisions of this
Section 31.
32. Removal of Personalty. At the expiration of the Lease Term, Lessee may
remove all Personalty from the Properties. Lessee shall repair any damage caused
by such removal and shall leave the Properties broom clean and in good and
working condition and repair inside and out (consistent with the condition prior
to removal). Any property of Lessee left on the Properties on the thirtieth day
following the expiration of the Lease Term shall, at Lessor's option,
automatically and immediately become the property of Lessor.
33. Financial Statements. Within 60 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Lessee, Lessee
shall deliver to Lessor and Lender (i) complete financial statements of Lessee
including a balance sheet, profit and loss statement, statement of cash flows
and all other related schedules for the fiscal period then ended (the "Company
Financial Statements"); and (ii) Store Income Statements (the "Company Financial
Statements and Store Income Statements are hereinafter collectively referred to
as the "Financial Statements"). All Financial Statements shall be certified to
be accurate and complete by Lessee (or the Treasurer or other appropriate
officer of Lessee) and all Company Financial Statements shall also be prepared
in accordance with GAAP. Lessee understands that Lessor and Lender will rely
upon the Financial Statements and Lessee represents that such reliance is
reasonable. In the event that Lessee's property and business at the Properties
is ordinarily consolidated with other business for financial statement purposes,
the Financial Statements shall be prepared on a consolidated basis showing
separately the sales, profits and losses, assets and liabilities pertaining to
each of the Properties with the basis for allocation of overhead of other
charges being clearly set forth. The Financial Statements delivered to Lessor
and Lender need not be audited, but Lessee shall deliver to Lessor and Lender
copies of any audited Financial Statements of Lessee which may be prepared, as
soon as they are available.
34. Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, acts of God, enemy or hostile governmental action, civil commotion,
fire or other casualty beyond the control of the party obligated to perform
shall excuse the performance by such party for a period equal to any such
prevention, delay or stoppage, except the obligations imposed with regard to
rental and other monies to be paid by Lessee pursuant to this Lease and any
indemnification obligations imposed upon Lessee under this Lease.
35. Time Is of the Essence. Time is of the essence with respect to each and
every provision of this Lease in which time is a factor.
36. Lessor's Liability. Notwithstanding anything to the contrary provided
in this Lease, it is specifically understood and agreed, such agreement being a
primary consideration for the execution of this Lease by Lessor, that (i) there
shall be absolutely no personal liability on the part of Lessor, its successors
or assigns and the trustees, members, partners, shareholders, officers,
directors, employees and agents of Lessor and its successors or assigns, to
Lessee with respect to any of the terms, covenants and conditions of this Lease,
(ii) Lessee waives all claims, demands and causes of action against the
trustees, members, partners, shareholders, officers, directors, employees and
agents of Lessor and its successors or assigns in the event of any breach by
Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, and (iii) Lessee shall look solely to the Properties for
the satisfaction of each and every remedy of Lessee in the event of any breach
by Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, or any other matter in connection with this Lease or the
Properties, such exculpation of liability to be absolute and without any
exception whatsoever, provided that, with respect to affirmative acts of Lessor
which constitute gross negligence or intentional misconduct (it being understood
and agreed that the acts of the Lessee and its shareholders, officers,
directors, employees and agents shall not be imputed to Lessor), Lessee shall
have the right to look to other assets of Lessor, but not the assets of the
trustees, members, partners, shareholders, officers, directors, employees and
agents of Lessor.
37. Consent of Lessor. (a) Unless specified otherwise herein, Lessor's
consent to any request of Lessee may be conditioned or withheld in Lessor's sole
discretion. Lessor shall have no liability for damages resulting from Lessor's
failure to give any consent, approval or instruction reserved to Lessor,
Lessee's sole remedy in any such event being an action for injunctive relief.
(b) It is understood and agreed that to the extent Lessor is required to obtain
the consent, approval, agreement or waiver of Lender with respect to a matter
for which Lessor's approval has been requested under this Lease, Lessor shall in
no event be deemed to have unreasonably withheld Lessor's consent, approval,
agreement or waiver thereof if Lender shall not have given its approval if
required and after Lessor has requested such approval.
38. Waiver and Amendment. No provision of this Lease shall be deemed waived
or amended except by a written instrument unambiguously setting forth the matter
waived or amended and signed by the party against which enforcement of such
waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver
of the same or any other matter on any future occasion. No acceptance by Lessor
of an amount less than the monthly rent and other payments stipulated to be due
under this Lease shall be deemed to be other than a payment on account of the
earliest such rent or other payments then due or in arrears nor shall any
endorsement or statement on any check or letter accompanying any such payment be
deemed a waiver of Lessor's right to collect any unpaid amounts or an accord and
satisfaction.
39. Successors Bound. Except as otherwise specifically provided herein, the
terms, covenants and conditions contained in this Lease shall bind and inure to
the benefit of the respective heirs, successors, executors, administrators and
assigns of each of the parties hereto.
40. No Merger. The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, shall not result in a merger of Lessor's and
Lessee's estates, and shall, at the option of Lessor, either terminate any or
all existing subleases or subtenancies, or operate as an assignment to Lessor of
any or all of such subleases or subtenancies.
41. Captions. Captions are used throughout this Lease for convenience of
reference only and shall not be considered in any manner in the construction or
interpretation hereof.
42. Severability. The provisions of this Lease shall be deemed severable.
If any part of this Lease shall be held unenforceable by any court of competent
jurisdiction, the remainder shall remain in full force and effect, and such
unenforceable provision shall be reformed by such court so as to give maximum
legal effect to the intention of the parties as expressed therein.
43. Characterization. A. It is the intent of the parties hereto that the
business relationship created by this Lease and any related documents is solely
that of a long-term commercial lease between landlord and tenant and has been
entered into by both parties in reliance upon the economic and legal bargains
contained herein. None of the agreements contained herein, is intended, nor
shall the same be deemed or construed, to create a partnership between Lessor
and Lessee, to make them joint venturers, to make Lessee an agent, legal
representative, partner, subsidiary or employee of Lessor, nor to make Lessor in
any way responsible for the debts, obligations or losses of Lessee. B. Lessor
and Lessee acknowledge and warrant to each other that each has been represented
by independent counsel and has executed this Lease after being fully advised by
said counsel as to its effect and significance. This Lease shall be interpreted
and construed in a fair and impartial manner without regard to such factors as
the party which prepared the instrument, the relative bargaining powers of the
parties or the domicile of any party. Whenever in this Lease any words of
obligation or duty are used, such words or expressions shall have the same force
and effect as though made in the form of a covenant.
44. Easements. During the Lease Term Lessor shall have the right to grant
utility, access or other similar easements on, over, under and above any of the
Properties without the prior consent of Lessee, provided that such easements
will not materially interfere with Lessee's use of such Properties or business
operations or increase Lessee's obligations or decrease Lessee's rights under
this Lease; and Lessor agrees to grant utility, access or other similar
easements on, over, under and above any of the Properties as Lessee may
reasonably request, provided that such easements will not materially interfere
with Lessor's ownership of such Properties or materially and adversely impact
the value of any of the Properties.
45. Bankruptcy. A. As a material inducement to Lessor executing this Lease,
Lessee acknowledges and agrees that Lessor is relying upon (i) the financial
condition and specific operating experience of Lessee and Lessee's obligation to
use each of the Properties specifically in accordance with system-wide
requirements imposed from time to time on Permitted Facilities, (ii) Lessee's
timely performance of all of its obligations under this Lease notwithstanding
the entry of an order for relief under the Code for Lessee and (iii) all
defaults under this Lease as to all Properties being cured promptly and this
Lease being assumed within 60 days of any order for relief entered under the
Code for Lessee, or this Lease being rejected within such 60 day period and the
Properties surrendered to Lessor. Accordingly, in consideration of the mutual
covenants contained in this Lease and for other good and valuable consideration,
Lessee hereby agrees that:
(i) All obligations that accrue under this Lease
(including the obligation to pay rent), from and after the date that an Action
is commenced shall be timely performed exactly as provided in this Lease and any
failure to so perform shall be harmful and prejudicial to Lessor;
(ii) Any and all obligations under this Lease that become due
from and after the date that an Action is commenced and that are not
paid as required by this Lease shall, in the amount of such rents,
constitute administrative expense claims allowable under the Code with
priority of payment at least equal to that of any other actual and
necessary expenses incurred after the commencement of the Action;
(iii) Any extension of the time period within which Lessee may
assume or reject this Lease without an obligation to cause all
obligations coming due under this Lease from and after the date that an
Action is commenced to be performed as and when required under this
Lease shall be harmful and prejudicial to Lessor;
(iv) Any time period designated as the period within which
Lessee must cure all defaults and compensate Lessor for all pecuniary
losses which extends beyond the date of assumption of this Lease shall
be harmful and prejudicial to Lessor;
(v) Any assignment of this Lease must result in all terms and
conditions of this Lease being assumed by the assignee without
alteration or amendment, and any assignment which results in an
amendment or alteration of the terms and conditions of this Lease
without the express written consent of Lessor shall be harmful and
prejudicial to Lessor;
(vi) Any proposed assignment of this Lease to an assignee: (a)
that will not use the Properties specifically as Permitted Facilities,
or (b) that does not possess financial condition, operating performance
and experience characteristics equal to or better than the financial
condition, operating performance and experience of Lessee as of the
Effective Date, shall be harmful and prejudicial to Lessor;
(vii) The rejection (or deemed rejection) of this Lease for
any reason whatsoever shall constitute cause for immediate relief from
the automatic stay provisions of the Code, and Lessee stipulates that
such automatic stay shall be lifted immediately and possession of the
Properties will be delivered to Lessor immediately without the
necessity of any further action by Lessor; and
(viii) This Lease shall at all times be treated as consistent
with the specific characterizations set forth in Section 3 of this
Lease, and assumption or rejection of this Lease shall be (a) in its
entirety, (b) for all of the Properties, and (c) in strict accordance
with the specific terms and conditions of this Lease.
B. No provision of this Lease shall be deemed a waiver of Lessor's rights
or remedies under the Code or applicable law to oppose any assumption and/or
assignment of this Lease, to require timely performance of Lessee's obligations
under this Lease, or to regain possession of the Properties as a result of the
failure of Lessee to comply with the terms and conditions of this Lease or the
Code.
C. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as such, shall constitute "rent" for the purposes of the
Code.
D. For purposes of this Section addressing the rights and obligations of
Lessor and Lessee in the event that an Action is commenced, the term "Lessee"
shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as
debtor in possession or other responsible person.
46. No Offer. No contractual or other rights shall exist between Lessor and
Lessee with respect to the Properties until both have executed and delivered
this Lease, notwithstanding that deposits may have been received by Lessor and
notwithstanding that Lessor may have delivered to Lessee an unexecuted copy of
this Lease. The submission of this Lease to Lessee shall be for examination
purposes only, and does not and shall not constitute a reservation of or an
option for Lessee to lease or otherwise create any interest on the part of
Lessee in the Properties.
47. Other Documents. Each of the parties agrees to sign such other and
further documents as may be reasonably necessary or appropriate to carry out the
intentions expressed in this Lease.
48. Attorneys' Fees. In the event of any judicial or other adversarial
proceeding between the parties concerning this Lease, to the extent permitted by
law, the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to which it may
be entitled. In addition, Lessor shall, upon demand, be entitled to all
attorneys' fees and all other costs incurred in the preparation and service of
any notice or demand hereunder, whether or not a legal action is subsequently
commenced.
49. Entire Agreement. This Lease and any other instruments or agreements
referred to herein, constitute the entire agreement between the parties with
respect to the subject matter hereof, and there are no other representations,
warranties or agreements except as herein provided. Without limiting the
foregoing, Lessee specifically acknowledges that neither Lessor nor any agent,
officer, employee or representative of Lessor has made any representation or
warranty regarding the projected profitability of the business to be conducted
on the Properties. Furthermore, Lessee acknowledges that Lessor did not prepare
or assist in the preparation of any of the projected figures used by Lessee in
analyzing the economic viability and feasibility of the business to be conducted
by Lessee at the Properties.
50. Forum Selection; Jurisdiction; Venue; Choice of Law. Lessee
acknowledges that this Lease was partially negotiated in the State of Arizona,
this Lease was executed and delivered in the State of Arizona, all payments
under this Lease will be delivered in the State of Arizona (unless otherwise
directed by Lessor or its successors) and there are substantial contacts between
the parties and the transactions contemplated herein and the State of Arizona.
Except for purposes of any action or proceeding concerning the creation of this
Lease and the rights and remedies of Lessor with respect to the Properties
(which actions or proceedings shall be conducted in the state where the affected
Property is located), for purposes of any action or proceeding arising out of
this Lease, the parties hereto expressly submit to the jurisdiction of all
federal and state courts located in the State of Arizona. Lessee and Lessor
consent that they may be served with any process or paper by registered mail or
by personal service within or without the State of Arizona in accordance with
applicable law. Furthermore, each of Lessee and Lessor waive and agree not to
assert in any such action, suit or proceeding that it is not personally subject
to the jurisdiction of such courts, that the action, suit or proceeding is
brought in an inconvenient forum or that venue of the action, suit or proceeding
is improper. The creation of this Lease and the rights and remedies of Lessor
with respect to the Properties, as provided herein and by the laws of the states
in which the Properties are located, as applicable, shall be governed by and
construed in accordance with the internal laws of the states in which the
Properties are located, as applicable, without regard to principles of conflicts
of law. With respect to other provisions of this Lease, this Lease shall be
governed by the internal laws of the State of Arizona, without regard to its
principles of conflicts of law. Nothing contained in this Section shall limit or
restrict the right of Lessor or Lessee to commence any proceeding in the federal
or state courts located in the states in which the Properties are located to the
extent Lessor or Lessee deems such proceeding necessary or advisable to exercise
remedies available under this Lease.
51. Counterparts. This Lease may be executed in one or more counterparts,
each of which shall be deemed an original.
52. Memorandum of Master Lease. Concurrently with the execution of this
Lease, Lessor and Lessee are executing the Memorandum to be recorded in the
applicable real property records with respect to each of the Properties.
53. No Brokerage. Lessor and Lessee represent and warrant to each other
that they have had no conversation or negotiations with any broker concerning
the leasing of the Properties, except Lessee's engagement of Banc of America
Securities LLC whose fee shall be paid by Lessee. Each of Lessor and Lessee
agrees to protect, indemnify, save and keep harmless the other, against and from
all liabilities, claims, losses, costs, damages and expenses, including
attorneys' fees, arising out of, resulting from or in connection with their
breach of the foregoing warranty and representation.
54. Waiver of Jury Trial and Punitive, Consequential, Special and Indirect
Damages. LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF
THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF
LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF ANY OF THE PROPERTIES, AND/OR
ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS
WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS
BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, LESSOR
AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM THE OTHER PARTY AND ANY OF SUCH OTHER PARTY'S AFFILIATES, OFFICERS,
DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY
AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY A PARTY AGAINST THE OTHER PARTY OR ANY OF SUCH OTHER PARTY'S
AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS
WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE OR
ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO, EXCEPT THAT SUCH WAIVER ON
THE PART OF LESSOR SHALL NOT BE DEEMED TO LIMIT, REDUCE OR PRECLUDE IN ANY WAY
LESSOR'S REMEDIES PURSUANT TO SECTION 23 HEREOF. THE RECIPROCAL WAIVERS BY
LESSOR AND LESSEE OF ANY RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
55. Reliance By Environmental Insurer and Lender. (a) Lessee acknowledges
and agrees that Environmental Insurer may rely on the representations,
warranties and covenants set forth in Section 16 of this Lease, that
Environmental Insurer is an intended third-party beneficiary of such
representations, warranties and covenants and that Environmental Insurer shall
have all rights and remedies available at law or in equity as a result of a
breach of such representations, warranties and covenants, including to the
extent applicable, the right of subrogation.
(b) Lessee acknowledges and agrees that Lender may rely on all of the
representations, warranties and covenants set forth in this Lease, that Lender
is an intended third-party beneficiary of such representations, warranties and
covenants and that Lender shall have all rights and remedies available at law or
in equity as a result of a breach of such representations, warranties and
covenants, including to the extent applicable, the right of subrogation.
56. Document Review. In the event Lessee makes any request upon Lessor
requiring Lessor, Lender or the attorneys of Lessor or Lender to review and/or
prepare (or cause to be reviewed and/or prepared) any documents, plans,
specifications or other submissions in connection with or arising out of this
Lease, then Lessee shall reimburse Lessor or its designee promptly upon Lessor's
demand therefor for all out-of-pocket costs and expenses incurred by Lessor in
connection with such review and/or preparation.
57. Substitution. A. Subject to the fulfillment of all of the conditions
set forth in the following subsection B, Lessee shall have the right to deliver
a rejectable offer to Lessor (each, a "Rejectable Substitution Offer") to
substitute a Substitute Property for a Property if: (i) the terms of Section
21.B of this Lease permit such substitution (each, a "Casualty/Condemnation
Substitution"); or (ii) the terms of Section 23.A(ix)(1) of this Lease permit
such substitution (each, a "FCCR Substitution").
In addition, from and after the third anniversary of the Effective Date
(and prior to such third anniversary if Lessor's prior written consent is
obtained) and subject to the fulfillment of all of the conditions set forth in
the following subsection B, Lessee shall also have the right to deliver a
Rejectable Substitution Offer to substitute a Substitute Property for a Property
if the Fixed Charge Coverage Ratio (with the definitions of Section 8.A being
deemed to be modified, as contemplated by Section 23.A(ix), to provide for a
calculation of a "Fixed Charge Coverage Ratio" for the Property to be replaced
only) for the Property to be replaced is less than 1.25:1 for the FCCR Period
(each, an "Uneconomic Substitution"); provided, however, the number of
Properties for which Lessee may do an Uneconomic Substitution shall not exceed
nine (9) Properties in the aggregate (it being understood that serial
substitutions of a Property shall be permitted, provided that each separate
substitution in the series shall count against the limit).
Each Rejectable Substitution Offer shall identify the proposed
Substitute Property in reasonable detail and contain a certificate executed by a
duly authorized officer of Lessee pursuant to which Lessee shall certify that in
Lessee's good faith judgment such proposed Substitute Property satisfies as of
the date of such notice, or will satisfy as of the date of the closing of such
substitution, all of the applicable conditions to substitution set forth in this
Section 57. Lessee agrees to deliver to Lessor all of the diligence information
and materials contemplated by the provisions of Section 57.B of this Lease
within 30 days after the delivery to Lessor of a Rejectable Substitution Offer.
