Exhibit 10.2
Participation Agreement, dated as of August 1, 2003, among the Company,
Wachovia Development Corporation, as the Borrower and the Lessor, the Lenders
and Wachovia Bank, National Association, as Agent for the Lenders and Secured
Parties.
PARTICIPATION AGREEMENT
Dated as of August 1, 2003
among
THE PEP BOYS - MANNY, MOE & ▇▇▇▇
THE PEP BOYS ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ OF CALIFORNIA
PEP BOYS - MANNY, MOE & ▇▇▇▇ OF DELAWARE, INC.
as the Lessee,
THE VARIOUS PARTIES HERETO FROM TIME TO TIME,
as the Guarantors
WACHOVIA DEVELOPMENT CORPORATION,
as the Borrower and as the Lessor
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Lenders,
and
WACHOVIA BANK, NATIONAL ASSOCIATION,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Secured Parties
TABLE OF CONTENTS
Page
SECTION 1. THE FINANCING. 1
SECTION 2. CONTINUATION OF LEASE FACILITY. 2
SECTION 3. SUMMARY OF TRANSACTIONS. 2
3.1. Operative Agreements. 2
3.2. Lease of Property; Refinance of Indebtedness. 2
SECTION 4. THE CLOSINGS. 3
SECTION 5. CLOSING CONDITIONS. 3
5.1. General. 3
5.2. Procedures for Funding. 3
5.3. Conditions Precedent for the Lessor, the Agent and the Lenders
Relating to the Loans and Lessor Advance on the Closing Date. 4
5.4. [Intentionally Reserved]. 7
5.5. [Intentionally Reserved]. 7
5.6. [Intentionally Reserved]. 7
5.7. [Intentionally Reserved]. 7
5.8. Payments. 8
SECTION 5B. LESSOR ADVANCE 8
5B.1. Procedure for Lessor Advance. 8
5B.2. Lessor Yield. 8
5B.3. Scheduled Return of Lessor Advance. 9
5B.4. Early Return of Lessor Advance. 9
5B.5. Computation of Yield. 9
5B.6. Conversion and Continuation Options. 10
SECTION 6. REPRESENTATIONS AND WARRANTIES. 10
6.1. Representations and Warranties of the Borrower. 10
6.2. Representations and Warranties of Each Credit Party. 12
SECTION 6B. GUARANTY 15
6B.1. Guaranty of Payment and Performance. 15
6B.2. Obligations Unconditional. 16
6B.3. Modifications. 17
6B.4. Waiver of Rights. 17
6B.5. Reinstatement. 18
6B.6. Remedies. 18
6B.7. Limitation of Guaranty. 18
SECTION 7. PAYMENT OF CERTAIN EXPENSES. 19
7.1. Transaction Expenses. 19
7.2. Brokers' Fees. 19
7.3. Certain Fees and Expenses. 19
7.4. [Intentionally Reserved]. 20
7.5. Administrative and Up Front Fees. 20
SECTION 8. OTHER COVENANTS AND AGREEMENTS. 20
8.1. Cooperation with Lessee. 20
8.2. Covenants of the Lessor. 21
8.3. Credit Party Covenants, Consent and Acknowledgment. 23
8.4. Sharing of Certain Payments. 25
8.5. Grant of Easements, etc. 26
8.6. Appointment by the Agent, the Lenders and the Lessor. 26
8.7. Collection and Allocation of Payments and Other Amounts. 27
8.8. Release of Properties, etc. 30
8.9. Lessee. 30
8.10. Distribution of Proceeds from the Properties. 30
8.11. Limitation of Lessor's Obligations. 31
8.12. No Representations or Warranties as to the Property or
Operative Agreements. 32
8.13. Reliance; Advice of Counsel. 32
8.14. Delayed Recordation of Certain Memoranda of the
Lease and Certain Lease Supplements. 33
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT. 33
9.1. The Lessee's Credit Agreement Rights. 33
9.2. [Intentionally Reserved]. 33
SECTION 10. TRANSFER OF INTEREST. 33
10.1. Restrictions on Transfer. 33
10.2. Effect of Transfer. 36
SECTION 11. INDEMNIFICATION. 36
11.1. General Indemnity. 36
11.2. General Tax Indemnity. 39
11.3. Increased Costs, Illegality, etc. 43
11.4. Funding/Contribution Indemnity. 45
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY,
ETC. 46
SECTION 12. MISCELLANEOUS. 46
12.1. Survival of Agreements. 46
12.2. Notices. 47
12.3. Counterparts. 48
12.4. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters. 49
12.5. Headings, etc. 49
12.6. Parties in Interest. 49
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
