Exhibit 10.25
MASTER LEASE
Dated as of February 28, 1997
Between
STATE STREET BANK AND TRUST COMPANY
(NOT INDIVIDUALLY BUT SOLELY AS TRUSTEE)
Lessor
------
and
THE PEP BOYS - MANNY, MOE & JACK
and Certain Subsidiaries Thereof
Lessee
------
THIS LEASE HAS BEEN MANUALLY EXECUTED IN COUNTERPARTS NUMBERED CONSECUTIVELY
FROM 1 TO 6. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER
(AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN
COUNTERPART NO. 1.
This is Counterpart No. ______
[1997 Pep Boys II Leased Property]
TABLE OF CONTENTS
(Not a part of the Lease)
Section Page
1. Lease of Property; Title and Condition.....................................2
2. Use; Quiet Enjoyment; Environmental Matters................................5
3. Term.......................................................................7
4. Rent.......................................................................8
5. Net Lease; Non-Terminability..............................................10
6. Taxes and Assessments; Compliance with Law; Certain Agreements............12
7. Matters of Title; Assignability...........................................15
8. Indemnification...........................................................16
9. Maintenance and Repair....................................................19
10. Alterations; Additions....................................................19
11. Lessee's Right to Contest Real Property Taxes.............................20
12. Condemnation and Casualty.................................................21
13. Early Termination Rights..................................................24
14. Offer to Purchase.........................................................26
15. Procedure Upon Purchase...................................................28
16. Insurance.................................................................29
17. Assignment; Subletting....................................................31
18. Permitted Contests........................................................32
19. Default Provisions........................................................33
20. Additional Rights.........................................................39
21. Notices...................................................................40
22. No Default Certificate....................................................42
23. Surrender.................................................................42
24. Separability; Binding Effect; Governing Law; Non-Recourse.................43
25. Headings and Table of Contents............................................44
26. Waiver of Landlord's Lien.................................................44
28. No Merger.................................................................46
29. Short Form Lease..........................................................46
30. Protection of Instrument Holders..........................................47
31. Additional Lessees........................................................47
32. Certain Representations and Covenants of Lessee...........................48
33. WAIVER OF JURY TRIAL......................................................55
34. Exhibits..................................................................55
35. Special Local Provisions..................................................55
EXHIBIT A - Net Rent; Additional Rent
EXHIBIT B - Form of Supplement for Addition of Parcels
EXHIBIT C - Construction Addendum
EXHIBIT D - Form of Construction Supplement
EXHIBIT E - Form of Interim Supplement
EXHIBIT F - Form of SNDA
EXHIBIT G - Form of Supplement for Additional Lessee(s)
ii
Table of Defined Terms
(Not a part of the Lease)
Term Section Where Defined
- ---- ---------------------
Acquisition Price Exhibit A
Additional Improvements Section 10.(a)
Additional Lessee Section 31.(a)
Additional Rent Section 4.(b)
Adjustment Date Exhibit A
Advances Preliminary Statement
Agent Preliminary Statement
Applicable Rate Exhibit A
Applicable Spread Exhibit A
Appraised Value Section 27.(b)
Break Costs Exhibit A
Business Day Exhibit A
Casualty Section 12.(a)
Change of Control Section 32.(c)
CLI Preliminary Statement
Closing Costs Section 15.(b)
Closing Date Section 15.(a)
Code Section 32.(a)
Commencement Date Section 3.(a)
Condemnation Section 12.(a)
Construction Advance Section 1.(d)
Construction Failure Payment Exhibit C
Construction Failure Exhibit C
Construction Supplement Section 1.(d)
Contingent Rent Payment Exhibit A
Declaration of Trust Preamble
Default Rate Section 4.(c)
Early Termination Fee Section 13.(a)
Early Termination Notice Section 13.(b)
Environmental Event Section 2.(c)
Environmental Indemnity Agreement Section 8.(e)
Environmental Laws Section 2.(c)
ERISA Section 32.(a)
Event of Default Section 19.(a)
Excess Funds Section 12.(c)
Expiration Date Section 3.(a)
Facility Agreements Section 6.(b)
GAAP Section 32.(c)
Hazardous Materials Section 2.(c)
Impositions Section 6.(a)
Improvements Preliminary Statement
Incipient Default Section 8.(b)
Increased Costs Exhibit A
Indemnified Party Section 8.(a)
Instrument Holders Preliminary Statement
Instruments Preliminary Statement
Insurance Requirements Section 16
Interim Advance Section 1.(e)
Interim Supplement Section 1.(e)
Law Section 5.(a)
Lease Preamble
Lease Guarantee Preliminary Statement
Lease Guarantor Preliminary Statement
Legal Requirements Section 6.(b)
Lessee Preamble
Lessee Parent Preamble
Lessee's Equipment Preliminary Statement
Lessor Preamble
iii
Term Section Where Defined
- ---- ---------------------
LIBO Business Day Exhibit A
LIBO Rate Reserve Percentage Exhibit A
LIBO Rate Exhibit A
Lien Section 7.(a)
Losses Section 8.(a)
Material Improvements Section 10.(a)
Minimum Price Section 27.(b)
Net Proceeds Section 12.(a)
Net Rent Section 4.(a)
New Improvements Section 1.(d)
Nominal Appraised Value Section 27.(b)
Non-Disturbance Agreement Section 30
Notice Date Section 19.(a)(viii)
Offer Purchase Price Section 15.(b)
Offer to Purchase Section 14.(a)
Parcel(s) Preliminary Statement
Partial Termination Notice Section 13.(a)
Payment Dates Section 4.(a)
PBGC Section 32.(a)
Pep Boys - Delaware Preamble
Pep Boys - California Preamble
Permitted Encumbrances Section 7.(a)
Person Section 32.(c)
Plans Exhibit C
Proceeds Section 12.(a)
Proceeds Trustee Section 12.(a)
Property Preliminary Statement
Required Completion Date Exhibit C
Reserve Costs Exhibit A
SNDA Section 30.(b)
Special Incipient Default Section 8.(b)
Special LIBO Rate Exhibit A
Special Minimum Price Exhibit C
Subsidiary Section 32.(c)
Supplement Section 1.(b)
Tenant Mortgage Section 20.(d)
Term Section 3.(a)
Termination Notice Section 12.(b)
Transaction Agreement Preliminary Statement
Transaction Documents Preliminary Statement
Transaction Mortgage Section 30.(b)
iv
MASTER LEASE
MASTER LEASE dated as of February 28, 1997 ("Lease"), between STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not individually
but solely in its capacity as Trustee under that certain "Declaration of Trust"
(herein so called) dated of even date herewith (in such capacity, and not
individually, "Lessor"), having an address at Two International Place, Fourth
Floor, Boston, Massachusetts 02110, Attn: Corporate Trust Department, THE PEP
BOYS - MANNY, MOE & JACK, a Pennsylvania corporation ("Lessee Parent"), THE PEP
BOYS MANNY MOE & JACK OF CALIFORNIA, a California corporation ("Pep Boys -
California"), and PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC., a Delaware
corporation ("Pep Boys - Delaware"). Lessee Parent, Pep Boys - California, Pep
Boys - Delaware, and such other Subsidiaries of the Lessee Parent as may become
"Additional Lessees" pursuant to Section 31 hereof are herein referred to,
either singly or collectively, as the context may require, as "Lessee". The
primary business address of Lessee for purposes of this Lease is at 3111 W.
Allegheny Avenue, Philadelphia, Pennsylvania 19132.
Preliminary Statement
A. Simultaneously herewith Lessor, Lessee Parent, Citicorp Leasing,
Inc., a Delaware corporation ("CLI"), and Bank of Montreal have entered into a
certain Transaction Agreement (herein so-called) pursuant to which Lessor will
from time to time purchase various parcels of real property (each a "Parcel") to
be leased to one of parties constituting the Lessee hereunder. In each case the
term "Parcel" will be deemed to include all agreements, easements, licenses,
rights of way or use, appurtenances, tenements, hereditaments, and other rights
and benefits belonging or pertaining to such parcels of property or any
improvements thereon.
B. Any improvements from time to time located on the Parcels that are
subject to this Lease (including without limitation, New Improvements, as
hereinafter defined) are collectively referred to as the "Improvements", while
all Parcels and Improvements subject to this Lease at any relevant time are
collectively referred to as the "Property". It is acknowledged that for all
purposes of this Lease the term "Property" does not include any trade fixtures,
inventory, equipment, or other movable personal property owned or leased by
Lessee and used in the conduct of its business ("Lessee's Equipment"), but the
Property does include (and "Lessee's Equipment" does not include) all equipment
and fixtures that constitute a part of the plumbing, HVAC, or other operating
systems of the buildings and improvements themselves.
C. Lessor will acquire the Parcels from time to time using the proceeds
of Advances (as defined in the Transaction Agreement) under certain A-Notes,
B-Notes and Certificates (herein referred to as the "Advances") issued by Lessor
pursuant to the Transaction Agreement to CLI (as the initial "Purchaser") or to
such other financial institutions as may from time to time become "Purchasers"
under the Transaction Agreement.
D. Pursuant to the Transaction Agreement CLI has been appointed as the
initial administrative agent on behalf of itself and the other Instrument
Holders (as defined in the Transaction Agreement) and Purchasers for the
exercise of certain rights and privileges set out in the Transaction Agreement,
the Declaration of Trust, this Lease, and the other "Transaction Documents".
CLI, acting in such capacity, or any successor administrative agent hereafter
appointed by the Instrument Holders and the Purchasers pursuant to the
Transaction Agreement, is herein referred to as the "Agent".
E. The obligations of the Lessee under this Lease have been guaranteed
by Lessee Parent pursuant to that certain "Lease Guarantee" (herein so-called)
of even date herewith executed by Lessee Parent for the benefit of Lessor,
Agent, and the Instrument Holders. Lessee Parent, in its capacity as the
guarantor of the Lease under the Lease Guarantee, is sometimes herein referred
to as the "Lease Guarantor."
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
1. Lease of Property; Title and Condition
(a) In consideration of the rents and covenants herein
stipulated to be paid and performed by the Lessee and upon the terms and
conditions herein specified, the Lessor hereby leases the Property to Lessee,
and the Lessee hereby leases the Property from the Lessor.
(b) If at any time Lessee Parent desires Lessor to acquire a
Parcel, together with any Improvements located thereon, for lease to a Lessee
hereunder, Lessee Parent may request that such Parcels and/or Improvements be
acquired by Lessor and subjected to this Lease, thereby becoming a part of the
"Property" covered hereby. The process for the addition of a Parcel to the
Property is as set out in the Transaction Agreement, and no Parcel shall be
added to the Property until the requirements for the addition of such Parcel to
the Property pursuant to the Transaction Agreement have been satisfied and
Lessor has received Advances under the Instruments pursuant to the Transaction
Agreement to provide Lessor with the necessary funds for such purpose. The
addition of a Parcel to the Property shall be effected by a "Parcel Addition
Supplement" (herein so called) to this Lease executed by Lessor, Lessee Parent
(solely in its capacity as Lease Guarantor, if the Lessee Parent is not also the
Lessee of the Parcel in question) and the Lessee that will lease such Parcel
hereunder (including any new Additional Lessee, if applicable) in substantially
the form attached hereto as Exhibit "B". The Parcel Addition Supplement shall,
among other items included therein, specify the adjustments to the Net Rent and
Contingent Rent Payment payable hereunder as a result of the addition of such
Parcel and Improvements to the Property. Without limitation of the other
applicable provisions of the Transaction Agreement, Lessee acknowledges that
Agent is not required to approve a Parcel Addition Supplement, nor any Advance
under the Transaction Agreement to provide Lessor sums necessary to acquire such
Parcel, if the Debt Rating (as defined in the Transaction Agreement) of Lessee
Parent does not satisfy the requirements of Section 1.04(g)(i) of the
Transaction Agreement.
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(c) The Property is leased to the Lessee by Lessor subject to
(a) all applicable Legal Requirements (as defined below); and (b) all Permitted
Encumbrances (as defined below). The execution of a Parcel Addition Supplement
shall constitute conclusive evidence that the Lessee has examined the Parcel in
question (and any Improvements thereon), and the title thereto, and has found
the same satisfactory for all purposes of this Lease.
(d) If at any time Lessee desires to construct new
improvements ("New Improvements") on any Parcel after such Parcel has been added
to the Property, and Lessee desires to receive a Construction Advance from
Lessor to reimburse Lessee for the costs of such construction, Lessee may do so
upon compliance with the provisions set out below. Any such New Improvements
shall be constructed by Lessee in accordance with the terms and conditions
contained in that certain Construction Addendum (herein so called) attached
hereto as Exhibit "C". Upon completion of any such New Improvements in
accordance with the terms and conditions of the Construction Addendum and
satisfaction of all requirements for the Lessor to receive an Advance (herein
referred to as a "Construction Advance") under the Transaction Agreement in the
amount needed to fund such Construction Advance, Lessor and Lessee shall execute
a "Construction Supplement" (herein so called) to this Lease in substantially
the form attached hereto as Exhibit "D". The Construction Supplement shall,
among other items included therein, specify the adjustments to the Net Rent and
the Contingent Rent Payment which result from the applicable Construction
Advance. Lessor shall have no obligation to (i) make a Construction Advance to
Lessee in respect of any New Improvements or (ii) execute the necessary
Construction Supplement with respect to such New Improvements, unless an Advance
therefor has been made to Lessor in accordance with Article I of the Transaction
Agreement. Any New Improvements which are constructed by Lessee, and for which
Lessee receives reimbursement from Lessor pursuant to the Construction Addendum,
shall not be treated as "Additional Improvements" (as defined in Section 10 of
this Lease) for purposes hereof; but rather the construction of such New
Improvements shall be governed by the Construction Addendum. In no event will
Lessee be entitled to receive any Construction Advance after August 31, 1998,
and further, in no event will Lessee be entitled to any such Construction
Advance if, at the time such Construction Advance would otherwise be made, the
Debt Rating (as defined in the Transaction Agreement) of Lessee Parent does not
satisfy the requirements of Section 1.04(c) and/or Section 1.04(g)(i), as
applicable, of the Transaction Agreement.
(e) In addition to Lessee's right to obtain Construction
Advances upon completion of New Improvements on a Parcel as provided for in
Section 1(d) above, Lessee may obtain "Interim Advances" (herein so-called) to
reimburse Lessee for costs theretofore incurred in connection with the
construction of New Improvements that are not yet completed and are therefore
not yet eligible for Construction Advances pursuant to Section 1(d). Interim
Advances shall be treated as "Construction Advances" and "Advances" for all
purposes of the Transaction Agreement and the other Transaction Documents,
except as otherwise specifically provided in Section 1.04(c) of the Transaction
Agreement. At such time as Lessee desires to obtain an Interim Advance, Lessor
and Lessee shall execute and submit to Agent an "Interim Supplement" (herein
so-called) in substantially the form attached hereto as Exhibit "E". The Interim
3
Supplement shall, among other items included therein, specify the adjustments to
the Net Rent and the Contingent Rent Payment which result from the applicable
Interim Advance. Lessor shall have no obligation to (i) make an Interim Advance
to Lessee in respect of any New Improvements or (ii) execute the necessary
Interim Supplement with respect to such New Improvements, unless Lessee has
satisfied all conditions to an Interim Advance under, and an Interim Advance has
been made to Lessor in accordance with, the provisions of Article I of the
Transaction Agreement. It is expressly agreed that any amounts advanced to
Lessee by Lessor hereunder as an Interim Advance shall be treated as a
"Construction Advance" for all purposes of this Lease, including, but without
limitation, for purposes of computing the amount of the Construction Failure
Payment under the Construction Addendum, when applicable.
(f) In connection with the construction of New Improvements on
a Parcel Lessee may demolish Improvements that were located on the Parcel in
question at the time such Parcel was acquired by Lessor so long as the value of
the Improvements to be demolished was not included in any appraised value of the
Parcel in question at the time such Parcel was acquired by Lessor and the amount
of the Advance made by the Purchaser(s) under the Transaction Agreement in
connection with such acquisition did not include any amount in respect of the
Improvements to be demolished. In the event Lessee is in doubt as to whether the
existing Improvements on any given Parcel are eligible for demolition as
aforesaid, Lessee may request confirmation thereof from Agent.
(g) THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING
A PORTION THEREOF, OR THE LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY,
FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION, OR DURABILITY THEREOF OR
AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, OR AS TO THE LESSOR'S
TITLE THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT BEING AGREED THAT ALL RISKS
INCIDENT THERETO ARE TO BE BORNE SOLELY BY THE LESSEE. IN THE EVENT OF ANY
DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROPERTY OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, WHETHER PATENT OR LATENT, THE LESSOR SHALL HAVE
NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO EXCEPT TO THE EXTENT SET
FORTH IN SECTION 8(a) BELOW. THE PROVISIONS OF THIS SUBSECTION 1(f) HAVE BEEN
NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY AND
ALL WARRANTIES, EXPRESS OR IMPLIED, BY THE LESSOR WITH RESPECT TO THE PROPERTY
OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER ARISING
PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW, NOW OR HEREAFTER IN
EFFECT. NOTHING IN THIS SECTION 1(f) SHALL BE DEEMED TO LIMIT LESSEE'S
CONTRACTUAL RIGHTS AGAINST LESSOR IN THE EVENT LESSOR VIOLATES ITS SPECIFIC
COVENANTS AND OBLIGATIONS TO LESSEE PURSUANT TO THE TRANSACTION AGREEMENT OR
THIS LEASE, BUT NO SUCH VIOLATION OF THE TRANSACTION AGREEMENT BY LESSOR SHALL
AFFECT LESSEE'S OBLIGATIONS UNDER THIS LEASE.
4
2. Use; Quiet Enjoyment; Environmental Matters
(a) Subject to the other specific terms and provisions hereof,
the Lessee may use the Property for any lawful purpose provided that the value
of the Property is not diminished by any such use. It is expressly agreed that
use of the Property for the operation of automobile parts and/or service centers
is a permitted use, subject to compliance with the other terms and conditions
hereunder, and such use will not be deemed to diminish the value of the
Property. Lessee shall not commit or suffer to be committed upon the Property
any acts or conditions that constitute a nuisance under applicable Law. Lessee
hereby agrees not to engage in any activity, or store upon the Property any
goods and equipment, which would render the property coverage insurance
described in Section 16 hereof void. During the Term the Lessor covenants that,
unless an Event of Default (as defined below) has occurred and is continuing,
Lessor will not, and will not permit any party claiming by, through or under the
Lessor to, interfere with the peaceful and quiet possession and enjoyment of the
Property by the Lessee; provided, however, that the Lessor, the Agent, or their
respective successors, assigns and agents may, upon at least ten (10) days prior
written notice to the Lessee (unless an emergency exists, in which case only
such written notice as shall be reasonably practicable under the circumstances
shall be necessary), enter upon and examine the Property or any part thereof.
Lessee will always be permitted to have a representative of Lessee accompany the
representative or agent of Lessor or Agent in question in any inspection if
Lessee desires to do so. It is expressly acknowledged that, as provided in
Section 5 hereof, violation of the foregoing covenant shall not permit Lessee to
withhold rent or terminate this Lease.
(b) The Lessee shall, and it shall require and ensure that any
and all sublessees, employees, contractors, subcontractors, agents,
representatives, affiliates, consultants and any and all other Persons, use,
employ, emit, store, handle, transport, dispose of and/or arrange for the
disposal of, any and all Hazardous Materials (as defined below) in, on or,
directly or indirectly, related to or in connection with the Property in
compliance with all Environmental Laws (as defined below) applicable thereto.
Without limitation of the inspection rights as elsewhere set out herein, if
Lessor or Agent at any time believes that an Environmental Event may have
occurred, Lessor or Agent may, at Lessee's expense, conduct tests of the
Property or portions thereof; provided, however, that in connection therewith:
(i) so long as no Event of Default pursuant to Sections 19(a)(i), (vii), (x),
(xi), (xii) or (xiv) hereof exists, no Event of Default under Section 19(a)(iv)
relating to the failure to have required insurance coverage in place (as opposed
to a failure to satisfy any other Insurance Requirement) exists, and Lessor or
Agent have not taken remedial actions relating to the possession or ownership of
such Parcel as a result of any other Event of Default that may then exist,
Lessor or Agent will first notify Lessee of its desire for tests to be conducted
and request that Lessee perform such tests and provide the results thereof to
Lessor, and so long as Lessee promptly carries out such tests Lessor or Agent
5
will not perform such tests directly, and (ii) in the conduct of any tests that
Lessor or Agent may conduct directly Lessor or Agent will take reasonable steps
to interfere as little as reasonably practicable with the conduct of Lessee's
business within the Property. Any failure by the Lessor or Agent or such other
Person to comply with the foregoing provisions of this Section 2 shall not give
the Lessee any right to cancel or terminate this Lease, or to abate, reduce or
make deduction from or offset against any Net Rent, Additional Rent or other sum
payable under this Lease, or to fail to perform or observe any other covenant,
agreement or obligation hereunder, but shall permit Lessee to prohibit Lessor or
Agent from conducting such tests until such requirements are satisfied. Lessee's
obligations hereunder with respect to Hazardous Materials and Environmental Laws
are intended to extend to and cover all matters and conditions in, on, under,
beneath, with respect to, affecting, related to, in connection with or involving
the Property or any part thereof, without regard to whether Lessee has actually
caused or participated in the event or circumstance giving rise to the matter in
question, and without regard to whether the matter in question arose prior to or
during the Term (as hereinafter defined) of this Lease.
(c) For purposes of the foregoing provisions (or where such
terms are used elsewhere in this Lease), the following terms shall have the
meanings specified below:
(A) "Environmental Laws" means any and all federal,
state and local Laws, including without limitation any and all
requirements to register underground storage tanks, relating to: (i)
emissions, discharges, spills, releases or threatened releases of
pollutants, contaminants, Hazardous Materials (as hereinafter defined),
or hazardous or toxic materials or wastes into ambient air, surface
water, groundwater, watercourses, publicly or privately owned treatment
works, drains, sewer systems, wetlands, septic systems or onto land;
(ii) the use, treatment, storage, disposal, handling, manufacturing,
transportation, or shipment of Hazardous Materials (as defined below),
materials containing Hazardous Materials or hazardous and/or toxic
wastes, material, products or by-products (or of equipment or apparatus
containing Hazardous Materials), or (iii) pollution or the protection
of the environment.
(B) "Hazardous Materials" means (i) hazardous
materials, hazardous wastes, and hazardous substances as those terms
are defined under any Environmental Laws, including, but not limited
to, the following: the Hazardous Materials Transportation Act, 49
U.S.C. ss. 1801 et seq., as amended from time to time ("HMTA"), the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., as
amended from time to time ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act, 42 U.S.C. ss. 9601 et seq., and as
further amended from time to time ("CERCLA"), the Clean Water Act, 33
U.S.C. ss. 1251 et seq., as amended from time to time ("CWA"), the
Clean Air Act, 42 U.S.C. ss. 7401 et seq., as amended from time to time
("CAA") and/or the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq., as amended from time to time ("TSCA"); (ii) petroleum and
6
petroleum products including crude oil and any fractions thereof; (iii)
natural gas, synthetic gas, and any mixtures thereof; (iv) asbestos
and/or any material which contains any hydrated mineral silicate,
including, but not limited to, chrysotile, amosite, crocidolite,
tremolite, anthophylite and/or actinolite, whether friable or
non-friable; (v) PCBs, or PCB-containing materials, or fluids; (vi)
radon; (vii) any other hazardous or radioactive substance, material,
contaminant, pollutant, or waste; and (viii) any substance with respect
to which any federal, state or local Environmental Law or governmental
agency requires environmental investigation, monitoring or remediation.
(C) "Environmental Event" shall mean any
environmental event or the discovery of any environmental condition in,
on, beneath or involving the Property or any portion thereof
(including, but not limited to, the presence, emission or release of
Hazardous Materials and the violation of any applicable Environmental
Law) that in the sole but reasonable judgment of Agent, if not properly
mitigated or remediated, might have a material adverse effect on the
use, occupancy, possession, value or condition of the Property or any
portion thereof.
3. Term
(a) Base Term. The term of this Lease ("Term") shall commence
on the date hereof ("Commencement Date") and continue until August 31, 2003 (the
"Expiration Date").
(b) Extension Provisions.
(i) If Lessee desires to extend the Term of this
Lease for an additional three (3) years beyond the original Expiration Date,
Lessee shall have the right, during the period beginning fifteen (15) months
prior to the Expiration Date and ending fourteen (14) months prior to the
Expiration Date, to advise Lessor and Agent of its desire to so extend the Term.
If Lessee expresses such a desire then during the period ending twelve (12)
months prior to Expiration Date Lessor and Lessee shall negotiate in good faith
toward a mutually acceptable extension of the Term. All terms and conditions of
any such extension (other than the length of the extension), including, without
limitation, the Net Rent and other amounts to be paid by Lessee during such
extended term, shall be subject to negotiation and the mutual agreement of
Lessor and Lessee and approved by Agent on behalf of the Instrument Holders
(unless the Instruments are discharged in full prior to the contemplated
Expiration Date), it being acknowledged and agreed that neither Lessor nor any
Instrument Holder shall be obligated to approve any extension, and their
approval of any requested extension and/or the terms thereof shall be at the
sole discretion of Lessor and such Instrument Holders. If any extension of the
Term is agreed upon then the parties hereto shall execute an amendment to this
Lease setting out the new Expiration Date and all appropriate revisions to this
Lease applicable during such extended period.
(ii) Notwithstanding the foregoing, if Lessee and
Agent desire to extend the Term of the Lease but one or more Instrument Holders
is unwilling to approve such extension, Lessee and Agent shall make reasonable
efforts to find a replacement party willing to purchase the Instruments held by
the Instrument Holders that do not desire to extend the Term, and otherwise to
cooperate reasonably at Lessee's expense to effect the mutually desirable
extension.