Lessor shall have 90 days from the delivery of a Rejectable Substitution
Offer notice satisfying the requirements of the preceding paragraph to deliver
to Lessee written notice of its election to either accept or reject the
Rejectable Substitution Offer. Lessor's failure to deliver such notice within
such time period shall be deemed to constitute Lessor's acceptance of the
Rejectable Substitution Offer. If the Mortgage corresponding to the Property to
be replaced is still outstanding, any rejection of the Rejectable Substitution
Offer by Lessor shall not be effective unless it is consented to in writing by
Lender. If Lessor accepts the Rejectable Substitution Offer or is deemed to have
accepted the Rejectable Substitution Offer or if Lender does not consent in
writing to any rejection of the Rejectable Substitution Offer by Lessor, then
Lessee shall complete such substitution, subject, however, to the satisfaction
of each of the applicable terms and conditions set forth in this Section 57. If
Lessor rejects the Rejectable Substitution Offer pursuant to the previous
paragraph for reasons other than that, in Lessor's reasonable judgment, the
proposed Substitute Property would not have satisfied the applicable
substitution conditions set forth in this Section 57, and such rejection is
consented to by Lender, then:
(X) if such rejected Rejectable Substitution Offer was made with
respect to a Casualty/Condemnation Substitution, the provisions of the last
paragraph of Section 21.B and the last sentence of the second paragraph of
Section 21.B shall be applicable; (Y) if such rejected Rejectable
Substitution Offer was made with respect to a FCCR Substitution, then the
breach of the Aggregate Fixed Charge Coverage Ratio requirement which was
the basis of such Rejectable Substitution Offer shall be deemed waived; and
(Z) if such rejected Rejectable Substitution Offer was made with respect to
a Uneconomic Substitution, this Lease shall terminate with respect to the
Property which Lessee proposed to replace on the next scheduled Base
Monthly Rental payment date (the "Early Substitution Termination Date")
provided Lessee has paid to Lessor all Base Annual Rental, Additional
Rental and all other sums and obligations then due and payable under this
Lease as of such Early Substitution Termination Date. On the Early
Substitution Termination Date, and provided Lessee shall have paid to
Lessor all Base Annual Rental, Additional Rental and other sums and
obligations then due and payable under this Lease as of the Early
Substitution Date:
(i) the Base Annual Rental then in effect shall be reduced by an
amount equal to the product of (x) the Applicable Rent Reduction Percentage
for the Property which Lessee proposed to replace, and (y) the Base Annual
Rental then in effect; and (ii) all obligations of Lessor and Lessee shall
cease as of the Early Substitution Termination Date with respect to such
Property; provided, however, Lessee's obligations to Lessor with respect to
such Property under any indemnification provisions of this Lease with
respect to such Property (including, without limitation, Sections 16 and 19
of this Lease) and Lessee's obligations to pay any sums (whether payable to
Lessor or a third party) accruing under this Lease with respect to such
Property prior to the Early Substitution Termination Date shall survive the
termination of this Lease with respect to such Property or otherwise. This
Lease shall, however, continue in full force and effect with respect to all
other Properties.
B. The substitution of a Substitute Property for a Property pursuant
to the preceding subsection A shall be subject to the fulfillment of all of
the following terms and conditions:
(i) The Substitute Property must: (1) be a Permitted Facility, in good
condition and repair, ordinary wear and tear excepted; (2) have a Fixed
Charge Coverage Ratio (with the definitions of Section 8.A being deemed to
be modified, as contemplated by the following sentence to provide for a
calculation of an individual "Fixed Charge Coverage Ratio" for the
Substitute Property only) for the FCCR Period of not less than the greater
of (X) 1.25:1 or (Y) the Fixed Charge Coverage Ratio for the Property to be
replaced for such FCCR Period; provided that, with respect to each FCCR
Substitution, the Fixed Charge Coverage Ratio for the Substitute Property
for such FCCR Period must also be high enough (after taking into account
any other substitutions for Properties which are being consummated
simultaneously therewith) to result in a cure of the breach of the
Aggregate Fixed Charge Coverage Ratio requirement (it being understood and
agreed that the determination of the Fixed Charge Coverage Ratio for the
Substitute Property shall be based on an assumption that the Operating
Lease Expense for the Substitute Property would be the same amount as the
Operating Lease Expense for the Property to be replaced, as determined in
accordance with the last sentence of this subitem (2)). For purposes of
this subitem (2), the definitions set forth in Section 8.A of this Lease
with respect to the calculation of the Aggregate Fixed Charge Coverage
Ratio shall be deemed modified as applicable to provide for the calculation
of a Fixed Charge Coverage Ratio for each Property on an individual basis
rather than on an aggregate basis with the other Properties. For purposes
of such calculation, the Operating Lease Expense with respect to this Lease
for each such Property shall equal the product of (x) the Applicable Rent
Reduction Percentage for such Property, and (y) the Base Annual Rental then
in effect; (3) have a fair market value no less than the greater of the
then fair market value of the Property being replaced or the fair market
value of such Property as of the Effective Date (in each case, determined
without regard to this Lease, but assuming that while this Lease has been
in effect, Lessee has complied with all of the terms and conditions of this
Lease), as reasonably determined by Lessor, and consented to by Lender,
utilizing the same valuation method as used in connection with the closing
of the transaction described in the Sale-Leaseback Agreement, which was
based upon the sum of (x) the fair market value of the land comprising such
Property and (y) the replacement cost of the improvements located thereon;
(4) have improvements which have a remaining useful life substantially
equivalent to, or better than, that of the improvements located at the
Property to be replaced; (5) be conveyed to Lessor (or, if directed by
Lessor, to Lessor and a person designated to acquire the remainderman
interest) by special or limited warranty deed, free and clear of all liens
and encumbrances, except such matters as are reasonably acceptable to
Lessor (the "Substitute Property Permitted Exceptions"); and (6) be located
in either (a) the same state as the Property to be replaced is then
located, or (b) in another state acceptable to Lessor in Lessor's
reasonable discretion;
(ii) Lessor shall have inspected and approved the Substitute Property
utilizing Lessor's customary site inspection and underwriting approval
criteria. Lessee shall have reimbursed Lessor and Lender for all of their
reasonable costs and expenses incurred with respect to such proposed
substitution, including, without limitation, Lessor's third-party and/or
in-house site inspectors' costs and expenses with respect to the proposed
Substitute Property. Lessee shall be solely responsible for the payment of
all costs and expenses resulting from such proposed substitution,
regardless of whether such substitution is consummated, including, without
limitation, the cost of title insurance and endorsements for both Lessor
and Lender, survey charges, stamp taxes, mortgage taxes, transfer fees,
escrow and recording fees, the cost of environmental policies or
endorsements to the Environmental Policies as applicable, income and
transfer taxes imposed on Lessor as a result of such substitution and the
reasonable attorneys' fees and expenses of counsel to Lessee, Lessor and
Lender;
(iii) Lessor shall have received a preliminary title report
and irrevocable commitment to insure title by means of an ALTA extended
coverage owner's policy of title insurance (or its equivalent, in the
event such form is not issued in the jurisdiction where the proposed
Substitute Property is located) for the proposed Substitute Property
issued by Title Company and committing to insure Lessor's good and
marketable title in the proposed Substitute Property, subject only to
the Substitute Property Permitted Exceptions and containing
endorsements substantially comparable to those required by Lessor at
the Closing (as defined in the Sale-Leaseback Agreement) and Lender
shall have received such title report and irrevocable commitment to
insure its first priority lien encumbering the proposed Substitute
Property as Lender shall reasonably require;
(iv) Lessor shall have received a current ALTA survey of the
proposed Substitute Property, the form of which shall be comparable to
those received by Lessor at the Closing and sufficient to cause the
standard survey exceptions set forth in the title policy referred to in
the preceding subsection to be deleted;
(v) Lessor shall have received an environmental insurance
policy with respect to the proposed Substitute Property, or to the
extent applicable, an endorsement to the Environmental Policies, the
form and substance of which shall be satisfactory to Lessor in its sole
discretion;
(vi) Lessee shall deliver, or cause to be delivered, with
respect to Lessee and the Substitute Property, opinions of Counsel (as
defined in the Sale-Leaseback Agreement) in form and substance
comparable to those received at Closing (but also addressing such
matters unique to the Substitute Property as may be reasonably required
by Lessor);
(vii) no Event of Default shall have occurred and be
continuing under any of the Sale-Leaseback Documents;
(viii) Lessee shall have executed such documents as may be
reasonably required by Lessor as a result of such substitution,
including amendments to this Lease and the Memorandum (the "Substitute
Documents"), all of which documents shall be in form and substance
reasonably satisfactory to Lessor;
(ix) the representations and warranties set forth in the
Substitute Documents, this Lease and the Sale-Leaseback Agreement
applicable to the proposed Substitute Property shall be true and
correct in all material respects as of the date of substitution, and
Lessee shall have delivered to Lessor an officer's certificate
certifying to that effect;
(x) Lessee shall have delivered to Lessor certificates of
insurance showing that insurance required by the Substitute Documents
is in full force and effect;
(xi) Lessor shall have obtained an endorsement to the policy
of residual value insurance issued to Lessor and Lender in connection
with the transaction described in the Sale-Leaseback Agreement with
respect to the proposed Substitute Property, which endorsement shall be
in form and substance reasonably satisfactory to Lessor and Lender;
(xii) Lender shall have consented to the substitution of the proposed
Substitute Property; and (xiii) the date of the closing of the
substitution shall occur no later than 30 days after the date of
acceptance (or deemed acceptance) by Lessor of the Rejectable
Substitution Offer.
C. Upon satisfaction of the foregoing conditions set forth in Section
57.B and provided Lessor has accepted the Rejectable Substitution Offer or
is deemed to have accepted the Rejectable Substitution Offer, or while the
Mortgage corresponding to such Property is still outstanding, any rejection
of the Rejectable Substitution Offer by Lessor is not consented to in
writing by the Lender:
(i) the proposed Substitute Property shall be deemed
substituted for the Property to be replaced;
(ii) the Substitute Property shall be referred to herein as a
"Property" and included within the definition of "Properties";
(iii) the Substitute Documents shall be dated as of the date
of the substitution; and
(iv) Lessor shall convey the Property to be replaced to Lessee
or a designee of Lessee "as-is" by special warranty deed, subject to
all matters of record (except for the Mortgage corresponding to the
Property to be replaced and any other consensual liens granted by
Lessor other than those granted by Lessor at the written request of
Lessee), and without representation or warranty, except as provided for
in the special warranty deed.
D. Notwithstanding the foregoing, nothing in this Section 57 shall be
construed as limiting or otherwise adversely affecting the representations,
warranties, covenants and characterizations set forth in Lease, including,
without limitation, those provisions set forth in Section 3 of this Lease.
58. Rejectable Purchase Offer. A. If Lessor shall have given Lessee
notice of a breach of the Aggregate Fixed Charge Coverage Ratio requirement
under this Lease, Lessee shall have the right to deliver a rejectable offer
to Lessor (a "Rejectable Purchase Offer") to purchase such of the
Properties as is contemplated by Section 23.A(ix)(2), subject to the
fulfillment of all of the conditions set forth in this Section 58.
Lessor shall have 90 days from the delivery of the Rejectable Purchase Offer
notice to deliver to Lessee written notice of its election to either accept or
reject the Rejectable Purchase Offer. Lessor's failure to deliver such notice
within such time period shall be deemed to constitute Lessor's acceptance of the
Rejectable Purchase Offer. If the Mortgage corresponding to the Property to be
purchased is still outstanding, any rejection of the Rejectable Purchase Offer
by Lessor shall not be effective unless it is consented to in writing by Lender.
If Lessor accepts the Rejectable Purchase Offer or is deemed to have accepted
the Rejectable Purchase Offer or if Lender does not consent in writing to any
rejection of the Rejectable Purchase Offer by Lessor, then Lessee shall complete
such purchase, subject, however, to the satisfaction of each of the terms and
conditions set forth in the following subsection B. If Lessor rejects the
Rejectable Purchase Offer pursuant to the previous paragraph, and, while the
Mortgage corresponding to the Property to be purchased is still outstanding,
such rejection is consented to by Lender, then, the breach of the Aggregate
Fixed Charge Coverage Ratio requirement which was the basis of such Rejectable
Purchase Offer shall be deemed waived.
B. The purchase of a Property pursuant to the preceding subsection A
shall be subject to the fulfillment of all of the following terms and
conditions:
(i) no Event of Default shall have occurred and be continuing under any
of the Sale-Leaseback Documents; (ii) the purchase of such Property
(together with any other Properties which are being purchased
simultaneously therewith) must result in a cure of the breach of the
Aggregate Fixed Charge Coverage Ratio requirement; (iii) Lessee shall
have paid to Lessor the Subject Purchase Price (as defined below),
together with all Base Annual Rental, Additional Rental and other sums
and obligations then due and payable under this Lease as of the date of
the closing of such purchase; (iv) Lessee shall be solely responsible
for the payment of all costs and expenses resulting from such proposed
purchase, regardless of whether the purchase is consummated, including,
without limitation, to the extent applicable, the cost of title
insurance and endorsements, including, survey charges, stamp taxes,
mortgage taxes, transfer taxes and fees, escrow and recording fees,
taxes imposed on Lessor as a result of such purchase (except for taxes
on income), the attorneys' fees of Lessee and the reasonable attorneys'
fees and expenses of counsel to Lessor and Lender; and (v) the date of
the closing of such purchase shall occur on the next scheduled Base
Monthly Rental payment date following Lessor's acceptance (or deemed
acceptance) of the Rejectable Purchase Offer, but in no event later
than 30 days after the date of acceptance (or deemed acceptance) by
Lessor of such Rejectable Purchase Offer.
On the date of the closing of the purchase of a Property pursuant to this
Section (the "Rejectable Purchase Closing Date"), subject to satisfaction of the
foregoing conditions:
(1) this Lease shall be deemed terminated with respect to such Property
only, but this Lease shall continue in full force and effect with
respect to all of the other Properties; provided, however, such
termination shall not limit Lessee's obligations to Lessor with respect
to such Property under any indemnification provisions of this Lease
(including, without limitation, Sections 16 and 19 of this Lease) and
Lessee's obligations to pay any sums (whether payable to Lessor or a
third party) accruing under this Lease with respect to such Property
prior to the Rejectable Purchase Closing Date shall survive the
termination of this Lease; (2) the Base Annual Rental shall be reduced
for each such Property by an amount equal to the product of (x) the
Applicable Rent Reduction Percentage for such Property and (y) the Base
Annual Rental then in effect; and (3) Lessor shall convey such Property
to Lessee "as-is" by special warranty deed, subject to all matters of
record (except for the Mortgage corresponding to the Property to be
replaced and any other consensual liens granted by Lessor other than
those granted by Lessor at the written request of Lessee), and without
representation or warranty except as provided for in the special
warranty deed. For purposes of this Section 58, the term "Subject
Purchase Price" shall mean the product of the amount specified on
Schedule I attached hereto which corresponds to the time period during
which such purchase occurs multiplied by the Purchase Price for the
Property being purchased.
59. State Specific Provisions. The provisions and/or remedies which
are set forth on Schedule II shall be deemed a part of and included within
the terms and conditions of this Lease.
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as of the
date first above written.
WITNESSES: LESSOR:
DAPPER PROPERTIES [I] [II] [III], LLC,
a Delaware limited liability company
____________________ By Dapper Equity [I] [II] [III], LLC, a Delaware
Printed Name: ___________ limited liability company, its member
_________________________ By:
Printed Name: ___________ Jamie Grossman
Its Vice President
LESSEE:
DISCOUNT AUTO PARTS, INC.,
a Florida corporation
________________________ By:
Printed Name: __________ C. Michael Moore
Its Executive Vice President-Finance and
Chief Financial Officer
Printed Name: ____________________
Lessee's Tax Identification Number:
59-1447420
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on February ____,
2001 by Jamie Grossman, Vice President of Dapper Equity [I] [II] [III], LLC, a
Delaware limited liability company, member of Dapper Properties [I] [II] [III],
LLC, a Delaware limited liability company, on behalf of the limited liability
company.
Notary Public
My Commission Expires:
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on February ___, 2001 by C.
Michael Moore, Executive Vice President-Finance and Chief Financial Officer of
Discount Auto Parts, Inc., a Florida corporation, on behalf of the corporation.
Notary Public
My Commission Expires:
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
I, the undersigned authority, a Notary Public in and for said County in
said State, hereby certify that Jamie Grossman, whose name as Vice President of
Dapper Equity [I] [II] [III], LLC, a Delaware limited liability company, member
of Dapper Properties [I] [II] [III], LLC, a Delaware limited liability company,
is signed to the foregoing instrument, and who is known to me, acknowledged
before me on this day that, being informed of the contents of the instrument,
she, as such representative and with full authority, executed the same
voluntarily for and as the act of said limited liability company.
Given under my hand and official seal this day of February, 2001.
Notary Public
My Commission Expires: ________________
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
I, the undersigned authority, a Notary Public in and for said County in
said State, hereby certify that C. Michael Moore, whose name as Executive Vice
President-Finance and Chief Financial Officer of Discount Auto Parts, Inc., a
Florida corporation, is signed to the foregoing instrument, and who is known to
me, acknowledged before me on this day that, being informed of the contents of
the instrument, he, as such representative and with full authority, executed the
same voluntarily for and as the act of said corporation.
Given under my hand and official seal this day of February, 2001.
Notary Public
My Commission Expires: ________________
EXHIBIT A
PROPERTIES
EXHIBIT A-1
LEGAL DESCRIPTIONS OF PROPERTIES
SCHEDULE I
STIPULATED LOSS VALUE
SCHEDULE II
STATE SPECIFIC PROVISIONS
The following provisions shall be deemed a part of the Lease to the extent any
of the Properties are located in the applicable states:
ALABAMA:
The taxes and assessments required to be paid by Lessee pursuant to
Section 10 of the Lease shall also include any Alabama Business Privilege Tax
owed by Lessor or Remainderman which is attributable to the period of time in
which this Lease is in effect. Lessee shall remit to Lessor the amount required
to be paid by Lessor or Remainderman with respect to the Alabama Business
Privilege Tax annually within ten (10) days after Lessor's request.
FLORIDA:
Radon Gas. Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from the county health public
health unit.
LOUISIANA:
Any and all declarations of facts made by authentic act before a notary public
in the presence of two witnesses by a person declaring that such facts lie
within his or her knowledge, shall constitute authentic evidence of such facts
for the purpose of executory process. Lessee specifically agrees that such an
affidavit by a representative of Lessor as to the existence, amount, terms and
maturity of the Indebtedness Hereby Secured (as defined in each Mortgage with
respect to real property located in Louisiana) and of a default thereunder shall
constitute authentic evidence of such facts for the purpose of executory
process.
EXHIBIT 10.29
SALE-LEASEBACK AGREEMENT
THIS SALE-LEASEBACK AGREEMENT (this "Agreement") is made as of February 27,
2001, by and between DAPPER PROPERTIES [I] [II] [III], LLC, a Delaware limited
liability company ("Buyer"), whose address is c/o U.S. Realty Advisors, LLC,
1370 Avenue of the Americas, New York, New York 10019, and DISCOUNT AUTO PARTS,
INC., a Florida corporation ("Seller"), whose address is 4900 Frontage Road
South, Lakeland, Florida 33815.
PRELIMINARY STATEMENT:
Unless otherwise expressly provided herein, all defined terms used in this
Agreement shall have the meanings set forth in Section 1. Seller owns or has an
option or right to purchase the Properties. Buyer desires to purchase the
Properties pursuant to this Agreement and lease the Properties to Seller
pursuant to the Lease.
AGREEMENT:
In consideration of the mutual covenants and provisions of this Agreement, the
parties agree as follows:
1. Definitions. The following terms shall have the following meanings
for all purposes of this Agreement:
"Acknowledgement" means the Acknowledgement of Master Lease Assignment
and Subordination, Nondisturbance and Attornment Agreement dated as of the
date of this Agreement among Buyer, Seller, Lender and Remainderman. A
duplicate original Acknowledgement will be executed and recorded in the
applicable real property records for each Property. Each Acknowledgement
will contain exhibits with the addresses and store identification numbers
for all of the Properties and the legal description for the applicable
Property.