VENUE. 49
12.8. Severability. 50
12.9. Liability Limited. 50
12.10. Rights of the Credit Parties. 51
12.11. Further Assurances. 51
12.12. Calculations under Operative Agreements. 52
12.13. Confidentiality. 52
12.14. Financial Reporting/Tax Characterization. 53
12.15. Set-off. 53
12.16. Approval of Exhibits. 54
12.17. Filing of Security Documents. 54
SCHEDULE 1 - Repayment of Tranche B Loans
EXHIBITS
A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4
B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j)
C - [Intentionally Reserved]
D- Form of Secretary's Certificate - Section 5.3(x)
E - Form of Officer's Certificate - Section 5.3(z)
F - Form of Secretary's Certificate - Section 5.3(aa)
G - Form of Outside Counsel Opinion for the Lessor - Section 5.3(bb)
H - Form of Outside Counsel Opinion for the Lessee - Section 5.3(cc)
I - [Intentionally Reserved]
J - [Intentionally Reserved]
K - Description of Material Litigation - Section 6.2(d)
L - State of Incorporation/Formation and Principal Place of Business of Each
Guarantor - Section 6.3(i)
M - Property Cost Certificate
N - Intercreditor Agreement
Appendix A - Rules of Usage and Definitions
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of August 1, 2003 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among THE PEP BOYS - MANNY, MOE & ▇▇▇▇ a
Pennsylvania corporation, THE PEP BOYS ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ OF CALIFORNIA, a
California corporation and PEP BOYS - MANNY, MOE & ▇▇▇▇ OF DELAWARE, INC.,
a Delaware corporation (jointly and severally, the "Lessee"); THE PEP BOYS -
MANNY, MOE & ▇▇▇▇ and the various parties hereto from time to time as
guarantors (subject to the definition of Guarantors in Appendix A hereto,
individually, a "Guarantor" and collectively, the "Guarantors"); WACHOVIA
DEVELOPMENT CORPORATION, a North Carolina corporation, (the "Borrower" or the
"Lessor"); the various banks and other lending institutions which are parties
hereto from time to time as lenders (subject to the definition of Lenders in
Appendix A hereto, individually, a "Lender" and collectively, the "Lenders");
and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as the
agent for the Lessor and the Lenders and respecting the Security Documents, as
the agent for the Secured Parties (in such capacity, the "Agent"). Capitalized
terms used but not otherwise defined in this Agreement shall have the meanings
set forth in Appendix A hereto.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:
SECTION 1. THE FINANCING.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, the
Financing Parties have agreed to (i) make the Lessor Advance (in the case of
the Lessor) and (ii) refinance the Existing Notes (in the case of the Lenders)
on the Closing Date pursuant to the terms of this Agreement, the Credit
Agreement, and the other Operative Agreements in an aggregate principal amount
of up to the aggregate amount of the Commitments in order for the Lessor to
acquire (through an assumption of the obligations under the Existing Notes and
an assignment of the Existing Holders Certificates, a payoff of a portion of
the loans evidenced by the Existing Notes, a termination of the Trust, an
assignment to Lessor of all of the Trust's right, title and interest in and
to the Property and an assumption of the Trust's obligations under the other
Existing Operative Agreements) title to the Property, and pay certain
Transaction Expenses in connection therewith and in consideration of the
refinancing of the loans evidenced by the Existing Notes, the Lessor will
issue the Notes. The obligations of the Lessee to the Lessor and the
obligations of the Borrower to the Lenders under the Operative Agreements
shall be secured by the Property.