7
(c) Keys and Locks. On the Expiration Date, Lessee shall
surrender to Lessor all keys to all doors of the Property, and give the Lessor
or Agent an explanation of the combination of all safes or safecabinets, if any,
which are to remain in the Property.
(d) Holdover Rent. Upon the termination of this Lease (whether
by the expiration of the Term of the Lease or otherwise) Lessee must immediately
vacate the Property. If Lessee fails to do so then at the option of Lessor, but
without the execution of a new lease by Lessor and Lessee, Lessee shall
immediately become a tenant from month-to-month of the Property, or any part
thereof, at a Net Rent (as hereinafter defined) equal to the greater of two
hundred percent (200%) of the Net Rent effective in the month immediately
preceding termination of this Lease or one hundred fifty percent (150%) of the
then applicable fair market rental value of the Property, and under all other
terms, conditions, provisions, and obligations of this Lease insofar as the same
are applicable to a tenancy from month-to-month.
4. Rent
(a) Throughout the Term, Lessee shall pay to the Lessor as net
rental (the "Net Rent") the amounts determined in accordance with, and on the
"Payment Dates" (herein so called) described on Exhibit "A" attached hereto.
During the Term, Lessee shall also pay to Lessor the items of Additional Rent
(as hereinafter defined) set out on Exhibit "A". At such time as Improvements or
Parcels are added to the Property, or construction advances are made to Lessee
by Lessor in respect of New Improvements constructed by Lessee on any Parcel,
the Net Rent and Additional Rent payments shall be adjusted as contemplated on
Exhibit "A" and/or on the Supplement by which such Improvements or Parcels are
added to the Property, and/or the Construction Supplement evidencing the
construction advance in question, as applicable.
(b) All amounts that the Lessee is required to pay to the
Lessor pursuant to this Lease (other than Net Rent), including, but not limited
to, any and all amounts payable upon expiration of the Lease Term and/or upon
transfer or purchase of the Property, together with amounts specifically
denominated as such on Exhibit "A" as well as every fine, penalty, interest and
cost that may be added for non-payment or late payment thereof, shall constitute
"Additional Rent". Lessor shall give Lessee notice of any Additional Rent due
hereunder promptly after it has knowledge of such Additional Rent, and shall use
its best efforts to notify Lessee in advance of the due date and amount of such
Additional Rent; provided that failure to give such prompt notice shall not
relieve the Lessee of its obligation to pay such Additional Rent, subject to, as
applicable, the Lessee's rights, if any, under Section 18 hereof.
8
(c) The Lessee shall pay on demand to the Lessor interest at a
rate (the "Default Rate") equal to the lesser of (i) a rate that is 200 basis
points (2%) in excess of the rate quoted from time to time by Citibank, N.A.,
New York, as its "prime" or "base reference" rate for short-term floating rate
commercial loans (whether or not such rate is actually charged in any particular
instance), adjusted daily, or (ii) the highest lawful rate, on all amounts
payable by it to the Lessor hereunder from the due date thereof until paid in
full, subject to Section 4(h) below. Any such interest at the Default Rate shall
be paid at the same place and in the same manner as Net Rent (as hereinafter
provided).
(d) All amounts payable by the Lessee hereunder shall be paid
in lawful money of the United States of America. All Net Rent payments shall be
made to Lessor by 11:00 A.M. (New York City Time) on the applicable Payment
Date. All Additional Rent or other sums due hereunder shall also be paid by 1:00
p.m. (New York City Time) on the applicable due date. All payments shall be made
by wire transfer or other immediately available funds. Unless and until Lessee
is otherwise notified in writing by Agent and Lessor, all payments of Net Rent
or Additional Rent hereunder shall be paid to Lessor as follows:
State Street Bank and Trust Company
c/o Citibank, N.A.
New York, New York
Account # 40685147
ABA #021000089
Re: 1997 Pep Boys II
Any payments of rental or other amounts hereunder by Lessee made other than in
accordance with the foregoing requirements shall be at Lessee's peril and shall
not be credited for the benefit of Lessee hereunder unless and until such funds
are actually received by Lessor. If any payment of Net Rent, Additional Rent, or
other sum due hereunder is timely made by Lessee but Lessor, as Trustee under
the Declaration, fails to make timely distribution of the amounts in question to
the Instrument Holder(s) entitled to receive such amounts, Lessee shall have no
responsibility for any late fees or other compensatory payments due to the
Instrument Holders in respect of such late payment by the Trustee, nor subject
to any other consequences arising therefrom.
(e) Agent shall endeavor to send to Lessee on a monthly basis
an invoice stating the amount of Net Rent due for the month in question. While
the delivery of such an invoice is not a condition precedent to Lessee's
obligation to pay the Net Rent due hereunder, if Agent fails to sent an invoice
Lessee shall not be deemed to be in default of its obligations to pay Net Rent
hereunder if, on the date the Net Rent is due hereunder Lessee (i) pays to
Lessor an amount equal to the amount of Net Rent that was due and payable for
the preceding month hereunder, (ii) delivers to Agent a written notice that
Lessee did not receive an invoice for the month in question and is therefore
unable to compute the exact amount due for the month in question, and (iii)
Lessee makes any reconciliation payments necessary such that Lessee pays the
correct amount of Net Rent hereunder for the month in question within five (5)
Business Days after Lessee receives a reconciliation invoice. If the amount
9
actually paid by Lessee is more than the Net Rent due for the month, Lessor
shall refund the overage to Lessee within five (5) Business Days after the
reconciliation invoice is produced by Agent. Any positive difference between the
amount of Net Rent due to Lessor and the actual amount paid by Lessee pursuant
to the foregoing provision shall bear interest at the Applicable Rate for the
period between the date the Net Rent payment is due hereunder and the date such
reconciliation payment is actually made by Lessee, and in the event the actual
payment of Net Rent made by Lessee as aforesaid is more than the amount of Net
Rent due for the month in question, any credit or refund to Lessee shall
likewise bear interest at the Applicable Rate from the date the Net Rent was
paid by Lessee until such refund payment is made.
(f) The Lessee shall perform all of its obligations under this
Lease at its sole cost and expense and shall pay, when due and without notice or
demand (except as otherwise provided in this Lease), all amounts due hereunder.
The Lessee agrees to pay on demand (i) all Impositions (as defined in Section 6)
(subject to Lessee's rights pursuant to paragraph 6) and (ii) all reasonable
fees and expenses of the counsel to each of Lessor and Agent, in connection with
the preparation, execution, delivery, modification and amendment of this Lease
and any other documents to be delivered in connection herewith or therewith or
in connection with or arising out of any refinancing or refunding thereof
requested or consented to by Lessee.
(g) In the event that Lessee shall fail to pay any portion of
any installment of Net Rent on the day on which such installment is due, to the
extent permitted by applicable law there shall be added to such unpaid amount a
late charge of two percent (2%) of the amount owed in order to compensate Lessor
and Agent for the extra administrative expenses incurred. Any such late charges
shall be paid by Lessee in the same manner as hereinabove provided for the
payment of Net Rent. The foregoing provision shall not be deemed to limit
Lessor's right to receive interest at the Default Rate with respect to such
payment as provided in subsection 4(c) above.
(h) Notwithstanding the foregoing Lessor shall waive any late
charges and/or any extra amounts due by Lessee as a result of the application of
the Default Rate to late payments made by Lessee hereunder on up to three (3)
occasions during the Term so long as the payment in question is made during the
applicable grace or cure period such that the late payment in question does not
become an Event of Default hereunder.
5. Net Lease; Non-Terminability
(a) This Lease is a net lease and, except as otherwise
expressly provided in this Lease, any present or future Law (as defined below)
to the contrary notwithstanding, shall not terminate, nor shall the Lessee be
entitled to any abatement, reduction, set-off, counterclaim, defense or
deduction with respect to any Net Rent, Additional Rent or other sum payable
hereunder. Without limitation of the generality of the foregoing, except as
otherwise expressly provided in this Lease, the obligations of the Lessee shall
not be affected by reason of: (i) any damage to or destruction of the Property
or any part thereof by any cause whatsoever (including, without limitation,
fire, Casualty (as defined in Section 12) or act of God or enemy or any other
force majeure event); (ii) any Condemnation (as defined in Section 12),
10
including, without limitation, a temporary Condemnation of the Property or any
part thereof; (iii) any prohibition, limitation, restriction or prevention of
the Lessee's use, occupancy or enjoyment of the Property by any person; (iv) any
matter affecting title to the Property or any part thereof; (v) any eviction of
the Lessee from, or loss of possession by the Lessee of, the Property or any
part thereof, by reason of paramount title or otherwise; (vi) any default by the
Lessor hereunder or under any other agreement; (vii) the invalidity or
unenforceability of any provision hereof or the impossibility or illegality of
performance by the Lessor or the Lessee or both; (viii) any action of any
federal, state or local governmental authority; or (ix) any other cause or
occurrence whatsoever, whether similar or dissimilar to the foregoing. The
parties intend that the obligations of the Lessee hereunder shall continue
unaffected unless such obligations shall have been modified or terminated
pursuant to an express provision of this Lease. For purposes hereof "Law" means
all statutes, laws, ordinances, rules, regulations, orders, writs, injunctions,
or decrees of any municipal, state, federal, foreign, or territorial government,
or any court, governmental body, subdivision, agency, department, commission,
board, bureau, or instrumentality thereof.
(b) The Lessee shall remain obligated under this Lease in
accordance with its terms and shall not take any action to terminate, rescind or
avoid this Lease notwithstanding any bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding affecting the Lessor or any action
with respect to this Lease which may be taken by any trustee, receiver or
liquidator or by any court. Except as expressly permitted in this Lease, the
Lessee waives all rights to terminate or surrender this Lease, or to any
abatement or deferment of Net Rent, Additional Rent or other sums payable
hereunder. The Lessee shall remain obliged under this Lease in accordance with
its terms and the Lessee hereby waives any and all rights now or hereafter
conferred by Law or otherwise to modify or to avoid strict compliance with its
obligations under this Lease. All payments made to the Lessor hereunder as
required hereby shall be final and the Lessee shall not seek recovery of, nor
shall Lessee be entitled to recover, any such payment or any part thereof for
any reason whatsoever, absent manifest error.
(c) Lessee shall be entitled to bring a separate action
against Lessor, Agent, or the Purchasers, as applicable, to enforce their
respective obligations to Lessee hereunder or under the other Transaction
Documents, but no such action (including any judgment received by Lessee in
connection therewith) shall ever permit or grant Lessee the right to terminate
this Lease or create any right of abatement, set-off, or other reduction or
suspension of the payments due by Lessee hereunder.
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6. Taxes and Assessments; Compliance with Law; Certain Agreements
(a) The Lessee shall pay or cause to be paid, subject to
Section 18, all Impositions before any fine, penalty, interest or cost may be
added or any default may be claimed or any termination or foreclosure or
forfeiture procedures for nonpayment may be commenced. If any Imposition may
legally be paid in installments, such Imposition may be so paid in installments
provided that the Lessee shall pay all such installments due and payable on or
prior to the Expiration Date or earlier termination of this Lease. "Impositions"
means (i) all taxes, assessments, levies, fees, water and sewer rents and
charges, inspection fees and other authorization fees and all other governmental
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, of every character (including all penalties or interest thereon)
which, at any time prior to or during the Term, may be imposed or levied upon or
assessed against or be a Lien (as defined in Section 7) upon (A) the Property or
any part thereof, or (B) this Lease or the leasehold estate hereby created, or
which arise in respect of the ownership, operation, occupancy, possession, use,
non-use or condition of the Property or any part thereof; (ii) all gross
receipts or similar taxes imposed or levied upon, assessed against or measured
by any Net Rent, Additional Rent or other sum payable hereunder; (iii) all
sales, value added, use and similar taxes at any time levied, assessed or
payable on account of the ownership, operation, occupancy, use, leasing, or
subleasing of the Property or any part thereof; (iv) all charges, levies, fees,
rents or assessments for or in respect of utilities, communications and other
services rendered or used on or about the Property or any part thereof; and (v)
payments in lieu of each of the foregoing. "Impositions" shall not be deemed to
include any taxes or charges imposed upon any sale or transfer of ownership
interests in the Lessor, nor any "Excluded Charges" (as defined in the
Transaction Agreement).
(b) Subject to Section 18, the Lessee shall comply with, and
cause the Property to comply with, all Legal Requirements. "Legal Requirements"
means (i) all Laws, foreseen or unforeseen, ordinary or extraordinary, or
arising from any restriction of record or otherwise, which now or at any time
hereafter may be applicable to the Lessor, as owner of the Property, the Lessee,
as lessee hereunder, or the Property or any part thereof, or any of the
adjoining sidewalks or vaults, if any, or the ownership, operation, occupancy,
use, non-use or condition of the Property or any part thereof and any other
governmental rules, orders and determinations now or hereafter enacted, made or
issued, and applicable to the Lessor, as owner of the Property, the Lessee, as
lessee hereunder, or the Property or any part thereof or the ownership,
construction, operation, mortgaging, occupancy, possession, use, non-use or
condition thereof whether or not presently contemplated; and (ii) all
agreements, permits, covenants, conditions, and restrictions applicable to the
Property or any part thereof or the ownership, operation, mortgaging, occupancy,
use, non-use, or condition thereof, including but not limited to, all Facility
Agreements (as defined below) and all such Laws (including, without limitation,
carrying out all necessary or appropriate remediation or other response to any
Environmental Event in accordance with all applicable Environmental Laws),
12
contracts, agreements, covenants, conditions and restrictions which require
structural, unforeseen or extraordinary changes in the Property or any part
thereof and all matters of public record. Without limitation, to the extent that
any portion of the Property currently is included in the same subdivision lot or
tax parcel with other property that is not included in the Property, Lessee
shall proceed to promptly cause such portions of the Property to be replatted
and/or to effect such other legal or administrative actions as may be required
to cause each portion of the Property to be in a legal subdivision lot and tax
parcel that does not include any property that is not a part of the Property;
provided, however, that in isolated cases Lessee may, in lieu of any such replat
or other proceedings, provide title insurance endorsements, bonds,
indemnification or other assurances satisfactory, in Agent's reasonable
discretion, to assure that neither Lessor nor any successor-in-title thereto
shall bear any risk of cost or loss as a result of any such subdivision lot or
tax lot discrepancy. For purposes hereof "Facility Agreements" mean all
contracts or agreements relating to or affecting the Property or the operation
thereof or any portion thereof, including, without limitation, any easements,
declarations, covenants, or restrictions affecting the Property, and any other
agreement or arrangement that constitutes a Permitted Encumbrance.
(c) The Lessee shall fully and promptly keep, observe, perform
and satisfy, on behalf of Lessor, any and all obligations, conditions, covenants
and restrictions of or on the Lessor under any and all Facility Agreements, or
contest any obligations or alleged obligations thereunder, so that there will be
no default thereunder (other than a default as to which remedial actions are
stayed or suspended pending a contest of the obligations in question pursuant to
Section 18 hereof) and so that the other parties thereunder shall be and remain
at all times obliged to perform their obligations thereunder. To the extent
within its control Lessee shall not permit to exist any condition, event or fact
that could allow or serve as a basis or justification for any such person to
avoid such performance or to impose or enforce a Lien on the Property or any
portion thereof as a result of the non-performance by Lessee under any Facility
Agreement. Lessor agrees that without Lessee's consent, which consent shall not
be unreasonably withheld, Lessor shall not terminate or modify any Facility
Agreement. Further, at the request and expense of Lessee, Lessor agrees to
reasonably cooperate with Lessee in connection with the creation of additional
Facility Agreements and/or with any amendment or modification of any existing
Facility Agreement that Lessee may deem desirable; provided, that no Facility
Agreement shall be created or amended without the prior written consent of
Agent, which consent shall not be unreasonably withheld. Lessor hereby further
authorizes Lessee to act on Lessor's behalf pursuant to the Facilities
Agreements in the ordinary course of business related to the routine daily
operation of the Property; provided, that (i) prompt written notice of any
material action taken or notice received by Lessee with respect to any Facility
Agreement shall be given by Lessee to Agent, (ii) no consent, approval,
modification, amendment, or waiver under any Facility Agreement nor any status
report, estoppel certificate, or similar statement or certification with respect
to any Facility Agreement may be given by Lessee on Lessor's behalf without the
prior written approval of Agent (which approval shall not be unreasonably
withheld) unless the Facility Agreement in question has been approved (or deemed
approved) by Agent and either the Facility Agreement in question or another
instrument approved by the Agent contains an express delegation to Lessee (in
its capacity as such) of the right to issue the item in question or of the right
to provide such consent or approval on behalf of Lessor.
13
(d) Lessee's execution of a Supplement adding any Parcel or
Improvements to the Property shall constitute Lessee's representation and
warranty to Lessor, Agent, and to each of the Instrument Holders that as of the
date of such Supplement, to Lessee's knowledge: (i) there is no default, or
event or circumstance which, with notice and/or the passage of time could result
in a default, by Lessee or, to Lessee's knowledge, any other party under any
Facility Agreement applicable to such Parcel or Improvements, (ii) Lessee has
paid all amounts currently due and payable with respect to the Property or any
portion thereof under the terms of any Facility Agreement, and (iii) Lessee has
received no notice of, nor does Lessee have any other knowledge of, any events,
circumstances, or facts that have resulted in, or could result in, the loss or
material reduction or interruption of any of the services, easements,
rights-of-way, or other benefits inuring to the applicable Parcel under any of
the Facility Agreements, and/or the imposition of any Lien or charge of any kind
upon the applicable Parcel or any portion thereof pursuant to any Facility
Agreement. Without limitation of any other indemnifications or other rights
granted for the benefit of Lessor, Agent, and/or the Instrument Holders herein,
Lessee expressly agrees to indemnify, save, and hold harmless Lessor, Agent,
each Instrument Holder, and their respective successors and assigns from and
against any breach of any of the representations, warranties, or covenants
regarding the Facility Agreements contained in this Section 6.
(e) If any Improvements situated on any Parcels at any time
during the Term shall encroach upon any property, street or right-of-way
adjoining or adjacent to such Parcel, or shall violate the agreements or
conditions contained in any Facility Agreements affecting such Parcel or any
part thereof, or shall impair the rights of others under or hinder or obstruct
any easement or right-of-way to which such Parcel is subject, then, promptly
after the written request of Lessor or Agent, or any person affected by any such
encroachment, violation, impairment, hindrance or obstruction, Lessee shall, at
its expense, either (i) contest such matter in accordance with Section 18, (ii)
obtain effective waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation, impairment, hindrance or
obstruction whether the same shall affect Lessor, Lessee or both, (iii) make
such changes in the Improvements and take such other action as shall be
necessary to remove such encroachments, hindrances or obstructions and to end
such violations or impairments, including, if necessary, the alteration or
removal of any Improvement (subject to Lessor's and Agent's consent if required
by Section 10(a) hereof), or (iv) provide to Lessor affirmative title insurance
endorsements, bonds, or other assurances satisfactory to Agent, in its
discretion, to assure that neither Lessor nor any successor-in-title thereto
shall bear any risk of cost or loss as a result of the existence of such
encroachment. Lessor and Agent will not make request for correction of any minor
encroachments or similar minor matters unless either (A) a governmental entity
or a person or entity having an interest (which need not be an ownership
interest) in the property affected by such matter requests correction thereof,
or (B) in Lessor's or Agent's good faith judgment the existence of such
encroachment has a materially adverse effect upon the ownership, marketability,
and/or financeability of the Parcel or portion of the Property to which such
encroachment or other matter relates.
14
(f) In those circumstances set out in this Section in which
Lessee is authorized or permitted to take an action only after the consent or
approval of the Agent or Lessor is authorized or permitted to execute Facility
Agreements or other agreements requested by Lessee only after the consent or
approval of Agent, Agent shall be deemed to have approved the action, or
execution by Lessor of the document, in question if no disapproval is given to
Lessee by Agent within ten (10) Business Days after Lessee's written request for
approval where such request for approval (A) contains a reasonably detailed
description of the actions which Lessee proposes to take if the request is
approved (including copies of documents proposed to be executed or delivered)
and (B) contains a specific notice to Agent that the request will be deemed
approved if not disapproved within such period. If Agent disapproves any
request, Agent shall state its reasons for disapproval (which may include lack
of sufficient information regarding the request or, in any appropriate case,
insufficient time to fully evaluate the request). If Agent fails to notify
Lessee within such ten (10) Business Day period that the information provided by
Lessee regarding the requested approval is inadequate for Agent's needs Agent
shall be deemed to have waived any right to refuse a requested approval on the
basis of inadequate information (but the foregoing shall not be deemed to limit
any rights or claims that the Lessor or Agent may have if the description or
other information provided by Lessee in connection with a requested approval is
inaccurate, misleading, or fraudulent). Agent shall deliver to Lessor written
authorizations or directions to evidence Agent's approval of actions or
documents that have been approved (or deemed approved) by Agent as aforesaid.
Following any such approval or deemed approval by Agent, and receipt by Lessor
of the aforesaid authorizations or directions, Lessor shall execute any approved
Facility Agreement or other approved agreements as requested by Lessee.
(g) Within five (5) Business Days after receipt thereof by
Lessor, unless it is apparent that such materials have independently been
received by Lessee or Agent, as applicable, Lessor shall deliver to Lessee, with
a copy to Agent, any tax bills, condemnation notices, mechanics' lien claims,
legal pleadings, notices relating to Facility Agreements or Permitted
Encumbrances, or other material communications relating to the Property.
7. Matters of Title; Assignability
(a) Subject to Section 18, and except for the Permitted
Encumbrances, the Lessee shall not create or permit to exist, and shall promptly
remove and discharge, any mortgage, charge, lien, security interest,
encumbrance, right or claim (each, a "Lien") upon this Lease or the Property or
any part thereof or interest therein, or upon any Net Rent, Additional Rent or
other sum payable hereunder, which Lien arises for any reason, including,
without limitation, any and all Liens which arise out of the use, condition,
occupancy, construction, possession, repair or rebuilding of the Property or any
part thereof (including, without limitation, by reason of a default under any
Facility Agreement) or by reason of labor or materials furnished or claimed to
have been furnished to the Lessee or for the Property or any part thereof.
"Permitted Encumbrances" means, with respect to the Property but only to the
15
extent applicable thereto (i) rights reserved to or vested in any municipality
or public authority by the terms of any right, power, franchise, grant, license,
permit or provision of Law affecting the Property to (A) terminate such right,
power, franchise, grant, license or permit, provided that the exercise of such
right would not materially impair the use of the Property or materially and
adversely affect the value thereof, or (B) purchase, condemn, appropriate or
recapture, or designate a purchaser of, the Property; (ii) any liens thereon for
Impositions and any liens of mechanics, materialmen and laborers for work or
services performed or materials furnished in connection with the Property, which
are not due and payable or which are not delinquent to the extent that penalties
for nonpayment may be assessed (or with respect to which title insurance
endorsements, bonds, or other security and assurances reasonably satisfactory to
Agent have been provided); (iii) easements, rights-of-way, servitudes,
restrictions and other minor defects, encumbrances, and irregularities in the
title to the Property approved by Agent as of the date the Parcel in question is
added to the Property and described in the owner's policies of title insurance
issued to Lessor, as owner of the Parcels, in connection with Lessor's
acquisition of the Parcels; (iv) rights reserved to or vested in any
municipality or public authority to control or regulate use of the Property or
to use the Property in any manner; (v) this Lease; and (vi) any Transaction
Documents.
(b) The Lessor shall not create any Lien upon this Lease, the
Property, or any part thereof except this Lease, the Liens securing the
obligations of Lessor and/or Lessee under the Transaction Documents, and any
Liens that may arise in respect of any action taken by the Lessor, Agent or the
Instrument Holders from time to time in connection with the enforcement of any
rights under this Lease or the Transaction Documents.
8. Indemnification
(a) The Lessee shall pay, protect, indemnify and hold harmless
each Indemnified Party (as defined below) from and against, and shall defend all
actions against any Indemnified Party with respect to, any and all liabilities
(including, but not limited to, liability in tort (whether strict liability or
otherwise)), losses, damages, costs, expenses (including, but not limited to,
reasonable attorneys' fees and expenses), causes of action, suits, claims,
demands or judgments of any nature whatsoever (collectively, "Losses") arising
from (i) any injury to or death of any person, or damage to or loss of property,
or any other event or circumstance occurring on or resulting from activities on
the Property, or resulting from or in connection with the ownership, leasing,
subleasing, operation, occupancy, possession, use, non-use or condition of the
Property, (ii) any Environmental Event, Incipient Default or Event of Default
hereunder, (iii) any act or omission of the Lessee or its agents, contractors,
licensees, sublessees, invitees, representatives or any Person for whose conduct
the Lessee is legally responsible on or relating to or in connection with the
ownership, leasing, subleasing, operation, management, maintenance, occupancy,
16
possession, use, non-use or condition of the Property; (iv) performance of any
labor or services or furnishing of any materials or other property in respect of
the Property or any part thereof; (v) any permitted contest referred to in
Section 18, provided, that no Indemnified Party shall be entitled to payment or
indemnification with respect to any amounts voluntarily paid by such Indemnified
Party in respect of matters being properly contested by Lessee under such
Section 18; or (vi) any violation by the Lessee of any contract or agreement to
which the Lessee is a party or of any Legal Requirement or Insurance
Requirement, in each case affecting any Indemnified Party or the Property, or
any part thereof or the ownership, operation, occupancy, possession, use,
non-use or condition thereof and in each case regardless of the acts, omissions
or negligence of any Indemnified Party (except as otherwise set forth in the
following proviso); provided, however, that the Lessee shall not be required to
indemnify any Indemnified Party hereunder against any such claims to the extent
arising solely as a result of the fraud, gross negligence or willful misconduct
of the Indemnified Party in question. IT IS THE EXPRESS INTENT AND UNDERSTANDING
OF THE PARTIES THAT THE FOREGOING PROVISION DOES CONSTITUTE AN INDEMNIFICATION
BY THE LESSEE OF THE INDEMNIFIED PARTIES OF AND FROM LOSSES ARISING OUT OF THE
NEGLIGENCE OF THE RESPECTIVE INDEMNIFIED PARTIES OR ANY OF THEM; PROVIDED,
HOWEVER, THAT THE PARTIES AGREE AND ACKNOWLEDGE THAT NO INDEMNIFIED PARTY SHALL
BE ENTITLED TO INDEMNIFICATION HEREUNDER FOR DAMAGES OR LOSSES TO THE EXTENT
CAUSED BY THE FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED
PARTY IN QUESTION. In connection with any such defense by Lessee, Lessee may
file answers and pleadings in the name of and on behalf of the applicable
Indemnified Party(ies) where necessary. For purposes of this Section 8,
"Indemnified Party" means the Lessor (in both its capacity as Trustee under the
Declaration of Trust and in its individual capacity), each Instrument Holder,
Agent (and any successor agent), and any officer, director, employee or agent of
any of the above. "Incipient Default" means the occurrence of any event or the
existence of any circumstance that would entitle Agent or Lessor to send a
notice requiring remedial action by Lessee which, if not carried out by Lessee
within the applicable grace or cure period as provided in the applicable
subsection of Section 19(a) hereof, would result in the existence of an Event of
Default hereunder.