"Affiliate" means any person or entity which directly or indirectly
controls, is under common control with, or is controlled by any other
person or entity. For purposes of this definition, "controls", "under
common control with" and "controlled by" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such person or entity, whether through ownership of voting
securities or otherwise. "Closing" shall have the meaning set forth in
Section 5.
"Closing Date" shall have the meaning set forth in Section 5.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"Commitment" means that certain commitment letter dated January 17,
2001, among U.S. Realty Advisors, LLC and Seller, and any amendments or
supplements thereto.
"Counsel" means one or more legal counsel to Seller licensed in the
states in which (i) the Properties are located, (ii) Seller is incorporated
or formed and (iii) Seller maintains its chief executive offices, as
selected by Seller and approved by Buyer.
"De Minimis Amounts" shall mean, with respect to any given level of
Hazardous Materials, that level or quantity of Hazardous Materials in any
form or combination of forms, the use, storage or release of which does not
constitute a violation of, or require regulation or remediation under, any
Environmental Laws and is customarily employed in the ordinary course of,
or associated with, similar businesses located in the states in which the
Properties are located.
"Environmental Condition" means any condition with respect to soil,
surface waters, groundwaters, land, stream sediments, surface or subsurface
strata, ambient air and any environmental medium comprising or surrounding
any of the Properties, whether or not yet discovered, which could or does
result in any damage, loss, cost, expense, claim, demand, order or
liability to or against Seller, Buyer or Lender by any third party
(including, without limitation, any Governmental Authority), including,
without limitation, any condition resulting from the operation of Seller's
business and/or the operation of the business of any other property owner
or operator in the vicinity of any of the Properties and/or any activity or
operation formerly conducted by any person or entity on or off any of the
Properties.
"Environmental Insurer" means American International Specialty Lines
Insurance Company or such other insurer providing Environmental Policies
reasonably acceptable to Buyer.
"Environmental Laws" means any present federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common
law, relating to Hazardous Materials and/or the protection of human health
or the environment, by reason of a Release or a Threatened Release of
Hazardous Materials or relating to liability for or costs of Remediation or
prevention of Releases. "Environmental Laws" includes, but is not limited
to, the following statutes, as amended, any successor thereto, and any
regulations, rulings, orders or decrees promulgated pursuant thereto, and
any state or local statutes, ordinances, rules, regulations and the like
addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I
relating to underground storage tanks); the Solid Waste Disposal Act; the
Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the
Safe Drinking Water Act; the Occupational Safety and Health Act; the
Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and
Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act. "Environmental
Laws" also includes, but is not limited to, any present federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well
as common law: conditioning transfer of property upon a negative
declaration or other approval of a Governmental Authority of the
environmental condition of the property; requiring notification or
disclosure of Releases or other environmental condition of any of the
Properties to any Governmental Authority or other person or entity, whether
or not in connection with transfer of title to or interest in property;
imposing conditions or requirements relating to Hazardous Materials in
connection with permits or other authorization for lawful activity;
relating to nuisance, trespass or other causes of action related to
Hazardous Materials; and relating to wrongful death, personal injury, or
property or other damage in connection with the physical condition or use
of any of the Properties by reason of the presence of Hazardous Materials
in, on, under or above any of the Properties.
"Environmental Policies" means the environmental insurance policy or
policies, as applicable, issued by Environmental Insurer to Buyer with
respect to the Properties, which Environmental Policies shall be in form
and substance satisfactory to Buyer in its sole but reasonable discretion.
"Event of Default" has the meaning set forth in Section 12.
"Fee" means an expense deposit made to cover certain costs and
expenses associated with the transactions contemplated hereby equal to
$150,000.00, which amount has been paid prior to the execution of this
Agreement.
"Franchise Finance" means Franchise Finance Corporation of America, a
Maryland corporation, and its successors.
"Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority of the United States, the states in which the
Properties are located or any political subdivision thereof.
"Hazardous Materials" means (i) any toxic substance or hazardous
waste, substance, solid waste or related material, or any pollutant or
contaminant; (ii) radon gas, asbestos in any form which is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
which contains dielectric fluid containing levels of polychlorinated
biphenyls in excess of federal, state or local safety guidelines, whichever
are more stringent, or any petroleum product; (iii) any substance, gas,
material or chemical which is or may be defined as or included in the
definition of "hazardous substances," "toxic substances," "hazardous
materials," "hazardous wastes," "regulated substances" or words of similar
import under any Environmental Laws; and (iv) any other chemical, material,
gas or substance the exposure to or release of which is or may be
prohibited, limited or regulated by any Governmental Authority that asserts
or may assert jurisdiction over any of the Properties or the operations or
activity at any of the Properties, or any chemical, material, gas or
substance that does or may pose a hazard to the health and/or safety of the
occupants of any of the Properties or the owners and/or occupants of
property adjacent to or surrounding any of the Properties.
"Indemnified Parties" has the meaning set forth in Section 14.
"Knowledge" or "knowledge' means the actual knowledge of the person.
"Lease" means the master lease agreement dated as of the date of this
Agreement to be executed by Buyer, as lessor, and Seller, as lessee, with
respect to the Properties, as the same may be amended from time to time.
"Lender" means FFCA [Acquisition] [Funding] Corporation, a Delaware
corporation.
"Loan Agreement" means the Loan Agreement dated as of the date of this
Agreement in effect between Buyer and Lender, as such agreement may be
amended from time to time and any and all replacements or substitutions
thereof.
"Memorandum" means the memorandum of master lease dated as of the date
of this Agreement to be executed by Buyer, as lessor, and Seller, as
lessee, with respect to the Properties. A duplicate original Memorandum
will be executed and recorded in the applicable real property records for
each Property. Each Memorandum will contain exhibits with the addresses and
store identification numbers for all of the Properties and the legal
description for the applicable Property.
"Non-Foreign Seller Certificate" means the non-foreign seller
certificate to be executed and delivered by Seller to Buyer prior to or on
the Closing Date.
"Other Agreements" means, collectively, all agreements and instruments
now or hereafter entered into between, among or by (1) any of the Seller
Entities, and, or for the benefit of, (2) Buyer; provided, however, the
term Other Agreements shall not include this Agreement and the other
Sale-Leaseback Documents.
"Pending Actions" means the legal proceedings described in Seller's
Quarterly Report on Form 10-Q with respect to its fiscal quarter ended
November 28, 2000 filed with the United States Securities and Exchange
Commission.
"Permitted Exceptions" means those recorded easements, restrictions,
liens and encumbrances set forth as exceptions in the title insurance
policies issued by Title Company to Buyer and approved by Buyer in
connection with this Agreement.
"Permitted Facility" means (i) a Discount Auto Parts store or (ii)
such other retail auto parts store or other concept as approved by Buyer
and Lender, such approval not to be unreasonably withheld, conditioned or
delayed.
"Personalty" means all machinery, appliances, furniture, equipment,
trade fixtures and other personal property of Seller (excluding inventory)
from time to time situated on or used in connection with the Properties;
provided, however, the term "Personalty" shall not include the HVAC, supply
fans, exhaust fans, air ducts, vents, built-in sinks, built-in countertops,
plumbing and electrical fixtures, sign poles and lighting poles, all of
which items are intended to be fixtures as such term is used within the
definition of "Properties".
"Properties" means, collectively, the parcels of real estate described
by address, Buyer Number and Unit Number in Exhibit A attached hereto and
legally described in Exhibit A-1 attached hereto, all rights, privileges
and appurtenances associated therewith, and all buildings, structures,
fixtures and other improvements now or hereafter located on such real
estate (excluding Personalty and inventory).
"Purchase Price" means the amount specified in Section 3.
"Questionnaires" means, collectively, (i) the environmental
questionnaires completed by Seller with respect to each of the Properties
and submitted to Environmental Insurer in connection with the issuance of
the Environmental Policies, and (ii) the environmental audits, reports and
files submitted by Seller to Buyer prior to Closing with respect to the
Properties.
"Related Sale-Leaseback Agreements" means, collectively, (a) that
certain Sale-Leaseback Agreement dated as of the Closing Date between
Dapper Properties __, LLC, a Delaware limited liability company, and
Seller, and (b) that certain Sale-Leaseback Agreement dated as of the
Closing Date between Dapper Properties ___, LLC, a Delaware limited
liability company, and Seller.
"Release" means any release, deposit, discharge, emission, leaking,
spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials.
"Remainderman" shall have the meaning set forth in Section 15.
"Remediation" means any response, remedial, removal, or corrective
action, any activity to cleanup, detoxify, decontaminate, contain or
otherwise remediate any Hazardous Materials, any actions to prevent, cure
or mitigate any Release, any action to comply with any Environmental Laws
or with any permits issued pursuant thereto, any inspection, investigation,
study, monitoring, assessment, audit, sampling and testing, laboratory or
other analysis, or any evaluation relating to any Hazardous Materials.
"Sale-Leaseback Documents" means this Agreement, the Lease, the
Memorandum, the Acknowledgement and all other documents executed in
connection therewith or contemplated thereby.
"Seller Entities" means, collectively, Seller and all Affiliates of
Seller.
"Threatened Release" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient
air or any other environmental medium comprising or surrounding any of the
Properties which may result from such Release.
"Title Company" means the title insurance company described in Section
6.
"UCC-1 Financing Statements" means such UCC-1 Financing Statements as
Buyer shall require to be executed and delivered by Seller with respect to
the transactions contemplated by this Agreement.
2. Transaction. On the terms and subject to the conditions set forth
herein:
(i) Seller shall sell, or cause to be conveyed, and Buyer
shall purchase all of the Properties; and
(ii) Buyer shall lease all of the Properties to Seller
pursuant to the Lease.
The sale and purchase of all of the Properties pursuant to this Agreement and
the lease of all of the Properties to Seller pursuant to the Lease are not
severable and shall be considered a single integrated transaction.
3. Purchase Price. The aggregate purchase price for all of the
Properties shall be $21,171,396.00 (the "Purchase Price"). The Purchase Price
has been allocated among the Properties as set forth on Exhibit A attached
hereto. The Purchase Price shall be paid at the Closing in cash or its
equivalent subject to any prorations and adjustments required by this Agreement.
The Purchase Price shall be remitted at Closing to Seller or at Seller's
direction. In addition to payment of the Purchase Price, Buyer shall be
responsible to pay at Closing the following fees and costs: (i) any
underwriting, site assessment, valuation, processing and commitment fee payable
to Lender, (ii) any costs related to the procurement of residual value insurance
policies by Buyer, (iii) attorneys' fees of Kutak Rock LLP, counsel to Lender,
(iv) attorneys' fees of Proskauer Rose LLP, counsel to Buyer, and (v) Buyer's
reasonable out-of-pocket costs.
4. Expense Deposit. At Closing, the Fee shall be applied to the costs
to be paid by Seller as contemplated by Section 6 and the balance, if any, shall
be refunded to Seller. In the event the transaction set forth in this Agreement
fails to close, the Fee shall be applied as contemplated by the Commitment.
5. Closing Date. The purchase and sale of the Properties shall be
closed (the "Closing") within 30 days following the satisfaction of all of the
terms and conditions contained herein, but in no event shall the date of the
Closing be extended beyond February 27, 2001, unless such extension shall be
approved by both Buyer and Seller (the date on which the Closing shall occur is
referred to herein as the "Closing Date").
6. Closing. Buyer has ordered a title insurance commitment for each of
the Properties from LandAmerica Financial Group ("Title Company"). Prior to the
Closing Date, the parties hereto shall deposit with Title Company all documents
and moneys necessary to comply with their obligations under this Agreement.
Title Company shall not cause the transaction to close unless and until it has
received written instructions from Buyer to do so. Except for the fees and costs
to be paid by Buyer pursuant to Section 3, all reasonable costs of such
transaction shall be borne by Seller, including, without limitation, the
reasonable cost of title insurance and endorsements, the attorneys' fees of
Seller, reasonable local counsel attorneys' fees of Buyer and Lender, the cost
of the Environmental Policies to be delivered pursuant to Section 11.E, the
reasonable cost of the surveys, stamp taxes, transfer fees and escrow and
recording fees. All real and personal property and other applicable taxes and
assessments and other charges relating to any of the Properties which are due
and payable on or prior to the Closing Date, as well as such taxes and
assessments due and payable subsequent to the Closing Date but which Title
Company requires to be paid at Closing as a condition to the issuance of the
title insurance policies described in Section 11.C, shall be paid by Seller at
or prior to the Closing, and all other taxes and assessments shall be paid by
Seller in its capacity as lessee under the Lease in accordance with the terms of
the Lease. The Closing documents shall be dated as of the Closing Date.
Seller and Buyer hereby employ Title Company to act as escrow agent in
connection with this transaction. Seller and Buyer will deliver to Title Company
all documents, pay to Title Company all sums and do or cause to be done all
other things necessary or required by this Agreement, in the reasonable judgment
of Title Company, to enable Title Company to comply herewith and to enable any
title insurance policy provided for herein to be issued. Title Company is
authorized to pay, from any funds held by it for Buyer's or Seller's respective
credit all amounts necessary to procure the delivery of such documents and to
pay, on behalf of Buyer and Seller, all charges and obligations payable by them,
respectively. Seller will pay all charges payable by it to Title Company. Title
Company is authorized, in the event any conflicting demand is made upon it
concerning these instructions or the escrow, at its election, to hold any
documents and/or funds deposited hereunder until an action shall be brought in a
court of competent jurisdiction to determine the rights of Seller and Buyer or
to interplead such documents and/or funds in an action brought in any such
court. Deposit by Title Company of such documents and funds, after deducting
therefrom its reasonable charges and its reasonable expenses and attorneys' fees
incurred in connection with any such court action, shall relieve Title Company
of all further liability and responsibility for such documents and funds. Title
Company's receipt of this Agreement and opening of an escrow pursuant to this
Agreement shall be deemed to constitute conclusive evidence of Title Company's
agreement to be bound by the terms and conditions of this Agreement pertaining
to Title Company. Disbursement of any funds shall be made by check, certified
check or wire transfer, as directed by Buyer (it being understood that the net
proceeds of the sale will be paid to Seller by way of wire transfer). Title
Company shall be under no obligation to disburse any funds represented by check
or draft, and no check or draft shall be payment to Title Company in compliance
with any of the requirements hereof, until it is advised by the bank in which
such check or draft is deposited that such check or draft has been honored.
Title Company is authorized to act upon any statement furnished by the holder or
payee, or a collection agent for the holder or payee, of any lien on or charge
or assessment in connection with any of the Properties, concerning the amount of
such charge or assessment or the amount secured by such lien without liability
or responsibility for the accuracy of such statement. The employment of Title
Company as escrow agent shall not affect any rights of subrogation under the
terms of any title insurance policy issued pursuant to the provisions thereof.
7. Representations and Warranties of Buyer. The representations and
warranties of Buyer contained in this Section are being made by Buyer as of the
date of this Agreement and the Closing Date to induce Seller to enter into this
Agreement and consummate the transactions contemplated herein, and Seller has
relied, and will continue to rely, upon such representations and warranties from
and after the execution of this Agreement and the Closing. Buyer represents and
warrants to Seller as follows:
A. Organization of Buyer. Buyer has been duly formed, is validly
existing and has taken all necessary action to authorize the execution,
delivery and performance by Buyer of this Agreement.
B. Authority of Buyer. The person who has executed this Agreement on
behalf of Buyer is duly authorized so to do.
C. Enforceability. Upon execution by Buyer, this Agreement shall
constitute the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms.
All representations and warranties of Buyer made in this Agreement
shall survive the Closing.
8. Representations and Warranties of Seller. The representations and
warranties of Seller contained in this Section are being made as of the date of
this Agreement and the Closing Date to induce Buyer to enter into this Agreement
and consummate the transactions contemplated herein, and Buyer has relied, and
will continue to rely, upon such representations and warranties from and after
the execution of this Agreement and the Closing. Seller represents and warrants
to Buyer as follows:
A. Information and Financial Statements. Seller has delivered
to Buyer financial statements (either audited financial statements or,
if Seller does not have audited financial statements, certified
financial statements) and certain other information concerning itself,
which financial statements and other information are true, correct and
complete in all material respects; and no material adverse change has
occurred with respect to any such financial statements and other
information provided to Buyer since the date such financial statements
and other information were prepared or delivered to Buyer. Seller
understands that Buyer is relying upon such financial statements and
information and Seller represents that such reliance is reasonable. All
such financial statements were prepared in accordance with generally
accepted accounting principles consistently applied and accurately
reflect in all material respects, as of the date of this Agreement and
the Closing Date, the financial condition of each individual or entity
to which they pertain.
B. Organization and Authority. (i) Seller is a duly organized
or formed corporation, validly existing and of active status under the
laws of its state of incorporation, and qualified to do business in (a)
each of the states in which the Properties are located and (b) any
other state where such qualification is required except where the
failure to be so qualified would not have a material adverse effect on
Seller. All necessary corporate action has been taken to authorize the
execution, delivery and performance of this Agreement and of the other
documents, instruments and agreements provided for herein.
(ii) The person who has executed this Agreement on behalf of
Seller is duly authorized so to do.
C. Enforceability of Documents. Upon execution by Seller, this
Agreement and the other documents, instruments and agreements to be
executed in connection with this Agreement, shall constitute the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms.
D. Litigation. There are no suits, actions, proceedings or
investigations pending or, to the best of its knowledge, threatened
against or involving Seller or any of the Properties before any
Governmental Authority, including, without limitation, the Pending
Actions, which might reasonably result in any material adverse change
in the contemplated business, condition, worth or operations of Seller
or any of the Properties.
E. Absence of Breaches or Defaults. Seller is not in breach or
default under any other document, instrument or agreement to which
Seller is a party or by which Seller, any of the Properties or any of
Seller's property is subject or bound, which breach or default could
reasonably be expected to have a material adverse effect on Seller or
any of the Properties. The authorization, execution, delivery and
performance of this Agreement and the documents, instruments and
agreements provided for herein will not result in any breach or default
under any other document, instrument or agreement to which Seller is a
party or by which Seller, any of the Properties or any of Seller's
property is subject or bound, which breach or default could reasonably
be expected to have a material adverse effect on Seller or any of the
Properties. The authorization, execution, delivery and performance of
this Agreement and the documents, instruments and agreements provided
for herein will not violate any applicable law, statute, regulation,
rule, ordinance, code, rule or order where the effect of such violation
could reasonably be expected to have a material adverse effect on
Seller or any of the Properties.
F. Utilities. At the Closing Date, each of the Properties will
be served by adequate public utilities to permit full utilization of
each of the Properties for their intended purposes and all utility
connection fees and use charges will have been paid in full.