SECTION 2. CONTINUATION OF LEASE FACILITY.
Each party hereto agrees that the Operative Agreements amend, restate
and replace the Existing Operative Agreements. Each of the parties hereto
agrees that (a) the proceeds from the Lessor Advance shall be used by the
Lessor to purchase and receive an assignment of the holder certificates
outstanding pursuant to the Existing Operative Agreements (the "Existing Holder
Certificates") and to prepay a portion of the notes outstanding pursuant
to the Existing Operative Agreements (the "Existing Notes"), (b) the Lenders
will purchase and receive an assignment of the Existing Notes and shall
refinance the loans evidenced thereby pursuant to the terms of the Credit
Agreement and the other Operative Agreements, (c) the obligations owing to the
Lessor with respect to the Lessor Advance shall be evidenced by Section 5B of
this Agreement and pursuant to the terms and conditions of the Operative
Agreements and (d) the Operative Agreements shall amend and restate the
Existing Operative Agreements. In accordance with the Operative Agreements,
the parties to this Agreement agree that the Lessor is permitted to (i) acquire
the beneficial interest in the Trust through an assumption of the obligations
under the Existing Notes and an assignment of the Existing Holder Certificates
and an assumption of the Trust's obligations under the other Existing Operative
Agreements, (ii) take all necessary action to evidence the Lessor's ownership
of the Property, including terminating the Trust and (iii) enter into and
perform its obligations pursuant to the Assignment and Recharacterization
Agreement.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. Operative Agreements.
On the Closing Date, each of the respective parties hereto and thereto
shall execute and deliver this Agreement, the Lease, the Credit Agreement, the
Notes, the Security Agreement, each applicable Mortgage Instrument and such
other documents, instruments, certificates and opinions of counsel as agreed to
by the parties hereto.
3.2. Lease of Property; Refinance of Indebtedness.
On the Closing Date and subject to the terms and conditions of this
Agreement (a) the Lenders will refinance the Existing Notes in accordance with
Section 5 of this Agreement and the terms and provisions of the Credit
Agreement, (b) the Lessor will make a Lessor Advance in accordance with
Sections 5 and 5B of this Agreement, (c) the Lessor shall acquire, through an
assumption of the obligations under the Existing Notes and an assignment of the
Existing Holder Certificates, a termination of the Trust, and an assumption of
the Trust's obligations under the Existing Operative Agreements, title to each
applicable Property, identified by the Lessee, in each case pursuant to a ▇▇▇▇
of Sale and Deed and grant the Agent (on behalf of the Secured Parties) a lien
on the Property by execution of the required Security Documents, (d) the Agent,
the Lessee and the Lessor shall execute and deliver an amended and restated
Lease Supplement relating to the Property acquired as of the Closing Date and
(e) the Term shall commence with respect to the Property.
SECTION 4. THE CLOSINGS.
All documents and instruments required to be delivered on the Closing
Date shall be delivered at the offices of ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇ PLLC, Charlotte,
North Carolina, or at such other location as may be determined by the Lessor,
the Agent and the Lessee.
Lessee shall deliver to the Agent an irrevocable requisition (a
"Requisition") in accordance with Section 5.2, in the form attached hereto as
EXHIBIT A or in such other form as is satisfactory to the Agent, in its
reasonable discretion, in connection with (a) the Transaction Expenses and (b)
the Loans and the Lessor Advances to be extended on the Closing Date.
SECTION 5. CLOSING CONDITIONS.
5.1. General.
To the extent funds have been made available to or by the Lessor pursuant to
this Section 5, the Lessor will use such funds in accordance with the terms and
conditions of this Agreement and the other Operative Agreements (i) at the
direction of Lessee to acquire title to the Property in accordance with the
terms of this Agreement and the other Operative Agreements, and (ii) to pay
Transaction Expenses, fees, expenses and other disbursements payable by the
Lessor under Section 7.