(b) The obligations of the Lessee under this Section 8 shall
survive the expiration or any termination of this Lease (whether by operation of
Law or otherwise) for all matters described in this Section 8 which occur or
arise prior to such expiration or termination or arise out of or result from
facts, events, claims, liabilities, actions or conditions occurring, arising or
existing on or before such expiration or termination; provided, that the
foregoing shall not be construed to extend or toll any applicable statute of
limitations with respect to the obligations of Lessee hereunder. In case any
action shall be brought against any Indemnified Party in respect of which
indemnity may be sought against the Lessee, such Indemnified Party shall
promptly notify the Lessee in writing, but failure to give such prompt notice
shall not relieve the Lessee from any liability hereunder except to the extent
Lessee is actually prejudiced by such failure to give prompt notice. So long as
no Event of Default exists, and no Incipient Default exists with respect to the
matters covered in Sections 19(a)(i), (iv), (vii), (x), (xi), or (xiv) (any such
Incipient Default being referred to as a "Special Incipient Default") has
occurred and is continuing hereunder, the Lessee, at its own expense, may defend
17
any action brought against an Indemnified Party, including the employment of
counsel reasonably satisfactory to such Indemnified Party and the payment of all
reasonable expenses thereof. Any Indemnified Party shall have the right to
employ separate counsel in any such action and to consult with the Lessee
regarding the defense thereof, provided that, except in the circumstances
described below any such separate counsel shall be employed at the sole cost and
expense of the Indemnified Party, and provided, further, that, except as
provided below, the Lessee shall at all times control such defense. If the
Lessee shall have failed to employ counsel reasonably satisfactory to such
Indemnified Party (or, upon notice from the Indemnified Party that the counsel
employed by Lessee is not satisfactory, if Lessee has failed to discharge
counsel previously employed and to retain new counsel that both Lessee and the
Indemnified Party agree upon), the fees and expenses of counsel to each
Indemnified Party shall be paid by the Lessee. Further Lessee shall pay all of
the Losses of such Indemnified Party incurred in respect of such defense if
either (i) the Lessee shall elect in writing not to assume the defense or,
having assumed such defense, shall thereafter fail to prosecute diligently such
defense thereof, or (ii) if any Special Incipient Default or Event of Default
has occurred and is continuing hereunder. Further, if any Indemnified Party
shall have been advised by counsel chosen by it that there may be one or more
legal defenses available to such Indemnified Party that are different from or
additional to those available to Lessee and the relief sought against the
Indemnified Party is other than payment of monetary damages, the Indemnified
Party may assume the defense of such loss or action once tendered and Lessee
will reimburse such Indemnified Party for the reasonable fees and expenses of
any counsel retained by the Indemnified Party. So long as Lessee is diligently
defending the claim in question as aforesaid or, if the Indemnified Party has
assumed defense thereof, so long as Lessee is paying the costs of such separate
defense in accordance herewith, the Lessee shall not be liable for any
settlement of any action without its consent. No settlement of any such action
may be made by the Lessee without the Indemnified Party's consent; provided,
however, such consent shall not be necessary if the settlement results in an
unconditional and final release of the Indemnified Party without the admission
by the Indemnified Party of guilt, complicity or culpability.
(c) Upon demand for payment by any Indemnified Party of any
Losses incurred by it for which indemnification is sought, along with a brief
description of the nature and extent of the Losses as well as the circumstances
under which indemnification is sought, Lessee shall pay when due and payable the
full amount of such Losses to the appropriate party, unless the Lessee shall
have assumed the defense of such Loss or action once tendered and is diligently
prosecuting the same and Lessee has taken all action as may be reasonably
necessary to prevent (i) the collection of such Losses from the Indemnified
Party; (ii) the sale, forfeiture or loss of the Property or any part thereof
during such defense of such action; and (iii) the imposition of any civil or
criminal liability for failure to pay such Losses when due and payable.
(d) Notwithstanding the foregoing, if a claim that is subject
to the indemnification provisions set out above is made seeking monetary damages
only and the maximum exposure of the Indemnified Party is less than
$1,000,000.00, then so long as the Lease Guarantor is in compliance with the
financial covenants set out in the Lease Guarantee, Lessee may defend or settle
such matter at its discretion and in the name of the Indemnified Party without
involvement of the Indemnified Party in the defense or settlement thereof.
18
(e) Lessee acknowledges the execution, of even date herewith,
of the "Environmental Indemnity Agreement" (herein so-called) wherein Lessee has
indemnified Lessor, Agent and the Instrument Holders for various matters
relating to Hazardous Substances and Environmental Laws relating to the
Property. The indemnification rights provided for herein are in addition to, and
not in lieu of, indemnification rights granted in the Environmental Indemnity
Agreement.
9. The Lessee, at its own expense, will manage and maintain the
Property in good repair and condition, subject to normal wear and tear. Further,
Lessee will take all action, and will make all changes and repairs, structural
and nonstructural, foreseen and unforeseen, ordinary and extraordinary, to the
Property from time to time as may be required to keep the Property in compliance
with any Legal Requirement or Insurance Requirement at any time in effect. The
Lessor shall not be required to, and Lessee hereby waives any right to require
the Lessor to, manage, maintain, repair or rebuild the Property or any part
thereof and the Lessee waives any and all rights it may now or hereafter have to
make any repairs at the expense of the Lessor pursuant to any Legal Requirement,
Insurance Requirement, or otherwise, at any time in effect. All repairs,
replacements and rebuilding by the Lessee hereunder shall immediately become and
shall remain part of the Property, subject to this Lease.
10.Alterations; Additions.
(a) At any time, so long as no Event of Default has occurred,
and no Special Incipient Default then exists, the Lessee may, at its own
expense, make Additional Improvements to the Property; provided, however, that
(i) the fair market value of the Property shall not be lessened thereby, and
(ii) such work shall be completed in a good and workmanlike manner free and
clear of any Liens for labor, services or materials (subject to Section 18
hereof) and in compliance with all applicable Legal Requirements and Insurance
Requirements, (iii) the structural integrity of the Improvements shall not be
impaired thereby, and (iv) any "Material Improvements" (as defined below) shall
have been approved in writing by Agent prior to commencement thereof (which
approval shall not be unreasonably withheld or delayed). "Additional
Improvements" means additions or alterations of the Improvements made by or for
the Lessee and "Material Improvements" means Additional Improvements which have
a cost in excess of $350,000.00 (for this purpose related segments of Additional
Improvements on any given Parcel (but not similar activities occurring on
separate Parcels) shall be aggregated). The installation or modification of
Lessee's Equipment inside any Improvements will not be treated as Additional
19
Improvements for purposes hereof. The Lessee shall be permitted, with the
consent of the Agent (which consent shall not be unreasonably withheld), at any
time during, or upon the expiration or termination of, the Term, and at its sole
cost and expense, to remove any such Additional Improvements to the Property;
provided, however, that, in the reasonable discretion of Agent, such removal
shall not impair the use or reduce the fair market value of the Property below
its fair market value on commencement of the Term and that such removal shall
not cause a violation of any Legal Requirement or Insurance Requirement. Any
damage to the Property or any part thereof caused by such removal shall promptly
be repaired by the Lessee and the Property or part thereof shall be restored to
its condition (or the reasonable equivalent thereof) as it existed immediately
prior to the construction of such Additional Improvements, at the Lessee's sole
cost and expense. The Lessee may place upon the Property or any part thereof any
inventory, fixtures, machinery, equipment or other property belonging to the
Lessee or third parties and remove the same at any time during the Term and at
the request of the Lessor or Agent shall remove the same at the expiration or
termination hereof unless the Lessee shall have purchased the Property pursuant
to the terms hereof; provided that any damage to the Property or any part
thereof caused by such removal shall promptly be repaired by the Lessee and the
Property or such part thereof shall be restored to its condition (or the
reasonable equivalent thereof) as it existed immediately prior to the placement
of any such property upon the Property, all at the Lessee's sole cost and
expense.
(b) If any request is made by Lessee for approval by Agent of
the construction of proposed Additional Improvement and/or the removal thereof
by Lessee where such approval is required, the request in question shall be
deemed approved if Agent has not given Lessee notice of disapproval within ten
(10) Business Days after Lessee's written request for approval where such
request for approval (A) contains a reasonably detailed description of the
action which Lessee proposes to take (including the Additional Improvements to
be constructed or demolished, and the effect thereof upon the value and utility
of the affected Parcel and the Improvements thereon), and (B) contains a
specific notice to Agent that the request will be deemed approved if not
disapproved within such period. If Agent disapproves any request, Agent shall
state its reasons for disapproval (which may include lack of sufficient
information regarding the request or, in an appropriate case, insufficient time
to fully evaluate the request). If Agent fails to notify Lessee within such ten
(10) Business Day period that the information provided by Lessee regarding the
requested approval is inadequate for Agent's needs Agent shall be deemed to have
waived any right to refuse a requested approval on the basis of inadequate
information (but the foregoing shall not be deemed to limit any rights or claims
that the Lessor or Agent may have if the description or other information
provided by Lessee in connection with a requested approval is inaccurate,
misleading, or fraudulent).
(c) All Additional Improvements shall become and remain part
of the Property and shall be subject to this Lease, unless and until removed by
the Lessee in accordance with subsection 10(a).
11. The Lessee, at its own cost and expense, shall have the sole right,
at any time, to seek a reduction in the assessed valuation of the Property or to
contest any real property taxes for the Property as provided for in Section 18
hereof. If required by any applicable Legal Requirement the proceeding or
contest may be brought by Agent in the name of Lessor as the owner of the
Property but Lessee shall pay any and all costs and expenses incurred by, or
20
that become the obligation of, the owner of the Property in connection
therewith. Lessee, on final determination of the proceeding or contest, shall,
subject to Section 18 hereof, immediately pay, discharge and satisfy any
decision or judgment rendered, together with all costs, interest, and penalties
incidental to the decision or judgment. Any tax refund or similar amount
received by Lessor as a result of any such contest by Lessee and attributable to
periods when the tax in question was paid by Lessee shall be received for the
benefit of Lessee and promptly paid over to Lessee by Lessor.
12. Condemnation and Casualty
(a) General.
(i) Subject to the provisions of this Section 12
Lessee hereby irrevocably assigns to the Lessor any award or compensation or
insurance payment to which the Lessee may become entitled (i) if the Property or
any part thereof is damaged or destroyed by fire or other casualty (such an
occurrence being herein called a "Casualty") or (ii) if the use, occupancy or
title of the Property or any part thereof is taken or requisitioned or sold in,
or on account of any actual or threatened condemnation or eminent domain
proceedings, or other action by any Person having the power of eminent domain
(such an occurrence being herein called a "Condemnation").
(ii) The Lessee shall promptly notify the Lessor in
writing of any Casualty or Condemnation and shall appear in any proceeding or
action to defend, negotiate, prosecute or adjust any claim for any award or
compensation or insurance payment on account thereof. The Lessee shall take all
appropriate action in connection therewith, including the employment of counsel
reasonably satisfactory to the Lessor and Agent. The Lessor and Agent shall have
the right to appear and participate and to employ separate counsel in any such
proceeding or action, and the fees and expenses of such counsel shall be paid by
the Lessee if the Lessee shall have failed to employ counsel reasonably
satisfactory to the Lessor and Agent (or, upon notice from Lessor or Lessee of
their dissatisfaction with the counsel employed by Lessee, Lessee shall have
failed to discharge counsel previously employed and to retain new counsel that
Lessee and the Agent and Lessor may agree upon). If the Lessee shall elect not
to enter an appearance in any such proceeding or action or shall fail to
prosecute any such proceeding or action diligently, or if any Special Incipient
Default or Event of Default has occurred and is continuing hereunder, the Lessor
and/or Agent may assume the prosecution thereof and the Lessee shall pay all of
the reasonable fees and expenses of Lessor's and/or Agent's counsel. No
settlement of any such proceeding or action shall be made by the Lessee without
the written consent of the Lessor and the Agent, which consent shall not
unreasonably be withheld.
(iii) All awards and proceeds attributable to
Lessee's Equipment, Lessee's moving and other expenses, and other losses
incurred by Lessee and all proceeds of Lessee's business interruption insurance
shall be paid to Lessee, and Lessor shall not have any rights therein, so long
as the award or insurance proceeds payable in respect of the Parcel and/or the
Improvements themselves are not reduced as a result of any such payments to
Lessee. In no event shall Lessee make any claim in any Condemnation proceeding
21
in respect of the loss or value of the leasehold estate in the Property created
hereby, and Lessee hereby assigns to Lessor any rights it may have to any award
based on the value of the leasehold estate; provided, however, that (i) the
foregoing shall not preclude Lessee from bringing a separate action for damage
to its leasehold estate if, and only if, the award to the Lessor is not reduced
as a result thereof, and further provided that (ii) if Lessee purchases the
Property (or applicable portion thereof) in connection with any such
Condemnation under any applicable provision of this Lease, Lessee shall be
entitled to any Net Proceeds arising therefrom and may prosecute or dispose of
any Condemnation action as it deems appropriate.
(iv) Except as otherwise set out below, any and all
amounts representing proceeds paid in connection with any such Condemnation or
Casualty (other than proceeds of rental loss insurance and proceeds attributable
to Lessee's personal property, Lessee's moving or other expenses, and business
interruption insurance), as the case may be (collectively, the "Proceeds"),
shall be paid over to the Proceeds Trustee (as defined below) to be held in
trust by such Proceeds Trustee and distributed pursuant to paragraph 12 or 15 of
this Lease, as appropriate, (all such Proceeds, less the reasonable expenses
incurred by the Lessor and the Lessee in collecting such amounts, but including
any reimbursement by the Lessee for reasonable costs and expenses in connection
therewith to which the Lessor and the Agent are entitled pursuant to this Lease,
are the "Net Proceeds"). Except as otherwise provided below, any and all
Proceeds received by the Lessee in connection with any such proceeding or action
shall be received and held in trust for the benefit of the Lessor, shall be
segregated from other funds of the Lessee and shall be forthwith paid over to
the Proceeds Trustee. The Lessee and Lessor agree that this Lease shall control
the rights of the Lessor and the Lessee in any such Proceeds, and any present or
future Law to the contrary is hereby waived. Any and all reasonable charges,
fees and expenses of the Proceeds Trustee shall be paid from the Net Proceeds.
"Proceeds Trustee" shall mean Agent, if Agent elects to perform such functions
or, if Agent elects not to perform such functions, such title company or other
independent bank or trust company as may be designated by the Lessor with the
approval of Agent.
(v) Notwithstanding the foregoing, however, if the
total amount of Proceeds attributable to a Casualty or Condemnation is less than
or equal to $350,000.00 with respect to any one Parcel, and no Special Incipient
Default and no Event of Default of any kind then exists, then Lessee may settle
the claim in question on behalf of Lessee and any and all Proceeds received by
Lessee in connection with any such proceeding or action may be retained by
Lessee (rather than being paid over to the Proceeds Trustee), and this Lease
shall continue in full force and effect, and the Lessee shall, at its expense,
promptly commence and diligently pursue to completion the rebuilding,
replacement or repair of any damage to such portion of the Property caused by
such event in conformity with the requirements of Sections 9 or 10, as
applicable, in order to restore such portion of the Property (in the case of a
Condemnation, as nearly as practicable) to the condition and fair market value
thereof immediately prior to such event.
22
(b) Condemnation with Termination. (i) If a Condemnation shall
in the good faith opinion of an authorized officer of Lessee affect the
Improvements on a given Parcel in such manner as to render it unsuitable for
restoration or for continued use and occupancy by the Lessee, then the Lessee
may deliver, not later than sixty (60) days after such occurrence, or (ii) if a
Condemnation shall affect the entirety of a Parcel and the Improvements thereon,
then the Lessee shall be deemed to have delivered as of such occurrence, to the
Lessor a written notice (herein called a "Termination Notice") containing (A)
notice of the Lessee's intention to terminate this Lease with respect to the
affected Parcel and the Improvements thereon, and (B) a certificate of an
officer of the Lessee describing the Condemnation giving rise to such
termination and certifying as to clause (i) or (ii) above, as appropriate. In
such event this Lease shall remain in full force and effect as to the Parcels
(and the Improvements thereon) not affected by the Condemnation in question, and
as to the affected Parcel and Improvements the Lessee shall have the same
options available to it that would be available to Lessee at the Expiration Date
with respect to the entire Property. Accordingly, Lessee may either purchase the
remainder of the Parcel and Improvements in question, if any, plus the Net
Proceeds attributable thereto for the Offer Purchase Price as provided for in
Section 15 below, or terminate this Lease as to the Parcel and Improvements in
question upon payment of a Contingent Rent Payment in respect of the Parcel and
Improvements in question in an amount equal to 84% of the amount that would be
the applicable Offer Purchase Price for the Parcel and Improvements in question
pursuant to Section 15. (If Lessee pays the Contingent Rent Payment in respect
of a portion of the Property pursuant to this provision, such amount shall be
credited, without interest, against the Contingent Rent Payment payable
hereunder at the Expiration Date.) If Lessee fails to elect which of the
foregoing options it requests at the time of delivery of the Termination Notice,
it shall be deemed to have elected to purchase the affected portion of the
Property for the applicable Offer Purchase Price.
(c) Condemnation Without Termination; Casualty.
(i) If, after a Condemnation, the Lessee has not
given a Termination Notice in accordance with subsection 12(b) with respect to
the affected Parcel and the Improvements thereon, or in any event after a
Casualty (unless, in the case of Casualty, Lessee elects to proceed pursuant to
Section 13 below, if applicable), then this Lease shall continue in full force
and effect with respect to the affected Parcel and the remainder of the
Property, and the Lessee shall, at its expense, promptly commence and diligently
pursue to completion the rebuilding, replacement or repair of any damage to such
portion of the Property caused by such event in conformity with the requirements
of Section 9 or 10, as applicable, in order to restore such portion of the
Property (in the case of a Condemnation, as nearly as practicable) to the
condition and fair market value thereof immediately prior to such event.
23
(ii) In circumstances where the Net Proceeds are to
be administered by the Proceeds Trustee, the Lessee shall be entitled to receive
payment from the Net Proceeds from time to time as such work of rebuilding,
replacement or repair progresses, but only after presentation of certificates of
a licensed architect chosen by the Lessee and subject to the approval of the
Agent (which approval shall not be unreasonably withheld or delayed), delivered
by the Lessee to the Proceeds Trustee (with a copy to the Agent) from time to
time as such work of rebuilding, replacement or repair progresses. Each such
architect's certificate shall describe the work for which the Lessee is
requesting permission to pay or requesting payment and the cost incurred by the
Lessee in connection therewith and shall state that such work has been properly
completed and that the Lessee has not theretofore received payment for such
work, and shall be accompanied by an officer's certificate of the Lessee
certifying that no Special Incipient Default or Event of Default has occurred
and is continuing and that the amounts held by the Proceeds Trustee are adequate
to complete such rebuilding, replacement or repair. The Proceeds Trustee shall
deliver, or cause to be delivered, payment within ten (10) Business Days after
its receipt of the certificates required above. Upon receipt by the Proceeds
Trustee (with a copy to the Agent) of an officer's certificate from the Lessee
to the effect that final payment has been made for any such work and stating
that the rebuilding, replacement or repair has been completed, the remaining
amount of such Net Proceeds shall be paid to the Lessee. The Lessee shall be
responsible for the cost of any such repair, rebuilding or restoration in excess
of such Net Proceeds, for which cost the Lessee shall make adequate provision
acceptable to the Lessor and Agent.
(d) Temporary Condemnation or Lease Termination.
Notwithstanding any other provision to the contrary contained in this Section
12, in the event of any temporary Condemnation, this Lease shall remain in full
force and effect, and provided no Special Incipient Default or Event of Default
has occurred and is continuing, the Lessee shall be entitled to receive the Net
Proceeds allocable to such temporary Condemnation, except that if this Lease
shall expire or terminate during such temporary Condemnation, then Lessee shall
only be entitled to the Net Proceeds allocable to the period after the
termination or expiration of this Lease if it has purchased the Property
pursuant to Section 14 hereof.
(e) Notwithstanding the foregoing provisions, in the event a
material Condemnation or Casualty with respect to a Parcel occurs during the
last twelve (12) months of the Term, Lessee may issue a Partial Termination
Notice with respect to the Parcel in question in the manner contemplated in
Section 13(a) hereof, but without satisfying the requirements set out in Section
13(a)(i)(3) regarding the Parcel in question. No Early Termination Fee shall be
payable in the event Lessee exercises such option.
13. Early Termination Rights
(a) Partial Termination.
24
(i) Subject to the provisions of subsections (a)(ii)
and (a)(iii) below, the Lessee may at any time deliver to the Lessor a written
notice signed by an authorized officer of the Lessee (herein called a "Partial
Termination Notice") containing (1) notice of the Lessee's intention to
terminate this Lease with respect to a specific Parcel and the Improvements
located thereon as of a Payment Date no earlier than thirty (30) days after the
delivery of such notice, (2) an Offer to Purchase with respect to such Parcel
and the Improvements located thereon pursuant to Section 14, and (3) a
certification of an authorized officer of Lessee to the effect that either (A)
the Parcel in question has become obsolete and is no longer needed by Lessee for
its operation; or (B) if an Event of Default, or any Incipient Default, exists
which in either case arises out of an Environmental Event relating solely to the
Parcel in question and Lessee elects to cure the Event of Default in question,
or to cure the Incipient Default before it becomes an Event of Default, by
purchasing the affected Parcel in lieu of taking the curative action required by
Lessor or Agent.
(ii) Specific Limitation. In no event shall Lessee
have the right to give a Partial Termination Notice with respect to any
Parcel(s) pursuant to subsection (a)(i)(A) above prior to the first anniversary
of the date the Parcel in question was added to the Property or while any Event
of Default shall have occurred and be continuing. The foregoing one (1) year
limitation will not apply to the exercise of Lessee's purchase option pursuant
to subsection (a)(i)(B) above. It is acknowledged that the option of the Lessee
to give a Partial Termination Notice pursuant to subsection (a)(i)(B) above is a
right granted to Lessee that is separate from the obligation of Lessee to
purchase a Parcel at the option of Lessor if the Environmental Event in question
ripens into an Event of Default, as provided in Section 14(a)(v).
(iii) In addition to any other amounts included
within the Offer Purchase Price, Lessee shall pay to Lessor an "Early
Termination Fee" (herein so-called) in an amount equal to one percent (1%) of
the Acquisition Price of the Parcel(s) in question, at the time the Lease is
terminated as to any Parcel(s) pursuant to this Section 13(a).
(b) Material Changes in Treatment of Transaction.
(i) The Lessee at any time may deliver to the Lessor
a written notice signed by an authorized officer of the Lessee (herein called an
"Early Termination Notice") upon the occurrence of any of the following:
(A) A ruling by the Internal Revenue Service
which results in the loss of MACRS (as defined in the Internal Revenue
Code of 1986) deductions relating to the Property by Lessee for federal
income tax purposes; or
(B) A change in GAAP or the interpretive
rulings applicable thereto which requires recharacterization of this
Lease as a "capital lease" rather than an "operating lease";
25
(C) Issuance of any rulings or requirements
by the Securities and Exchange Commission ("SEC") that would require
that this Lease be accounted for as a "capital lease" rather than as an
"operating lease" in any financial statements of Lessee used in any
public SEC filings.
The Early Termination Notice shall contain notice of the Lessee's intention to
terminate this Lease as of a Payment Date no earlier than thirty (30) days after
the delivery of such notice, and (ii) an Offer to Purchase all of the Property
pursuant to paragraph 14.
(ii) No Early Termination Fee shall be due in the
event of a purchase of the Property pursuant to this Section 13(b).
14. Offer to Purchase
(a) Lessee shall have the right, or obligation, as applicable,
to deliver an "Offer to Purchase" (herein so-called) for the Property or an
applicable portion thereof from Lessor under the following circumstances:
(i) On the date that is six (6) months prior to the
Expiration Date (as extended, if applicable), Lessee shall be deemed to
have delivered to Lessor an Offer to Purchase the entire Property
unless, on or before such date, Lessee has given notice to Lessor of
Lessee's election to pay the Contingent Rent Payment pursuant to
Section 27 hereof. Any such purchase of the entire Property may be
closed at any time during the last six (6) months of the Term and no
Early Termination Fee shall be applicable thereto. The exercise by
Lessee of its rights on one or more occasions under Sections 12(b) or
13(a)(i) or 13(b) shall not limit or otherwise affect Lessee's right to
elect either to deliver an Offer to Purchase or to pay the Contingent
Rent Payment hereunder with respect to the portions of the Property
that remain subject to this Lease at the time the provisions of Section
27 become applicable.