G. Intended Use and Zoning; Compliance With Laws. Seller
intends to use each of the Properties solely for the operation of a
Permitted Facility in accordance with the standards of operations then
in effect on a system-wide basis, and related ingress, egress and
parking, and for no other purposes. Each of the Properties is in
material compliance with all applicable zoning requirements and the
current officers of Seller have not received any written notice that
the use of any of the Properties as a Permitted Facility constitutes a
nonconforming use under applicable zoning requirements. Each of the
Properties complies in all material respects with all applicable
statutes, regulations, rules, ordinances, codes, licenses, permits,
orders and approvals of any governmental agencies, departments,
commissions, bureaus, boards or instrumentalities of the United States,
the states in which the Properties are located and all political
subdivisions thereof, including, without limitation, all health,
building, fire, safety and other codes, ordinances and requirements,
all applicable standards of the National Board of Fire Underwriters and
the Americans With Disabilities Act of 1990, and all policies or rules
of common law, in each case, as amended, and any judicial or
administrative interpretation thereof, including any judicial order,
consent, decree or judgment applicable to Seller.
H. Area Development; Wetlands. No condemnation or eminent
domain proceedings affecting any of the Properties have been commenced
or, to the knowledge of the officers of Seller, are contemplated. To
the knowledge of the officers of Seller, the area where any of the
Properties is located has not been declared blighted by any
Governmental Authority. Except as may be shown on the surveys for the
Properties delivered by or on behalf of Seller to Buyer, each of the
Properties and, to the knowledge of Seller's officers, the real
property bordering any of the Properties is not designated by any
Governmental Authority as wetlands.
I. Licenses and Permits; Access. Prior to the Closing Date,
Seller shall have all required licenses and permits, both governmental
and private, to use and operate each of the Properties in the intended
manner. There are adequate rights of access either directly or through
an easement, to public roads and ways available to each of the
Properties to permit full utilization of each of the Properties for its
intended purpose and all such public roads and ways have been completed
and dedicated to public use.
J. Condition of Properties. As of the Closing Date, each of
the Properties will be of good workmanship and materials, fully
equipped and operational, in good condition and repair, free from
structural defects, clean, orderly and sanitary, safe, well lit, ,
attractive and well maintained.
K. Environmental. Seller is fully familiar with the present
use of each of the Properties. To the knowledge of the officers of
Seller, no Hazardous Materials have been used, handled, manufactured,
generated, produced, stored, treated, processed, transferred or
disposed of at or on any of the Properties, except in De Minimis
Amounts or in material compliance with all applicable Environmental
Laws, and no Release or Threatened Release has occurred at or on any of
the Properties except such as have been remedied in compliance with all
applicable Environmental Laws. To the knowledge of the officers of
Seller, the activities, operations and business undertaken on, at or
about each of the Properties, including, but not limited to, any past
or ongoing alterations or improvements at each of the Properties, are
and have been at all times, in material compliance with all
Environmental Laws. To the knowledge of the officers of Sellers, no
further action is required to remedy any Environmental Condition
directly impacting any of the Properties or violation of, or to be in
compliance in all material respects with, any Environmental Laws, and
no lien has been imposed on any of the Properties by any Governmental
Authority in connection with any Environmental Condition, the violation
or threatened violation of any Environmental Laws or the presence of
any Hazardous Materials on or off any of the Properties.
To the knowledge of the officers of Sellers, there is no pending or
threatened litigation or proceeding before any Governmental Authority
in which any person or entity alleges the violation or threatened
violation of any Environmental Laws on or at any of the Properties or
the Release, Threatened Release or placement on or at any of the
Properties of any Hazardous Materials, or of any facts which would give
rise to any such action, nor has Seller (a) received any notice (and
the officers of Seller have no actual knowledge) that any Governmental
Authority or any employee or agent thereof has determined, threatens to
determine or requires an investigation to determine that there has been
a violation of any Environmental Laws at, on or in connection with any
of the Properties or that there exists a Release, Threatened Release or
placement of any Hazardous Materials on or at any of the Properties, or
the use, handling, manufacturing, generation, production, storage,
treatment, processing, transportation or disposal of any Hazardous
Materials at or on any of the Properties other than such as are in
material compliance with all applicable Environmental Laws or have been
remedied in compliance with all applicable Environmental Laws; (b)
received any notice under the citizen suit provision of any
Environmental Law in connection with any of the Properties or any
facilities, operations or activities conducted thereon, or any business
conducted in connection therewith; or (c) received any request for
inspection, request for information, notice, demand, administrative
inquiry or any formal or informal complaint or claim with respect to or
in connection with the violation or threatened violation of any
Environmental Laws or existence of Hazardous Materials relating to any
of the Properties or any facilities, operations or activities conducted
thereon or any business conducted in connection therewith. To the
knowledge of the officers of Seller, the information and disclosures in
the Questionnaires are true, correct and complete in all material
respects. Buyer and Environmental Insurer may rely on such information
and disclosures, and the person or persons executing the Questionnaires
were duly authorized to do so.
L. Title to Properties. Fee title to each of the Properties is
and immediately prior to Closing will be vested in Seller, free and
clear of all liens, encumbrances, charges and security interests of any
nature whatsoever, except the Permitted Exceptions.
M. No Other Agreements and Options. Except as otherwise
disclosed in the title commitment or commitments with respect to the
Properties, neither Seller nor, to the knowledge of the officers of
Seller, any of the Properties is subject to any commitment, obligation,
or agreement, including, without limitation, any right of first
refusal, option to purchase or lease granted to a third party, which
could or would prevent Seller from completing or impair Seller's
ability to complete the sale of any of the Properties under this
Agreement or which would bind Buyer subsequent to consummation of the
transaction contemplated by this Agreement.
N. No Mechanics' Liens. There are no outstanding accounts
payable, mechanics' liens, or rights to claim a mechanics' lien in
favor of any materialman, laborer, or any other person or entity in
connection with labor or materials furnished to or performed on any
portion of any of the Properties that will not have been fully paid for
on or before the Closing Date; no work has been performed or is in
progress nor have materials been supplied to any of the Properties or
agreements entered into for work to be performed or materials to be
supplied to any of the Properties prior to the date hereof, which will
not have been fully paid for before the date the same becomes
delinquent; Seller shall be responsible for any and all claims for
mechanics' liens and accounts payable that have arisen or may
subsequently arise due to agreements entered into for and/or any work
performed on, or materials supplied to any of the Properties prior to
the Closing Date; Seller shall and does hereby agree to defend,
indemnify and forever hold Buyer and Buyer's designees harmless for,
from and against any and all such mechanics' lien claims, accounts
payable or other commitments relating to any of the Properties due to
contracts or arrangements initiated by Seller or its agents.
O. No Reliance. Seller acknowledges that Buyer did not prepare
or assist in the preparation of any of the projected financial
information used by Seller in analyzing the economic viability and
feasibility of the transaction contemplated by this Agreement, and that
Seller has not relied on any report or statement by Buyer in entering
into this Agreement. Furthermore, Seller acknowledges that it has not
relied upon, nor may it hereafter rely upon, the analysis undertaken by
Buyer in determining the Purchase Price, and such analysis will not be
made available to Seller.
P. Purchase Price. The Purchase Price is the fair market value
of the Properties and was agreed to by Seller and Buyer solely on that
basis.
All representations and warranties of Seller made in this Section 8 shall
survive the Closing. Seller acknowledges and agrees that Environmental Insurer
may rely on the environmental representations and warranties set forth in the
preceding subsection K, that Environmental Insurer is an intended third-party
beneficiary of such representations and warranties and that Environmental
Insurer shall have all rights and remedies available at law or in equity as a
result of a breach of such representations and warranties, including, to the
extent applicable, the right of subrogation.
9. Covenant and Agreements of Seller. Prior to Closing, Seller shall, at
all reasonable times, upon reasonable advance notice from Buyer (i) provide
Buyer and Buyer's officers, employees, agents, advisors, attorneys, accountants,
architects, and engineers with access to each of the Properties, all drawings,
plans, and specifications for each of the Properties in possession of Seller,
all engineering reports relating to each of the Properties in the possession of
Seller, the files and correspondence relating to each of the Properties, and the
financial books and records, including lists of delinquencies, relating to the
ownership, operation, and maintenance of each of the Properties, and (ii) allow
such persons to make such inspections, tests, copies, and verifications as Buyer
considers reasonably necessary. All such persons shall use reasonable efforts
not to unduly interfere with the conduct of Seller's business.
10. Transaction Characterization. A. It is the intent of the parties that
the conveyance of each of the Properties to Buyer be an absolute conveyance in
effect as well as form, and the instruments of conveyance to be delivered at
Closing are not intended to serve or operate as a mortgage, equitable mortgage,
deed of trust, security agreement, trust conveyance or financing or trust
arrangement of any kind, nor as a preference or fraudulent conveyance against
any creditors of Seller. After the execution and delivery of the deeds described
in Section 11.A, Seller will have no legal or equitable interest or any other
claim or interest in any of the Properties other than as set forth in the Lease.
Furthermore, the parties intend:
(i) for the Lease to be a true lease and not a transaction
creating a financing lease, capital lease, equitable mortgage,
mortgage, deed of trust, security interest or other financing
arrangement, and the economic realities of the Lease are those of a
true lease; and
(ii) for the Lease to constitute a single master lease of all,
but not less than all, of the Properties, and to be a unitary,
unseverable instrument pertaining to all, but not less than all, of the
Properties and that neither the Lease nor the duties, obligations or
rights of Seller may be allocated or otherwise divided by Seller among
the Properties.
Notwithstanding the existence of the Lease, neither party shall contest
the validity, enforceability or characterization of the sale and purchase of any
of the Properties by Buyer pursuant to this Agreement as an absolute conveyance,
and both parties shall support the intent expressed herein that the purchase of
all of the Properties by Buyer pursuant to this Agreement provides for an
absolute conveyance and does not create a joint venture, partnership, equitable
mortgage, trust, financing device or arrangement, security interest or the like,
if, and to the extent that, any challenge occurs.
B. This Agreement is a contract to extend a financial accommodation (as
such term is used in the Code) for the benefit of Seller and may not be assumed
over the objection of Buyer in the event Seller becomes a debtor or debtor in
possession in any bankruptcy proceeding. The financial accommodation made
through this Agreement is Buyer's acquisition of all of the Properties for the
purpose of leasing all of the Properties to Seller pursuant to a true lease.
11. Conditions of Closing. The obligation of Buyer to consummate the
purchase of the Properties pursuant to this Agreement is subject to the
fulfillment or waiver of each of the following conditions:
A. Title. Seller shall convey each of the Properties to Buyer
and Remainderman by special warranty deeds (collectively, the "Deeds"),
free of all liens, encumbrances, restrictions, encroachments and
easements, except the Permitted Exceptions.
B. Condition of Properties. Buyer shall have inspected and
approved each of the Properties, and each of the Properties shall be in
good condition and repair.
C. Evidence of Title. Buyer shall have received a preliminary
title report and irrevocable commitment to insure title by means of an
ALTA extended coverage owner's policy of title insurance (or its
equivalent, in the event such form is not issued in the jurisdiction
where any of the Properties is located) issued by Title Company showing
good and marketable fee title in Seller, committing to insure Buyer's
fee simple ownership in each of the Properties subject only to
Permitted Exceptions and containing such endorsements as Buyer may
reasonably require.
D. Survey; Flood Hazard. Buyer shall have received a current
ALTA survey of each of the Properties, the form and substance of which
shall be satisfactory to Buyer in its sole discretion. Seller shall
have provided Buyer with evidence satisfactory to Buyer that the
location of each of the Properties is not within the 100-year flood
plain or identified as a Special Flood Hazard Area by the Federal
Emergency Management Agency, or if any of the Properties is in such a
Special Flood Hazard Area, Seller shall provide Buyer with evidence of
flood insurance maintained on such Properties in amounts and on terms
and conditions reasonably satisfactory to Buyer.
E. Environmental. Buyer shall have received the Environmental
Policies with respect to the Properties.
F. Zoning. If requested by Buyer, Seller shall have provided
Buyer with evidence satisfactory to Buyer to confirm that each of the
Properties is properly zoned for its use as a Permitted Facility and
that such use constitutes a legal, conforming use under applicable
zoning requirements.
G. Utilities. Buyer shall have received evidence satisfactory
to Buyer in its sole discretion that all utilities and roads necessary
for the operation of each of the Properties as a Permitted Facility are
available and that all necessary consents to the use of such utilities
and roads have been obtained.
H. Compliance With Representations, Warranties and Covenants.
(i) All obligations of Seller under this Agreement shall have been
fully performed and complied with, and no event shall have occurred or
condition shall exist which would, upon the Closing Date, or, upon the
giving of notice and/or passage of time, constitute a breach or default
by Seller hereunder or under the Lease or any other agreement between
or among Buyer or Seller pertaining to the subject matter hereof, and
no event shall have occurred or condition shall exist or information
shall have been disclosed by Seller or discovered by Buyer which has
had or would have a material adverse effect on any of the Properties,
Seller or Buyer's willingness to consummate the transaction
contemplated by this Agreement, as determined by Buyer in its sole and
absolute discretion.
(ii) Buyer shall have received such evidence satisfactory to
Buyer in its reasonable discretion that the representations and
warranties of Seller under this Agreement are true, correct and
complete as of the Closing Date.
I. Proof of Insurance. Seller shall have delivered to Buyer
copies of insurance policies, showing that all insurance required by
the Lease and providing coverage and limits reasonably satisfactory to
Buyer is in full force and effect.
J. Opinions of Counsel to Seller. Seller shall have caused
Counsel to prepare and deliver opinions in form and substance reasonably
satisfactory to Buyer and its counsel.
K. Closing of Loan Agreement and Related Sale-Leaseback
Agreements. All of the transactions described in the Loan Agreement and
the Related Sale-Leaseback Agreements shall have closed prior to or
simultaneously with the Closing of the transaction described in this
Agreement.
L. Closing Documents. On or prior to the Closing Date, Buyer
and/or Seller, as may be appropriate, shall execute and deliver or
cause to be executed and delivered to Title Company or Buyer, as may be
appropriate, all documents required to be delivered by this Agreement,
and such other documents, payments, instruments and certificates, as
Buyer may require in form acceptable to Buyer, including, without
limitation, the following:
(i) Deeds;
(ii) Lease;
(iii) Memorandum;
(iv) Acknowledgement;
(v) Proof of Insurance;
(vi) Opinions of Counsel to Seller;
(vii) Non-Foreign Seller Certificate;
(viii) Owner's Affidavit of No Lien and Possession;
(ix) UCC-1 Financing Statements; and
(x) Closing settlement statement prepared by
Title Company.
Upon fulfillment or waiver of all of the above conditions, Buyer shall deposit
funds necessary to close this transaction with the Title Company and this
transaction shall close in accordance with the terms and conditions of this
Agreement.
12. Default and Remedies. A. Each of the following shall be deemed an
event of default by Seller (each, an "Event of Default"):
(i) If any representation or warranty of Seller set forth in
any of the Sale-Leaseback Documents is false in any material respect
when made or as of the Closing Date or if Seller knowingly renders any
statement or account which is false in any material respect as and when
made;
(ii) If Seller fails to keep or perform any of the terms or
provisions of this Agreement;
(iii) If Seller is or becomes insolvent within the meaning of
the Code, files or notifies Buyer that it intends to file a petition
under the Code, initiates a proceeding under any similar law or statute
relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts (collectively, an "Action"), becomes the subject of
either a petition under the Code or an Action which is not dissolved
within 90 days after filing, or is not generally paying its debts as
the same become due;
(iv) If there is an "Event of Default" under the Lease; or
(v) If there is an "Event of Default" or a breach or default,
after the passage of all applicable notice and cure or grace periods,
under any other Sale-Leaseback Document or any of the Other Agreements.
B. In the event of any Event of Default, Buyer shall be entitled to
exercise, at its option, concurrently, successively or in any combination, all
remedies available under the Lease or at law or in equity (other than seeking
punitive, consequential, indirect or special damages), including without
limitation any one or more of the following:
(i) To terminate this Agreement by giving written notice to
Seller in which case neither party shall have any further obligation or
liability, except such liabilities as Seller may have for such breach
or default;
(ii) To proceed with the Closing and direct Title Company to
apply such portion of the Purchase Price as Buyer may deem reasonably
necessary to cure any such breach or default;
(iii) To bring an action for damages (other than punitive,
consequential, indirect or special damages) against Seller, which, in
the event Buyer proceeds to close, may include an amount equal to the
difference between the value of the Properties as conveyed to Buyer and
the value such Properties would have had if all representations and
warranties of Seller were true and Seller had complied with all of its
obligations;
(iv) To bring an action to require Seller specifically to
perform its obligations hereunder; and/or
(v) To recover from Seller all reasonable costs and expenses,
including reasonable attorneys' fees, paid or incurred by Buyer in
connection with the transaction contemplated by this Agreement and all
costs and expenses incurred or paid by Buyer as a result of such breach
or default.
13. Assignments. A. From and after the Closing, Buyer may assign in
whole or in part its rights under this Agreement. In the event of any
unconditional assignment of Buyer's entire right and interest hereunder and
provided Buyer's assignee shall have assumed in writing all of the duties and
obligations of Buyer hereunder, Buyer shall automatically be relieved, from and
after the date of such assignment, of liability for the performance of any
obligation of Buyer contained herein.
B. Seller shall not, without the prior written consent of Buyer, which
consent may be withheld in Buyer's sole discretion, sell, assign, transfer,
mortgage, convey, encumber or grant any easements or other rights or interests
of any kind in any of the Properties, any of Seller's rights under this
Agreement, whether voluntarily, involuntarily or by operation of law or
otherwise, including, without limitation, by merger, consolidation, dissolution
or otherwise, except, subsequent to the Closing, to the extent not expressly
prohibited by the Lease.
14. Indemnity. Seller agrees to indemnify, protect, hold harmless and
defend Buyer, Lender and their respective directors, officers, shareholders,
members, employees, successors, assigns, agents, lenders, contractors,
subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees
and invitees, as applicable (collectively, the "Indemnified Parties"), for, from
and against any and all losses, costs, claims, liabilities, damages and expenses
(collectively, "Losses") (including, without limitation, Buyer's reasonable
attorneys' fees but excluding Losses suffered by an Indemnified Party arising
out of such Indemnified Party's gross negligence or willful misconduct;
provided, however, that the term "gross negligence" shall not include gross
negligence imputed as a matter of law to any of the Indemnified Parties solely
by reason of the Buyer's interest in any of the Properties or Seller's failure
to act in respect of matters which are the obligation of Seller under the Lease)
arising as the result of an Environmental Condition and/or a breach of any of
the representations, warranties, covenants, agreements or obligations of Seller
set forth in this Agreement. Without limiting the generality of the foregoing,
such indemnity shall include, without limitation, any damages incurred with
respect to any engineering, governmental inspection and reasonable attorneys'
fees and expenses that the Indemnified Parties may incur by reason of any
Environmental Condition and/or any representation or warranty set forth in
Section 8.K being false, or by reason of any investigation or claim of any
Governmental Authority in connection therewith. No Indemnified Party shall make
any claim against Seller under this Section 14 for Losses which constitute
punitive, consequential, indirect and/or special damages, except with respect to
claims by a third party which are asserted against an Indemnified Party for
punitive, consequential, indirect and/or special damages. The provisions of this
Section 14 shall survive the Closing.