5.2. Procedures for Funding.
(a) Lessee shall deliver to the Agent, prior to 12:00 Noon
Charlotte, North Carolina time at least three (3) Business Days prior to the
Closing Date, a Requisition as described in Section 4 hereof and Agent shall
promptly provide copies thereof to Lenders.
(b) Subject to the satisfaction of the conditions precedent
set forth in Section 5.3 on the Closing Date (i) the Lenders shall refinance
the Loans based on their respective Lender Commitments to the Lessor in an
aggregate amount equal to ninety?five percent (95%) of the Requested Funds
specified in the Requisition (ratably between the Tranche A Lenders and the
Tranche B Lenders with the Tranche A Lenders funding seventy?five percent (75%)
of the Requested Funds and the Tranche B Lenders funding twenty percent (20%)
of the Requested Funds), up to an aggregate principal amount equal to the
aggregate of the Lender Commitments; (ii) the Lessor shall make a Lessor
Advance based on its Lessor Commitment in an aggregate amount equal to five
percent (5%) of the amounts requested in the Requisition, up to the aggregate
advanced amount equal to the aggregate of the Lessor Commitment; and (iii) the
total amount of such Loans assumed and the Lessor Advance made on the Closing
Date shall be used by the Lessor to acquire title to the Property, prepay a
portion of the loans evidenced by the Existing Notes and to pay the Transaction
Expenses related thereto.
(c) [Intentionally Reserved]
(d) All Operative Agreements which are to be delivered to
the Lessor, the Agent or the Lenders shall be delivered to the Agent, on behalf
of the Lessor, the Agent or the Lenders, and such items (except for the Notes,
with respect to which there shall be only one original) shall be delivered with
originals sufficient for the Lessor, the Agent and each Lender. All other
items which are to be delivered to the Lessor, the Agent or the Lenders shall
be delivered to the Agent, on behalf of the Lessor, the Agent or the Lenders,
and such other items shall be held by the Agent. To the extent any such other
items are requested in writing from time to time by the Lessor or any Lender,
the Agent shall provide a copy of such item to the party requesting it.
5.3. Conditions Precedent for the Lessor, the Agent and the Lenders Relating
to the Loans and Lessor Advance on the Closing Date.
The obligations on the Closing Date, of the Lessor, the Agent and the Lenders
to enter into the transactions contemplated by this Agreement, including
without limitation the obligation to execute and deliver the applicable
Operative Agreements to which each is a party are subject to the satisfaction
or waiver of the following conditions precedent on or prior to the Closing
Date, as the case may be:
(a) the correctness of the representations and warranties
of the parties to this Agreement contained herein, in each of the other
Operative Agreements and each certificate delivered pursuant to any Operative
Agreement (including without limitation the Incorporated Representations and
Warranties);
(b) the performance by the parties to this Agreement of
their respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to the Closing Date;
(c) the Agent shall have received a fully executed
counterpart copy of the Requisition, appropriately completed;
(d) title to each such Property shall conform to the
representations and warranties set forth in Section 6.2(l) hereof;
(e) the relevant Lessee shall have delivered to the Agent
a good standing certificate for Lessee in the state where each Property is
located.