(ii) Simultaneously with the delivery of Partial
Termination Notice pursuant to Section 13(a)(i) above with respect to
any applicable portion of the Property, Lessee shall be obligated to
deliver an Offer to Purchase such portion of the Property and the
delivery of such Offer to Purchase shall be a condition precedent to
the effectiveness of such Partial Termination Notice.
(iii) Simultaneously with the delivery of any Early
Termination Notice pursuant to Section 13(b) above, Lessee shall be
obligated to deliver an Offer to Purchase the entire Property and the
delivery of such Offer to Purchase shall be a condition precedent to
the effectiveness of such Early Termination Notice.
26
(iv) Simultaneously with the delivery of any
Termination Notice with respect to an applicable portion of the
Property pursuant to Section 12(b) hereof in connection with any
Condemnation, Lessee shall be obligated to deliver an Offer to Purchase
such portion of the Property and the delivery of such Offer to Purchase
shall be a condition precedent to the effectiveness of such Termination
Notice.
(v) Upon the occurrence of an Event of Default,
Lessee shall, at the option of Lessor or Agent, be deemed to have
delivered an Offer to Purchase covering the entire Property (unless the
Event of Default in question is one that arises solely out of facts or
conditions applicable to one or more particular Parcel(c) [as opposed
to the Property as a whole, or the condition of Lessee or Lessee
Parent] such that if the Parcel(s) in question were not part of the
Property the Event of Default in question would not exist, in which
case the Offer to Purchase shall be applicable only to the Parcel(s) as
to which such Event of Default relates) effective as of the date on
which such Event of Default is declared by Lessor or Agent; provided,
however, that in the case of any Event of Default as defined in
subsection 19(a)(xi) or 19(a)(xii), the Offer to Purchase shall be
deemed to have been given immediately upon the occurrence of the Event
of Default in question and without the necessity or requirement of any
notice or request from Lessor or Agent. An Early Termination Fee in an
amount equal to one percent (1%) of the applicable Acquisition Price
shall be due and payable with respect to any purchase of one or more
Parcel(s) pursuant to this subsection (v).
(vi) If a Construction Failure (as defined in Section
3 of the Construction Addendum) shall occur with respect to the
construction of New Improvements on any one or more Parcel(s), then
unless Lessee elects in writing within fifteen (15) days thereafter to
terminate the Lease with respect to the Parcel as to which the
Construction Failure has occurred pursuant to Section 3.1 of the
Construction Addendum, Lessee shall be deemed to have delivered an
Offer to Purchase the Parcel with respect to which such Construction
Failure has occurred upon the earlier of the Required Completion Date
(as defined in the Construction Addendum) or the date on which such
Construction Failure occurs for the New Improvements in question. No
Early Termination Fee shall be payable with respect to any such
purchase.
(b) Any Offer to Purchase delivered by the Lessee shall be
irrevocable, except as otherwise provided herein.
(c) The Lessor shall promptly accept any Offer to Purchase
delivered by Lessee in accordance with the foregoing provisions and the
procedure for the purchase of the Property or applicable portion thereof and the
purchase price therefor shall be governed by Section 15 hereof.
27
15. Procedure Upon Purchase
(a) If the Lessee shall deliver (or is deemed to have
delivered) an Offer to Purchase under Section 14(a)(i), the closing of the
Lessee's purchase of the Property (the "Closing Date") shall be on the
Expiration Date (or such earlier date during the last six (6) months of the Term
as may be designated by Lessee). Otherwise, the Closing Date shall be: (1) in
the case of an Offer to Purchase covering all or a portion of the Property given
pursuant to subsection 14(a)(ii), (iii), or (iv), on the Payment Date specified
in the Partial Termination Notice, Early Termination Notice, or Termination
Notice, as applicable; (2) in the case of an Offer to Purchase (covering either
all of the Property or an applicable portion thereof) delivered pursuant to
subsection 14(a)(v) or (vi) on the first Payment Date that is at least thirty
(30) days after delivery (or deemed delivery) of the Offer to Purchase to Lessor
by Lessee. In any case the Closing Date may be on such other date as may be
mutually agreed upon by the Lessor and the Lessee. On the Closing Date, upon
receipt of the Offer Purchase Price, the Lessor shall convey, or cause to be
conveyed, the Property or applicable portion thereof (or, in the case of
Condemnation, the remaining portion thereof) to the Lessee or its designee by an
appropriate recordable limited or special warranty deed and other appropriate
conveyance documents containing no representation or warranty (expressed or
implied) except that the Property or applicable portion thereof is free and
clear of any conveyance, mortgage, lease, or Lien or other adverse interest of
any kind created or caused by the Lessor or any person claiming by, through or
under the Lessor but not otherwise (except as consented to by the Lessee).
(b) On the Closing Date, the Lessee shall pay, or cause to be
paid, to the Lessor the "Acquisition Price" for the Property or the portion(s)
thereof covered by the Offer to Purchase in question as defined in Exhibit "A",
together with all Net Rent, Additional Rent and other sums then due and payable
hereunder relating to the Property (including, in the case of a transfer of less
than all of the Property, all such sums attributable both to the portions of the
Property being transferred and the remaining portions of the Property) up to and
including such Closing Date, plus the Early Termination Fee (if applicable)
(such amounts, plus all amounts payable by Lessee pursuant to the following
sentence, are herein referred to as the "Offer Purchase Price"), and the Lessor
shall simultaneously (i) deliver to the Lessee or its designee the instruments
referred to in this Section 15 with respect to the Property or the applicable
portions thereof and any other instruments reasonably necessary to convey to
Lessee or its designee the Property or the applicable portions thereof and
assign any other property then required to be assigned pursuant hereto, and (ii)
convey, or cause to be conveyed, to the Lessee or its designee any Net Proceeds
and/or the right to receive the same attributable to the portions of the
Property being transferred that have not theretofore been disbursed. The
Transaction Mortgage granted by Lessor on the Property pursuant to the
Transaction Agreement shall be released from the Property (or applicable portion
thereof) purchased by Lessee, by the Agent, by appropriate recordable
instrument. The Lessee shall also pay, or cause to be paid, all charges incident
to such conveyance, including reasonable attorneys' fees of Lessor's counsel
28
and/or Agent's counsel, and escrow fees, recording fees, any fees, costs or
expenses incurred by the Lessor or Agent in connection with the same, and all
applicable transfer taxes which may be imposed by reason of such conveyance and
the delivery of said instruments (collectively, the "Closing Costs"). Upon the
completion of any purchase of the Property pursuant to this Section 15, but not
prior thereto, this Lease shall terminate with respect to the Property or the
applicable portions thereof affected by such transaction except with respect to
obligations and liabilities of the Lessee (actual or contingent) (i) under
Section 8 hereof, and (ii) which have arisen with respect to the Property on or
prior to such date of purchase, and except as elsewhere provided herein.
(c) If less than all of the Property is purchased, this Lease
shall remain in full force and effect as to the remaining portions of the
Property, and the Net Rent shall be adjusted as provided for on Exhibit "A".
16. Throughout the Term of the Lease (including any extension thereof),
Lessee shall comply with the following "Insurance Requirements" (herein
so-called):
(a) The Lessee will purchase and maintain, or cause to be
purchased and maintained, insurance with respect to the Property of the
following types and in the following amounts, or if greater, in sufficient
amounts to prevent the Lessor, the Lessee, the Agent and/or the Instrument
Holders from becoming co-insurers of any loss:
(i) Property Insurance: Insurance against physical
damage to the Property caused by "all risks" perils (subject to certain
commercially customary exclusions such as earthquake damage), as well
as broad form boiler and machinery coverage.
(ii) Commercial General Liability Insurance:
Insurance (issued on an "occurrence" rather than "claims made" basis)
against claims for bodily injury (including death) and property damage
occurring on, in or about the Property or resulting from activities on
the Property, in the minimum combined single limit amount of
$50,000,000 in the aggregate and $25,000,000 for each occurrence for
bodily injury (or death) and/or property damage. Such coverage may be
provided either by a primary policy having such limits or by a primary
policy with lower limits and one or more secondary or "umbrella"
policies, so long as in the aggregate the required coverage is
provided.
(iii) Other Insurance: Such other insurance, in such
amounts and against such risks, as is available from time to time and
customarily carried by companies owning, operating or leasing property
or conducting businesses similar and/or similarly situated to the
Property and/or the Lessee.
Such insurance shall be written by companies that are nationally recognized
(including Lloyd's of London or other recognized international insurers) and
primary insurance shall be written by companies with a Best's rating of at least
B+/VI for property insurance and B+/X or better for other insurance, and in each
case legally qualified to issue such insurance, selected by the Lessee and shall
name Lessor (in both its individual capacity and in its capacity as Trustee
29
under the Declaration of Trust, to the extent of its respective interests under
the Transaction Documents) and Agent (for the benefit of itself and the
Instrument Holders) as an additional insured and/or loss payee, as their
interests may appear. If the Property or any part thereof shall be damaged or
destroyed by fire or other insured peril, the Lessee shall promptly notify the
Lessor thereof and of the estimated cost of rebuilding, and of replacing or
repairing the same.
(b) The property insurance referred to in subsection 16(a)(i)
for the Property shall (i) at all times be in an amount at least equal to one
hundred percent (100%) of the replacement cost value (without depreciation), but
excluding the cost of footers, foundations, and site improvements not normally
insured, and (ii) include a lenders' loss payable endorsement in favor of the
Agent, as mortgagee under the Transaction Mortgage, and any loss or damage under
such property insurance policy other than proceeds representing compensation for
business interruption or damage to Lessee's personal property shall be paid to
the Proceeds Trustee (or, if received by any other party, shall be immediately
endorsed or paid over to the Proceeds Trustee) where required pursuant to
Section 12 of this Lease to be held and applied pursuant to the terms of this
Lease. Every policy required under Section 16(a) shall (i) expressly provide
that it will not be canceled or terminated due to a lapse for non-payment of
premium or materially changed except upon fifteen (15) days' written notice to
the Lessor, Agent and the Lessee; (ii) provide that the interests of the Lessor
and the Agent shall be insured regardless of any breach or violation by the
Lessee of any warranties, declarations or conditions contained in such
insurance; (iii) provide that such insurance shall not be invalidated as to the
Lessor, the Agent, or any Instrument Holder by any act, omission or negligence
of the Lessee or any other of the Lessor, the Agent or any Instrument Holder,
nor by any foreclosure or other proceedings or notices thereof relating to the
Property or any part thereof, nor by legal title to, or ownership of the
Property or any part thereof becoming vested in the Agent or its agents, nor by
occupancy or use of the Property or any part thereof for purposes more hazardous
than permitted by such policy; (iv) provide that all insurance claims pertaining
to the Property or any part thereof shall be adjusted by the insurers thereunder
with the Lessee but that the Lessor and Agent must consent to any such adjusted
claim (which consent shall not be unreasonably withheld) except in those
circumstances where Lessee is authorized to adjust the insurance claim in
question pursuant to Section 12 hereof; and (v) include a waiver of all rights
of subrogation against the Lessor, the Agent and/or the Instrument Holders and
any recourse against the Lessor, the Agent and/or the Instrument Holders for
payment of any premiums or assessments under any policy. The Lessee shall advise
the Lessor promptly of any policy cancellation or any change adversely affecting
the coverage provided thereby.
(c) The Lessee shall deliver to the Lessor and Agent the
certificates of insurance in form and substance reasonably acceptable to Lessor
and Agent evidencing the existence of all insurance which is required to be
maintained by the Lessee hereunder including descriptions of the previously
mentioned Insurance Requirements not normally found in a standard insurance
policy as well as descriptions of the exclusions from coverage under such
policies, such delivery to be made (i) on or before the Commencement Date, (ii)
within thirty (30) days of the issuance of any additional policies or amendments
or supplements to any of such insurance, and (iii) on or before the expiration
30
date of any such insurance; provided, however, that Lessee may deliver the
necessary certificate for a renewal or replacement policy within five (5) days
after the expiration date of the policy being renewed or replaced so long as
Lessee provides Lessor and Agent with some reasonable evidence that the required
coverage is in fact in place on or before the expiration date of the expiring
policy. The Lessee shall not obtain or carry separate insurance concurrent in
form, or contributing in the event of loss, with that required by this Section
16 unless the Lessor, the Agent and/or the Instrument Holders, as applicable,
are named as additional insureds therein as their interests may appear, with
loss payable as provided in this Lease. The Lessee shall immediately notify the
Lessor and the Agent whenever any such separate insurance is obtained and shall
deliver to the Lessor and Agent the certificates of insurance evidencing the
same as is required hereunder. Any insurance required hereunder may be provided
under Lessee's blanket policies; provided that the coverage allocable to the
Property is not less than the coverage required by this Section 16 as separately
stated.
(d) The requirements of subsections (a) through (c) of this
Section 16 shall not be construed to negate or modify the Lessee's obligations
under Section 8 hereof.
(e) From time to time Lessee may elect to satisfy all or
certain of the insurance requirements of this Section 16 through use of a
self-insurance program, subject to Lessor's and Agent's prior written reasonable
approval of the self-insurance program in question and after delivery to Lessor
and Agent of such assurances and undertakings as Lessor and Agent may reasonably
require to evidence that any loss or damage that would have been covered by
third party insurance policies hereunder in the absence of such a self-insurance
program will be paid or covered by Lessee pursuant to such self-insurance
program. In this regard Lessee's current self-insurance program as described on
Annex I attached hereto and made a part hereof for all purposes is approved.
Further, so long as no Event of Default exists hereunder Lessee may from time to
time increase the self-insurance retention limits/deductibles for general
liability, automobile liability, and/or property damage losses, respectively, in
its self-insurance program from the amounts set out on such Annex I to amounts
not in excess of $1,000,000.00 without the consent of Lessor or Agent. Without
limitation on any indemnification or other obligations of Lessee hereunder
Lessee hereby expressly acknowledges and agrees that Lessee shall be fully
responsible and liable to Lessor, Agent, and/or the Instrument Holders, as
applicable, from time to time for any loss or damage that would have been
covered by third party insurance policies hereunder in the absence of such
self-insurance program and any such loss or damage will be paid or covered by
Lessee on demand.
17. Assignment; Subletting
(a) Sublease Requirements. The Lessee may sublet the Property
or any part thereof if, but only if, (i) at the time of execution of any such
sublease, no Event of Default shall have occurred and be continuing; (ii) any
such sublease shall by its terms be expressly made subject and subordinate to
the terms of this Lease and the Transaction Documents; and (iii) the Lessee
shall provide the Lessor, within ten (10) days prior to the effective date of
such sublease, with a conformed copy of the instrument creating such sublease.
31
Any sublease executed by Lessee and not in strict compliance with the foregoing
shall be null and void and of no force or effect.
(b) Assignment or Hypothecation. The Lessee shall not assign,
convey, or otherwise transfer, or mortgage, pledge or otherwise hypothecate or
encumber its interest in and to this Lease or in and to any sublease or the
rentals payable thereunder without the prior written consent of the Agent, which
consent may be conditioned or denied in Agent's sole discretion; Any such
assignment, conveyance, transfer, mortgage, pledge, hypothecation, or
encumbrance made without Agent's consent shall be null and void and of no force
or effect. The foregoing shall not prohibit Lessee from mortgaging or granting a
security interest in Lessee's Equipment. In addition, any Lessee may assign its
lease position with respect to a particular Parcel to any other Lessee without
the consent of the Agent, but in such instance the Lessees involved shall notify
Agent and Lessor of the assignment, which shall be effective upon execution of a
supplement to this Lease in form reasonably satisfactory to Agent confirming the
change of the Lessee applicable to the Parcel in question.
(c) Use By Affiliates. Notwithstanding anything herein to the
contrary, Lessee may from time to time during the Term permit Affiliates of the
Lessee to occupy portions of the Property and Lessor acknowledges and agrees to
the same.
(d) Lessee Remains Liable. No sublease pursuant to this
Section 17 or any occupancy of the Property by any Affiliate of the Lessee, nor
any assignment or hypothecation that may be approved by Agent (but without
implying any obligation whatsoever on Agent to approve any proposed assignment
or hypothecation), shall modify or limit any right or power of the Lessor
hereunder or affect or reduce any obligation of the Lessee hereunder, and all
such obligations shall continue in full force and effect as obligations of a
principal and not of a guarantor or surety, as though no subletting, assignment,
or hypothecation had been made or occupancy permitted.
18. Permitted Contests
(a) The Lessee shall not be required, nor shall the Lessor
have the right, to pay, discharge or remove any Imposition, to comply or cause
the Property or any part thereof to comply with any applicable Legal
Requirement, to pay any materialman's, laborer's or undischarged or unremoved
Lien, to perform any disputed obligations under any Facility Agreements, or to
take action to cure any alleged encroachment affecting a Parcel as long as no
Special Incipient Default, and no Event of Default of any kind, exists hereunder
and so long as the Lessee shall at its sole expense contest, or cause to be
contested, in good faith the existence, amount or validity thereof by
appropriate proceedings which shall (i) in the case of an unpaid Imposition or
32
undischarged or unremoved Lien, prevent the collection thereof from the Lessor,
the Agent, the Instrument Holders and/or against the Property, (ii) in all cases
prevent the sale, forfeiture, loss of the Property or any part thereof, and
(iii) in all cases not subject the Lessor, the Agent, and/or the Instrument
Holders to the risk of any civil or criminal liability for failure to comply
therewith. The Lessee shall give such security as may be reasonably demanded by
the Lessor or Agent to insure ultimate payment of such Imposition or the
discharge or removal of materialman's, laborer's or mechanic's Lien or to insure
compliance with such Legal Requirement or Facility Agreement and to prevent any
sale or forfeiture of the Property or any part thereof, or any interference with
or deductions from any Net Rent, Additional Rent or any other sum required to be
paid by the Lessee hereunder by reason of such non-payment, non-discharge,
non-removal or non-compliance; provided that no such security shall be required
so long as Lease Guarantor is in compliance with the financial covenants set out
in the Lease Guarantee.
(b) The Lessor shall cooperate with the Lessee in any contest
and shall allow the Lessee to conduct such contest (in the name of the Lessor,
if necessary) at the Lessee's sole cost and expense. The Lessee shall notify the
Lessor of each such proceeding within ten (10) days after the commencement
thereof, which notice shall describe such proceeding in reasonable detail.
(c) The Lessee shall, promptly after the final determination
(including appeals) of any contest brought by it pursuant to this Section 18,
pay and discharge all amounts which shall be determined to be payable therein
and shall be entitled to receive and retain for its own account all amounts
refunded and/or rebated as a result of any such contest and if the Lessor
receives any amount as a result of such contest to which it is not otherwise
entitled pursuant to this Lease, it shall promptly return such amount to the
Lessee.
19. Default Provisions
(a) Any of the following occurrences or acts shall constitute
an event of default (each, an "Event of Default") under this Lease:
(i) if the Lessee shall fail to pay any Net Rent,
Offer Purchase Price or Contingent Rent Payment on the date on which
payment is due; provided, however, that with respect to Net Rent,
Lessee shall be entitled to notice of such non-payment and a five (5)
Business Day cure period with respect to the defaulted amount before
such non-payment of Net Rent becomes an Event of Default on up to two
(2) occasions during any period of eighteen (18) consecutive months
during the Term (after such two (2) notices of non-payment of Net Rent
during any period of eighteen (18) consecutive months Lessee will not
be entitled to further notice of non-payment or grace or cure periods
with respect to Net Rent payments during the remainder of the eighteen
(18) month period in question (i.e. the period beginning with the first
of such two occasions) and an Event of Default shall exist if future
Net Rent payments during such period of eighteen (18) consecutive
months are not made when due).
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(ii) subject to the terms of Section 18 relating to
permitted contests, if the Lessee shall fail to pay any Imposition
(including, without limitation, any interest or penalties that may then
be applicable thereto) within five (5) Business Days after written
demand by Lessor or Agent.
(iii) if the Lessee shall fail to pay any Additional
Rent or other monetary payment due hereunder (other than the payment
referred to in subsections [i] or [ii] above) or due under the
Transaction Agreement or any Transaction Document on the date such
payment is due and such failure is not cured within five (5) Business
Days after written notice of such failure is given by either Lessor or
Agent to Lessee;
(iv) if the Lessee shall fail to comply with any
Insurance Requirement (either by actual insurance or through the use of
a self-insurance program satisfying the requirements of Section 16(e)
hereof) and such failure is not cured within thirty (30) days after
written notice of such failure is given to Lessee (which cure period
shall be ten (10) days instead of thirty (30) days if the
non-compliance in question is an actual failure to have any required
insurance in force); provided, that the foregoing cure period shall not
be deemed to limit Lessor's or Agent's right to take action as deemed
necessary to avoid lapse or termination of coverage even during such
cure period nor Lessee's obligations to reimburse Lessor for any funds
it may expend in connection therewith;
(v) if the Lessee shall voluntarily grant or create
any Lien (other than Permitted Encumbrances) upon the Property or any
part thereof or interest therein or upon any Net Rent, Additional Rent
or other sum payable hereunder;
(vi) if Lessee shall fail to comply with any of the
affirmative or negative covenants set out in Section 32 hereof;
(vii) if any representation or warranty made by
Lessee under this Lease, any supplement hereto, the Transaction
Agreement, or any other Transaction Document proves to have been false
or materially misleading at the time made and the misrepresentation, in
the reasonable judgment of Lessor or Agent, as applicable, has a
material adverse effect upon Lessor or the Instrument Holders;
(viii) if the Lessee shall fail to observe or perform
any other provision hereof (except as provided in Section 18 hereof),
or fail to observe or perform Lessee's obligations under the
Transaction Agreement or any Transaction Document and, in either case,
Lessee does not cure such failure within thirty (30) days after receipt
of written notice to the Lessee of such failure;
(ix) if an Event of Default has occurred under the
Environmental Indemnity Agreement, or an Event of Default by Lessee has
occurred under the Transaction Agreement or any of the other
Transaction Documents;
34
(x) Upon the occurrence of a payment default by
Lessee with respect to any other indebtedness in an amount in excess of
$5 million owed by Lessee to any person or entity as and when such
payment is due, which default continues beyond any grace or cure
periods applicable thereto under the terms of the instruments
evidencing such indebtedness; or
(xi) if a custodian, receiver, liquidator, or trustee
of Lessee, or of any of the property of Lessee, is appointed or takes
possession, and such appointment or possession remains in effect for
more than sixty (60) days; or Lessee generally fails to pay its debts
as they become due or admits in writing its inability to pay its debts
as they mature; or Lessee is adjudicated bankrupt or insolvent; or an
order for relief is entered under the Federal Bankruptcy Code against
Lessee; or any of the property of Lessee is sequestered by court order
and the order remains in effect for more than sixty (60) days; or a
petition is filed against Lessee under the bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently in
effect, and is not stayed or dismissed within sixty (60) days after
filing;
(xii) if Lessee files a petition in voluntary
bankruptcy or seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
subsequently in effect; or consents to the filing of any petition
against it under any such law; or consents to the appointment of or
taking possession by a custodian, receiver, trustee or liquidator of
Lessee or of all or any part of the property of Lessee;
(xiii) if the Property or any material portion
thereof shall be left vacant or unattended and without proper
maintenance for a period of thirty (30) days after notice from Lessor
requesting maintenance or other appropriate action. Nothing in the
foregoing provision shall be deemed to prohibit Lessee from ceasing
retail operations at any Parcel so long as the Improvements as to which
retail operations have ceased continue to be properly secured,
maintained, and insured as required by the terms of this Lease; or
(xiv) if an Event of Default by the Lease Guarantor
has occurred under the Lease Guarantee.
To the extent any provision of this Lease requires payment and/or performance of
any matter after written request or demand by Lessor, and Lessor gives such
written request or demand for the action in question to Lessee, such written
request or demand to Lessee specifically requesting or demanding payment or
performance of the matter in question, and specifying that if payment or
performance is not made an Event of Default may be declared by Lessor or Agent,
35
shall constitute the notice required to be given by Lessor under this Section
19(a) for purposes of beginning any applicable grace or cure period, and if the
action requested or demanded is not taken by Lessee within the applicable grace
or cure period in question, an Event of Default shall arise hereunder without
the necessity of any further notice or demand by Lessor or Agent.
It is expressly agreed that in all circumstances where Lessee is
entitled to receive notice of non-performance from Lessor pursuant to this
Section 19(a) the notice in question may be given on behalf of Lessor by Agent,
and Lessor hereby appoints Agent as its agent for purposes of giving such
notices to Lessee.
If at any time there is more than one entity that is a Lessee under the
terms of this Lease, then (A) any Event of Default by any Lessee (including, but
without limitation, an Event of Default pursuant to subsections 19(a)(xi) and/or
(xii) as to such Lessee, shall constitute an Event of Default for purposes of
all parties constituting "Lessee," and (B) where Lessor or Agent is required to
give notice of any default, non-payment, or non-performance hereunder, notice
shall be given to the Lessee Parent which shall be effective as to all Lessees
regardless of which Lessee actually uses or occupies the portions of the
Property in question.
If an Event of Default occurs (including the expiration of applicable
grace or cure periods), then the subsequent performance of the defaulted
obligation shall not be deemed to "cure" the Event of Default unless Lessor
(with the consent of Agent) agrees to accept such cure in writing, and absent
such agreement the Event of Default in question shall be deemed to "continue"
for all purposes of this Lease. However, the purchase by Lessee of an affected
portion of the Property pursuant to subsection 13(a)(i), 14(a)(v) or 14(a)(vi)
where no Event of Default exists with respect to the remaining portions of the
Property shall be deemed to "cure" the Event of Default in question, the Lease
shall remain in effect as to the remainder of the Property, and the Lessor and
Lessee shall be automatically restored to their former rights and positions
hereunder.