15. Remainderman. Notwithstanding anything to the contrary contained
herein, Seller acknowledges that Buyer may only obtain title to an estate for
years in each of the Properties, and that Buyer may arrange for a remainderman
("Remainderman") to obtain title to the remainder of the estate of the
Properties (the "Remainder Interest"). Seller agrees to cooperate in such event,
which cooperation shall include, without limitation (1) the granting of deeds
for the estate for years in each of the Properties to Buyer and separate deeds
for the Remainder Interest to the Remainderman (or its designee), (2) the
execution of a tripartite agreement among Seller, Buyer and the Remainderman
relating to, inter alia, the extension terms under the Lease, (3) delivering
appropriate title insurance policies to the Remainderman, and (4) delivery of
such other documents as may be reasonably required. Seller acknowledges that
Remainderman is an approved assignee of this Agreement to the extent of the
Remainder Interest.
16. Miscellaneous Provisions.
A. Notices. All notices, consents, approvals or other
instruments required or permitted to be given by either party pursuant
to this Agreement shall be in writing and given by (i) hand delivery,
(ii) facsimile, (iii) express overnight delivery service or (iv)
certified or registered mail, return receipt requested, and shall be
deemed to have been delivered upon (a) receipt, if hand delivered, (b)
transmission, if delivered by facsimile, (c) the next business day, if
delivered by express overnight delivery service, or (d) the third
business day following the day of deposit of such notice with the
United States Postal Service, if sent by certified or registered mail,
return receipt requested. Notices shall be provided to the parties and
addresses (or facsimile numbers, as applicable) specified below:
If to Seller: Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, FL 33815
Attention: C. Michael Moore
Executive Vice President-Finance
and Chief Financial Officer
Telephone: (863) 284-2140
Telecopy: (863) 284-2063
With a copy to: Trenam Kemker
2700 Bank of America Plaza
Tampa, FL 33602
Attention: Gary I. Teblum, Esq.
Telephone: (813) 223-7474
Telecopy: (813) 229-6553
If to Buyer: Dapper Properties [I] [II] [III], LLC
c/o U.S. Realty Advisors, LLC
1370 Avenue of the Americas
New York, NY 10019
Attention: Mr. David M. Ledy
Telephone: (212) 581-4540
Telecopy: (212) 581-4950
With a copy to: Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Attention: Kenneth S. Hilton, Esq.
Telephone: (212) 969-3000
Telecopy: (212) 969-2900
B. Risk of Loss. As between Buyer and Seller, Seller shall be
responsible for the risk of loss, damage or destruction of any of the
Properties or any part thereof prior to the Closing Date.
C. Condemnation. In the event of a taking of all or any part
of any of the Properties prior to the Closing, Buyer at its sole option
shall have the right to either (i) receive the proceeds of any
condemnation award and, proceed to close this transaction or (ii)
terminate this Agreement with respect to any Property which is subject
to such taking. Buyer and Seller agree to execute such amendments to
this Agreement as may be reasonably required by Buyer to evidence any
such termination.
D. Real Estate Commission. Buyer and Seller represent and
warrant to each other that they have dealt with no real estate broker,
agent, finder or other intermediary in connection with the transactions
contemplated by this Agreement, except Seller's engagement of Banc of
America Securities, LLC whose fee shall be paid by Seller. Buyer and
Seller shall indemnify and hold each other harmless for, from and
against any costs, claims or expenses, including attorneys' fees,
arising out of the breach of their respective representations and
warranties contained within this Section.
E. Waiver and Amendment. No provisions of this Agreement shall
be deemed waived or amended except by a written instrument
unambiguously setting forth the matter waived or amended and signed by
the party against which enforcement of such waiver or amendment is
sought. Waiver of any matter shall not be deemed a waiver of the same
or any other matter on any future occasion.
F. Captions. Captions are used throughout this Agreement for
convenience of reference only and shall not be considered in any manner
in the construction or interpretation hereof.
G. Buyer's Liability. Notwithstanding anything to the contrary
provided in this Agreement, it is specifically understood and agreed,
such agreement being a primary consideration for the execution of this
Agreement by Buyer, that (i) there shall be absolutely no personal
liability on the part of Buyer, its successors or assigns and the
trustees, members, partners, shareholders, officers, directors,
employees and agents of Buyer and its successors and assigns, to Seller
with respect to any of the terms, covenants and conditions of this
Agreement or the other Sale-Leaseback Documents, as applicable, (ii)
Seller waives all claims, demands and causes of action against the
trustees, members, partners, shareholders, officers, directors,
employees and agents of Buyer and its successors or assigns in the
event of any breach by Buyer of any of the terms, covenants and
conditions of this Agreement or the other Sale-Leaseback Documents, as
applicable, to be performed by Buyer, and (iii) Seller shall look
solely to the Properties for the satisfaction of each and every remedy
of Seller in the event of any breach by Buyer of any of the terms,
covenants and conditions of this Agreement or the other Sale-Leaseback
Documents, as applicable, to be performed by Buyer, or any other matter
in connection with this Agreement, the other Sale-Leaseback Documents
or any of the Properties, such exculpation of liability to be absolute
and without any exception whatsoever, provided that, with respect to
(x) affirmative acts of Buyer which constitute gross negligence or
intentional misconduct (it being understood and agreed that the acts of
the Seller and its shareholders, officers, directors, employees and
agents shall not be imputed to Buyer) and (y) any amounts which Buyer
may be responsible for under Section 16.K, Seller shall have the right
to look to other assets of Buyer, but not the assets of the trustees,
members, partners, shareholders, officers, directors, employees and
agents of Buyer.
H. Severability. The provisions of this Agreement shall be
deemed severable. If any part of this Agreement shall be held
unenforceable, the remainder shall remain in full force and effect, and
such unenforceable provision shall be reformed by such court so as to
give maximum legal effect to the intention of the parties as expressed
therein.
I. Construction Generally. This is an agreement between
parties who are experienced in sophisticated and complex matters
similar to the transaction contemplated by this Agreement and is
entered into by both parties in reliance upon the economic and legal
bargains contained herein and shall be interpreted and construed in a
fair and impartial manner without regard to such factors as the party
which prepared the instrument, the relative bargaining powers of the
parties or the domicile of any party. Seller and Buyer were each
represented by legal counsel competent in advising them of their
obligations and liabilities hereunder.
J. Other Documents. Each of the parties agrees to sign such
other and further documents as may be necessary or reasonably requested
by the other party in order to carry out the intentions expressed in
this Agreement.
K. Attorneys' Fees. In the event of any judicial or other
adversarial proceeding between the parties concerning this Agreement,
the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other reasonable costs in addition to any other
relief to which it may be entitled.
L. Entire Agreement. This Agreement, together with any other
certificates, instruments or agreements to be delivered hereunder,
constitute the entire agreement between the parties with respect to the
subject matter hereof, and there are no other representations,
warranties or agreements, written or oral, between Seller and Buyer
with respect to the subject matter of this Agreement. Notwithstanding
anything in this Agreement to the contrary, upon the execution and
delivery of this Agreement by Seller and Buyer, the Commitment shall be
deemed null and void and of no further force and effect and the terms
and conditions of this Agreement shall control notwithstanding that
such terms and conditions are inconsistent with or vary from those set
forth in the Commitment.
M. Forum Selection; Jurisdiction; Venue; Choice of Law. Seller
acknowledges that this Agreement was partially negotiated in the State
of Arizona, the Agreement was delivered by Seller and Buyer in the
State of Arizona, all payments under the Lease will be delivered in the
State of Arizona (unless otherwise directed by Buyer or its successors)
and there are substantial contacts between the parties and the
transactions contemplated herein and the State of Arizona. Except for
purposes of any action or proceeding concerning the rights and remedies
of Buyer with respect to the Properties (which actions or proceedings
shall be conducted in the state where the affected Property is
located), for purposes of any action or proceeding arising out of this
Agreement, the parties hereto hereby expressly submit to the
jurisdiction of all federal and state courts located in the State of
Arizona and Seller consents that it may be served with any process or
paper by registered mail or by personal service within or without the
State of Arizona in accordance with applicable law. Furthermore, Seller
waives and agrees not to assert in any such action, suit or proceeding
that it is not personally subject to the jurisdiction of such courts,
that the action, suit or proceeding is brought in an inconvenient forum
or that venue of the action, suit or proceeding is improper. It is the
intent of the parties hereto that all provisions of this Agreement
shall be governed by and construed under the laws of the State of
Arizona. To the extent that a court of competent jurisdiction finds
Arizona law inapplicable with respect to any provisions hereof, then,
as to those provisions only, the law of the states in which the
Properties are located, as applicable, shall be deemed to apply.
Nothing in this Section shall limit or restrict the right of Buyer to
commence any proceeding in the federal or state courts located in the
states in which the Properties are located, as applicable, to the
extent Buyer deems such proceeding necessary or advisable to exercise
remedies available under this Agreement.
N. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
O. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Seller and Buyer and their respective
successors and permitted assigns, including, without limitation, any
United States trustee, any debtor-in-possession or any trustee
appointed from a private panel.
P. Survival. Except for the conditions of Closing set forth in
Section 11, which shall be satisfied or waived as of the Closing Date,
all representations, warranties, agreements, obligations and
indemnities of Seller and Buyer set forth in this Agreement (including,
without limitation, the provisions of Sections 7, 8 and 14) shall
survive the Closing.
Q. Waiver of Jury Trial and Punitive, Consequential, Special
and Indirect Damages. BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST
THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED
HEREIN OR RELATED HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY
RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, BUYER AND SELLER HEREBY
EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY
HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM
THE OTHER PARTY AND ANY OF THE OTHER PARTY'S AFFILIATES, OFFICERS,
DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT
TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY SUCH PARTY AGAINST THE OTHER PARTY OR ANY OF
THE OTHER PARTY'S AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES
OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN
OR RELATED HERETO, EXCEPT THAT SUCH WAIVER ON THE PART OF BUYER SHALL
NOT BE DEEMED TO LIMIT, REDUCE OR PRECLUDE IN ANY WAY BUYER'S REMEDIES
PURSUANT TO SECTION 23 OF THE LEASE. THE WAIVER BY EACH OF BUYER AND
SELLER OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO
AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
R. Reliance By Lender. Seller acknowledges and agrees that
Lender may rely on all of the representations, warranties and covenants
set forth in this Agreement, that Lender is an intended third-party
beneficiary of such representations, warranties and covenants and that
Lender shall have all rights and remedies available at law or in equity
as a result of a breach of such representations, warranties and
covenants, including to the extent applicable, the right of
subrogation.
S. Radon Gas. Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in sufficient quantities,
may present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been
found in buildings in Florida. Additional information regarding radon
and radon testing may be obtained from the county health public health
unit.
IN WITNESS WHEREOF, Seller and Buyer have entered into this Agreement as of the
date first above written.
BUYER:
DAPPER PROPERTIES [I] [II] [III], LLC,
a Delaware limited liability company
By: Dapper Equity [I] [II] [III], LLC, a Delaware
limited liability company, its member
By
Jamie Grossman
Its Vice President
SELLER:
DISCOUNT AUTO PARTS, INC.
a Florida corporation
By
C. Michael Moore
Its Executive Vice President-Finance and
Chief Financial Officer
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on February ____,
2001 by Jamie Grossman, Vice President of Dapper Equity [I] [II] [III], LLC, a
Delaware limited liability company, member of Dapper Properties [I] [II] [III],
LLC, a Delaware limited liability company, on behalf of the limited liability
company.
Notary Public
My Commission Expires:
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on February ___, 2001 by C.
Michael Moore, Executive Vice President-Finance and Chief Financial Officer of
Discount Auto Parts, Inc., a Florida corporation, on behalf of the corporation.
Notary Public
My Commission Expires:
EXHIBIT A
PROPERTIES
EXHIBIT A-1
LEGAL DESCRIPTIONS OF PROPERTIES
EXHIBIT 10.30
AGREEMENT AND GENERAL RELEASE
THIS AGREEMENT AND GENERAL RELEASE is executed as of the 17th day of
January, 2001, by and between WILLIAM C. PERKINS ("Employee") and DISCOUNT AUTO
PARTS, INC. as employer of record ("Company").
W I T N E S S E T H :
WHEREAS, Employee's employment with Company has been terminated as of
January 17, 2001; and
WHEREAS, the Employee has been in employment of the Company for an extended
period, during which time Employee has been provided access to the Company's
trade secrets and other confidential, proprietary business information; and
WHEREAS, the Company is engaged in a very competitive business in which it
must restrict the disclosure of its trade secrets and other confidential and
proprietary business information in order to be successful; and
WHEREAS, Company and Employee wish to provide for certain payments to be
made to Employee in exchange for a General Release and other terms and
conditions as set forth below;
NOW, THEREFORE, in consideration of the premises and mutual promises herein
contained, it is agreed as follows:
FIRST: Recitals. The recitals stated herein above are incorporated herein
and made an integral part of this Agreement and General Release as an inducement
to each party to enter into this Agreement and General Release.
SECOND: Prior Obligations. The parties agree that the sums of money
provided for in Paragraph THIRD to be paid by Company to Employee, with the
exception of the Supplemental Executive Profit Sharing Plan monies, are amounts
that are not currently owed to Employee as a result of any prior obligation of
Company.
THIRD: Consideration. In consideration for the agreements and obligations
of Employee herein set forth (including without limitation the agreement to make
himself available to perform certain consulting services) and the other terms
and conditions hereof, Company agrees to pay to Employee (1) Six Hundred
Twenty-seven Thousand Dollars and 00/100 ($627,000.00) in equal monthly
installments over twenty-four (24) months, with such payments to continue during
such period so long as Employee is not in breach of any of the terms or
conditions of this Agreement, (2) any earned but unused vacation time existing
at employee's termination date and computed based on a per diem rate of $740;
and (3) the fiscal 2001 third quarter bonus that the Employee would have earned
had he been employed on the last day of such third quarter, payable at the same
time as other executives receive their third quarter bonuses, so long as
Employee is at such time not then in breach of any of the terms or conditions of
this Agreement, it being understood that such bonus would be the final bonus
paid to Employee. Required deductions shall be made from all payments. In the
event of a Change of Control of Company, all amounts then still owed under this
Paragraph THIRD will become immediately due and payable. For the purpose of this
Agreement, a "Change of Control" shall occur if (i) Company shall not be the
surviving entity in any merger or consolidation (or survives only as a
subsidiary of an entity other than a previously wholly-owned subsidiary of
Company), (ii) Company sells, leases or exchanges or agrees to sell, lease or
exchange all or substantially all of its assets to any other person or entity
(other than a wholly-owned subsidiary of Company), (iii) Company is to be
dissolved and liquidated, (iv) any person or entity, including a "group" as
contemplated by Section 13(d)(3) of the 1934 Act, (other than Peter Fontaine,
Fontaine Industries Limited Partnership, Glenden Enterprises Limited Partnership
or any of their respective affiliates and other than (A) any employee plan
established by Company, (B) Company, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities or (D) a corporation
owned, directly or indirectly, by stockholders of Company in substantially the
same proportions as their ownership of Company) acquires or gains beneficial
ownership or control (including, without limitation, power to vote) of more than
51% of the combined voting power of Company's then outstanding voting
securities, or (v) as a result of or in connection with any cash tender or
exchange offer, merger or other business combination, sales of assets or a
contested election for the board of directors, or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of
Company before such Transaction shall cease to constitute a majority of the
board of directors of Company.
In further consideration for the terms hereof, Company also agrees to
continue to provide health insurance coverage for the Employee and his family
for a period of twenty-four (24) months to the same extent as is generally
provided during such period to other senior members of Company's management
provided that the Employee continues to pay to Company the percentage of total
premiums for family coverage as was being paid by Employee immediately prior to
the execution of this Agreement, the amount of which is currently $180.00 per
month. The Employee may continue to make such payment by an offset against the
payments due and payable under the preceding paragraph of this Paragraph THIRD
by an authorization in writing submitted to the Human Resources Department of
Company. Should Employee find other employment during this period and should
that employer cover Employee for health insurance, then the heath insurance
coverage by Company shall end.
Within thirty (30) days following the execution of this Agreement, the
Company also will pay to Employee in further consideration for the terms hereof
the agreed upon current balance of the Employee under the Company's Supplemental
Executive Profit Sharing Plan, as amended, which current balance is agreed to be
Seventy-seven Thousand Seven Hundred Eleven Dollars and 00/100 ($77,711.00).
FOURTH: Reimbursement of Expenses. Employee has advised Company that he has
appropriate substantiation and can prepare appropriate expense reports for
expenditures incurred in connection with his employment by Company. If, on or
before February 15, 2001 and in accordance with Company's requirements and
policies for expense substantiation and expense reports, Employee submits
expense reports substantiating such expenditures, Company shall reimburse
Employee for such expenditures on or before March 15, 2001.
FIFTH: Personal Property. Company acknowledges that certain property
belonging to Employee may remain physically located at the Company's offices,
including without limitation, certain office furniture, personal effects and
wall hangings. Company's agrees to permit Employee, during normal business hours
and upon reasonable notice to a senior officer of Company, to remove or arrange
for the removal of such personal effects.
SIXTH: Stock Options. Employee shall receive (1) a nonqualified stock
option to purchase 50,000 shares of the Company's common stock with a term of
five (5) years from the date hereof and (2) a separate nonqualified stock option
to purchase 50,000 shares of the Company's common stock with a term of three (3)
years from the date hereof. Each option shall be evidenced by a separate stock
option agreement. The right to purchase such stock under each option shall be
nontransferable and shall be fully vested on the date received. The option price
under each option shall be $7.00 per share. Although these options will not be
granted under any of the Company's existing stock option plans and the shares
issued pursuant to the exercise thereof will not be the subject of any
registration statement filed with the SEC, the other terms pursuant to which
each such stock option is granted shall be substantially similar to the terms of
grant contained in the Company's Amended
SEVENTH: Exclusive Obligations. Employee agrees that other than the
obligations created by Paragraphs THIRD and FOURTH, he is not owed any further
amounts by Company in salary, wages, expenses, vacation, reimbursement,
severance or otherwise.
EIGHTH: Resignation. Employee agrees that he is, simultaneously with the
execution of this Agreement and General Release, resigning from all positions
with the Company and its subsidiaries, including without limitation as an
employee and an officer and agrees to execute such further documents as may be
reasonably necessary to evidence such resignations.
NINTH: Employee agrees to immediately return all Company property in his
possession, including, but not limited to, Company credit cards, keys, pager,
customer lists, reports (including sales reports by store listings), catalogs,
price lists, computer files and records, and copies thereof.
TENTH: Representations by Employee. Employee represents and warrants that
he has not filed any charges or complaints of any nature or kind whatsoever
against Company, and its subsidiaries, affiliates or related companies and/or
their respective present and former officers, directors, shareholders, partners,
employees, supervisors, agents, representatives, attorneys, servants and
successors or any person in any way related to Company, and each of them
("Released Parties") with any state or federal court or any governmental agency
based on events occurring prior to the date of execution of this Agreement and
General Release and there are no facts known to Employee that might reasonably
serve as a basis now or in the future for any such charges, claims or complaints
by anyone.