(f) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and no
Default or Event of Default under any of the Operative Agreements will have
occurred after giving effect to the Advance requested by the Requisition;
(g) Lessee shall have delivered to the Agent title
insurance commitments to issue policies respecting each such Property, with
such endorsements as the Agent deems reasonably necessary, in favor of the
Lessor and the Agent from a title insurance company reasonably acceptable to
the Agent, but only with such title exceptions thereto as are acceptable to
the Agent;
(h) Lessee shall have delivered to the Agent an
environmental insurance policy providing coverage for each such Property, in
form and substance reasonably acceptable to the Agent;
(i) Lessee shall have delivered to the Agent a survey (with
a flood hazard certification) respecting each Property prepared by (i) an
independent recognized professional acceptable to the Agent and (ii) in a
manner and including such information as is required by the Agent;
(j) Lessee shall have caused to be delivered to the Agent a
legal opinion in the form attached hereto as EXHIBIT B or in such other form as
is acceptable to the Agent with respect to local law real property issues
respecting the state in which each such Property is located addressed to the
Lessor, the Agent and the Lenders, from counsel located in the state where each
such Property is located, prepared by counsel acceptable to the Agent and a
separate flood hazard certificate respecting the Property prepared by an
independent recognized professional acceptable to the Agent;
(k) Each of the parties hereto shall agree to the Loan
Property Cost, the Lessor Property Cost and the Property Cost for each Property
and such amounts for each Property shall be contained on Exhibit M attached
hereto.
(l) Lessee shall have delivered to the Agent invoices for,
or other reasonably satisfactory evidence of, the various Transaction Expenses
and other fees, expenses and disbursements referenced in Section 7.1 of this
Agreement, as appropriate;
(m) Lessee shall have caused to be delivered to the Agent
Mortgage Instruments (in such form as is acceptable to the Agent, with
revisions as necessary to conform to applicable state law), Lessor Financing
Statements and Lender Financing Statements respecting each such Property, all
fully executed and in recordable form;
(n) Lessee shall have delivered to the Agent with respect
to each such Property a Lease Supplement and a memorandum (or short form lease)
regarding the Lease and such Lease Supplement (such memorandum or short form
lease to be in the form attached to the Lease as EXHIBIT B or in such other
form as is acceptable to the Agent, with modifications as necessary to conform
to applicable state law, and in form suitable for recording);
(o) Lessee shall have caused all of the conditions
precedent to the initial loans under the Lessee Credit Agreement to be
satisfied or waived in writing;
(p) [Intentionally Reserved];
(q) Lessee shall have provided evidence to the Agent proof
of insurance with respect to the Property as provided in the Lease;
(r) Lessee shall have caused an Appraisal regarding the
Property to be provided to the Agent from an appraiser selected by the Agent
and the other Financing Parties and the aggregate amount of such Appraisal
shall be acceptable to the Agent;
(s) Lessee shall cause (i) Uniform Commercial Code lien
searches, tax lien searches and judgment lien searches regarding the Lessee to
be conducted (and copies thereof to be delivered to the Agent) in such
jurisdictions as determined by the Agent by a nationally recognized search
company acceptable to the Agent and (ii) the liens referenced in such lien
searches which are objectionable to the Agent to be either removed or otherwise
handled in a manner reasonably satisfactory to the Agent;
(t) all taxes, fees and other charges in connection with
the execution, delivery, recording, filing and registration of the Operative
Agreements and/or documents related thereto shall have been paid or provisions
for such payment shall have been made to the reasonable satisfaction of the
Agent;
(u) [Intentionally Reserved];
(v) since the date of the most recent audited financial
statements (as delivered pursuant to the requirements of the Lessee Credit
Agreement) of the Credit Parties (on a consolidated basis), there shall not
have occurred any event, condition or state of facts which shall have or could
reasonably be expected to have a Material Adverse Effect, other than as
specifically contemplated by the Operative Agreements;
(w) [Intentionally Reserved];
(x) the Agent shall have received (i) a certificate of the
Secretary or an Assistant Secretary of each Credit Party, dated as of the
Closing Date, in the form attached hereto as EXHIBIT D or in such other form as
is acceptable to the Agent attaching and certifying as to (1) the resolutions
of the Board of Directors of such Credit Party duly authorizing the execution,