(b) The Lessor may take all steps to protect and enforce the
rights of the Lessor or obligations of the Lessee hereunder, whether by action,
suit or proceeding at law or in equity (for the specific performance of any
covenant, condition or agreement contained in this Lease, or in aid of the
execution of any power herein granted, or for the enforcement of any other
appropriate legal or equitable remedy) or otherwise as the Lessor shall deem
necessary or advisable.
(c) If an Event of Default shall have occurred and be
continuing, then:
(i) By written notice by the Lessor to the Lessee,
the Lessor may terminate this Lease; provided, that no such termination shall be
effective unless approval of such termination is given in writing by Agent to
both Lessor and Lessee. This Lease and the estate hereby granted shall expire
and terminate on the date specified in such notice (or, if later, the date on
which approval of such notice is given by Agent) as fully and completely and
with the same effect as if such date were the Expiration Date herein fixed for
the expiration of the Term and all rights of the Lessee hereunder shall expire
and terminate, but the Lessee shall remain liable as hereinafter provided.
36
(ii) Should the Lessor elect not to terminate this
Lease after the occurrence of an Event of Default, this Lease shall continue in
effect and Lessor may enforce all Lessor's rights and remedies under this Lease
including the right to recover the rent as it becomes due under this Lease. For
the purposes hereof, the following do not constitute a termination of this
Lease:
(A) Acts of maintenance or preservation of
the Property or any part thereof or efforts to relet the Property or
any part thereof, including, without limitation, termination of any
sublease of the Property and removal of such subtenant from the
Property; and/or
(B) The appointment of a receiver upon
initiative of the Lessor to protect the Lessor's interest under this
Lease.
(d) If an Event of Default shall have occurred and be
continuing, the Lessor shall have (i) the right, whether or not this Lease shall
have been terminated pursuant to subsection 19(c) hereof, to re-enter and
repossess the Property or any part thereof, as the Lessor may elect, by summary
proceedings, ejectment, any other legal action or in any other lawful manner the
Lessor determines to be necessary or desirable and (ii) the right to remove all
persons and property therefrom. The Lessor shall be under no liability by reason
of any such re-entry, repossession or removal. No such re-entry or repossession
of the Property or any part thereof shall be construed as an election by the
Lessor to terminate this Lease unless a notice of such termination is given to
the Lessee pursuant to subsection 19(c) hereof, or unless such termination is
decreed by a court or other governmental tribunal of competent jurisdiction.
Should the Lessor elect to re-enter the Property as herein provided or should
the Lessor take possession pursuant to legal proceedings or pursuant to any
notice provided for by Law or upon termination of this Lease pursuant to
subsection 19(c) hereof or otherwise as permitted by Law, the Lessee shall
peaceably quit and surrender the Property or any part thereof to the Lessor. In
any such event, neither the Lessee nor any person claiming through or under the
Lessee, by virtue of any Law, shall be entitled to possession or to remain in
possession of the Property, but shall forthwith quit and surrender the Property
to the Lessor.
(e) At any time or from time to time after the re-entry or
repossession of the Property or any part thereof pursuant to subsection 19(d)
hereof, whether or not this Lease shall have been terminated pursuant to
subsection 19(c) hereof, the Lessor may (but, except as otherwise required by
applicable Law, shall be under no obligation to) relet the Property or any part
thereof, for the account of the Lessee, without notice to the Lessee, for such
term or terms and on such conditions and for such uses as the Lessor, in its
discretion, may determine. The Lessor may collect and receive any rents payable
by reason of such reletting. The Lessor shall not be liable for any failure to
relet the Property or any part thereof or for any failure to collect any rent
due upon any such reletting.
37
(f) No termination of this Lease pursuant to subsection 19(c)
hereof, or by operation of Law, and no re-entry or repossession of the Property
or any part thereof, pursuant to subsection 19(d) hereof, and no reletting of
the Property or any part thereof pursuant to subsection 19(e) hereof, shall
relieve the Lessee of its liabilities and obligations hereunder, all of which
shall survive such termination, re-entry, repossession or reletting.
(g) Upon the occurrence of an Event of Default, the Lessor,
without waiving any Event of Default or releasing Lessee from any obligation,
may (but shall be under no obligation to) make any required payment or perform
any required act for the account and at the expense of the Lessee, and may enter
upon the Property for such purpose and take all such action thereon as, in the
Lessor's sole discretion, may be necessary or appropriate therefor. No such
entry shall be deemed an eviction of the Lessee or a termination of this Lease.
All sums so paid by the Lessor and all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses so incurred, together with
interest thereon to the extent permitted by Law) shall be paid by the Lessee to
the Lessor on demand as Additional Rent.
(h) In the event of any termination of this Lease or re-entry
or repossession of the Property or any part thereof by reason of the occurrence
of any Event of Default, the Lessee shall pay to the Lessor all Net Rent and
Additional Rent and other sums required to be paid to and including the date of
such termination, re-entry or repossession; and thereafter, until the end of the
Term, whether or not the Property or any part thereof shall have been relet, the
Lessee shall be liable to the Lessor for, and shall pay to the Lessor, on the
days on which such amounts would be payable under this Lease in the absence of
such termination, re-entry or repossession, as agreed current damages and not as
a penalty: all Net Rent, all Additional Rent and other sums which would be
payable under this Lease by the Lessee, in the absence of such termination,
re-entry or repossession, and all costs (including reasonable attorneys' fees
and expenses) incurred by the Lessor hereunder (payable on demand). At such time
after the termination or expiration of this Lease as the Lessee shall have paid
all amounts required to be paid by it under this Lease and the Lessor shall have
discharged any and all obligations to the Agent, then the Lessor shall pay to
the Lessee, within five (5) Business Days after its receipt thereof, the net
proceeds, if any, of any reletting effected for the account of the Lessee
pursuant to subsection 19(e), after deducting from such proceeds all the
Lessor's reasonable expenses in connection with such reletting (including, but
not limited to, all repossession costs, brokerage commissions, attorneys' fees
and expenses, employees' expenses, alteration costs and expenses of preparation
for such reletting), and the amounts to which Lessee may be entitled hereunder
shall be held by Lessor in trust for Lessee pending any such payment to Lessee.
(i) Lessor may exercise its rights under this Section 19
either directly or indirectly or through any agent (including, without
limitation, the Agent under the Transaction Agreement) as Lessor may from time
to time appoint to act on Lessor's behalf.
38
(j) It is acknowledged that if Lessee closes the purchase of
the Property pursuant to an Offer to Purchase properly given (or deemed given)
by Lessee hereunder and pays the Offer Purchase Price to Lessor therefor, this
Lease shall terminate as of the closing of such purchase and Lessor will have no
further remedial rights with respect to any then existing Event of Default, but
such purchase shall not extinguish any rights of indemnification or other such
rights of Lessor, Agent, or the Instrument Holders that, by the terms or
implications hereof, are intended to survive termination of this Lease.
20. Additional Rights
(a) No right or remedy hereunder shall be exclusive of any
other right or remedy, but shall be cumulative and in addition to any other
right or remedy hereunder or now or hereafter existing by law or in equity and
the exercise by the Lessor of any one or more of such rights, powers or remedies
shall not preclude the simultaneous exercise of any or all of such other rights,
powers or remedies. Failure to insist upon the strict performance of any
provision hereof or to exercise any option, right, power or remedy contained
herein shall not constitute a waiver or relinquishment thereof for the future.
Receipt by the Lessor of any Net Rent, Additional Rent or other sum payable
hereunder with knowledge of the breach by Lessee of any provision hereof shall
not constitute waiver of such breach, and no waiver by the Lessor of any
provision hereof shall be deemed to have been made unless made in writing. The
Lessor shall be entitled to injunctive relief in case of the violation or
attempted or threatened violation of any of the provisions hereof, a decree
compelling performance of any of the provisions hereof or any other remedy
allowed to the Lessor by law or in equity.
(b) The Lessee hereby waives and surrenders for itself and all
those claiming under it, including creditors of all kinds, any right and
privilege which they may have to redeem the Property or to have a continuance of
this Lease after termination of the Lessee's right of occupancy by Law or by any
legal process or writ, or under the terms of this Lease, or after the
termination of the term of this Lease as herein provided. Lessee also waives, to
the maximum extent permitted by law, any requirement that the Lessor re-let the
Property or otherwise mitigate or attempt to mitigate damages arising out of any
default by Lessee.
(c) If an Event of Default exists hereunder, the Lessee shall
pay to the Lessor on demand, all reasonable fees and expenses incurred by the
Lessor in enforcing its rights under this Lease, including reasonable attorneys'
fees and expenses, and expressly including any obligations or liabilities that
Lessor may incur to Agent or the Instrument Holders in respect of costs incurred
by Agent or the Instrument Holders as a result of such Event of Default.
(d) (i) Lessor and Lessee intend that this Lease be treated as
an operating lease. If, notwithstanding the intention of the parties, a court of
competent jurisdiction determines in a final judgment or order that the
transaction represented by this Lease will be treated as a financing transaction
under state law, then in such event it is the intention of the parties hereto
(1) that this Lease be treated as a mortgage and security agreement or other
39
similar instrument (the "Tenant Mortgage") from Lessee, as mortgagor, to Lessor,
as mortgagee, encumbering the Property, (2) that upon an Event of Default Lessor
shall have, as a result of such determination, all of the rights, powers and
remedies of a mortgagee available under applicable Law to take possession of and
sell (whether by foreclosure or otherwise) the Property, (3) that the effective
date of the Tenant Mortgage shall be the effective date of this Lease, (4) that
the recording of an instrument referencing this provision shall be deemed to be
the recording of the Tenant Mortgage, and (5) to conform strictly to any
applicable usury Laws (in such regard, if the Tenant Mortgage would otherwise be
usurious under applicable Law, then, notwithstanding anything herein to the
contrary, it is agreed as follows: (A) the aggregate of all consideration that
constitutes interest under applicable Law that is contracted for, taken,
reserved, charged or received shall under no circumstances exceed the maximum
amount allowed by such applicable Law, (B) in the event of acceleration or any
required or permitted prepayment, then such consideration that constitutes
interest under applicable Law may never include more than the maximum amount
allowed by such applicable Law, and (C) excess interest, if any, provided for
herein shall be canceled automatically and if theretofore paid, shall be
credited to or refunded to Lessee. It is further agreed that sums paid or agreed
to be paid for the use, forbearance or detention of money hereunder shall, to
the extent permitted by applicable Law, be amortized, prorated, allocated and
spread throughout the full Term until payment in full so that the rate or amount
of interest does not exceed the applicable usury ceiling, if any). Lessee hereby
grants, bargains, sells, conveys, mortgages, and hypothecates all of Lessee's
right, title, and interest in the Property to Lessor to the extent necessary to
effect the foregoing provisions, and appropriate words of conveyance shall be
included in the recorded memorandum of this Lease as necessary to give effect to
such provisions under state law.
(ii) If this Lease is treated as a Mortgage then for
purposes of clause (i) above, the term "applicable Law" shall mean the Law of
the State of Pennsylvania (or the Law of any other jurisdiction whose Laws may
be mandatorily applicable notwithstanding other provisions of this Lease, or Law
of the United States of America applicable hereto which would permit the parties
to contract for, charge, take, reserve or receive a greater amount of interest
than under Pennsylvania (or such other jurisdiction's) Law.
(e) At all times during the Term of this Lease, and without
regard to the characterization of this Lease for state law or for financial
accounting purposes, the Lessor shall claim no depreciation deductions with
respect to the Property for federal income tax purposes. Further, to the extent
Lessor is required to file a tax return as a legal entity Lessor will treat all
Net Rent received as interest income for federal income tax purposes.
21. Any notice required to be delivered hereunder shall be deemed
delivered, whether actually received or not, one (1) Business Day after deposit
with a nationally recognized courier service for overnight delivery addressed to
the parties hereto or Agent, as applicable, at the respective addresses
specified below, or at such other address as they or the Agent may have
subsequently specified by written notice. The addresses for notices to Lessor,
Lessee, and Agent are as follows:
40
If to Lessor: State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Fourth Floor
Boston, MA 02110
Attention: Donald E. Smith
Vice-President
Fax No. 617/664-5371
with a copy to: Bingham, Dana & Gould LLP
100 Pearl Street
Hartford, CT 06103
Attention: James G. Scantling, Esq.
Fax No. 860/527-5188
If to Lessee: The Pep Boys - Manny, Moe & Jack
(all Lessees shall 3111 W. Allegheny Avenue
be deemed notified Philadelphia, PA 19132
by notice to this Attention: Michael Holden
address) Senior Vice President-Finance
Fax No. 215/227-9533
with a copy to: The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Avenue
Philadelphia, PA 19132
Attention: Ronald M. Neifield, Esq.
Real Estate Counsel
Fax No. 215/229-5076
If to Agent: Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, NY 10528
Attention: EFL/CBL Credit Head
Fax No. 914/899-7308
with a copy to: Brown McCarroll & Oaks Hartline
300 Crescent Court, Suite 1400
Dallas, Texas 75201
Attention: Charles W. Morris, Esq.
Fax No. 214/999-6170
Notices sent by any other method (including regular or certified mail, hand
delivery, or facsimile transmission) shall be deemed delivered when actually
received by the addressee. Any notice of change of address shall be effective
only upon actual receipt, regardless of delivery method, and such new address
41
shall be effective as to notices given by the other parties commencing ten (10)
days after such change of address notice is received by such parties. No party
may establish an official address for notice outside the continental United
States.
22. No Default Certificate. Each party hereby shall, at the reasonable
request of the other party hereto, deliver to such other party a certificate
stating whether such other party has knowledge of, or has received notice from
any person of, any Environmental Event, Casualty, Condemnation, Incipient
Default or Event of Default.
23. Surrender. If upon the expiration or termination of the Term of
this Lease, or upon any partial termination of the Lease as to a Parcel pursuant
to Section 12(b), Lessee or its designee has not purchased the Property or
applicable Parcel as provided hereunder, the Lessee shall surrender the Property
or applicable Parcel to the Lessor in the condition in which the Property or
applicable Parcel was upon the addition of the Parcel to the Property or, in the
case of a Parcel on which New Improvements have been added, the condition in
which such Parcel existed at the time the Construction Advance in respect of
such New Improvements was made, except as repaired, rebuilt, altered or added to
as permitted or required hereby and except for ordinary wear and tear. In
addition, simultaneously with the surrender of the Property or applicable Parcel
to Lessor, Lessee shall deliver to Lessor and Agent a current "Phase I"
Environmental Assessment Report covering all portions of the Property or
applicable Parcel evidencing that the Property or applicable Parcel does not
appear, based on the visual review of same, to be in violation of Environmental
Laws or contaminated with any Hazardous Substances and that the consultant
issuing such report (which consultant must be acceptable to Agent) based on such
consultant's review of the Hazardous Substances handling practices of Lessee and
review of all documents and records with respect thereto does not recommend any
further testing or environmental remediation work on the Property or any portion
thereof. To the extent that the Property or applicable Parcel is not in such
condition upon such expiration or termination, the Lessee shall pay to the
Lessor such additional amounts as are reasonably required to place it in such
condition. The Lessee shall also surrender the Property or applicable Parcel to
the Lessor free and clear of all Liens, easements, consents and restrictive
covenants and agreements affecting the Property or applicable Parcel which the
Lessee is obliged hereunder to remove but Lessee shall not be required to remove
any Permitted Encumbrance or any other matter specifically approved for such
purpose in writing by Agent. Nothing contained in this Section 23 shall relieve
or discharge or in any way affect the obligation of the Lessee to cure promptly
pursuant to this Lease any violations of Legal Requirements referred to in this
42
Lease, or to pay and discharge any Liens and Impositions against the Property or
applicable Parcel, subject, however, to the right of the Lessee to contest the
same pursuant to the provisions of Section 18. The Lessee, at its sole cost and
expense, shall remove from the Property or applicable Parcel on or prior to
expiration or termination all property situated thereon which is not owned by
the Lessor and shall repair any damage caused by such removal and shall restore
the Property or applicable Parcel to the condition (or reasonable equivalent
thereof) in which they existed immediately prior to the installation of such
property, except for ordinary wear and tear. Lessee shall indemnify and hold
harmless the Lessor against any loss, liability or claim arising out of the
Lessee's removal of such property from the Property or applicable Parcel.
Property not so removed shall be deemed abandoned by Lessee, shall become the
property of the Lessor, and the Lessor may cause such property to be removed
from the Property or applicable Parcel and disposed of, but the reasonable cost
of any such removal and disposition and of repairing any damage caused by such
removal and of the restoration of the Property or applicable Parcel to the
condition (or reasonable equivalent thereof) in which it existed immediately
prior to the installation of such property, ordinary wear and tear excepted,
shall be borne by the Lessee. The obligations of the Lessee under this Section
23 shall survive the expiration or any termination of this Lease (whether by
operation of Law or otherwise) for all matters described in this Section 23
which occur or arise prior to such expiration or termination or arise out of or
result from facts, events, claims, liabilities, actions or conditions occurring,
arising or existing on or before such expiration or termination.
24. Separability; Binding Effect; Governing Law; Non-Recourse
(a) Except as expressly provided otherwise in this Lease, each
provision hereof shall be separate and independent and the breach of any such
provision by the Lessor shall not discharge or relieve the Lessee from its
obligations to perform each and every covenant to be performed by the Lessee
hereunder. If any provision hereof or the application thereof to any Person or
circumstance shall be invalid or unenforceable, the remaining provisions hereof,
or the application of such provision to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby,
and each provision hereof shall be valid and shall be enforceable to the extent
permitted by Law. All provisions contained in this Lease shall be binding upon,
inure to the benefit of, and be enforceable by, the respective permitted
successors and assigns of the Lessor and the Lessee to the same extent as if
each successor and assignee were named as a party hereto. Further, all rights of
the Agent and/or Instrument Holders hereunder shall inure to the benefit of each
successor and assignee of Agent, in its capacity as such, or any successor
holder of any Instrument. This Lease may not be changed, modified or discharged
except by a writing signed by the Lessor and the Lessee and approved in writing
by Agent. Any change, modification or discharge made otherwise than as expressly
permitted by this Section 24 shall be null and void. THIS LEASE SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
PENNSYLVANIA, WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES; PROVIDED THAT
TO THE EXTENT THAT AT ANY TIME A PORTION OF THE PROPERTY IS LOCATED IN A STATE
OTHER THAN THE STATE OF PENNSYLVANIA THE LAWS OF SUCH STATE SHALL GOVERN SUCH
PROVISIONS, IF ANY, OF THIS LEASE AS BY THEIR NATURE MUST BE INTERPRETED AND
ENFORCED UNDER THE LAWS OF SUCH OTHER STATE WITH RESPECT TO MATTERS OCCURRING IN
OR AFFECTING SUCH STATE. IT IS EXPRESSLY AGREED, HOWEVER, THAT IT IS THE DESIRE
AND INTENT OF THE PARTIES THAT THE LAW OF THE STATE OF PENNSYLVANIA GOVERN ALL
PORTIONS OF THIS LEASE TO THE EXTENT THAT SUCH INTENT MAY BE HONORED WITHOUT
43
VIOLATION OF THE LAW OR PUBLIC POLICY OF THE STATE IN WHICH ANY PORTION OF THE
PROPERTY IS LOCATED. All references in this Lease to "applicable Law" or terms
of similar import shall be interpreted consistent with the foregoing. This
Lease, when delivered, shall constitute an original, fully enforceable
counterpart for all purposes except that only the counterpart stamped or marked
"COUNTERPART NUMBER 1" shall constitute, to the extent applicable, "chattel
paper" or other "collateral" within the meaning of the Uniform Commercial Code
in effect in any jurisdiction.
(b) No recourse shall be had against the Lessor, Agent, and/or
any Instrument Holder or their employees, agents or shareholders, for any claim
based on any failure by the Lessor in the performance or observance of any of
the agreements, covenants or provisions contained in this Lease and in the event
of any such failure, recourse shall be had solely against the Property.
(c) It is acknowledged that from time to time various
Affiliates of the Original Lessee may become a party to this Lease as an
Additional Lessee as provided in Section 31 hereof. Each entity that becomes a
"Lessee" hereunder shall be jointly and severally liable for the obligations of
the "Lessee" hereunder. It is acknowledged, however, that no employee, agent,
director, officer or shareholder of any Lessee or any Additional Lessee (except
an agent or shareholder that is itself a Lessee hereunder) shall be liable for
the obligations of Lessee.
25. Headings and Table of Contents. The table of contents and the
headings of the various Sections and Exhibits of this Lease are for convenience
only and shall not affect the meaning of the terms and conditions of this Lease.
26. Waiver of Landlord's Lien. Lessor hereby waives any right to
distrain Lessee's Equipment and any landlord's lien or similar lien upon, or
security interest in Lessee's Equipment, regardless of whether such lien is
created by statute or otherwise. Lessor agrees, at the request of Lessee, to
execute a waiver of any landlord's or similar lien for the benefit of any
present or future holder of a security interest in, or lessor of, any of
Lessee's Equipment, subject to the approval of the form and substance of such
waiver by Agent, which approval shall not be unreasonably withheld or delayed.
Lessor acknowledges, and agrees to acknowledge in the future (in a written form
reasonably satisfactory to Lessee and Agent), to such persons, at such times and
for such purposes as Lessee may reasonably request, that Lessee's Equipment is
Lessee's property and that Lessor has no right, title or interest in any of
Lessee's Equipment.
27. Lessee's Obligation at Expiration.
(a) In addition to its other rights and obligations under
Section 14 hereof, Lessee shall, by notice given not less than six (6) months
prior to the Expiration Date, elect either to (i) purchase the Property as of
the Expiration Date (or such earlier date during the last six (6) months of the
Term as may be designated by Lessee) as provided for in Section 14(a)(i) for the
applicable Offer Purchase Price, in which case the transfer of the Property
shall be governed by the terms of Section 15; or (ii) terminate this Lease,
abandon all of the Property as of the Expiration Date and pay to the Lessor on
44
the Expiration Date, in addition to any Net Rent, Additional Rent or other sums
that may be then due and payable to the Lessor hereunder, a "Contingent Rent
Payment" in the amount determined at the applicable time as provided for on
Exhibit "A" (as amended from time to time). If Lessee fails to give the notice
required in this Section 27(a) on or before the date that is six (6) months
prior to the Expiration Date, then Lessee shall be irrevocably deemed to have
elected the option provided for in clause 27(a)(i) and on the Expiration Date
(or such earlier date during the six month period preceding the Expiration Date
as Lessee may designate by reasonable notice to Lessor and Agent) Lessee shall
purchase the Property for the Offer Purchase Price.
(b) If Lessee elects to terminate the Lease pursuant to
Section 27(a)(ii) above, then Lessee, as agent for Lessor but at Lessee's sole
cost and expense, shall use its best efforts to sell the Property to a third
party at the maximum available market price not later than the date that is
thirty (30) days after the Expiration Date. Lessor shall join in any sale at or
above the Minimum Price and Agent's approval of such sale will not be required;
however, Lessee may not sell the Property without the consent of Agent, which
consent may not be given without the approval of the Majority Holders, and in
any event may be withheld at Agent's sole and absolute discretion, if the
purchase price is less than the Minimum Price. To the extent that the net sale
proceeds of the Property received by Lessor upon any such sale are more than the
amounts necessary to permit Lessor to discharge all amounts due to the
Instrument Holders and/or the Lessor under the Transaction Agreement and/or the
Transaction Documents (a sale price that will produce net sale proceeds, after
all transaction costs, in such amount being referred to as the "Minimum Price"),
then Lessor shall credit against the Contingent Rent Payment (or refund to
Lessee if the Contingent Rent Payment has theretofore been paid) all such excess
payments up to, but not in excess of, the full amount of the Contingent Rent
Payment. If Lessee has failed to cause the Property to be sold within such
period, Lessee's rights under this subsection (b) shall cease and Lessor shall
thereafter have the sole and exclusive right to sell or dispose of the Property
solely for the account of the Instrument Holders. If the net sale proceeds of
any such proposed sale arranged by Lessee are to be less than the Minimum Price
(or if Lessee does not propose a sale and Lessor or Agent is unable to sell the
Property prior to the Expiration Date for an amount to produce net sale proceeds
equal to or in excess of the Minimum Price), then Lessor or Agent may order an
MAI appraisal of the Property, at Lessee's sole cost and expense, prior to the
closing of any proposed sale by Lessee (or if Lessee does not propose such a
sale, after Lessor's or Agent's reasonable efforts to sell the Property for an
amount equal to or in excess of the Minimum Price) to determine the fair market
value of the Property at such time (the "Appraised Value") as well as what the
Appraised Value of the Property would have been if the Property has been
maintained in good repair and condition and otherwise in accordance with Section
9 of this Lease, subject to normal wear and tear (the "Nominal Appraised
Value"). If such appraisal indicates a Nominal Appraised Value for the Property
45
that is greater than the price to be received in the sale proposed by Lessee
(or, if Lessee does not propose a sale, such appraisal indicates an actual
Appraised Value for the Property that is less than the Nominal Appraised Value,
or a Nominal Appraised Value that is greater than the price that would have been
received by Lessor or Agent had they accepted the best written bona fide offer
from a purchaser ready, willing and able to close), then Lessee shall pay to
Lessor a sum equal to the lesser of (A) the amount by which the actual Appraised
Value, or the proposed, actual or possible sale price, as applicable, is less
than the Minimum Price, or (B) the difference between the Nominal Appraised
Value and the proposed, actual or possible net sales proceeds or the actual
Appraised Value (whichever is applicable) as an additional "Contingent Rent
Payment" in order to compensate Lessor for extraordinary wear and tear on the
Property.
(c) If the mechanical provisions of Section 27(b) above are
applicable to a situation where the Lease has been terminated as to less than
the entire Property, then the "Minimum Price" for application of the foregoing
provisions shall be that amount which will produce net sale proceeds (after
applicable closing and transaction costs) sufficient to permit the Lessor (or
Agent on behalf of the Lessor) to pay to the applicable Instrument Holders the
amount that such Instrument Holders would have received if, in lieu of
terminating the Lease and making the Contingent Rent Payment, the Lessee had
purchased the Parcel(s) in question and paid the Offer Purchase Price therefor,
taking into account the additional interest or certificate yield, as applicable,
accrued on the Instruments in question with respect to the amount that would
have been paid on sale of the Property to Lessee at the Offer Purchase Price but
which remained unpaid on the date of such partial termination of the Lease as a
result of the Contingent Rent Payment being less than the Acquisition Price of
the Parcel(s) in question.