ELEVENTH: Release by Employee. Employee does hereby, for himself and for
his successors, heirs, executors, administrators and assigns, release, acquit
and forever discharge the Released Parties of and from any and all claims,
actions, causes of action, rights, contract claims, claims for attorneys' fees,
demands, debts, damages or accountings of whatever nature, whether known or
unknown, fixed or contingent, liquidated or unliquidated from the beginning of
time to the date hereof including but not limited to any claims for
discrimination, harassment, torts, damage to character, damage to reputation,
defamation, interference with contract, intentional infliction of emotional
distress, pain and suffering, retaliation, breach of contract, claims for
commissions, wages, bonuses, incentive pay, benefits or claims under any state,
federal or local law, constitution or ordinance or at common law including,
without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights
Act of 1991, the Equal Pay Act, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Fair Labor Standards Act, the Employee
Retirement Income Security Act, or the Florida Civil Rights Act, it being the
intention of the parties to make this release as broad and as general as the law
permits. Employee further covenants not to sue or cause or allow any suit to be
filed, against the Company or any one or more of the Released Parties for any
matters released herein. Employee understands that rights or claims under the
Age Discrimination in Employment Act that may arise after the date this
Agreement and General Release is executed are not waived.
TWELFTH: Employee Acknowledgment of Business Interests to Be Protected.
Employee acknowledges that as a result of his employment by the Company, he has
received valuable and specialized skills, training and knowledge about the
Company and about its business. Employee further acknowledges that the Company
has developed, at its expense, valuable and substantial relationships with its
customers and prospective customers, and that the Company enjoys the benefit of
goodwill associated with its ongoing business and relationships. Employee
acknowledges that the Company's marketing techniques and strategies, methods
and/or cost of doing business including current store base sales information,
pricing strategies, margin strategies and expectations, vendor lists, customer
lists, administrative procedures, financial information, personnel information,
business plans including real estate and expansion plans, and other similar
business information, are all trade secrets or otherwise constitute valuable,
confidential, proprietary information belonging to the Company.
THIRTEENTH: Non-Disclosure Covenant. During the five (5) year period
immediately following the termination of his employment by and for the Company
Employee will not, directly or indirectly, individually or by or through any
other corporate or business entity, misappropriate or otherwise use any trade
secret or other valuable, confidential, proprietary business information
belonging to the Company and material in any respect to its business or
operations, nor will he disclose or communicate any such information to any
person, firm, corporation, association or other entities. Employee acknowledges
that all of the matters described in the preceding Paragraph TWELFTH above are
the types of information subject to this prohibition against his unauthorized
disclosure or use. Notwithstanding the foregoing, this prohibition shall not
apply to any information that (a) was already known to Employee prior to
disclosure of same to him by the Company or prior to his having been provided
access to same by the Company, as applicable; (b) was or becomes publicly known
through no wrongful act of Employee; (c) was rightfully obtained by Employee
from a third party without similar restriction and without breach hereof; (d)
was independently developed by Employee without the use of any of such
confidential or proprietary information disclosed to Employee by the Company or
to which Employee had access through the Company; (e) was disclosed pursuant to
the requirement or request of a governmental agency, which disclosure cannot be
made in confidence, provided that, in such instance, Employee shall first give
to the Company notice of such requirement or request; or (f) was identified by
the parties in a separate writing signed by the parties specifically
acknowledging information that is not within the prohibitions of this section.
FOURTEENTH: Non-Competition Covenant. During the three (3) year period
immediately following the termination of his employment by and for the Company,
Employee will not, either directly or indirectly, whether personally or as an
associate, employee, partner, manager, agent or otherwise, on behalf of any
other person:
(1) Engage in the business of selling automotive and motor
vehicle parts, accessories and/or maintenance items at retail or to
commercial accounts such as installers, mechanics and garages in
competition with the business of the Company within the states of
Florida, Georgia, Alabama, South Carolina, Mississippi, Louisiana,
Texas, Tennessee, Arkansas or North Carolina, or within the
Commonwealth of Puerto Rico;
(2) Accept employment or otherwise provide services to or for the
benefit of any company engaged in competition with the Company, which
competing company has or maintains stores within or engages in sales
within any of the proscribed jurisdictions described above;
(3) Accept employment with any of the following companies:
Autozone, Advance Auto Parts/Western Auto, O'Reilly's Auto Parts, Pep
Boys, CSK Auto Parts, NAPA (Genuine Parts), or Car Quest Auto Parts;
(4) Solicit, sell to, call upon, or otherwise engage in any
contact with any commercial account customer, or any person who was
identified as a prospective commercial account customer, of the
Company for the purpose of soliciting, selling or providing to such
person any goods or services in competition with the Company nor will
he accept any orders from any such persons;
(5) Hire or engage for employment or services, or solicit to do
so, any employee, leased employee, agent, representative or other
person while such person is providing services to or for the Company
or at any time within one (1) year after the termination of any such
person's relationship with the Company;
(6) Recruit, solicit, train or assist any other person to engage
in any of the activities proscribed by any covenant of this Agreement
and General Release.
It is agreed by Company and Employee that if any portion of the covenants set
forth in this Paragraph FOURTEENTH are held to be invalid, unreasonable,
arbitrary, or against public policy, then such portion of such covenants shall
be considered divisible as to both time and geographic area. Company and
Employee agree that, if any court of competent jurisdiction determines the
specified time period or the specified geographic area applicable to this
Paragraph FOURTEENTH to be invalid, unreasonable, arbitrary, or against public
policy, then a lesser time period or geographic area which is determined to be
reasonable, non-arbitrary, and not against public policy may be enforced against
the Employee. Company and the Employee agree that the foregoing covenants are
appropriate and reasonable when considered in light of the nature and extent of
the business conducted by Company.
If at any time the Company fails to make any material payment to Employee that
is required to be made under this Agreement or otherwise breaches any of its
material obligations hereunder, and such failure continues without cure through
the date which is ten (10) days after the Company receives written notice from
Employee of such failure, Employee shall be relieved of the covenants set forth
in this Paragraph FOURTEENTH from and after the date of such failure by the
Company; provided however that such failure shall not relieve Employee of any
other obligations hereunder.
FIFTEENTH: Remedies in the Event of Breach. In the event of a breach by the
Employee of any of the covenants of the Employee in this Agreement and General
Release, including without limitation the covenants in Paragraphs TWELFTH,
THIRTEENTH or FOURTEENTH of this Agreement and General Release, the Company,
after providing written notice of such breach to Employee and provided that
Employee has not cured such breach within ten (10) days following the giving of
such notice, shall be entitled to:
(1) Obtain an injunction enjoining any violation or threatened
violation of the covenants herein for the benefit and protection of
the Company;
(2) Obtain an injunction compelling the performance by Employee
of all obligations and covenants owed to the Company under this
Agreement and General Release;
(3) Obtain a judgment for all losses, damages, profits or
expenses which are incurred, lost or suffered by the Company,
including all reasonable attorneys' fees and court costs incurred by
the Company, in enforcing any right under this Agreement and General
Release;
(4) Extend the non-disclosure, non-competition, non-solicitation
and other prohibition periods for any time during which Employee is in
breach of this Agreement and General Release;
(5) Withhold from Employee and not pay to Employee any sum
otherwise payable by Company to Employee, including without
limitation, any such sum payable under this Agreement and General
Release; and
(6) Terminate the stock options granted pursuant to Paragraph
SIXTH.
SIXTEENTH: Voluntary and Knowing Action. Employee represents that he has
been advised to consult an attorney before executing this Agreement and General
Release and that he has had sufficient time to review, consider, and become
fully informed of the terms and effect of this Agreement and General Release
before signing it. In particular, Employee represents that he has had a full
twenty (21) days within which to consider this Agreement and General Release
before executing it, or has waived such time period in order to begin and obtain
the payments and benefits hereunder. Employee further acknowledges that he is
voluntarily entering into this Agreement and General Release and has full
capacity to enter into this Agreement and General Release. Employee agrees that
his covenants and promises made in this Agreement and General Release are in
consideration of the agreements and payment obligations of the Company made
pursuant to this Agreement and General Release.
Employee has a full seven (7) days following the execution of this
Agreement and General Release to revoke this Agreement and General Release,
provided such revocation is accompanied by the return of any and all payments
then having been made to Employee hereunder and any and all property then having
been provided to Employee hereunder, and has been and hereby is advised in
writing that this Agreement and General Release shall not become effective or
enforceable until the revocation period has expired.
SEVENTEENTH: Confidentiality. Except to the extent disclosure may be
required by applicable law, Employee agrees that the terms, provisions, and fact
of this Agreement and General Release shall remain completely confidential and
that he has not and will not hereafter disclose any information concerning this
Agreement and General Release to anyone except his attorney, accountant and/or
other professional advisors, who will in turn keep such information completely
confidential, and not disclose it to others. Employee understands that his
promise of confidentiality includes, but is not limited to, any current or
former Employee, customer, supplier or vendor of the Company or any related
entity and the media, or competitor company.
Should Employee violate any of his promises and representations as provided
for in this Agreement and General Release and fail to cure such violation within
ten (10) days after the Company gives Employee written notice of such violation,
the payments provided pursuant to Paragraph THIRD above shall be returned and/or
forfeited to the Company, the property delivered to Employee by the Company
pursuant to Paragraph FIFTH above shall be returned and/or forfeited to the
Company and the stock options provided pursuant to Paragraph SIXTH above shall
be returned and/or forfeited to the Company, but this Agreement and General
Release shall otherwise remain in full force and effect. Additionally a breach
by Employee of any of the provisions of this Agreement and General Release will
entitle Company to any and all rights and remedies against Employee available
under the laws of Florida, including, but not limited to, reimbursement for all
costs, expenses and attorneys fees incurred to enforce this Agreement and
General Release, together with the return of any payments and property
previously made.
EIGHTEENTH. Non-Disparagement. Employee shall not hereafter (i) make any
public or private statements criticizing the business or activities of Company,
or (ii) take any action which is intended, or would reasonably be expected, to
harm Company or its reputation or which would reasonably be expected to lead to
unwanted or unfavorable publicity concerning Company. Company shall not
hereafter (i) make any public or private statements criticizing the activities
of Employee in any way or (ii) take any action which is intended, or would
reasonably be expected, to harm Employee or Employee's reputation or which would
reasonably be expected to lead to unwanted or unfavorable publicity concerning
Employee. If either party wishes to make a public statement concerning the
matters addressed by this Agreement and General Release, such party shall prior
thereto provide a copy of such statement to the other party and such other party
may provide comments thereon; provided however, that nothing herein shall be
deemed to prohibit any party from making any disclosure which its counsel deems
necessary in order to fulfill such party's disclosure obligations imposed by
law.
NINETEENTH: Cooperation; Consulting Services. Employee agrees that he will
cooperate with and assist the Company in connection with consummating the terms
and provisions of this Agreement and General Release and in any investigation
and proceedings, related to or arising out of or in connection with any matter
in which he was involved or of which he had knowledge while providing services
to the Company.
Employee also agrees during the period January 18, 2001, to January 31,
2003, to make himself available as a consultant to the Company up to a maximum
of twenty (20) hours per month upon reasonable request by the Company to assist
his successor(s) or any other representative designated by the CEO or President
of the Company to complete and/or help resolve any outstanding matters, to
assist in the management transition and to provide the benefit of his experience
and expertise.
TWENTIETH: Outplacement. The Company, at its cost, will provide Employee
with one year of outplacement services from an independent outplacement service
either selected by the Company or, if suggested by the Employee, approved in
advance by the Company in its reasonable discretion. The extent of outplacement
services shall be as is customary for executives similarly situated, within a
level of program reasonably acceptable to the Company. In no event shall the
cost of such services exceed $10,000.00.
TWENTY-FIRST: Entire Agreement; Amendment; Etc. This Agreement and General
Release supersedes all prior oral and/or written agreements between the parties
(including without limitation the Change of Control Employment Agreement dated
as of January 17, 2000 between the Company and the Employee), all of which shall
be deemed terminated, null and void and of no further effect from and after the
date hereof. There are no representations, warranties or commitments, except as
specifically set forth herein. This Agreement and General Release may be amended
only by an instrument in writing duly executed by each of the parties hereto.
All rights, entitlements and benefits of this Agreement and General Release
inure to the Company and to any of its successors or assigns and, without
limitation thereof, the obligations of Paragraphs TWELFTH, THIRTEENTH and
FOURTEENTH are specifically intended to be enforceable by all successors and
assigns.
All covenants herein survive the termination or expiration of this
Agreement and General Release.
TWENTY-SECOND: Independent Covenants; Waiver. Except as otherwise expressly
provided for herein, the restrictive covenants herein are independent of any
other agreement between the parties, and no claim by Employee against the
Company shall be a defense to the enforcement of these covenants. Further, any
waiver of a breach by the Company does not constitute a waiver of any subsequent
breach, nor does any failure to take action by the Company against any other
employee for similar breaches constitute a waiver or estoppel as to Employee.
TWENTY-THIRD: Notices. All notices required or permitted under this
Agreement and General Release shall be in writing and shall be deemed delivered
when delivered in person or three days after deposited in the United States
mail, postage paid, addressed as follows:
Company: DISCOUNT AUTO PARTS, INC.
Attn: Vice President of Human Resources
4900 Frontage Road South
Lakeland, Florida 33815
Employee: WILLIAM C. PERKINS
Tampa, FL
Such addresses may be changed from time to time by either party by providing
written notice in the manner set forth above.
TWENTY-FOURTH: Severability. Should any provision of this Agreement and
General Release be declared or determined by any court to be invalid, illegal or
unenforceable in any respect, the remaining provisions of this Release will not
be affected or impaired in any way.
TWENTY-FIFTH: Governing Law. This Agreement and General Release shall be
construed and interpreted in accordance with the laws of the state of Florida.
TWENTY-SIXTH: Jurisdiction. In the event of any litigation arising out of
the enforcement or interpretation of this Agreement and General Release,
Employee hereby consents to venue in Polk County, Florida. Employee further
stipulates that the Circuit Court in and for the Tenth Judicial Circuit in and
for Polk County, Florida, shall be the exclusive forum for all legal proceedings
involving this Agreement and General Release and he hereby consents to be
subject to and bound by the personal jurisdiction of such court.
TWENTY-SEVENTH: Attorneys Fees. In the event of any litigation arising out
of the enforcement or interpretation of this Agreement and General Release, the
prevailing party shall be entitled to recover the expenses incurred by it in
such litigation, including without limitation reasonable attorneys fees and
costs.
IT IS FURTHER UNDERSTOOD AND AGREED, AND EMPLOYEE EXPRESSLY ACKNOWLEDGES, THAT
THIS AGREEMENT AND GENERAL RELEASE IS INTENDED TO INCLUDE IN ITS EFFECT, WITHOUT
LIMITATION, A RELEASE OF ALL CLAIMS WHICH HAVE ARISEN PRIOR TO THE DATE OF THIS
AGREEMENT AND GENERAL RELEASE INCLUDING THOSE OF WHICH EMPLOYEE DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTION HEREOF, AND THAT THE
TERMS AGREED UPON CONTEMPLATES THE EXTINGUISHMENT OF ANY SUCH CLAIM OR CLAIMS.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
General Release on the date first above written.
By:/s/ William C. Perkins
----------------------------------------
WILLIAM C. PERKINS
Date: January 17, 2001
----------------------------------------
DISCOUNT AUTO PARTS, INC.
By:/s/ Peter J. Fontaine
----------------------------------------
PETER J. FONTAINE
Title: Chief Executive Officer
----------------------------------------
Date: January 17, 2001
----------------------------------------
EXHIBIT 10.31
FIRST AMENDMENT
TO
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
THIS AGREEMENT is between DISCOUNT AUTO PARTS, INC., a Florida corporation
(the "Company"), and C. MICHAEL MOORE, residing at Clearwater, Florida (the
"Executive") and is dated as of the 19th day of March, 2001.
WITNESSETH:
WHEREAS, the parties hereto have entered into that certain Change of
Control Employment Agreement dated as of January 17, 2000 by and between the
Company and the Executive (the "Change of Control Employment Agreement"); and
WHEREAS, the Company and the Executive have agreed to amend the terms of
the Change of Control Employment Agreement in certain respects as set forth in
this First Amendment to Employment Agreement (the "Amendment").
NOW, THEREFORE, in consideration of the above premises and mutual
agreements herein set forth and the services performed and to be performed by
the Executive for the Company, the parties agree as follows:
1. Applicable Number of Months.
Section 3.b. of the Change of Control Employment Agreement shall
be replaced in its entirety by the following:
b. For purposes of this Agreement, the Applicable Number of
Months will be equal to thirty-six (36) months.
2. Notice Address.
The notice address for the Executive in Section 12.c. of the
Change of Control Employment Agreement shall be changed to be the
following:
To the Executive:
C. Michael Moore
Clearwater, Florida
3. Miscellaneous.
Unless specifically modified, added or deleted by this Amendment,
all terms and provisions of the Change of Control Employment Agreement
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
WITNESSES:
DISCOUNT AUTO PARTS, INC.
/s/ Glenda G. Cronin
By:/s/Peter J. Fontaine
/s/ Kristi Mullis Peter J. Fontaine,
Chief Executive Officer
"Company"
/s/ Kristi Mullis /s/C. Michael Moore
Michael Moore
/s/ Marta Jones "Executive"
EXHIBIT 10.32
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made and entered into effective as of
February 20, 2001, by and between DONALD W. OLSON (the "Indemnified Party") and
DISCOUNT AUTO PARTS, INC., a Florida corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, it is essential to the Corporation to retain and attract as
Directors and/or Executive Officers the most capable persons available; and
WHEREAS, the substantial increase in corporate litigation subjects
directors and officers to expensive litigation risks at the same time that the
availability of directors' and officers' liability insurance has been severely
limited; and
WHEREAS, in addition, the statutory indemnification provisions of the
Florida Business Corporations Act and Article VI of the bylaws of the
Corporation (the "Article") expressly provide that they are non-exclusive; and
WHEREAS, the Indemnified Party does not regard the protection available
under the Article and insurance, if any, as adequate in the present
circumstances, and considers it necessary and desirable to his service as a
Director and/or Executive Officer to have adequate protection, and the
Corporation desires the Indemnified Party to serve in such capacity and to have
such protection; and
WHEREAS, the Florida Business Corporations Act and the Article provide
that indemnification of Directors and Executive Officers of the Corporation may
be authorized by agreement, and thereby contemplates that contracts of this
nature may be entered into between the Corporation and the Indemnified Party
with respect to indemnification of the Indemnified Party as a Director and/or
Executive Officer of the Corporation.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained in this Agreement, it is hereby agreed as follows:
1. INDEMNIFICATION GENERALLY.
(a) Grant of Indemnity. Subject to and upon the terms and conditions of this
Agreement, the Corporation hereby agrees to indemnify the Indemnified Party
in respect of any and all claims, losses, damages and expenses which may be
incurred by the Indemnified Party as a result of or arising out of:
(1) any threatened, pending, or completed action, suit or proceeding,
whether brought by or in the right of the Corporation or
otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnified Party may be or
may have been involved as a party or otherwise, arising out of
the fact that the Indemnified Party is or was a director,
officer, employee, agent or stockholder of the Corporation or any
of its "Affiliates" (as such term is defined in the rules and
regulations promulgated by the Securities and Exchange Commission
under the Securities Act of 1933), or served as a director,
officer, stockholder, agent, employee, salesman, independent
contractor, partner, franchisor or joint venturer in or for any
person, firm, partnership, corporation or other entity at the
request of the Corporation (including without limitation service
in any capacity for or in connection with any employee benefit
plan maintained by the Corporation or on behalf of the
Corporation's employees).