delivery and performance by such Credit Party of each of the Operative
Agreements to which it is or will be a party, (2) the articles of incorporation
of such Credit Party certified as of a recent date by the Secretary of State of
its state of incorporation and its by-laws and (3) the incumbency and signature
of persons authorized to execute and deliver on behalf of such Credit Party the
Operative Agreements to which it is or will be a party and (ii) a good standing
certificate (or local equivalent) from the respective states where such Credit
Party is incorporated and where the principal place of business of such Credit
Party is located as to its good standing in each such state. To the extent
any Credit Party is a partnership, a limited liability company or is otherwise
organized, such Person shall deliver to the Agent (in form and substance
satisfactory to the Agent) as of the Closing Date (A) a certificate regarding
such Person and any corporate general partners covering the matters described
in EXHIBIT D and (B) a good standing certificate, a certificate of limited
partnership or a local equivalent of either the foregoing as applicable;
(y) [Intentionally Reserved];
(z) the Agent shall have received an Officer's Certificate
of the Lessor dated as of the Closing Date in the form attached hereto as
EXHIBIT E or in such other form as is reasonably acceptable to the Agent,
stating that (i) each and every representation and warranty of the Lessor
contained in the Operative Agreements to which it is a party is true and
correct on and as of the Closing Date, (ii) each Operative Agreement to which
the Lessor is a party is in full force and effect with respect to it and (iii)
the Lessor has duly performed and complied in all material respects with all
covenants, agreements and conditions contained herein or in any Operative
Agreement required to be performed or complied with by it on or prior to the
Closing Date;
(aa) the Agent shall have received (i) a certificate of
the Secretary or Assistant Secretary of the Lessor in the form attached hereto
as EXHIBIT F or in such other form as is acceptable to the Agent, attaching and
certifying as to (A) the signing resolutions duly authorizing the execution,
delivery and performance by the Lessor of each of the Operative Agreements to
which it is or will be a party, (B) its articles of incorporation, certified as
of a recent date by the Secretary of State of North Carolina, and its by-laws
and (C) the incumbency and signature of persons authorized to execute and
deliver on its behalf the Operative Agreements to which it is a party and (ii)
a good standing certificate from the Secretary of State of North Carolina;
(bb) counsel for the Lessor acceptable to the Agent shall
have issued to the Lessee, the Lenders and the Agent its opinion in the form
attached hereto as EXHIBIT G or in such other form as is reasonably acceptable
to the Agent;
(cc) Lessee shall have caused to be delivered to the Agent
a legal opinion in the form attached hereto as EXHIBIT H or in such other form
as is reasonably acceptable to the Agent, addressed to the Lessor, the Agent
and the Lenders, from counsel acceptable to the Agent; and
(dd) no Casualty and no Condemnation respecting the Property
shall have occurred and no action shall be pending or threatened by a
Governmental Authority to initiate a Condemnation with respect to the Property.
5.4. [Intentionally Reserved].
5.5. [Intentionally Reserved].
5.6. [Intentionally Reserved].
5.7. [Intentionally Reserved].
5.8. Payments.
All payments of principal, interest, Lessor Advances, Lessor Yield and
other amounts to be paid by Lessee under this Agreement or the Lease
(including, without limitation, Rent, damages, payments in respect of the
Termination Value and other amounts) or any other Operative Agreements
(excluding Excepted Payments which shall be paid directly to the party to whom
such payments are owed) shall be paid by or on behalf of Lessee to the Agent at
the office designated by the Agent from time to time in Dollars and in
immediately available funds, without setoff, deduction, or counterclaim.
Subject to the definition of "Interest Period" in Appendix A attached hereto,
whenever any payment under this Agreement or any other Operative Agreements
shall be stated to be due on a day that is not a Business Day, such payment
may be made on the next succeeding Business Day, and such extension of time in
such case shall be included in the computation of interest, Lessor Yield and
fees payable pursuant to the Operative Agreements, as applicable and as the
case may be.
SECTION 5B. LESSOR ADVANCE
5B.1. Procedure for Lessor Advance.
(a) Upon receipt from Lessee by the Agent of the Requisition, and subject
to the terms and conditions of the Participation Agreement, the Agent shall
request from Lessor the Lessor Advance and Lessor shall make such Lessor
Advance under its Lessor Commitment, on the Closing Date, pursuant to Section 5
hereof.