(d) Lessor shall reasonably cooperate in any sale of the
Property by Lessee (after approval of the sale by Agent, where required), but at
Lessee's sole cost and expense, such cooperation to include execution of
contracts of sale, closing documents, and related materials; provided that
Lessor shall not be required to incur any liability beyond its interest in the
Property in connection therewith.
28. No Merger. Unless and until execution of a written agreement to the
contrary by a single Person that at the time thereof holds all of the interests
of both Lessor and Lessee in the Property, and the full payment and discharge of
the Instruments and release of Transaction Mortgage held by Agent on the
Property, there shall be no merger of this Lease or of the leasehold estate
created by this Lease with the fee or any other estate or interest in or the
Property or any portion thereof by reason of the fact that the same person owns
or holds, directly or indirectly, all such estates and interests or any
combination thereof.
29. Short Form Lease. Lessee agrees not to record this Lease, but
Lessor and Lessee shall execute a memorandum or short-form of lease in form
reasonably satisfactory to Lessor and Lessee in each jurisdiction where any
portion of the Property is located. The memorandum of lease may be recorded by
Lessee at any time. Lessor agrees that it will not record a memorandum of this
Lease if requested not to do so by Lessee unless Lessor or Agent determines,
based upon written advice of counsel, that recordation of such memorandum of
this Lease is advisable for the protection of the interests of the Lessor or the
Instrument Holders.
46
30. Protection of Instrument Holders
(a) Rights of Instrument Holders. Notwithstanding anything in
this Lease, so long as amounts owing under any of the Instruments, or any of the
Transaction Documents, remain unpaid, (i) Agent and each Purchaser and
Instrument Holder shall be third party beneficiaries of the provisions of this
Lease, including, without limitation, all provisions of this Section 30, and
Section 8 hereof, (ii) Lessor and Lessee acknowledge that each has been
sufficiently notified and apprised of the Purchasers and Instrument Holders, and
the mailing address of Agent, as the administrative agent acting on behalf of
the Instrument Holders, as contemplated by the provisions of this Section 30 and
any other provision of this Lease, and (iii) this Lease shall not be amended,
modified or assigned (collaterally or directly), in any respect without the
prior written consent of Agent.
(b) Subordination and Non-Disturbance. Simultaneously with the
addition of a Parcel to the Property, Lessor will execute and record a mortgage
or deed of trust (as applicable, the "Transaction Mortgage") on the Property to
Agent for the benefit of the Noteholders as provided for in the Transaction
Agreement, and Lessor, Lessee, and Agent (on behalf of the Noteholders) shall
enter into a Subordination, Non-Disturbance, and Attornment Agreement (the
"SNDA") covering this Lease with respect to the Parcel in question and relating
to the Transaction Mortgage in substantially the form attached hereto as Exhibit
"F". In the event of any default by Lessor hereunder, Lessee shall notify Agent
of such default in accordance with Section 21 hereof. Agent, on behalf of the
Noteholders, shall thereafter have a reasonable opportunity (but no obligation)
to cure Lessor's default, including time to obtain possession of the Property by
power of sale or judicial foreclosure of the Transaction Mortgage, if same
should prove necessary to effect a cure, before Lessee may take any action
against Lessor. Lessee shall accept a cure of Lessor's default from Agent in the
event that Agent tenders such cure on behalf of the Noteholders.
31. Additional Lessees
(a) From time to time Lessee Parent may request that one or
more wholly-owned Subsidiaries of the Lessee Parent be approved by Agent to
become a Lessee under this Lease, which approval shall not be unreasonably
withheld. Any such Person approved by Agent shall be referred to as an
"Additional Lessee", and from and after the date of execution of a Supplement to
this Lease in substantially the form attached hereto as Exhibit "G" such
Additional Lessee shall be a party to this Lease in the same manner as if such
Additional Lessee had been an original Lessee hereunder.
(b) From and after the date on which an Additional Lessee
becomes a party hereto, such Additional Lessee shall be jointly and severally
liable for any and all obligations of the "Lessee" hereunder, whether accruing
or arising before or after the date such Additional Lessee becomes a party
hereto. The assumption of liability hereunder by any Additional Lessee shall not
reduce or limit the obligations of any other Person that is or becomes a party
hereto as a Lessee.
47
(c) Agent may, as a condition to its approval of the
Supplement making one of the Additional Lessees a party hereto, require legal
opinions, review of corporate authorizations and other corporate documents, and
similar matters comparable to those required by Lessor and Agent with respect to
the Lessee Parent and the other original Lessees in connection with the original
execution hereof.
32. Certain Representations and Covenants of Lessee. The terms of this
Section 32 shall, as of the date hereof, be binding upon each Lessee. At such
time as any Additional Lessee becomes a party to this Lease pursuant to Section
31 above, each such Additional Lessee will be required to make similar
representations and warranties and assume comparable obligations pursuant to the
instrument by which they become a party to this Lease.
(a) Representations and Warranties. The Lessees jointly and
severally represent and warrant to Lessor, Agent, and each Instrument Holder
that, as to each Lessee:
(i) Lessee (A) is duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of its incorporation, (B) has full corporate power and authority to own
and operate its properties and to conduct its business as presently
conducted, and full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Lease, (C) is
duly qualified to do business as a foreign corporation in good standing
in each jurisdiction in which its ownership or leasing of properties or
the conduct of its business requires such qualification.
(ii) This Lease has been duly authorized, executed
and delivered by Lessee and is a legal, valid and binding obligation of
Lessee, enforceable according to its terms (subject as to enforcement
of remedies to any applicable bankruptcy, reorganization, moratorium,
or other Laws or principles of equity affecting the enforcement of
creditors' rights generally).
(iii) The execution, delivery and performance by
Lessee of this Lease will not result in any violation of any term of
the certificate of incorporation or the by-laws of Lessee, does not
require stockholder approval or the approval or consent of any trustee
or holders of debt of Lessee except such as have been obtained prior to
the date hereof, and will not conflict with or result in a breach of
any terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien upon, any property or assets of
Lessee under, any indenture, mortgage or other agreement or instrument
to which Lessee is a party or by which it or any of its property is
bound, or any existing applicable law, rule, regulation, license,
judgment, order or decree of any government, governmental body or court
having jurisdiction over Lessee or any of its activities or properties,
including, without limitation, any rule or order of any public utility
commission or other governmental body.
48
(iv) There are no consents, licenses, orders,
authorizations or approvals of, or notices to or registrations with any
governmental or public body or authority which are required in
connection with the valid execution, delivery and performance of this
Lease by Lessee that have not been obtained or made, and any such
consents, licenses, orders, authorizations, approvals, notices and
registrations that have been obtained or made are in full force and
effect.
(v) Except as disclosed in writing to Agent by Lessee
concurrently herewith or publicly disclosed in Lessee Parent's 10-Q
and/or 10-K filings with the Securities and Exchange Commission, if
any, (A) there is no action, suit, proceeding or investigation at law
or in equity by or before any court, governmental body, agency,
commission or other tribunal now pending or, to the best knowledge of
Lessee after due inquiry, threatened against or affecting Lessee or any
property or rights of Lessee as to which there is a significant
possibility of an adverse determination, and which if adversely
determined, may have a material adverse effect on the financial
condition or business of Lessee or which, if adversely determined could
materially impair the ability of Lessee to perform its obligations
under this Lease, and (B) there is no action, suit, proceeding or
investigation at law or in equity by or before any court, governmental
body, agency, commission or other tribunal now pending or, to the best
knowledge of Lessee after due inquiry, threatened which questions or
would question the validity of this Lease.
(vi) Lessee is not in default under or with respect
to any agreement or other instrument to which it is party or by which
it or its assets may be bound which would have a material adverse
effect on the financial condition of Lessee or the ability of Lessee to
perform its obligations under this Lease. Lessee is not subject to or
in default under any order, award or decree of any court, arbitrator,
or other governmental authority binding upon or affecting it or by
which any of its assets may be bound or affected which would have a
material adverse effect on the ability of Lessee to carry on its
business as presently conducted or to perform its obligations under
this Lease.
(vii) Lessee has filed or caused to be filed all tax
returns which to the knowledge of Lessee are required to be filed, and
has paid all taxes shown to be due and payable on said returns or on
any assessments made against it, except for (i) returns which have been
appropriately extended and (ii) taxes, fees, assessments or other
charges, the amount or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of
Lessee.
49
(viii) Lessee and each of its Subsidiaries are in
compliance in all material respects with the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations
thereunder insofar as ERISA, the Code and such rules and regulations
relate to any employee benefit plan as defined in Section 3(3) of
ERISA. No employee pension benefit plan (as defined in Section 3[2] of
ERISA) maintained by Lessee or any of its Subsidiaries for its
employees and covered by ERISA (a "Plan") had an "accumulated funding
deficiency", within the meaning of said term under Section 302 of
ERISA, as of the last day of the most recent fiscal year of such Plan,
and neither Lessee nor any of its Subsidiaries has incurred with
respect to any Plan any liability to the Pension Benefit Guaranty
Corporation ("PBGC") which is material to the consolidated financial
condition of Lessee or any of its Subsidiaries. For the purpose of this
subsection (viii), the term "Subsidiary" shall include a Controlled
Group of Corporations as that term is defined in Section 1563 of the
Code or Section 4.001 of ERISA.
(ix) The consolidated financial statements of Lessee
Parent furnished to Lessor and Agent on or before the date hereof have
been prepared in accordance with GAAP and fairly present the financial
condition of Lessee Parent as of the date thereof. Since the date of
such financial statements there has been no material adverse change in
the financial condition or business of Lessee Parent which would impair
the ability of Lessee Parent to perform its obligations hereunder.
(b) Affirmative Covenants. Lessee covenants and agrees with
Lessor, Agent and the Instrument Holders that, so long as this Lease shall
remain in effect each Lessee will, unless Lessor and Agent shall otherwise
consent in writing:
(i) Compliance with Laws. Comply, and cause each of
its Subsidiaries to comply, in all material respects with all
applicable Laws, for which the failure to so comply could have a
material adverse effect on the operations of Lessee as a whole so as to
adversely affect its capacity to perform its obligations under this
Lease, and such compliance shall include, without limitation, paying
before the same become delinquent all taxes imposed upon it or its
property, except to the extent contested diligently and in good faith,
and for which adequate reserves are established.
(ii) Maintenance of Existence; Licenses and
Franchises. Maintain, and cause each of its Subsidiaries that is a
Lessee or an approved Additional Lessee to maintain, its existence, and
preserve and maintain, and shall cause each of its Subsidiaries that is
a Lessee or an approved Additional Lessee to preserve and maintain, all
material licenses, privileges, franchises, certificates, authorizations
and other permits and agreements necessary for the operation of its
business in the respective jurisdictions in which any Property leased
by Lessee or such Additional Lessee, as applicable, is located, and in
its jurisdiction of origin.
50
(iii) Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance policies with respect to its
property and business in such amounts and against such casualties and
contingencies as is customary in its industry; provided that nothing
herein shall prejudice the right of Lessee or any Subsidiary thereof to
self-insure for certain risks in accordance with customary procedures.
(iv) Additional Information. Lessee shall furnish to
Agent: (1) within sixty (60) days of the end of each quarterly fiscal
period during the Term, unaudited quarterly financial statements for
Lessee Parent (and its consolidated Subsidiaries) (including a balance
sheet, income statement, and such other reports as Agent may reasonably
request); (2) within one hundred twenty (120) days of the end of each
fiscal year during the Term, annual financial statements for Lessee
Parent (and its consolidated Subsidiaries) audited by a nationally
recognized public accounting firm (including a balance sheet, income
statement and such other material reports as Agent may reasonably
request); (3) when issued or filed, copies of the most recent 10-K for
Lessee Parent, proxy statements, financial statements and other reports
filed by Lessee Parent with the Securities and Exchange Commission or
any national securities exchange or market on which any of Lessee
Parent's securities are traded or quoted; (4) from time to time upon
Agent's request, an Officer's Certificate stating that there exists no
Event of Default (or event or circumstance which with notice and or the
passage of time could mature into an Event of Default) under this Lease
or, if any such event or circumstances does exist, specifying the
nature and period of existence thereof and what action Lessee proposes
to take with respect thereto; and (5) from time to time at the request
of Agent, and in any event simultaneously with delivery of the annual
consolidated financial statements of the Lessee Parent, a statement
certified by a senior financial officer of the Lessee Parent (A)
certifying that the Lessee Parent is in compliance with all of the
financial covenants (both affirmative and negative) contained in the
Lease Guarantee and (ii) certifying the Leverage Ratio, Tangible Net
Worth, Current Ratio, and NOP/Interest Charges Ratio (as such terms are
defined in the Lease Guarantee) of the Lessee Parent as of the end of
the preceding quarter or fiscal year, or for the preceding quarter or
fiscal year, as applicable. The fiscal year of the Lessee Parent is the
approximately fifty-two (52) week period ending on the Saturday falling
nearest to January 31.
(v) Review of Records. Further, Lessee will permit
the duly authorized representatives of Agent at all reasonable times
upon at least ten (10) days prior written notice to examine the books
and records of Lessee and its Subsidiaries, and take memoranda and
extracts therefrom; provided, that information, including financial
information, which is non-public and confidential or proprietary in
nature disclosed to Agent (as a result of any examination of the books
and records of Lessee and its Subsidiaries or pursuant to Section
32(b)(iv) or otherwise) will be kept confidential and will not, without
the prior written consent of Lessee, be disclosed in any manner
whatsoever, in whole or in part, except that Agent shall be permitted
to disclose such information (A) to the Instrument Holders (who shall
be bound by the same confidentiality requirements upon receipt of such
51
information), (B) to any regulatory agencies having jurisdiction over
Agent or any Instrument Holder in connection with their regulatory
functions, and (C) as required by Law or court order, or in connection
with any investigation or proceeding arising out of the transactions
contemplated by this Lease.
(vi) Taxes, Charges, Etc. Duly pay and discharge, or
cause to be paid and discharged, when due, all taxes, assessments and
other governmental charges imposed upon it or any Subsidiary that is an
approved Additional Lessee and its and their properties, or any part
thereof or upon the income or profits therefrom, as well as all claims
for labor, materials or supplies which if unpaid could have a
materially adverse effect on the operations of Lessee as a whole so as
to adversely affect Lessee's capacity to perform its obligations under
this Lease, except such items as are being in good faith appropriately
contested by Lessee or any applicable Subsidiary and for which adequate
reserves are being maintained in accordance with GAAP.
(c) Negative Covenants. Lessee covenants and agrees with
Lessor and Agent that, so long as this Lease shall remain in effect Lessee will
not, unless Agent shall otherwise consent in writing:
(i) The Lessee will not, nor will it permit any of
its Subsidiaries to, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution). The Lessee will not make,
and will not permit any of its Subsidiaries to make, any acquisition
(in one transaction or a series of related transactions) in excess of
$50,000,000. The Lessee will not, and will not permit any of its
Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of
in one transaction or a series of transactions, all or a substantial
part of its business or assets, whether now owned or hereafter acquired
(including, without limitation, receivables and leasehold interests,
but excluding (i) any inventory or other assets (including real
property) sold or disposed of in the ordinary course of business and
(ii) obsolete or worn-out property, tools or equipment no longer used
or useful in its business). Notwithstanding the foregoing provisions:
(1) any Subsidiary of the Lessee may be
merged or consolidated with or into: (i) the Lessee or another
Lessee if the Lessee or another Lessee shall be the continuing
or surviving corporation or (ii) any other such Subsidiary;
provided that if any such transaction shall be between a
Subsidiary and a wholly-owned Subsidiary, the wholly-owned
Subsidiary shall be the continuing or surviving corporation;
(2) any such Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Lessee or
another Lessee or a wholly-owned Subsidiary of the Lessee or
another Lessee; and
52
(3) any Lessee may sell, lease, transfer or
otherwise dispose of all or any of its assets (upon voluntary
liquidation or otherwise) to any other Lessee.
(ii) Lines of Business. Engage or, in the case of
Lessee Parent, permit any of its Subsidiaries that are approved
Additional Lessees to engage, to any substantial extent in any line or
lines of business activity other than the business of owning and
operating retail stores and auto service centers (including functions
that are directly related thereto and supportive thereof).
(iii) Change of Control. Permit the occurrence of any
Change of Control with respect to Lessee Parent or any approved
Additional Lessee; provided, however, that a Change of Control as to
the Lessee Parent shall not constitute a violation of this Lease if, as
of the date that such Change of Control occurs, the senior unsecured
debt of the Lessee Parent is rated BBB or better by Standard & Poors
and/or Baa2 or better by Moody's Investors Services, and the Lessee
Parent or its securities are not in a "credit watch" status with either
such rating service.
(iv) Judgments. Permit or acquiesce in the entry of
any final unappealable judgment or order for the payment of money in
excess of $1,000,000.00 against Lessee or any of its Subsidiaries;
provided, however, that any such judgment or order shall not be an
Event of Default if and for so long as (x) the entire amount of such
judgment or order is covered (subject to customary deductibles) by a
valid and binding policy of insurance between the defendant and the
insurer covering payment thereof and (y) such insurer, which shall be
rated at least "B+/X" by A. M. Best Company, has been notified of, and
has not disputed the claim made for payment of the amount of such
judgment or order.
(v) Limitation on Liens. The Lessee will not, nor
will it permit any of its Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, except:
(1) Liens imposed by any governmental
authority for taxes, assessments or charges not yet due or
which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are
maintained on the books of the Lessee or any of its
Subsidiaries, as the case may be, in accordance with GAAP;
(2) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are not overdue for a period
of more than 30 days or which are being contested in good
faith and by appropriate proceedings;
53
(3) pledges or deposits under worker's
compensation, unemployment insurance and other social security
legislation;
(4) deposits to secure the performance of
bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the
ordinary course of business;
(5) Liens on assets of corporations which
become Subsidiaries of the Lessee after the date of this
Lease, provided that such Liens are in existence at the time
the respective corporations become Subsidiaries of the Lessee
and were not created in anticipation thereof;
(6) Liens upon real property, fixtures and
equipment (excluding equipment that constitutes inventory)
acquired after the date hereof (by purchase, construction or
otherwise) by the Lessee or any of its Subsidiaries;
(7) Liens upon the assets of the Lessee and
its Subsidiaries in existence on the date hereof; and
(8) any extension, renewal or replacement of
the foregoing, provided, however, that the Liens permitted
hereunder shall not be spread to cover any additional
Indebtedness or property (other than a substitution of like
property).
As used in this Section 32(c), the following terms have the meanings indicated
below:
"Change of Control" means, after the date hereof, (A) as to Lessee
Parent, any event or circumstance that results in a majority of the
individuals comprising the board of directors of the Lessee Parent as
of any date to consist of individuals that were not members of the
board of directors of the Lessee Parent twelve (12) months previous to
such date (other than by reason of death), or (B) as to any other
Lessee, any event or circumstance that results in such Lessee not being
a wholly owned Subsidiary of the Lessee Parent.
"GAAP" shall mean generally accepted accounting principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time
to time, and (b) consistently applied with past financial statements of
any Person adopting the same principles.
54
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect
of such asset. For purposes of this Lease, Lessee or any of its
Subsidiaries shall be deemed to own subject to a Lien any asset which
it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Subsidiary" shall mean, as to any Person, any corporation of which at
least a majority (or in the case of a wholly-owned Subsidiary, 100%) of
the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any
other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries.
33. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
AND FOR THE PURPOSE OF REDUCING THE TIME AND EXPENSE OF LITIGATION, LESSOR AND
LESSEE WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON, UNDER, OR BY VIRTUE OF THIS
AGREEMENT.
34. Exhibits. The following Exhibits are attached hereto and made a
part hereof for all purposes.
Annex I - Approved Self-Insurance Program
Exhibit A - Net Rent; Additional Rent
Exhibit B - Form of Supplement for Addition of Parcels
Exhibit C - Construction Addendum
Exhibit D - Form of Construction Supplement
Exhibit E - Form of Interim Supplement
Exhibit F - Form of SNDA
Exhibit G - Form of Supplement for Additional Lessee(s)
35. Special Local Provisions. It is expressly agreed that this Lease
may be amended or supplemented, as necessary, with any special local provisions
or requirements deemed necessary by Lessor or Agent, which provisions shall be
included in the Supplement adding the portions of the Property to which such
special provisions shall be applicable to the coverage of this Lease.
55
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this Lease to be duly executed on the attached signature
pages by their respective officers thereunto duly authorized, to be effective as
of the day and year first above written.
[SEE ATTACHED SIGNATURE PAGES]
56
SIGNATURE PAGE OF LESSOR
ATTACHED TO
MASTER LEASE
(1997 PEP BOYS II LEASED PROPERTY)
LESSOR:
-------
STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company not in its
individual capacity but solely as Trustee
under the Declaration of Trust
By: _____________________________________
Name: ___________________________________
Title: __________________________________
57
SIGNATURE PAGE OF LESSEE
ATTACHED TO
MASTER LEASE
(1997 PEP BOYS II LEASED PROPERTY)
LESSEE:
THE PEP BOYS - MANNY, MOE & JACK, a
Pennsylvania corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
THE PEP BOYS MANNY MOE & JACK OF
CALIFORNIA, a California corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
PEP BOYS - MANNY, MOE & JACK OF DELAWARE,
INC., a Delaware corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
58
ANNEX I
Approved Self-Insurance Program
EXHIBIT "A"
Net Rent; Additional Rent and Related Definitions
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Lease to which this Exhibit "A" is attached
(including terms defined by reference in the Lease to other instruments or
documents).
A. Net Rent. Net Rent during the Term shall be due and payable monthly
in arrears on each Payment Date in an amount determined by multiplying (1) the
then applicable Acquisition Price for the Property times (2) the lesser of the
Applicable Rate for the LIBO Rate Period in which such month falls or the
highest lawful rate times (3) a fraction, the numerator of which is the actual
number of days in the month in question, and the denominator of which is 360 (or
if the highest lawful rate is used in lieu of the Applicable Rate, 365 or 366,
as applicable).
"Payment Date" means the first (1st) day of each calendar
month to and including the last day of the Term, as well as the last day of the
Term itself; provided, however, that if such Payment Date is not a Business Day,
such Payment Date shall be the next succeeding Business Day. It is acknowledged
that for the period between the date a Parcel is added to the Property or a
Construction Advance is made in respect of New Improvements and the next
Adjustment Date the Net Rent will be computed using multiple Applicable Rates
applied to the respective Acquisition Prices, as set forth in the next sentence,
and the payments shall be adjusted accordingly. In the event this Lease is
terminated as to a Parcel and the Improvements thereon pursuant to the terms
hereof, or a Parcel or Improvements thereon are added to the Property, or a
Construction Advance is made, the Net Rent shall be adjusted, as of the date of
such termination or addition, by eliminating from the aggregate Acquisition
Price (in the case of a partial termination) or adding to the aggregate
Acquisition Price (in the case of the addition of a Parcel and Improvements or a
Construction Advance in respect of New Improvements) the portion of the
aggregate Acquisition Price thereof attributable to the portion of the Property
so released or added.
If, at any time, the Applicable Rate then in effect shall
exceed the highest lawful rate, then any subsequent reductions in the Applicable
Rate shall not reduce the Net Rent below the amount of Net Rent that would be
payable hereunder if the Applicable Rate were equal to the highest lawful rate
until the total amount of Net Rent accrued hereunder equals the amount of Net
Rent that would have accrued hereunder if the Applicable Rate had at all times
been the Applicable Rate without the limitation of the highest lawful rate. In
the event that at the Expiration Date (howsoever the Expiration Date occurs) the
total amount of Net Rent paid or accrued hereunder is less than the total amount
of Net Rent that would have accrued if the Applicable Rate had at all times been
in effect without the limitation of the highest lawful rate, then Lessee agrees,
to the fullest extent permitted by Law, to pay to Lessor on the Expiration Date
an amount equal to the difference between (a) the lesser of (i) the amount of
Net Rent that would have accrued hereunder if the highest lawful rate had at all
times been utilized to compute the Net Rent accruing hereunder, or (ii) the
amount of Net Rent that would have accrued hereunder if the Applicable Rate had
at all times been utilized to compute the Net Rent without the limitation of the
highest lawful rate, and (b) the amount of Net Rent otherwise accrued hereunder.
The parties agree to modify the Applicable Rate payable
hereunder as contemplated in the Transaction Agreement to provide to Lessee the
financial benefit of any interest or yield reductions on the Instruments.
B. Additional Rent. In addition to such Additional Rent as may
otherwise be payable under the Lease, Lessee shall pay, within thirty (30) days
of a demand therefor, as Additional Rent, all Break Costs, Reserve Costs,
Increased Costs and/or all reasonable expenses as set forth elsewhere herein or
in the Transaction Documents of Lessor or Agent required to be paid by Lessee
pursuant to this Lease, the Transaction Agreement, or any Transaction Document.
C. Definitions. As used herein, the following terms have the following
meanings:
"Acquisition Price" means the amount attributable to the
Property (in the aggregate) or a particular Parcel, as applicable, as set out at
the time in question on the most recent Schedule "A-1" to the Lease. The Parcel
Addition Supplement by which any Parcel is added to the Property and the Interim
Supplement or the Construction Supplement with respect to the Construction
Advance related to any Improvements shall designate the increase in the
Acquisition Price attributable thereto and any other agreed adjustment to the
Acquisition Price Schedule by the attachment of an updated Schedule "A-1". At
such time as this Lease is terminated as to any Parcel and either the Offer
Purchase Price, the Contingent Rent Payment, or the Construction Failure Payment
amount applicable thereto is paid under any applicable provision of this Lease,
the Parcel in question shall no longer be part of the Property, the portion of
the Acquisition Price previously applicable to such Parcel shall no longer be a
part of the Acquisition Price of the Property for any purpose, and Schedule A-1
shall be adjusted to reflect the exclusion of such Parcel from the Property.