(2) any attempt (regardless of its success) by any person to charge
or cause the Indemnified Party to be charged with wrongdoing or
with financial responsibility for damages arising out of or
incurred in connection with the matters indemnified against in
this Agreement; or
(3) any expense, assessment, fine, tax, judgment or settlement
payment arising out of or incident to any of the matters
indemnified against in this Agreement including reasonable fees
and disbursements of counsel (before and at trial and in
appellate proceedings).
(i) Claims for Indemnification. Whenever any claims
shall arise for indemnification under this Agreement, the
Indemnified Party shall notify the Corporation promptly and
in any event within 30 days after the Indemnified Party has
actual knowledge of the facts constituting the basis for
such claim. The notice shall specify all facts known to the
Indemnified Party giving rise to such indemnification right
and the amount or an estimate of the amount of liability
(including estimated expenses) arising therefrom.
(ii) Any indemnification under this Agreement shall be
made no later than 30 days after receipt by the Corporation
of the written notification specified in Section 1(b)(i),
unless a determination is made within such 30 day period by
(X) the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the matter
described in the notice or (Y) independent legal counsel,
agreed to by the Corporation, in a written opinion (which
counsel shall be appointed if such a quorum is not
obtainable), that the Indemnified Party has not met the
relevant standards for indemnification under this Agreement.
(iii) Rights to Defend or Settle; Third Party Claims,
etc. If the facts giving rise to any indemnification right
under this Agreement shall involve any actual or threatened
claim or demand against the Indemnified Party, or any
possible claim by the Indemnified Party against any third
party, such claim shall be referred to as a "Third Party
Claim." If the Corporation provides the Indemnified Party
with an agreement in writing in form and substance
satisfactory to the Indemnified Party and his counsel,
agreeing to indemnify and hold the Indemnified Party
harmless from all costs and liability arising from any Third
Party Claim (an "Agreement of Indemnity"), and demonstrating
to the satisfaction of the Indemnified Party the financial
wherewithal to accomplish such indemnification, the
Corporation may at its own expense undertake full
responsibility for the defense or prosecution of such Third
Party Claim. The Corporation may contest or settle any such
Third Party Claim for money damages on such terms and
conditions as it deems appropriate but shall be obligated to
consult in good faith with the Indemnified Party and not to
contest or settle any Third Party Claim involving injunctive
or equitable relief against or affecting the Indemnified
Party or his properties or assets without the prior written
consent of the Indemnified Party, such consent not to be
withheld unreasonably. The Indemnified Party may participate
at his own expense and with his own counsel in defense or
prosecution of a Third Party Claim pursuant to this Section
1(c)(i), and such participation shall not relieve the
Corporation of its obligation to indemnify the Indemnified
Party under this Agreement.
(iv) If the Corporation fails to deliver a satisfactory
Agreement of Indemnity and evidence of financial wherewithal
within 10 days after receipt of notice pursuant to Section
1(b), the Indemnified Party may contest or settle the Third
Party Claim on such terms as it sees fit but shall not reach
a settlement with respect to the payment of money damages
without consulting in good faith with the Corporation. The
Corporation may participate at its own expense and with its
own counsel in defense or prosecution of a Third Party Claim
pursuant to this Section 1(c)(ii), but any such
participation shall not relieve the Corporation of its
obligations to indemnify the Indemnified Party under this
Agreement. All expenses (including attorneys' fees) incurred
in defending or prosecuting any Third Party Claim shall be
paid promptly by the Corporation as the suit or other matter
is proceeding, upon the submission of bills therefor or
other satisfactory evidence of such expenditures during the
pendency of any matter as to which indemnification is
available under this Agreement. The failure to make such
payments within 30 days after submission shall constitute a
breach of a material obligation of the Corporation under
this Agreement.
(v) If by reason of any Third Party Claim a lien,
attachment, garnishment or execution is placed upon any of
the property or assets of the Indemnified Party, the
Corporation shall promptly furnish a satisfactory indemnity
bond to obtain the prompt release of such lien, attachment,
garnishment or execution.
(vi) The Indemnified Party shall cooperate in the
defense of any Third Party Claim which is controlled by the
Corporation, but the Indemnified Party shall continue to be
entitled to indemnification and reimbursement for all costs
and expenses incurred by him in connection therewith as
provided in this Agreement.
(b) Cooperation. The parties to this Agreement shall execute such powers of
attorney as may be necessary or appropriate to permit participation of
counsel selected by any party hereto and, as may be reasonably related to
any such claim or action, shall provide to the counsel, accountants and
other representatives of each party access during normal business hours to
all properties, personnel, books, records, contracts, commitments and all
other business records of such other party and will furnish to such other
party copies of all such documents as may be reasonably requested
(certified, if requested).
(c) Choice of Counsel. In all matters as to which indemnification is available
to the Indemnified Party under this Agreement, the Indemnified Party shall
be free to choose and retain counsel, provided that the Indemnified Party
shall consult in good faith with the Corporation regarding such choice.
(d) Consultation. If the Indemnified Party desires to retain the services of an
attorney prior to the determination by the Corporation as to whether it
will undertake the defense or prosecution of the Third Party Claim as
provided in Section 1(c), the Indemnified Party shall notify the
Corporation of such desire in the notice delivered pursuant to Section
1(b)(i), and such notice shall identify the counsel to be retained. The
Corporation shall then have 10 days within which to advise the Indemnified
Party whether it will assume the defense or prosecution of the Third Party
Claim in accordance with Section 1(c)(i). If the Indemnified Party does not
receive an affirmative response within such 10 day period, he shall be free
to retain counsel of his choice, and the indemnity provided in Section 1(a)
shall apply to the reasonable fees and disbursements of such counsel
incurred after the expiration of such 10 day period. Any fees or
disbursements incurred prior to the expiration of such 10 day period shall
not be covered by the indemnity of Section 1(a).
(i) Repayment. Notwithstanding the other provisions of
this Agreement to the contrary, if the Corporation has
incurred any cost, damage or expense under this Agreement
paid to or for the benefit of the Indemnified Party and it
is determined by a court of competent jurisdiction from
which no appeal may be taken that the Indemnified Party has
engaged in "Nonindemnifiable Conduct" as that terms is
defined in Section 1(g)(ii), the Indemnified Party shall
reimburse the Corporation for any and all such amounts
previously paid to or for the benefit of the Indemnified
Party.
(ii) For these purposes, "Nonindemnifiable Conduct"
shall mean actions or omissions of the Indemnified Party
material to the cause of action to which the indemnification
under this Agreement related determined to involve:
(2) a violation of the criminal law, unless the
Indemnified Party had reasonable cause to believe his
conduct was lawful and no reasonable cause to believe his
conduct was unlawful;
(3) a transaction in which the Indemnified Party
derived an improper personal benefit;
(4) if the Indemnified Party is a director of the
Corporation, a circumstance under which the liability
provisions of Section 607.0834 (or any successor or similar
statute) are applicable;
(5) willful misconduct or a conscious disregard for the
best interests of the Corporation in a proceeding by or in
the right of the Corporation to procure a judgment in favor
of the Corporation or in a proceeding by or in the right of
a stockholder; or
(6) conduct pursuant to then applicable law that
prohibits such indemnification.
2. TERM.
This Agreement shall be effective upon its execution by all
parties and shall continue in full force and effect until the date five years
after the date of this Agreement, or five years after the termination of the
Indemnified Party's employment or term of office, whichever is later, provided
that such term shall be extended by any period of time during which the
Corporation is in breach of a material obligation to the Indemnified Party, plus
ninety days. Such term shall also be extended with respect to each Third Party
Claim then pending and as to which notice under Section 1(b) has theretofore
been given by the Indemnified Party to the Corporation, and this Agreement shall
continue to be applicable to each such Third Party Claim.
3. REPRESENTATIONS AND AGREEMENTS OF THE CORPORATION.
(a) Authority. The Corporation represents, covenants and agrees that it
has the corporate power and authority to enter into this Agreement and
to carry out its obligations under this Agreement. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized
by the Board of Directors of the Corporation. This Agreement is a
valid and binding obligation of the Corporation and is enforceable
against the Corporation in accordance with its terms.
(i) The Corporation's Insurance and Indemnification.
The Corporation represents, covenants and agrees that during
the term of this Agreement, it will use its best efforts to
maintain a policy or policies of officers' and directors'
liability insurance providing coverage to the Indemnified
Party in respect of his service as an officer, director
and/or employee of the Corporation, which policy at all
times shall be in an amount and shall contain terms and
conditions no less favorable than the policy in effect at
such time for the Corporation's other officers and
directors.
(ii) During the term of this Agreement, to the fullest
extent permitted by law, the Corporation will cause those
sections of its bylaws regarding indemnification of
directors and officers currently in effect to remain in full
force and effect, and it and its directors will act in good
faith and in accordance with the procedures and spirit of
such bylaws.
(b) Noncontestability. The Corporation represents, covenants and agrees
that it will not initiate, and that it will use its best efforts to
cause any of its Affiliates not to initiate, any action, suit or
proceeding challenging the validity or enforceability of this
Agreement.
(c) Good Faith Judgment. The Corporation represents, covenants and agrees
that it will exercise good faith judgment in determining the
entitlement of the Indemnified Party to indemnification under this
Agreement.
4. RELATIONSHIP OF THIS AGREEMENT TO OTHER INDEMNITIES.
(a) Nonexclusivity. This Agreement and all rights granted to the
Indemnified Party under this Agreement are in addition to and are not
deemed to be exclusive with or of any other rights that may be
available to the Indemnified Party under any Articles of
Incorporation, bylaw, statute, agreement, or otherwise.
(i) Availability, Contribution, Etc.. The availability
or nonavailability of indemnification by way of insurance
policy, Articles of Incorporation, bylaw, vote of
stockholders, or otherwise from the Corporation to the
Indemnified Party shall not affect the right of the
Indemnified Party to indemnification under this Agreement,
provided that all rights under this Agreement shall be
subject to applicable statutory provisions in effect from
time to time.
(ii) Any funds received by the Indemnified Party by way
of indemnification or payment from any source other than
from the Corporation under this Agreement shall reduce any
amount otherwise payable to the Indemnified Party under this
Agreement.
(iii) If the Indemnified Party is entitled under any
provision of this Agreement to indemnification by the
Corporation for some claims, issues or matters, but not as
to other claims, issues or matters, or for some or a portion
of the expenses, judgments, fines or penalties actually and
reasonably incurred by him or amounts actually and
reasonably paid in settlement by him in the investigation,
defense, appeal or settlement of any matter for which
indemnification is sought under this Agreement, but not for
the total amount thereof, the Corporation shall nevertheless
indemnify the Indemnified Party for the portion of such
claims, issues or matters or expenses, judgments, fines,
penalties or amounts paid in settlement to which the
Indemnified Party is entitled.
(iv) If for any reason a court of competent
jurisdiction from which no appeal can be taken rules that
the indemnity provided under this Agreement is unavailable,
or if for any reason the indemnity under this Agreement is
insufficient to hold the Indemnified Party harmless as
provided in this Agreement, then in either event, the
Corporation shall contribute to the amounts paid or payable
by the Indemnified Party in such proportion as equitably
reflects the relative benefits received by, and fault of the
Indemnified Party and the Corporation and its Affiliates.
(b) Allowance for Compliance with SEC Requirements. The Indemnified Party
acknowledges that the Securities and Exchange Commission ("SEC") has
expressed the opinion that indemnification of directors and officers
from liabilities under the Securities Act of 1933 (the "1933 Act") is
against public policy as expressed in the 1933 Act and, is therefore,
unenforceable. The Indemnified Party hereby agrees that it will not be
a breach of this Agreement for the Corporation to undertake with the
Commission in connection with the registration for sale of any stock
or other securities of the Corporation from time to time that, in the
event a claim for indemnification against such liabilities (other than
the payment by the Corporation of expenses incurred or paid by a
director or officer of the Corporation in the successful defense of
any action, suit or proceeding) is asserted in connection with such
stock or other securities being registered, the Corporation will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of competent jurisdiction on
the question of whether or not such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue. The Indemnified Party further agrees
that such submission to a court of competent jurisdiction shall not be
a breach of this Agreement.
5. MISCELLANEOUS.
(a) Notices. All notices, requests, demands and other communications which
are required or which may be given under this Agreement shall be in
writing and shall be deemed to have been duly given if personally
delivered or mailed, first class mail, postage prepaid to:
If to the Indemnified Party: Donald W. Olson
Clearwater, FL 33637
If to the Corporation: Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, Florida 33801
(i) Construction and Interpretation. This Agreement
shall be construed pursuant to and governed by the
substantive laws of the State of Florida (and any provision
of Florida law shall not apply if the law of a state or
jurisdiction other than Florida would otherwise apply).
(ii) The headings of the various sections in this
Agreement are inserted for the convenience of the parties
and shall not affect the meaning, construction or
interpretation of this Agreement.
(iii) Any provision of this Agreement which is
determined by a court of competent jurisdiction to be
prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability
or legality of such provision in any other jurisdiction. In
any such case, such determination shall not affect any other
provision of this Agreement, and the remaining provisions of
this Agreement shall remain in full force and effect. If any
provision or term of this Agreement is susceptible to two or
more constructions or interpretations, one or more of which
would render the provision or term void or unenforceable,
the parties agree that a construction or interpretation
which renders the term or provision valid shall be favored.
(b) Entire Agreement. Except as otherwise expressly provided herein, this
Agreement constitutes the entire Agreement, and supersedes all prior
agreements and understandings, oral and written, among the parties to
this Agreement with respect to the subject matter hereof.
(i) Specific Enforcement. The parties agree and
acknowledge that in the event of a breach by the Corporation
of its obligation promptly to indemnify the Indemnified
Party as provided in this Agreement, or breach of any other
material provision of this Agreement, damages at law will be
an insufficient remedy to the Indemnified Party.
Accordingly, the parties agree that, in addition to any
other remedies or rights that may be available to the
Indemnified Party, the Indemnified Party shall also be
entitled, upon application to a court of competent
jurisdiction, to obtain temporary or permanent injunctions
to compel specific performance of the obligations of the
Corporation under this Agreement.
(ii) There shall exist in such action a rebuttable
presumption that the Indemnified Party has met the
applicable standard(s) of conduct and is therefore entitled
to indemnification pursuant to this Agreement, and the
burden of proving that the relevant standards have not been
met by the Indemnified Party shall be on the Corporation.
Neither the failure of the Corporation (including its Board
of Directors or independent legal counsel) prior to the
commencement of such action to have made a determination
that indemnification is proper in the circumstances because
the Indemnified Party has met the applicable standard of
conduct, nor an actual determination by the Corporation
(including its Board of Directors or independent legal
counsel) that the Indemnified Party has not met such
applicable standard of conduct, shall (X) constitute a
defense to the action, (Y) create a presumption that the
Indemnified Party has not met the applicable standard of
conduct, or (Z) otherwise alter the presumption in favor of
the Indemnified Party referred to in the preceding sentence.
(iii) Cost of Enforcement; Interest. If the Indemnified
Party engages the services of an attorney or any other third
party or in any way initiates legal action to enforce his
rights under this Agreement, including but not limited to
the collection of monies due from the Corporation to the
Indemnified Party, the prevailing party shall be entitled to
recover all reasonable costs and expenses (including
reasonable attorneys' fees before and at trial and in
appellate proceedings). Should the Indemnified Party
prevail, such costs and expenses shall be in addition to
monies otherwise due him under this Agreement.
(iv) If any monies shall be due the Indemnified Party
from the Corporation under this Agreement and shall not be
paid within 30 days from the date of written request for
payment, interest shall accrue on such unpaid amount at the
rate of 1% per annum in excess of the prime rate announced
from time to time by Sun Bank, National Association,
Orlando, Florida, or such lower rate as may be required to
comply with applicable law.
(c) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the successors in interest and assigns, heirs and personal
representatives, as the case may be, of the parties.
(d) Further Assurances. The parties to this Agreement will execute and
deliver, or cause to be executed and delivered, such additional or
further documents, agreements or instruments and shall cooperate with
one another in all respects for the purpose of carrying out the
transactions contemplated by this Agreement.
(e) Venue; Process. The parties to this Agreement agree that jurisdiction
and venue in any action brought pursuant to this Agreement to enforce
its terms or otherwise with respect to the relationships between the
parties shall properly lie in the Circuit Court of the Tenth Judicial
Circuit of the State of Florida in and for Polk County or in the
United States District Court for the Middle District of Florida, Tampa
Division. Such jurisdiction and venue are merely permissive;
jurisdiction and venue shall also continue to lie in any court where
jurisdiction and venue would otherwise be proper. The parties agree
that they will not object that any action commenced in the foregoing
jurisdictions is commenced in a forum non conveniens. The parties
further agree that the mailing by certified or registered mail, return
receipt requested, of any process required by any such court shall
constitute valid and lawful service of process against them, without
the necessity for service by any other means provided by statute or
rule of court.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original, but all
of which together shall constitute one and the same instrument.
(g) Waiver and Delay. No waiver or delay in enforcing the terms of this
Agreement shall be construed as a waiver of any subsequent breach. No
action taken by the Indemnified Party shall constitute a waiver of his
rights under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
DISCOUNT AUTO PARTS, INC.
By:/s/ C. Michael Moore
Name: C. Michael Moore
Title: Executive Vice President - Finance,
Chief Financial Officer and Secretary
WITNESSES:
/s/ Donald W. Olson
Donald W. Olson
/s/B.B. Rogers
/s/Joyce Ruggieso
EXHIBIT 10.33
FIRST AMENDMENT TO MASTER AGREEMENT
This First Amendment to Master Agreement, dated and effective as of
August 29, 2000 (this "Amendment"), is among DISCOUNT AUTO PARTS, INC., a
Florida corporation ("DAP" or "Guarantor"), DISCOUNT AUTO PARTS DISTRIBUTION
CENTER, INC., a Mississippi corporation ("DAP SUB"), ATLANTIC FINANCIAL GROUP,
LTD., a Texas limited partnership (the "Lessor"), certain financial institutions
parties hereto as a lender (individually, a "Lender" and collectively, the
"Lenders") and SUNTRUST BANK, a Georgia banking corporation, as agent for the
Lenders (in such capacity, the "Agent").
BACKGROUND
1. DAP, DAP SUB and certain subsidiaries of DAP that may become parties
thereto, the Lessor, the Lenders and the Agent are parties to that
certain Master Agreement, dated as of May 30, 2000 (the "Master
Agreement").
2. The parties hereto desire to amend the Master Agreement, and by virtue
of effectuating amendments to Appendix A, to amend the Lease, the Loan
Agreement and the Construction Agency Agreement, all as set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Definitions. Capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings assigned thereto in the Master
Agreement.