(b) Upon receipt of any such notice delivered pursuant to Section 5B.1(a),
Lessor shall make the amount of its Lessor Advance available to the Agent at
the office of the Agent referred to in Section 12.2 of the Participation
Agreement (or at such other address as may be identified by the Agent from time
to time) on the Closing Date in funds immediately available.
5B.2. Lessor Yield.
(a) Lessor Advances shall bear yield calculated at the rate of Lessor Yield
applicable from time to time. Payment of Lessor Yield shall be made in arrears
on each Scheduled Interest Payment Date occurring after the Closing Date or as
otherwise provided herein or in Section 2.6 of the Credit Agreement or Section
8.7 of the Participation Agreement.
(b) If (i) an Event of Default has occurred and is continuing or (ii) all
or a portion of Lessor Yield shall not be received by the Lessor when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount and the Lessor Advance shall, without limiting the rights of the Lessor
hereunder or under any Operative Agreement, bear interest at the Lessor Overdue
Rate, in each case from the date of nonpayment until all such overdue amounts
are paid in full and no Event of Default is continuing (whether after or before
judgment) and all such amounts shall be paid upon demand.
5B.3. Scheduled Return of Lessor Advance.
The outstanding amount of the Lessor Advance shall be due in full on
the Maturity Date. On the Expiration Date, subject to the terms of the
Participation Agreement, the Lessor (or the Agent on behalf of the Lessor)
shall receive from the Lessee as Basic Rent under the Lease, the outstanding
amount of the Lessor Advance then due, together with all accrued but unpaid
Lessor Yield and all other amounts due to Lessor under the Operative Agreements.
5B.4. Early Return of Lessor Advance.
(a) Subject to Sections 11.2(e), 11.3 and 11.4 of the Participation
Agreement, the Lessor Advance may be prepaid by the Lessee as a payment of
Supplemental Rent, in whole or in part, without premium or penalty, upon at
least three (3) Business Days' irrevocable notice to the Agent, specifying the
date and amount of prepayment. Upon receipt of such notice, the Agent shall
promptly notify the Lessor thereof. If such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein. Amounts prepaid shall not be re-advanced.
(b) If on any date the Agent or the Lessor shall receive any
payment in respect of (i) any Casualty, Condemnation or Environmental Violation
pursuant to Sections 15.1(a) or 15.1(g) or Article XVI of the Lease (excluding
any payments in respect thereof which are payable to Lessee in accordance with
the Lease), or (ii) the Termination Value of any Property in connection with
the delivery of a Termination Notice pursuant to Article XVI of the Lease, or
(iii) the Termination Value of any Property or such other applicable amount in
connection with the exercise of a Purchase Option under Article XX of the Lease
or the exercise of the option of the Lessor to transfer the Properties to the
Lessee pursuant to Section 20.3 of the Lease then in each case, the Lessor
shall receive proceeds in accordance with Section 8.7(b) hereof.
(c) Each prepayment of the Lessor Advance pursuant to Section 5B.4
(a) shall be allocated to reduce the respective Lessor Property Costs of all
Properties pro rata. Each prepayment of the Lessor Advance pursuant to Section
5B.4(b) shall be allocated to reduce the Lessor Property Cost of the Property
or Properties subject to the respective Casualty, Condemnation, Environmental
Violation, termination, purchase, transfer or other circumstance giving rise
to such prepayment. Any amounts applied to reduce the Lessor Property Cost
of any Property pursuant to this paragraph (c) shall also be applied to reduce
the Loan Property Cost of such Property until such Loan Property Cost has been
reduced to zero (0).
5B.5. Computation of Yield.
(a) Lessor Yield shall be calculated on the basis of a year of
three hundred sixty (360) days for the actual days elapsed. Any change in the
Lessor Yield resulting from a change in the ABR or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective.
(b) Pursuant to Section 12.12 of the Participation Agreement, the
calculation of Lessor Yield under this Section 5B.5 shall be made by the Agent.