"Adjustment Date" means the first day of each month throughout
the Term.
"Applicable Rate" means, for any month, as applicable (A) the
sum of (i) the LIBO Rate for the LIBO Rate Period in which such month falls,
plus (ii) the Applicable Spread or (B) as to the portion of the Acquisition
Price attributable to a Parcel or a Construction Advance prior to the first
Adjustment Date after such Parcel is added to the Property or such Construction
Advance is made, the sum of the Special LIBO Rate applicable thereto plus the
Applicable Spread.
"Applicable Spread" means, as applicable, the amount based on
the debt rating most recently issued by Standard & Poor's for Lessee's senior
unsecured debt as of any Adjustment Date determined by reference to the
following:
Lessee's Most
Recent Debt Rating Applicable Spread
------------------ -----------------
BBB+ (or higher) 45.0 basis points (0.45%)
BBB 49.8 basis points (0.498%)
BBB- 59.4 basis points (0.594%)
less than BBB- 81.0 basis points (0.81%)
"Break Costs" shall mean an amount equal to the amount (if
any) required to compensate any Instrument Holder for any additional losses
(including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or funds acquired by such Instrument
Holder to fund or maintain a Trust Instrument) it may reasonably incur as a
result of Lessee's payment of the Offer Purchase Price, or the Contingent Rent
Payment other than on an Adjustment Date or the Expiration Date.
"Business Day" means every day on which banks in the cities of
New York, New York, Chicago, Illinois, Boston, Massachusetts, and Philadelphia,
Pennsylvania, are open for business and not required to be closed.
"Contingent Rent Payment" means, as of any relevant time, an
amount equal to the lesser of (A) eighty-four percent (84%) of the aggregate of
all Advances theretofore made under the Transaction Agreement (less any amounts
theretofore paid by Lessee as Contingent Rent Payments or Construction Failure
Payments), or (B) 100% of the Acquisition Price of the Parcels remaining subject
to this Lease as of the date the Contingent Rent Payment is made. In the event
that any Parcel(s) are purchased by Lessee during the period ending on the
Outside Funding Date (as defined in the Transaction Agreement), pursuant to any
option or obligation of Lessee to make such purchase hereunder, the Contingent
Rent Payment computed under clause (A) above shall be recomputed so as to equal
eighty-four percent (84%) of the aggregate of all Advances theretofore made
under the Transaction Agreement excluding Advances theretofore made in respect
of the Parcel(s) purchased by Lessee during such period. The parties acknowledge
that the obligation for the payment of Contingent Rent Payments is a rental
obligation in consideration of the lease of the Property to Lessee hereunder,
and that Lessee has agreed to make the Contingent Rent Payment when due
hereunder in consideration of the Lessor's agreement to accept Net Rent payments
during the Term in a lower amount than Lessor would otherwise be willing to
accept.
"Increased Costs" means any additional amounts required to be
paid to any Instrument Holder by Lessor under the Transaction Agreement to
compensate such Instrument Holder for any increased costs of maintaining the
Instruments or the advances evidenced thereby (the effect of which was not
included in the applicable Instrument Holder's determination of such costs at
the more recent to occur of the original issuance of such Instrument or the date
of adjustment of the Note Rate or Certificate Rate applicable to such Instrument
or applicable interest therein in connection with the Secondary Transaction) as
a result of the implementation after the date hereof of any applicable Law
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Instrument Holder (or any office thereof) with
any request or directive regarding capital adequacy (whether or not having the
force of Law) of any such authority, central bank or comparable agency which has
the effect of increasing the amount of capital required or expected to be
maintained as a result of its maintaining the Instruments held by it.
"LIBO Business Day" means a day of the year on which dealings
are carried on in the London interbank market and banks are open for business in
London and not required or authorized to close in New York City.
"LIBO Rate" for the period commencing on the date hereof to
the first Adjustment Date and for each period commencing on any Adjustment Date
to and until the next succeeding Adjustment Date (each, a "LIBO Period") means
an interest rate per annum equal to the average (rounded, if necessary, to the
next highest 1/16 of 1%) of the rates of interest per annum at which deposits in
United States dollars are offered to prime banks in the London interbank market
at 11:00 a.m. (London time) two LIBO Business Days before the first day of such
LIBO Period (the "Interest Setting Date") for a period equal to such LIBO
Period.
"LIBO Rate Reserve Percentage" for any LIBO Period means the
reserve percentage applicable to the Instrument Holders during such LIBO Period
under the regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or if more than one such percentage is so applicable,
the daily average for such percentages for those days in such LIBO Period during
which any such percentage shall be so applicable) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for the Instrument Holders in respect of
liabilities or assets consisting of or including Eurocurrency Liabilities (as
defined in Regulation D of the Board of Governors of Federal Reserve System as
in effect from time to time) having a term equal to such LIBO Period.
"Reserve Costs" means, so long as any Instrument Holder
hereafter shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves in excess of those maintained at the
more recent to occur of the original issuance of the applicable Instrument or
the date of adjustment of the Note Rate or Certificate Rate applicable to such
Instrument or applicable interest therein in connection with the Secondary
Transaction with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional amounts equal to the product of (1) the
outstanding balance of the Instruments held by such Instrument Holder,
multiplied by (2) an interest rate per annum equal at all times during the
period in which such reserves were assessed to the remainder obtained by
subtracting (a) the LIBO Rate for the applicable period from (b) the rate
obtained by dividing such LIBO Rate applicable during such period by a
percentage equal to 100% minus the then applicable LIBO Rate Reserve Percentage,
payable on each Payment Date.
Promptly after Lessor receives notice from Agent or any
Instrument Holder of any Reserve Costs or Increased Costs to be payable as
Additional Rent Lessor shall notify the Lessee of the same; provided, however,
that the failure to provide such notice as to Increased Costs shall not affect
the Lessor's right to recover Additional Rent for the same. A certificate in
reasonable detail (i) setting forth the basis for and the amount of such costs
submitted by the Lessor to the Lessee and (ii) in the case of Increased Costs,
setting forth in reasonable detail the calculation of the same and that the
Instrument Holder has certified to the Lessor that such Increased Costs are
generally being charged by the Instrument Holder to other similarly situated
persons under similar arrangements, which notice shall be conclusive and binding
for all purposes, absent manifest error, unless such notice fails to set forth
the information required above as to the Increased Costs.
"Special LIBO Rate" means, for any period commencing on the
date any Parcel is added to the Property or a Construction Advance is made, as
applicable, through the next Adjustment Date, an interest rate per annum equal
to the rate of interest per annum at which deposits in United States dollars are
offered to prime banks in the London interbank market at 11:00 a.m. (London
time) two LIBO Business Days before the date such Parcel is added to the
Property, or the Construction Advance is made, for a period equal to the period
between such date and the next Adjustment Date. The Special LIBO Rate shall be
used to determine the Applicable Rate only for that portion of the Acquisition
Price attributable to the Parcel in question and/or the construction advance in
question, but only through the next Adjustment Date.
FORM OF
SCHEDULE "A-1"
Schedule of Acquisition Prices
Date of Schedule: __________, 199__
Applicable Portion of
Parcel Acquisition Price
------ ---------------------
$ (1)
------------
- --------------------------------------------------------------------------------
Total Acquisition Price $ ____________
Contingent Rent Payment $ ____________
- ----------
(1) Insert, for each Parcel, as applicable, either (A) amount of the initial
advance for purchase of Parcel if no Construction Advance has been made, or
(B) the aggregate of the original purchase advance for the Parcel and the amount
of any Interim Advance or other Constrution Advance for the Parcel that has
been funded.
EXHIBIT "B"
Form of Parcel Addition Supplement
SUPPLEMENT TO MASTER LEASE
(_____________, ________) [Location of Parcel]
This Parcel Addition Supplement ("Supplement") is hereby added, as of
the _____ day of _________, _____, to that certain Master Lease (as heretofore
amended and supplemented, the "Lease"), dated as of _____________, 1997, by and
between STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as
Trustee under that certain Declaration of Trust of even date with the Lease (in
such capacity, and not individually, "Lessor"), and, among other Lessees therein
named, ________________________, a _________ corporation ("Lessee"). Upon
execution hereof by Lessor and Lessee, and approval hereof by CITICORP LEASING,
INC., a Delaware corporation (as administrative agent for the "Purchasers" [as
defined in the Lease]) ("Agent"), this Supplement shall be included in and shall
be a part of the Lease for all purposes. Terms used but not otherwise defined
herein shall have the meanings given to such terms in the Lease.
The parties hereto, intending to be legally bound hereby, acknowledge
and agree to the following:
Lessee is one of the parties to the Lease as a "Lessee" thereunder. [IF
LESSEE IS AN "ADDITIONAL LESSEE" REFERENCE SUPPLEMENT PURSUANT TO WHICH SUCH
ADDITIONAL LESSEE BECAME A PARTY TO THE LEASE.]
The parcel of land (the "Parcel") more fully described on Exhibit "A"
attached hereto and the improvements, if any, located thereon (the
"Improvements") are hereby added by this Supplement to this Lease and shall
hereafter constitute a part of the "Property" for all purposes of the Lease.
Lessor hereby leases the Parcel and Improvements to Lessee, and Lessee hereby
leases the Parcel and Improvements from Lessor pursuant to the Lease.
The "Permitted Encumbrances" with respect to the Parcel shall consist
of those items listed on Exhibit "B" attached hereto, which shall hereafter
constitute the "Permitted Encumbrances" applicable to the Parcel for all
purposes of the Lease.
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised Schedule
A-1 attached hereto, and all references to the "Acquisition Price" of all or any
Parcel(s) for any purpose shall be deemed to refer to the Acquisition Price(s)
referred to on such Revised Schedule A-1. [ATTACH REVISED SCHEDULE A-1] From and
after the date hereof the aggregate Acquisition Price under the Lease is
increased to $______________ [SHOULD MATCH NEW SCHEDULE A-1 TOTAL], which amount
shall be used for the computation of Net Rent under the Lease until further
adjusted.
The Contingent Rent Payment shall be increased by $____________ [INSERT
AMOUNT EQUAL TO 84% OF THE ADVANCE FOR THE PARCEL] as a result of the addition
to the Lease of the Parcel and Improvements, resulting in a new Contingent Rent
Payment in the amount of $_____________ .
Lessee hereby confirms, as of the date hereof, that all representations
and warranties made in the Lease with respect to the Property heretofore covered
by the Lease remain true and correct in all material respects; that all
representations and warranties included in the Lease with respect to the
"Property" are, as of the date hereof, true and correct as to the Parcel and the
Improvements as if such Parcel and Improvements had been originally included
within the term "Property"; and that no Event of Default and, to the best of
Lessee's knowledge, no event which with notice and/or the passage of time might
ripen into an Event of Default exists under the Lease. Without limitation,
Lessee confirms that all representations and warranties set out in Section 6(d)
of the Lease are, as of the date hereof, true and correct as to the Parcel and
Improvements hereby added to the Property.
Lessee hereby acknowledges and confirms that as of the date hereof,
Lessee has no defense to the payment or performance of the Lessee's obligations
under the Lease and that, to the best of Lessee's knowledge, no claims,
counterclaims, affirmative defenses, or other such rights exist against Lessor,
Agent, or any Purchaser or Instrument Holders under the Lease.
Lessee acknowledges and confirms hereby that it has examined the Parcel
and the Improvements and title thereto, and that it accepts and approves the
Parcel and the Improvements and all matters relating thereto as suitable and
satisfactory for inclusion in the Lease [except that the improvements located on
the Parcel on the date hereof may be demolished, in whole or in part, as
provided below -- DELETE THIS PROVISION IF NOT APPLICABLE.
Lease Guarantor, as "Indemnitor" under that certain Environmental
Indemnity Agreement (the "Environmental Indemnity") of even date with the Lease,
executed by Lease Guarantor for the benefit of Lessor, Agent and the Instrument
Holders, hereby acknowledges that said Environmental Indemnity and each and
every representation, warranty, covenant, obligation, indemnity, or other term
thereof applies to, and applies with respect to, the Parcel and the Improvements
added to the Lease hereby and that from and after the date hereof such Parcel
and Improvements shall constitute part of the "Property" for all purposes of the
Environmental Indemnity.
Further, Lease Guarantor, as "Guarantor" under that certain Lease
Guarantee (the "Lease Guarantee") of even date with the Lease, executed by Lease
Guarantor and Lessor, hereby acknowledges that said Lease Guarantee and each and
every representation, warranty, covenant, obligation, indemnity, or other term
thereof applies to, and with respect to, the Parcel(s) and the Improvements
added to the Lease hereby and that from and after the date hereof such Parcel(s)
and Improvements (including any Improvements hereafter constructed by Lessee on
the Parcel) shall be covered by the Lease Guarantee, and that the Lease
Guarantee remains in full force and effect and continues to apply to the Lease,
as supplemented hereby.
It is expressly acknowledged and agreed that Agent and the Purchasers
and Instrument Holders are intended to be beneficiaries of this Supplement to
the same extent as Agent and the Purchasers and Instrument Holders are
beneficiaries of the Lease and the Environmental Indemnity.
[INSERT HERE ANY ADDITIONAL PROVISIONS APPLICABLE
TO THE NEW PROPERTY]
[The Improvements existing on the Parcel as of the date hereof are
approved for demolition pursuant to Section 1(f) of the Lease -- DELETE OR
MODIFY BASED ON FACTS AND UNDERWRITING.]
[INSERT ONLY IF APPLICABLE AND MODIFY TO REFLECT
APPLICABLE UNDERWRITING CRITERIA]
[The Parcel contains [describe excess land by legal description, size
and location, or other available information] (the "Excess Land") which is not
needed for Lessee's purposes. Lessee shall have the right to subdivide the
Excess Land from the remainder of the Parcel and dispose of the Excess Land,
subject to satisfaction of the following requirements:
(i) the Excess Land and the remainder of the Parcel must be
separately platted legal lots, have adequate legal and physical access
to publicly dedicated streets or rights of way, be separate tax
parcels, and (except pursuant to approved Facility Agreements)
otherwise not be dependent upon each other for any legal or functional
purpose whatsoever, and the disposition of the Excess Land must not
cause the remainder of the Parcel (including any Improvements thereon
or New Improvements contemplated to be developed thereon) to violate
any parking requirements, set-back lines, zoning requirements,
floor-area ratio requirements, or other legal or applicable private
restrictions, requirements or development standards.
(ii) the surveys, Title Policies, appraisals, and other
underwriting reports and materials provided to Agent in connection with
the addition of the Parcel to the Property must show (or be
supplemented, endorsed, and updated, as applicable, to show) the
remainder of the Parcel (exclusive of the Excess Land), and must
satisfy all underwriting requirements set out in the Transaction
Agreement such that the Parcel, without regard to the Excess Land,
would be eligible for inclusion as a part of the Property (with the
applicable Acquisition Price) if it did not already constitute a part
of the Property.
(iii) any utility, access, or other rights across the Excess
Land necessary for the use and operation of the remainder of the Parcel
shall be documented into formal easements that are not subject or
subordinate to any mortgage or other lien affecting the Excess Land.
(iv) the remainder of the Parcel shall have a separate
approved site plan, final development plan, development plat,
infrastructure plan, or other applicable legal filings and approvals as
may be necessary in the applicable jurisdiction such that the Parcel
and Improvements thereon are entirely legally separate from any other
property (including, without limitation, being covered by separate
certificates of occupancy or local equivalent).
(v) all costs or expenses of Agent or Lessor in connection
with the release of the Excess Land shall be paid by Lessee.
If the Excess Land and the remainder of the Parcel satisfy the foregoing
requirements the Excess Land may be transferred to Lessee or its designee and
excluded from the coverage of this Lease without requirement for payment of any
Acquisition Price (but otherwise at the sole cost and expense of Lessee). In
such event the Agent shall also release the Transaction Mortgage from the Excess
Land. The release of the Excess Land shall not reduce the Acquisition Price for
the Parcel.]
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
LESSOR:
-------
STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its
individual capacity but solely as Trustee
under the Declaration of Trust
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
"LESSEE":
---------
[ONLY SPECIFIC LESSEE LEASING PARCEL NEED SIGN]
________________________________,
a _____________________ corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
The undersigned, in its capacity as Lessee Parent, Lease Guarantor, and
party to the Environmental Indemnity Agreement joins in this Supplement for the
purposes therein stated.
LESSEE PARENT AND LEASE GUARANTOR:
----------------------------------
THE PEP BOYS - MANNY, MOE & JACK, a
Pennsylvania corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
------
CITICORP LEASING, INC., a Delaware
corporation (as administrative agent on
behalf of the Purchasers)
By: _____________________________________
Name: ___________________________________
Title: __________________________________
EXHIBIT "C"
Construction Addendum
If Lessee elects to construct New Improvements on any Parcel and
receive a Construction Advance in respect thereof the New Improvements in
question must be constructed on such Parcel in accordance with the requirements
of this Construction Addendum. Any such New Improvements constructed upon the
Property shall be the property of Lessor from the date such New Improvements (or
any portions thereof) are placed on the Property.
Section 1. Construction of New Improvements.
1.1 If Lessee desires to construct New Improvements on any
Parcel in respect of which Lessee intends to seek a Construction Advance upon
completion thereof, then prior to commencing construction of such New
Improvements Lessee shall notify Agent of its intention to construct such New
Improvements and its desire to receive a Construction Advance for the costs
thereof upon completion. Such notice shall include (i) a description of the
Parcel on which such construction is to occur, (ii) a general description of the
work to be performed (which, in the case of New Improvements that are
substantially consistent with a "prototype" store or service center previously
approved by Agent, may consist merely of an indication that the New Improvements
in question are to be of such prototype, and (iii) a good faith (but
non-binding) estimate of the amount of the Construction Advance Lessee expects
to seek upon completion of construction of the New Improvements.
1.2 Lessee shall enter into such contracts and agreements as
it shall deem necessary or appropriate in order to cause completion of the New
Improvements on the Parcel in question. Such contracts and agreements shall be
in Lessee's name only and the obligations to be performed by Lessee thereunder
shall be the sole responsibility of Lessee.
1.3 If requested by Agent, Lessee shall deliver to Agent (i)
copies of all contracts and agreements relating to construction of the New
Improvements, (ii) the plans and any related specifications, working drawings
and construction schedules for the New Improvements (the "Plans"), (iii) all
governmental permits and licenses relating to or necessary for completion of the
New Improvements, and (iv) any other Documents which Lessor or Agent may
reasonably require with respect thereto. Delivery of such materials shall not be
a condition precedent to the addition of the Parcel to the Property or the
commencement of construction of the New Improvements, but Agent shall have the
right to review such materials in connection with its approval of the
Construction Advance. Agent's review and approval of such materials shall be
from the perspective of permitting it to assure itself that any Construction
Advance is made with respect to New Improvements that are constructed in
accordance with applicable legal requirements and sound construction and
development practices. Agent's approval shall not be based upon cost, value, or
market analyses or similar matters (except to the extent that such matters
influence the amount of the appraisal of the Parcel and New Improvements). If
Agent has previously been provided with Plans for a prototype of New
Improvements Agent shall not request Plans for specific New Improvements that
Lessee represents to Agent have been or are to be constructed substantially in
accordance with the prototype Plans. If Lessee makes any material change or
modification in any documents or materials delivered to Agent pursuant to this
Section 1.3 Lessee shall provide Agent with a copy of the modified version of
such documents or other materials.
1.4 Lessee shall effect or cause to be effected the completion
of the New Improvements in a good and workmanlike manner, free of any patent or
latent defects, in substantial accordance with the Plans, and in accordance with
all laws, rules, regulations and ordinances applicable thereto (including,
without limitation, all Environmental Laws). Any New Improvements shall be
completed on or before earlier of (i) August 31, 1998, or (ii) the first
anniversary of the date on which the Parcel in question was added to the
Property (as applicable, the "Required Completion Date").
1.5 Lessee shall be solely responsible for, and shall pay or
cause to be paid in a timely manner, all costs of completion of the New
Improvements, including, without limitation, (a) amounts paid or to be paid to
contractors and other persons for work and services actually performed
(including employees of Lessee) and fees of architects, engineers and other
consultants and professionals, (b) all premiums for builder's risk, public
liability, worker's compensation and other insurance premiums pursuant to
insurance policies required hereby or by the Lease, and (c) survey costs. Lessee
agrees to hold Lessor, Agent and each Instrument Holder harmless from the
payment of all costs of completion of the New Improvements. Lessee also agrees
to pay directly to the party to whom such amounts are owed within thirty (30)
days after demand all reasonable out-of-pocket costs, charges, reasonable fees
and expenses of the Lessor and its counsel and the Agent and its counsel,
related to the preparation, evaluation (including related diligence activities),
and execution of any supplements to the Lease in connection therewith.
1.6 During the period when any construction activities are
being carried out by Lessee with respect to any of the New Improvements, Lessee
shall cause to be carried and to be in full force and effect (either directly or
pursuant to the self-insurance program permitted under the Lease) (a)
non-reporting builder's risk or all-risk property insurance insuring the Parcel
and New Improvements in the amount of the full replacement value thereof (on an
"as-built" basis), (b) insurance covering all materials stored at the
construction site (or off the construction site) that are intended to be
incorporated into the New Improvements in an amount not less than the full
insurable value of such materials from time to time, and (c) such other
insurance coverage as Lessee may be required to carry under the Lease. All of
such insurance coverage shall be carried in accordance with all applicable
provisions of the Lease.
1.7 Upon completion of the New Improvements for any Parcel,
and as a condition precedent to Lessee's right to receive a Construction Advance
in respect thereof, Lessee shall cause to be delivered to Agent (a) complete
as-built plans and specifications for the New Improvements (or, if the New
Improvements are constructed pursuant to prototype Plans previously provided to
Agent, a certification that the New Improvements have been so constructed), (b)
an "as-built" survey of the Parcel (in form reasonably satisfactory to Lessor
and Agent) updated to show the location of the New Improvements and all
easements or other Permitted Encumbrances affecting the Parcel, (c) copies of
books and records reflecting the cost of the New Improvements in such detail as
may be sufficient to enable Agent to substantiate the cost of the New
Improvements in question, (d) such lien waivers and contractor's affidavits as
may reasonably be required by Agent, (e) an endorsement to the mortgagee title
policy showing no exceptions for mechanic's and materialman's liens and
otherwise in form and substance reasonably satisfactory to Agent, and (f) such
other instruments, documents and/or materials which may be reasonably requested
by the Agent to evidence the completion of such New Improvements, the payment of
the costs thereof, and the satisfaction of the conditions to a Construction
Advance pursuant to the Transaction Agreement. The delivery of any such
materials or documents to Agent shall constitute a representation by Lessee to
Lessor and Agent that such materials are correct and complete in all material
respects.
1.8 Provided that all conditions have been timely satisfied by
Lessee, Agent will proceed to obtain the funding of the Construction Advance by
the Purchasers as provided in the Transaction Agreement.
Section 2. Funding of Construction Advance. Immediately upon receipt of
any funding of an Advance in respect of the New Improvements under the
Transaction Agreement, Lessor shall pay to Lessee, as a Construction Advance for
the New Improvements, the amount of such funding in consideration of the
performance by Lessee of its obligations hereunder. In connection with such
funding Lessee and Lessor shall execute such instruments or documents
(including, without limitation, a Construction Supplement) and do such things as
may be required to fulfill the provisions of the Lease relating to the
construction of the New Improvements and the provisions of the Transaction
Agreement relating to the funding of a Construction Advance thereunder.
Section 3. Construction Failure.
3.1 If the New Improvements on any Parcel are not completed
and/or the requirements hereof necessary to permit Lessee to obtain a final
Construction Advance under the Transaction Agreement in respect of such New
Improvements are not satisfied prior to the Required Completion Date for that
Parcel (a "Construction Failure"), then Lessee shall, at its option, either (i)
make an Offer to Purchase the Parcel with respect to which such Construction
Failure has occurred pursuant to Section 14 of the Lease, or (ii) elect to
terminate this Lease as to the Parcel with respect to which the Construction
Failure has occurred. If Lessee fails to elect option (ii) within fifteen (15)
days after the Construction Failure occurs then Lessee shall irrevocably be
deemed to have elected option (i). In either event neither Agent, the Instrument
Holders, nor Lessor shall have any further obligation (other than as provided in
Section 3.1.2 below) to Lessee for the cost of constructing the New
Improvements.
3.1.1 If Lessee elects (or is deemed to have elected) to
purchase the Parcel with respect to which the Construction Failure has
occurred pursuant to option (i) above then the Offer Purchase Price for
such Parcel as provided in Section 15 of the Lease (which Offer
Purchase Price will include the Acquisition Price for the Parcel in
question, as such Acquisition Price shall theretofore have been
increased as a result of any construction allowance attributable to
such Parcel that may theretofore have been advanced) and the closing of
Lessee's purchase of such Parcel from Lessor shall otherwise be in
accordance with Section 15 of the Lease.
3.1.2 If Lessee elects to terminate this Lease as to an
affected Parcel pursuant to option (ii) above as a result of a
Construction Failure then Lessee shall, on the date that is fifteen
(15) days after such Construction Failure occurs, pay to Lessor a
special termination payment (the "Construction Failure Payment") in an
amount (not to exceed the Acquisition Price for the Parcel in question)
determined as follows:
3.1.2.1 First, the aggregate amount of costs and
expenses incurred and paid for by Lessee in connection with
the construction of the New Improvements on the Parcel in
question, as substantiated to Agent's reasonable satisfaction,
that have not previously been reimbursed to Lessee through an
Interim Advance or Construction Advance ("Unadvanced Costs")
shall be determined;
3.1.2.2 Second, Lessee shall apply for, and Lessor
shall make, an Interim Advance in respect of the Parcel in
question in an amount equal to the amount of the Unadvanced
Costs in respect of the Parcel in question, and the
Acquisition Price for the Parcel in question shall be
increased by the amount of such Interim Advance;
3.1.2.3 Third, multiply the Acquisition Price of the
Parcel in question, after giving effect to the Interim Advance
provided for in Section 3.1.2.2 above, by eighty-nine percent
(89%), and the product so determined shall be the required
"Construction Failure Payment."