SECTION 2. Definitions. Appendix A to Master Agreement, Lease, Loan
Agreement and Construction Agency Agreement is hereby amended as follows:
(a) The definition of "Applicable Margin" is hereby deleted in its
entirety, and in lieu thereof, there is substituted the
following:
"Applicable Margin" means, with respect to LIBOR Advances:
The Applicable Margin shall be the number of basis points designated
below based on DAP's Consolidated Funded Debt to Consolidated
EBITDAR Ratio, measured quarterly:
- --------------------------------------------------------------------------------------------------------------------
Consolidated Funded Debt to Consolidated EBITDAR Ratio
- --------------------------------------------------------------------------------------------------------------------
==============---------------------------------------------------------------------------------------===============
>1.5:1 & >2.0:1 & >2.5:1 & >3.0:1 & >3.25:1 & >3.5:1 & >3.75:1 &
<1.5:1 <2.0:1 <2.5:1 <3.0:1 <3.25:1 <3.5:1 <3.75:1 <3.9:1
- -----------------------------------------------------------------------------------------------------===============
62.50bp 75.00bp 87.50bp 100.00bp 112.50bp 125.00bp 150.00bp 190.00bp
- -----------------------------------------------------------------------------------------------------===============
provided, however, that adjustments, if any, to the Applicable Margin
based on changes in DAP's Consolidated Funded Debt to Consolidated
EBITDAR Ratio as set forth above shall be calculated by the Agent
quarterly, based upon DAP's quarterly financial statements, beginning
with DAP's statements for the period ended November 28, 2000, and shall
become effective on December 1, 2000 for any change calculated with
respect to DAP's quarterly financial statements for the period ended
November 28, 2000 and, thereafter, on the first day of the next
succeeding fiscal quarter following the date of each such calculation;
provided, further, however, if DAP shall fail to deliver any such
quarterly financial statements within the time period required by
Section 5.7 of the Master Agreement, then the Applicable Margin for
LIBOR Advances shall be that shown above for a Consolidated Funded Debt
to Consolidated EBITDAR Ratio equal to or greater than 3.75:1, and
provided, further, however, if DAP shall fail to deliver any such
quarterly financial statements within the time period required by
Section 5.7 of the Master Agreement, then the Applicable Margin for
LIBOR Advances which will be effective on the first day of the next
succeeding fiscal quarter following such failure shall be that shown
above for a Consolidated Funded Debt to Consolidated EBITDAR Ratio
equal to or greater than 3.75:1, it being understood that if and when
such quarterly financial statements are subsequently delivered, then
the Applicable Margin shall be readjusted, effective upon and as of the
date of such delivery, to that number of basis points designated above
based on DAP's Consolidated Funded Debt to Consolidated EBITDAR Ratio
as reflected in such delivered quarterly financial statements.
(a) The definition of "Sale Leaseback" is hereby added to Appendix A, in
the proper alphabetical order, as follows:
"Sale Leaseback" means that certain sale leaseback transaction
or those certain sale leaseback transactions proposed to be entered
into by DAP involving a lease or series of substantially identical
leases under which DAP or one or more of its Subsidiaries becomes
liable as lessee of up to an aggregate of 160 retail locations of DAP,
which locations were, immediately prior to establishing such lease or
series of leases, owned by DAP and sold or transferred by DAP to any
other Person (other than any of DAP's Subsidiaries) and involving
consideration of at least $15,000,000 in the aggregate in each
simultaneously closed sale leaseback transaction.
(b) The definition of "Capital Expenditures" is hereby added to Appendix A,
in the proper alphabetical order, as follows:
"Capital Expenditures" means for any period, without
duplication, (a) the additions to property, plant and equipment and
other capital expenditures of DAP and its Consolidated Subsidiaries
that are (or would be) set forth on a consolidated statement of cash
flows of DAP for such period prepared in accordance with GAAP and (b)
Capitalized Lease Obligations incurred by DAP and its Consolidated
Subsidiaries during such period.
(c) The definition of "Consolidated Funded Debt" contained in Appendix A is
hereby deleted in its entirety and, in lieu thereof, there is
substituted the following:
"Consolidated Funded Debt" means, without duplication, all
Indebtedness for money borrowed, purchase money mortgages, Capitalized
Lease Obligations, amounts outstanding in respect of asset
securitization vehicles, conditional sales contracts and similar title
retention debt instruments, including any current maturities of such
indebtedness, plus the net present value of future operating lease
payments (excluding payments relating to synthetic leases) calculated
using standard S&P methodology, plus the redemption amount with respect
to any redeemable preferred stock of DAP or any Consolidated
Subsidiaries required to be redeemed within the next twelve (12)
months, provided, however, that solely for purposes of computing the
Consolidated Fund Debt to Consolidated EBITDAR Ratio and the
Consolidated Funded Debt to Total Capitalization Ratio, wherever such
ratios may be utilized or referenced in the Operative Documents, any
synthetic lease ("Permitted Synthetic Leases") to which the Required
Lenders have consented and any Indebtedness incurred by any Person in
connection with any Permitted Synthetic Lease shall not be considered
to be included as part of Consolidated Funded Debt. Consolidated Funded
Debt shall also include any Consolidated Funded Debt, other than
Permitted Synthetic Leases and Indebtedness incurred in connection
therewith, which has been guaranteed by DAP or any Consolidated
Subsidiary or which is supported by a letter of credit issued for the
account of DAP or any Consolidated Subsidiary.
(d) The definition of "Consolidated Tangible Net Worth" is hereby added to
Appendix A, in the proper alphabetical order, as follows:
"Consolidated Tangible Net Worth" means, as of any date, (i)
the total assets of DAP and its Consolidated Subsidiaries that would be
reflected on DAP's consolidated balance sheet as of such date prepared
in accordance with GAAP, after eliminating all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Consolidated Subsidiaries, minus the sum of (i) the total liabilities
of DAP and its Consolidated Subsidiaries that would be reflected on
DAP's consolidated balance sheet as of such date prepared in accordance
with GAAP, (ii) the amount of any write_up in the book value of any
assets resulting from a revaluation thereof or any write_up in excess
of the cost of such assets acquired reflected on the consolidated
balance sheet of DAP as of such date prepared in accordance with GAAP
and (iii) the net book amount of all assets of DAP and its Consolidated
Subsidiaries that would be classified as intangible assets on a
consolidated balance sheet of DAP as of such date prepared in
accordance with GAAP.
(e) The definition of "Adjusted LIBO Rate" is hereby added to Appendix A,
in the proper alphabetical order, as follows:
"Adjusted LIBO Rate" means with respect to each Rent Period
for a LIBOR Advance, the rate obtained by dividing (A) LIBOR for such
Rent Period by (B) a percentage equal to 1 minus the then stated
maximum rate (stated as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurodollar liabilities as defined in
Regulation D of the Board of Governors of the Federal Reserve System,
as the same may be in effect from time to time (or against any
successor category of liabilities defined in such Regulation D).
SECTION 2. Litigation Schedule. Schedule 4.1(e) to the Master Agreement is
hereby deleted in its entirety and the revised Schedule 4.1(e) attached hereto
is substituted in lieu thereof.
SECTION 3. Financial Covenants.
(a) Paragraphs (a) and (c) of Section 5.8 of the Master Agreement are
hereby deleted in their entirety and, in lieu thereof, the following are
substituted:
"(a) Interest Coverage Ratio. DAP will maintain as at the last
day of each fiscal quarter, a ratio of (i) Consolidated EBITDAR to
(ii)(y) Consolidated Interest Expense plus (z) Consolidated Rental
Expense of at least (A) 2.5:1 for the period ended May 30, 2000; (B)
2.25:1 for the period from May 31, 2000 to the end of DAP's fiscal year
ending in 2002; (C) 2.5:1 for DAP's fiscal year ending in 2003; and (D)
2.75:1 thereafter, computed on a rolling four_quarter basis in each
instance, based on information contained in DAP's current financial
statement and its financial statements for the preceding three
quarters.
(c) Consolidated Funded Debt to Consolidated EBITDAR Ratio.
DAP will maintain a maximum ratio of Consolidated Funded Debt to
Consolidated EBITDAR of less than or equal to (A) 3.90:1 through DAP's
fiscal year ending in 2001; (B) 3.75:1 for DAP's fiscal year ending in
2002; and (C) 3.50:1 thereafter, tested quarterly at the end of each
fiscal quarter, computed on a rolling four quarter basis in each
instance, based on information contained in DAP's current financial
statements and its financial statements for the preceding three fiscal
quarters."
(b) Section 5.8 of the Master Agreement is hereby amended by adding the
following new paragraphs (d) and (e) and closing paragraph:
"(d) Minimum Tangible Net Worth. DAP will maintain a minimum
Consolidated Tangible Net Worth equal to or greater than (i) at the end
of DAP's fiscal year ending in 2000, $265,000,000.00, and (ii) at the
end of each subsequent fiscal year, the sum of (A) the minimum
Consolidated Tangible Net Worth requirement that was in effect at the
end of DAP's immediately preceding fiscal year plus (B) seventy_five
percent (75%) of DAP's positive Consolidated Net Income for the fiscal
year being tested, in each case, tested quarterly at the end of each
fiscal quarter. For example, if the Consolidated Net Income for DAP's
fiscal year ending in 2001 were to be $40,000,000, then the minimum
Consolidated Tangible Net Worth for the end of fiscal year 2001 and
each of the following three (3) fiscal quarters shall be
$295,000,000.00 ($265,000,000.00 + {$40,000,000 X 0.75}).
(e) Capital Expenditures. DAP shall not make Capital
Expenditures in excess of (i) $45,000,000 in DAP's fiscal year ending
in 2001, (ii) $55,000,000 in DAP's fiscal year ending in 2002 and (iii)
$65,000,000 in DAP's fiscal year ending in 2003. If, as at the end of
any fiscal quarter, DAP's Interest Coverage Ratio is greater than
2.75:1 and its Consolidated Funded Debt to Consolidated EBITDAR Ratio
is less than 3.50:1, and DAP's projections indicate that on a pro forma
basis it will sustain such ratios at such levels, the foregoing
limitation on Capital Expenditures will be removed; provided, however,
that said limitation shall be reinstated at any time and for so long as
DAP's Interest Coverage Ratio is less than or equal to 2.75:1 or its
Consolidated Funded Debt to Consolidated EBITDAR Ratio is greater than
or equal to 3.50:1.
In the event the Sale Leaseback is not consummated and DAP
writes off the costs associated therewith, DAP will be allowed to add
back, in making the various income_related computations, up to
$2,500,000 of such costs for all purposes under this Master Agreement,
including without limitation for purposes of calculating (i) compliance
with the financial covenants contained in this Section 5.8, and (ii)
the Applicable Margin."
SECTION 4. Additional Covenants. Article V of the Master Agreement is
hereby amended by adding thereto the following new Sections thereto (and the
existing Section 5.24 shall be renumbered to Section 5.27):
"SECTION 5.24. Indebtedness. DAP will not, and will not permit any of its
Consolidated Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness created pursuant to the Revolving Credit Agreement and the
Operative Documents;
(b) Indebtedness existing on the date hereof and set forth on its financial
statements delivered to the Funding Parties pursuant hereto and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof (immediately prior to giving effect to such
extension, renewal or replacement) or shorten the maturity or the weighted
average life thereof;
(c) Capitalized Lease Obligations of DAP or any Consolidated Subsidiary
incurred to finance the acquisition of new equipment, provided, however, that
the aggregate principal amount of such Indebtedness added during any fiscal year
shall not exceed $7,000,000.00;
(d) other unsecured Indebtedness in an aggregate principal amount not to
exceed $25,000,000 at any time outstanding; provided, however, that no new
Indebtedness may be incurred in reliance on this exclusion if DAP is not then in
compliance on a current basis with all financial covenants contained in this
Master Agreement or if, after giving effect to such new Indebtedness, DAP would
not be in compliance on a pro forma basis with all financial covenants contained
in this Master Agreement; and
(e) Indebtedness of DAP owing to any Wholly_Owned Subsidiary which has
executed and delivered a Subsidiary Guaranty to the Agent and of any such
Wholly_Owned Subsidiary owing to DAP or any other such Wholly_Owned Subsidiary.
If, as at the end of any fiscal quarter, DAP's Interest Coverage Ratio
is greater than 2.75:1 and its Consolidated Funded Debt to Consolidated
EBITDAR Ratio is less than 3.50:1, and DAP's projections indicate that
on a pro forma basis it will sustain such ratios at such levels, the
foregoing limitation on Indebtedness will be removed; provided,
however, that said limitation shall be reinstated at any time and for
so long as DAP's Interest Coverage Ratio is less than or equal to
2.75:1 or its Consolidated Funded Debt to Consolidated EBITDAR Ratio is
greater than or equal to 3.50:1."
"SECTION 5.25. Sale and Leaseback. Except for the Sale Leaseback, DAP will
not, and will not permit any of the Consolidated Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereinafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred. If, as at the end of any fiscal quarter,
DAP's Interest Coverage Ratio is greater than 2.75:1 and its Consolidated Funded
Debt to Consolidated EBITDAR Ratio is less than 3.50, and DAP's projections
indicate that on a pro forma basis it will sustain such ratios at such levels,
the foregoing restriction will be removed; provided, however, that said
restriction shall be reinstated at any time and for so long as DAP's Interest
Coverage Ratio is less than or equal to 2.75:1 or its Consolidated Funded Debt
to Consolidated EBITDAR Ratio is greater than or equal to 3.50:1.
SECTION 5.26. Share Repurchases. Except as specifically set forth to the
contrary in the final sentence of this Section 5.26, unless and until at least
$50,000,000 of the Sale Leaseback is consummated, DAP will not repurchase or
enter into any agreements to repurchase any of its capital stock. If at least
$50,000,000 of the Sale Leaseback is consummated, DAP will not repurchase or
enter into any agreements to repurchase any of its capital stock in excess of
$10,000,000 in the aggregate. If, as at the end of any fiscal quarter, DAP's
Interest Coverage Ratio is greater than 2.75:1 and its Consolidated Funded Debt
to Consolidated EBITDAR Ratio is less than 3.50:1, and DAP's projections
indicate that on a pro forma basis it will sustain such ratios at such levels,
the foregoing restriction against share repurchases will be removed; provided,
however, that said restriction shall be reinstated at any time and for so long
as DAP's Interest Coverage Ratio is less than or equal to 2.75:1 or its
Consolidated Funded Debt to Consolidated EBITDAR Ratio is greater than or equal
to 3.50:1."
SECTION 5. Reaffirmation of Guaranty. DAP hereby affirms that the Guaranty
Agreement remains in full force and effect, after giving effect to this
Amendment.
SECTION 6. Miscellaneous. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Florida. This Amendment
may be executed by the parties hereto in separate counterparts (including by
facsimile) each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same agreement.
The Master Agreement, as amended hereby, remains in full force and effect. Any
reference to the Master Agreement from and after the date hereof shall be deemed
to refer to the Master Agreement as amended hereby, unless otherwise expressly
stated. DAP shall promptly pay, or shall reimburse the Agent for, all
out-of-pocket costs and expenses incurred by the Agent in connection with this
Amendment, including, without limitation, reasonable legal fees and expenses.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the year first above
written.
DISCOUNT AUTO PARTS, Inc., as Guarantor
By:/s/ Peter Fontaine
Name Printed: Peter Fontaine
Title: CEO
DISCOUNT AUTO PARTS DISTRIBUTION CENTER, INC., as a Lessee
By:/s/ Peter Fontaine
Name Printed: Peter Fontaine
Title: President
SUNTRUST BANK, as a Lender
and as Agent
By:/s/ W. David Wisdom
Name Printed: W. David Wisdom
Title: Vice President
EXHIBIT 10.34
SECOND AMENDMENT TO MASTER AGREEMENT
This Second Amendment to Master Agreement, dated and effective as of
February 16, 2001 (this "Amendment"), is among DISCOUNT AUTO PARTS, INC., a
Florida corporation ("DAP" or "Guarantor"), DISCOUNT AUTO PARTS DISTRIBUTION
CENTER, INC., a Mississippi corporation ("DAP SUB"), ATLANTIC FINANCIAL GROUP,
LTD., a Texas limited partnership (the "Lessor"), certain financial institutions
parties hereto as a lender (individually, a "Lender" and collectively, the
"Lenders") and SUNTRUST BANK, a Georgia banking corporation, as agent for the
Lenders (in such capacity, the "Agent").
BACKGROUND
1. DAP, DAP SUB and certain subsidiaries of DAP that may become parties
thereto, the Lessor, the Lenders and the Agent are parties to that
certain Master Agreement, dated as of May 30, 2000, as amended by the
First Amendment to Master Agreement, dated as of August 29, 2000 (the
"Master Agreement").
2. The parties hereto desire to amend the Master Agreement to increase the
amount of the facility provided pursuant to the Master Agreement, as
set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Definitions. Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings assigned
thereto in the Master Agreement.
SECTION 2. Limits on Funded Amounts. Section 2.2(c) of the Master
Agreement is
hereby amended by deleting the number "$28,000,000" where it appears in
clause (y) of the first sentence thereof and substituting therefor the
number "$34,000,000". Schedule 2.2 of the Master Agreement is hereby
deleted in its entirety and Schedule 2.2 attached to this Amendment is
substituted therefor.
SECTION 3. Fee. In consideration of the increase in the facility set
forth in this Amendment, DAP SUB shall pay on or before the date
hereof a fee to the Agent in the amount of $75,000.
SECTION 4. Representations and Warranties. Each of DAP and DAP SUB
hereby represents and warrants that, after giving effect to this
Amendment (i) the representations and warranties set forth in
Section 4.1 of the Master Agreement are true and correct in all
material respects as of the date hereof, except to the extent
such representations and warranties relate solely to an earlier
date, in which case such representations and warranties shall
have been true and correct in all material respects on and as of
such earlier date and (ii) no Event of Default or Potential Event
of Default has occurred and is continuing.
SECTION 5. Reaffirmation of Guaranty. DAP hereby affirms that the
Guaranty Agreement remains in full force and effect, after giving
effect to this Amendment.
SECTION 6. Miscellaneous. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Florida.
This Amendment may be executed by the parties hereto in separate
counterparts (including by facsimile) each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
agreement. The Master Agreement, as amended hereby, remains in
full force and effect. Any reference to the Master Agreement from
and after the date hereof shall be deemed to refer to the Master
Agreement as amended hereby, unless otherwise expressly stated.
DAP shall promptly pay, or shall reimburse the Agent for, all
reasonable out-of-pocket costs and expenses incurred by the Agent
in connection with this Amendment, including, without limitation,
reasonable legal fees and expenses.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the year first above
written.
DISCOUNT AUTO PARTS, Inc., as Guarantor
By:
Name Printed:
Title:
DISCOUNT AUTO PARTS DISTRIBUTION CENTER, INC., as a Lessee
By:
Name Printed:
Title:
SUNTRUST BANK, as a Lender
and as Agent
By:
Name Printed:
Title:
ATLANTIC FINANCIAL GROUP, LTD.,
as Lessor
By: Atlantic Financial Managers, Inc., its
General Partner
By:
Name Printed:
Title:
SCHEDULE 2.2
AMOUNT OF EACH FUNDING PARTY'S COMMITMENT
Lessor Commitment Percentage: 3.5%
Lessor Commitment: $1,190,000
Lender Commitment Percentages:
SunTrust Bank 96.5%
Lender Commitments:
SunTrust Bank
ATLANTIC FINANCIAL GROUP, LTD.,
as Lessor
By: Atlantic Financial Managers, Inc., its
General Partner
By: /s/ Jeffrey B. Brawner
Name Printed: Jeffrey B. Brawner
Title: Vice President