The Construction Failure Payment shall be treated and disposed of by
Lessor in the same manner as a Contingent Rent Payment (notwithstanding
that the Construction Failure Payment is computed as a different
percentage of the Acquisition Price than is used to compute the regular
Contingent Rent Payment hereunder) for all purposes of this Lease and
the other Transaction Documents. For the convenience of the Purchasers
and the Agent, if desired, the amount of the final Interim Advance to
be made pursuant to Section 3.1.2.2 above may be "netted" against the
amount of the Construction Failure Payment and not actually advanced to
Lessee.
3.2 If Lessee elects to terminate the Lease as to a Parcel
with respect to which a Construction Failure has occurred and has paid the
Construction Failure Payment in respect thereof, then Lessee, as agent for
Lessor but at Lessee's sole cost and expense, shall use its best efforts to sell
the Parcel in question to a third party at the maximum available market price
not later than the date that is thirty (30) days after the effective date of
such termination. Lessor shall join in any sale at or above the Special Minimum
Price (defined below) and Agent's approval of such sale will not be required;
however, Lessee may not sell the Parcel in question without the consent of
Agent, which consent may not be given without consent of the Majority Holders
and in any event may be withheld at Agent's sole and absolute discretion, if the
purchase price is less than that price that will produce net sale proceeds of
the Parcel received by Lessor upon any such sale (after applicable closing and
transaction costs) sufficient, together with the Construction Failure Payment
itself, to permit the Lessor (or Agent on behalf of Lessor) to pay to the
applicable Instrument Holders the amount that such Instrument Holders would have
received if, in lieu of terminating the Lease and making the Construction
Failure Payment, the Lessee had purchased the Parcel(s) in question and paid the
Offer Purchase Price therefor (computed after giving full effect to the Interim
Advance, if any, made pursuant to Section 3.1.2.2 above), taking into account
the additional interest or certificate yield, as applicable, accrued on the
Instruments in question with respect to the amount that would have been paid on
sale of the Property to Lessee at the Offer Purchase Price but which remained
unpaid on the date of such partial termination of the Lease as a result of the
Construction Failure Payment being less than the Acquisition Price of the
Parcel(s) in question (a sale price that will produce net sale proceeds, after
all transaction costs, in such amount being referred to as the "Special Minimum
Price"). To the extent the net sale proceeds exceed the Special Minimum Price
Lessor shall refund all such excess to Lessee. If Lessee has failed to cause the
Parcel to be sold within such period, Lessee's rights under this subsection 3.2
shall cease and Lessor shall thereafter have the sole and exclusive right to
sell or dispose of the Parcel in question solely for the account of the
Instrument Holders. Lessor shall reasonably cooperate in any sale of the Parcel
in question by Lessee (after approval of the sale by Agent, where required), but
at Lessee's sole cost and expense, such cooperation to include execution of
contracts of sale, closing documents, and related materials; provided that
Lessor shall not be required to incur any liability beyond its interest in the
Parcel in question in connection therewith.
Section 4. Representations and Warranties of Lessee. Lessee represents
and warrants to Lessor with respect to each Parcel and the New Improvements
thereon, as of the date of funding of the Construction Advance as follows:
4.1 No violation of any Laws exists with respect to the Parcel
and New Improvements. The intended use and operation of the Parcel and New
Improvements complies with all Legal Requirements, including, without
limitation, building codes, zoning, and private covenants.
4.2 All streets, easements, utilities and related services
necessary for the construction of the New Improvements and the operation and use
thereof for its intended purposes are available, dedicated, and fully
operational to the boundaries of the Parcel, including, without limitation,
reciprocal use easements, potable water, electric, gas and telephone facilities,
garbage removal, and sewer services.
4.3 The Plans are adequate for construction of the New
Improvements, comply with all applicable Laws, building codes, covenants,
conditions, or restrictions applicable to the Parcel and New Improvements, and
were prepared in accordance with good commercial construction practices, and the
New Improvements have been constructed in substantial accordance with the Plans.
4.4 Lessee has obtained or caused to be obtained all requisite
building permits, licenses and approvals required by any governmental authority
with respect to construction of the New Improvements.
To the extent any of the foregoing representations is
inaccurate in any respect with regard to a specific Parcel at the time a
Construction Advance is requested for such Parcel, Lessee shall set forth the
accurate representation in writing, together with the status of such matters and
the protections to be afforded to Lessor, Agent and the Instrument Holders and,
so long as the effect of the facts as they exist, giving effect to such
protections as are provided to address such matters, do not reduce the value of
the Parcel and New Improvements relative to the value set out in the appraisal
received by Agent, and Agent is otherwise satisfied that neither Lessor, Agent,
nor any Instrument Holder is materially adversely affected by the existing facts
and conditions, such variance shall not delay, condition or serve as the basis
for a refusal of the Construction Advance requested by Lessee.
Section 5. Nature of Relationship.Nothing contained herein shall create
the relationship of partnership or of joint venture or of any association
between Lessor and Lessee.
EXHIBIT "D"
Form of Construction Supplement for Completed Improvements
CONSTRUCTION SUPPLEMENT TO MASTER LEASE
(_____________________, ___________) [Project Location]
This Construction Supplement ("Supplement") is hereby added, as of the
_____ day of _________, _____, to that certain Master Lease (as heretofore
amended or supplemented, the "Lease"), dated as of __________, 1997, by and
between STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, in
its capacity as Trustee under that certain Declaration of Trust dated of even
date with the Lease (in such capacity, and not individually, "Lessor"), and
among other Lessees therein named, ____________________________, a
________________ corporation ("Lessee"). Upon execution hereof by Lessor and
Lessee, and approval hereof by CITICORP LEASING, INC., a Delaware corporation
(as administrative agent for the Purchasers [as defined in the Lease])
("Agent"), this Supplement shall be included in and shall be a part of the Lease
for all purposes. Terms used but not otherwise defined herein shall have the
meanings given to such terms in the Lease.
The parties hereto, intending to be legally bound hereby, acknowledge
and agree to the following:
Lessee is one of the parties to the Lease as a "Lessee"
thereunder. [IF LESSEE IS AN "ADDITIONAL LESSEE" REFERENCE SUPPLEMENT PURSUANT
TO WHICH SUCH ADDITIONAL LESSEE BECAME A PARTY TO THE LEASE.]
The parcel of land (the "Parcel") more fully described on Exhibit "A"
attached hereto was added to the Lease by Parcel Addition Supplement dated
______________, and constitutes a part of the "Property" for all purposes of the
Lease. Lessee has elected to construct "New Improvements" (as defined in the
Lease) on the Parcel pursuant to Section 1(d) of the Lease and the Construction
Addendum attached thereto.
Lessee hereby represents and warrants to Lessor, Agent, and each
Purchaser and Instrument Holder that the construction of the New Improvements on
the Parcel has been completed in accordance with the terms and conditions of the
Construction Addendum. Based on such representation and warranty, Lessor and
Lessee desire to increase the Acquisition Price for the Parcel by the amount of
$__________, which amount is being simultaneously herewith advanced to Lessee by
Lessor as a Construction Advance in respect of the New Improvements.
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised Schedule
A-1 attached hereto, and all references to the "Acquisition Price" of all or any
Parcel(s) for any purpose shall be deemed to refer to the Acquisition Price(s)
referred to on such Revised Schedule A-1. [ATTACH REVISED SCHEDULE A-1]
The Contingent Rent Payment is hereby increased by $____________
[insert amount equal to 84% of the Construction Advance], resulting in a
Contingent Rent Payment in the amount of $_____________.
Lessee hereby confirms, as of the date hereof, that all representations
and warranties made in the Lease with respect to the Property heretofore covered
by the Lease remain true and correct in all material respects; that all
representations and warranties included in the Lease with respect to the
"Property" are, as of the date hereof, true and correct as to the Parcel and the
New Improvements; and that no Event of Default and, to the best of Lessee's
knowledge, no event which with notice and/or the passage of time might ripen
into an Event of Default, exists under the Lease.
Lessee hereby acknowledges and confirms that as of the date hereof,
Lessee has no defenses to the payment or performance of the Lessee's obligations
under the Lease and that, to the best of Lessee's knowledge, no claims,
counterclaims, affirmative defenses, or other such rights exist against Lessor,
Agent or any Purchaser or Instrument Holder under the Lease.
It is expressly acknowledged and agreed that Agent and the Purchasers
and Instrument Holders are intended to be beneficiaries of this Supplement to
the same extent as Agent and the Purchasers and Instrument Holders are
beneficiaries of the Lease and the Environmental Indemnity.
Lease Guarantor joins in the execution hereof for the purpose of
acknowledging the Construction Advance being made and the adjustments to the Net
Rent and Contingent Rent Payment to be affected thereby. Lease Guarantor
confirms that the Lease Guarantee dated as of even date with the Lease, executed
by Lease Guarantor remains in full force and effect and continues to apply to
the Lease, as supplemented hereby.
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO CONSTRUCTION SUPPLEMENT
LESSOR:
-------
STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its
individual capacity but solely as Trustee
under the Declaration of Trust
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE ATTACHED TO CONSTRUCTION SUPPLEMENT
"LESSEE":
---------
[ONLY SPECIFIC LESSEE LEASING PARCEL NEED SIGN]
__________________________________,
a _____________________corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
The undersigned, in its capacity as Lessee Parent, Lease Guarantor, and
party to the Environmental Indemnity Agreement joins in this Supplement for the
purposes therein stated.
LESSEE PARENT AND LEASE GUARANTOR:
THE PEP BOYS - MANNY, MOE & JACK, a
Pennsylvania corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE ATTACHED TO CONSTRUCTION SUPPLEMENT
Approved and Accepted as of the date first above written.
AGENT:
------
CITICORP LEASING, INC., a Delaware
corporation (as administrative agent for
itself and the Purchasers)
By: _____________________________________
Name: ___________________________________
Title: __________________________________
EXHIBIT "E"
Form of Supplement for Interim Advance
INTERIM SUPPLEMENT TO MASTER LEASE
This Interim Supplement ("Supplement") is hereby added, as of the ____
day of _____________, 199__, to that certain Master Lease (as amended,
supplemented or otherwise modified from time to time, the "Lease"), dated as of
__________, 1997, by and between STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, as Trustee under that certain Declaration of Trust
of even date with the Lease (in such capacity, and not individually, "Lessor"),
and among other lessees named therein, [NAME OF APPLICABLE LESSEE] , a
_____________ corporation ("Lessee"). Upon execution hereof by Lessor and Lessee
and approval hereof by CITICORP LEASING, INC., a Delaware corporation (as
administrative agent for the "Purchasers" [as defined in the Lease]) ("Agent"),
this Supplement shall be included in and shall be a part of the Lease for all
purposes. Terms used but not otherwise defined herein shall have the meanings
given to such terms in the Lease.
The parties hereto, intending to be legally bound hereby, acknowledge
and agree to the following:
Lessee hereby represents and warrants to Lessor and Lender that New
Improvements (as defined in the Lease), have been partially constructed (but are
not yet completed), in accordance with the terms and conditions of the
Construction Addendum, upon the Parcel located in ______________, more
particularly described on Exhibit "A" attached hereto (the "_______ Parcel"),
and the New Improvements, or the portion thereof so completed, constitute a part
of the "Property" for all purposes of the Lease. Based on such representation
and warranty and in consideration of the advance by Lessor of even date herewith
of a reimbursement for construction costs incurred to date, Lessor and Lessee
desire to increase the Acquisition Price for the _________ Parcel by the amount
of $___________ [IF MORE THAN ONE PARCEL INVOLVED-ALLOCATE AMONG APPLICABLE
PARCELS]. The aggregate amount to date that has been paid to Lessee in
reimbursement for the costs of constructing the New Improvements on the
__________ Parcel is $_______________. [MODIFY AS APPROPRIATE IF MORE THAN ONE
PARCEL INVOLVED-FULL AMOUNT MUST BE ALLOCATED AMONG PARCELS]
Effective as of the date hereof, the Schedule of Acquisition Prices
attached as Schedule A-1 of the Lease is hereby replaced by the Revised Schedule
A-1 attached hereto, and all references to the "Acquisition Price" of all or any
Parcel(s) for any purpose shall be deemed to refer to the Acquisition Price(s)
referred to on such Revised Schedule A-1. [ATTACH REVISED SCHEDULE
A-1--ACQUISITION PRICE OF EACH AFFECTED PARCEL TO BE INCREASED BY THE PORTION
OF THE INTERIM ADVANCE ALLOCABLE TO SUCH PARCEL--AGGREGATE ACQUISITION PRICE
MUST BE INCREASED BY TOTAL AMOUNT OF INTERIM ADVANCE AND SHOULD EQUAL AMOUNT OF
AGGREGATE ADVANCES TO DATE (LESS PURCHASE PRICE OF PARCELS REPURCHASED, IF
APPLICABLE)]
Lessor and Lessee hereby confirm, as of the date hereof, that all
representations and warranties made in the Lease with respect to the Property
remain true and correct in all material respects; and that to the best of
Lessee's knowledge no Event of Default or event which with notice and/or the
passage of time might ripen into a Event of Default exists under the Lease.
Lessee hereby acknowledges and confirms that as of the date hereof,
Lessee has no defense to the payment or performance of the Lessee's obligations
under the Lease and that, to the best of Lessee's knowledge, no claims,
counterclaims, affirmative defenses, or other such rights exist against Lessor,
Agent, or any Purchaser or Instrument Holders under the Lease.
It is expressly acknowledged and agreed that Agent and the Purchasers
and Instrument Holders are intended to be beneficiaries of this Supplement to
the same extent as Agent and the Purchasers and Instrument Holders are
beneficiaries of the Lease and the Environmental Indemnity.
EXECUTED as of the date first above written.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
LESSOR:
-------
STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its
individual capacity but solely as Trustee
under the Declaration of Trust
By: _____________________________________
Donald E. Smith, Vice President
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
LESSEE:
-------
____[MAY BE MULTIPLE LESSEES]_____
By: _____________________________________
Name: ___________________________________
Title: __________________________________
The undersigned, in its capacity as Lessee Parent, Lease Guarantor, and
party to the Environmental Indemnity Agreement joins in this Supplement for the
purposes therein stated.
LESSEE PARENT AND LEASE GUARANTOR:
----------------------------------
THE PEP BOYS - MANNY, MOE & JACK, a
Pennsylvania corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE ATTACHED TO
INTERIM SUPPLEMENT TO MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
------
CITICORP LEASING, INC., a Delaware
corporation (as administrative agent on
behalf of the Purchasers)
By: _____________________________________
Name: ___________________________________
Title: __________________________________
EXHIBIT "F"
Form of SNDA
EXHIBIT "G"
Form of Supplement for Additional Lessee
SUPPLEMENT NO. _____ TO MASTER LEASE
This Supplement ("Supplement") is hereby added, as of the _____ day of
_________, _____, to that certain Master Lease (as heretofore amended and
supplemented, the "Lease"), dated as of _____________, 1995, by and between
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as Trustee
under that certain Declaration of Trust of even date with the Lease (in such
capacity, and not individually, "Lessor"), and THE PEP BOYS - MANNY, MOE & JACK,
a Pennsylvania corporation, THE PEP BOYS MANNY, MOE & JACK OF CALIFORNIA, a
California corporation, and PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC., a
Delaware corporation ("Lessee"). Upon execution hereof by Lessor, Lessee Parent,
and Additional Lessee, and approval hereof by CITICORP LEASING, INC., a Delaware
corporation (as administrative agent for the "Purchasers" [as defined in the
Lease]) ("Agent"), this Supplement shall be included in and shall be a part of
the Lease for all purposes. Terms used but not otherwise defined herein shall
have the meanings given to such terms in the Lease.
The parties hereto, intending to be legally bound hereby, acknowledge
and agree to the following:
___________________________, a _________ corporation ("Additional
Lessee") and Lessee Parent desire for the Additional Lessee to become a party to
the Lease as a Lessee as provided for in Section 31 of the Lease.
To induce approval of the acceptance of Additional Lessee as a party to
the Lease Lessee Parent and Additional Lessee hereby represent and warrant to
Agent and Lessor that, as of the date hereof:
(a) Additional Lessee is a wholly-owned Subsidiary of
Lessee Parent.
(b) All representations and warranties made in the Lease with
respect to the "Lessee" are true and correct in all material respects
as to the Additional Lessee as of the date hereof.
(c) Giving effect to the approval of Additional Lessee as a
party to the Lease, all representations and warranties made in the
Lease and in the Lease Guarantee as to Lessee Parent remain true and
correct in all material respects.
Lease Guarantor, as "Indemnitor" under that certain Environmental
Indemnity Agreement (the "Environmental Indemnity") of even date with the Lease,
executed by Lease Guarantor for the benefit of Lessor, Agent and the Instrument
Holders, hereby acknowledges that said Environmental Indemnity and each and
every representation, warranty, covenant, obligation, indemnity, or other term
thereof applies to, and applies with respect to, the Additional Lessee and any
Parcel and the Improvements that may ever be leased by the Additional Lessee
pursuant to the Lease.
Further, Lease Guarantor, as "Guarantor" under that certain Lease
Guarantee (the "Lease Guarantee") of even date with the Lease, executed by Lease
Guarantor and Lessor, hereby acknowledges that said Lease Guarantee and each and
every representation, warranty, covenant, obligation, indemnity, or other term
thereof applies to, and with respect to, the Additional Lessee and any Parcel(s)
and the Improvements that may ever be leased by the Additional Lessee pursuant
to the Lease and that from and after the date hereof the Additional Lessee shall
be covered by the Lease Guarantee as if the Additional Lessee had been an
original Lessee, and that the Lease Guarantee remains in full force and effect.
Additional Lessee hereby assumes, jointly and severally, all
obligations of the Lessee under the Lease, whether arising prior to, or
subsequent to, the date of this Supplement.
It is expressly acknowledged and agreed that Agent and the Purchasers
and Instrument Holders are intended to be beneficiaries of this Supplement to
the same extent as Agent and the Purchasers and Instrument Holders are
beneficiaries of the Lease and the Environmental Indemnity.
EXECUTED as of the date first written above.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
LESSOR:
-------
STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its
individual capacity but solely as Trustee
under the Declaration of Trust
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
"ADDITIONAL LESSEE":
--------------------
__________________________________,
a _____________________corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
The undersigned, in its capacity as Lessee Parent, Lease Guarantor, and
party to the Environmental Indemnity Agreement joins in this Supplement for the
purposes therein stated.
LESSEE PARENT AND LEASE GUARANTOR:
----------------------------------
THE PEP BOYS - MANNY, MOE & JACK, a
Pennsylvania corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE ATTACHED TO SUPPLEMENT TO MASTER LEASE
Approved and Accepted as of the date first above written.
AGENT:
------
CITICORP LEASING, INC., a Delaware
corporation (as administrative agent on
behalf of the Purchasers)
By: _____________________________________
Name: ___________________________________
Title: __________________________________
FIRST AMENDMENT TO MASTER LEASE
(Pep Boys II Transaction)
This FIRST AMENDMENT TO MASTER LEASE dated as of July 31, 1997 (this
"Amendment"), is entered into by and between STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, not individually but solely in its
capacity as Trustee under that certain "Declaration of Trust" (herein so called)
dated as of February 28, 1997 (in such capacity, and not individually,
"Lessor"), having an address at Two International Place, Fourth Floor, Boston,
Massachusetts 02110, Attn: Corporate Trust Department, THE PEP BOYS - MANNY, MOE
& JACK, a Pennsylvania corporation ("Lessee Parent"), THE PEP BOYS MANNY MOE &
JACK OF CALIFORNIA, a California corporation ("Pep Boys - California"), and PEP
BOYS - MANNY, MOE & JACK OF DELAWARE, INC. ("Pep Boys - Delaware"), each having
an address at 3111 W. Allegheny Avenue, Philadelphia, Pennsylvania 19132. Lessee
Parent, Pep Boys - California, and Pep Boys - Delaware are herein referred to,
singly or collectively as the context may require, as the "Lessee."
RECITALS
On or about February 28, 1997, Lessor and Lessee entered into a certain
Master Lease (the "Master Lease") relating to certain real property to be leased
from time to time by Lessor to Lessee. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in the Master
Lease.
The Master Lease was executed in furtherance of certain transactions
contemplated by a Transaction Agreement of even date therewith among Lessor,
Lessee Parent, Citicorp Leasing, Inc. (in various capacities), and Bank of
Montreal. Of even date herewith the Transaction Agreement has been amended and
such amendment requires a corresponding amendment to the Master Lease to fully
effect the intents and purposes of the parties.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, the parties hereto have agreed to amend, and do
hereby amend, the Master Lease in the following respects.
AGREEMENTS
1. Section 12 (b) of the Lease is hereby amended to read, in its
entirety, as follows:
"(b) Condemnation with Termination. (i) If a Condemnation
shall in the good faith opinion of an authorized officer of Lessee
affect the Improvements on a given Parcel in such manner as to render
it unsuitable for restoration or for continued use and occupancy by the
Lessee, then the Lessee may deliver, not later than sixty (60) days
after such occurrence, or (ii) if a Condemnation shall affect the
entirety of a Parcel and the Improvements thereon, then the Lessee
shall be deemed to have delivered as of such occurrence, to the Lessor
a written notice (herein called a "Termination Notice") containing (A)
notice of the Lessee's intention to terminate this Lease with respect
to the affected Parcel and the Improvements thereon, and (B) a
certificate of an officer of the Lessee describing the Condemnation
giving rise to such termination and certifying as to clause (i) or (ii)
above, as appropriate. In such event this Lease shall remain in full
force and effect as to the Parcels (and the Improvements thereon) not
affected by the Condemnation in question, and as to the affected Parcel
and Improvements the Lessee shall receive the remainder of the Parcel
and Improvements in question, if any, as well as the Net Proceeds
attributable thereto upon payment of the Offer Purchase Price as
provided for in Section 15 below. No Early Termination Fee shall be
payable in the event of a termination occurring under this Section
12(b)."
2. A new subsection 19(a)(xv) is hereby inserted in the Lease to read,
in its entirety, as follows:
"(xv) If the Lease Guarantee or the Environmental Indemnity
shall for any reason cease to be, or be asserted by the Lease Guarantor
or any Indemnitor, as applicable, not to be, a legal, valid and binding
obligation of the Lease Guarantor or such Indemnitor, enforceable in
accordance with their respective terms, or the Lease Guarantor or any
Indemnitor, as applicable, shall disaffirm or seek to disaffirm its
obligations thereunder."
3. A new Section 36 is hereby added to the Lease, to read in its
entirety as follows:
"36. Joint and Several Liability. The Lessee Parent, Pep
Boys-California, and Pep Boys-Delaware hereby confirm that their
liability and obligations under this Lease are joint and several."
4. A new Section 37 is hereby added to the Lease, to read in its
entirety, as follows:
"37. Consent to Jurisdiction. Each of the Lessee Parent, Pep
Boys-California, Pep Boys-Delaware, and any Additional Lessees that
hereafter become parties hereto hereby consent to jurisdiction in the
Commonwealth of Pennsylvania for all purposes of the Lease and/or any
other Transaction Documents, and acknowledge and agree that the
applicable state or federal courts operating in Philadelphia,
Pennsylvania, constitute a proper venue for any actions arising out of
or relating to the Lease or the other Transaction Documents. Lessee
Parent, Pep Boys-California and Pep Boys-Delaware acknowledge that
service of process in the Commonwealth of Pennsylvania may be served on
any or all of them by delivery of service to Lessee Parent."
5. Paragraph B on Exhibit "A" of the Lease (captioned, "Additional
Rent") is hereby amended by the insertion of the word "Taxes", after the words
"Reserve Costs," and prior to the word "Increased Costs" on the third line of
the section.
6. The forms of Parcel Addition Supplement (Exhibit B), Construction
Supplement (Exhibit D) and Interim Advance Supplement (Exhibit E) attached to
the Lease are hereby replaced, in their entirety, by the forms attached hereto
as Schedules 1, 2, and 3, respectively.
7. Except as amended hereby, the terms and provisions of the Lease
shall be and remain in full force and effect and are hereby ratified and
affirmed. By its execution hereof Lessee Parent hereby ratifies and affirms each
and every representation, warranty, covenant, obligation and indemnity contained
in the Lease as of the date hereof.
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this Amendment to be duly executed on the attached Signature
Pages by their respective officers thereunto duly authorized, to be effective as
of the day and year first above written.
[SEE ATTACHED SIGNATURE PAGES]
SIGNATURE PAGE ATTACHED TO FIRST AMENDMENT TO MASTER LEASE
Between
State Street Bank and Trust Company, Trustee, as Lessor
and
The Pep Boys - Manny, Moe & Jack, et al., as Lessee
LESSOR:
-------
STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its
individual capacity but solely as Trustee
under the Declaration of Trust
By: _____________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE ATTACHED TO FIRST AMENDMENT TO MASTER LEASE
Between
State Street Bank and Trust Company, Trustee, as Lessor
and
The Pep Boys - Manny, Moe & Jack, et al., as Lessee
LESSEE:
-------
THE PEP BOYS - MANNY, MOE & JACK, a
Pennsylvania corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
THE PEP BOYS MANNY MOE & JACK, OF
CALIFORNIA, a California corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
PEP BOYS - MANNY, MOE & JACK OF DELAWARE,
INC., a Delaware corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________