Each determination of a Lessor Yield rate by the Agent shall be conclusive and
binding on the Lessor in the absence of manifest error and unless otherwise
specified, such determination shall be effective as of the first day of the
month.
(c) If the Eurodollar Rate cannot be determined by the Agent in the
manner specified in the definition of the term "Eurodollar Rate", the Agent
shall give or cause to be given telecopy or telephonic notice thereof to the
Lessor as soon as practicable. Commencing on the Scheduled Interest Payment
Date next occurring after the delivery of such notice and continuing until such
time as the Eurodollar Rate can be determined by the Agent in the manner
specified in the definition of such term, all outstanding Lessor Advances shall
bear a yield at the ABR plus the Applicable Percentage. Until such time as the
Eurodollar Rate can be determined by the Agent in the manner specified in the
definition of such term, no further Eurodollar Lessor Advances shall be made or
shall be continued as such at the end of the then current Interest Period nor
shall the Lessor have the right to convert ABR Lessor Advances to Eurodollar
Lessor Advances.
5B.6. Conversion and Continuation Options.
(a) Subject to the restrictions set forth in Section 5B.1, any
Eurodollar Lessor Advance shall be continued as such upon the expiration of the
then current Interest Period, provided, that no Eurodollar Lessor Advance may
be continued as such after the date that is one (1) month prior to the Maturity
Date, provided, further, no Eurodollar Lessor Advance may be continued as such
if an Event of Default has occurred and is continuing as of the last day of the
Interest Period for such Eurodollar Lessor Advance, and provided, further, if
such continuation is not permitted pursuant to the preceding proviso or
otherwise, the Lessor Advance shall automatically be converted to an ABR Lessor
Advance on the last day of such then expiring Interest Period.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. Representations and Warranties of the Borrower.
The Borrower represents and warrants to each of the other parties
hereto that as of the date hereof (except to the extent any such representation
or warranty relates to an earlier date):
(a) It is a corporation duly organized and validly existing and in good
standing under the laws of the State of North Carolina, is qualified to do
business in each jurisdiction necessary to permit the Borrower to own and lease
the Property and perform its obligations under each of the Operative Agreements
and has the power and authority to enter into and perform its obligations under
each of the Operative Agreements to which it is or will be a party and each
other agreement, instrument and document to be executed and delivered by it on
or before such Closing Date in connection with or as contemplated by each such
Operative Agreement to which the Borrower is or will be a party. Lessor is a
multi-purpose Wachovia Wholly-Owned Entity;
(b) The execution, delivery and performance of each Operative Agreement to
which it is or will be a party has been duly authorized by all necessary action
on its part and neither the execution and delivery thereof, nor the
consummation of the transactions contemplated thereby, nor compliance by it
with any of the terms and provisions thereof (i) does or will require any
approval or consent of any trustee or holders of any of its indebtedness or
obligations or any other consent or approval that has not previously been
obtained, (ii) does or will contravene any Legal Requirement, (iii) does or
will contravene or result in any breach of or constitute any default under, or
result in the creation of any Lien upon any of its property under, (A) its
charter or by-laws, or (B) any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement or other
agreement or instrument to which it is a party or by which it or its properties
may be bound or affected, which contravention, breach, default or Lien under
clause (B) could reasonably be expected to materially and adversely affect its
ability to perform its obligations under the Operative Agreements to which it
is a party or would question the validity or enforceability of any of the
Operative Agreements to which it is or will become a party or (iv) does or will
require any Governmental Action by any Governmental Authority;
(c) Each Operative Agreement to which the Borrower is or will be a party
have been, or on or before such Closing Date will be, duly executed and
delivered by the Borrower, and each Operative Agreement to which the Borrower
is a party constitutes, or upon execution and delivery will constitute, a
legal, valid and binding obligation enforceable against the Borrower in
accordance with the terms thereof;
(d) There is no action or proceeding pending or, to its knowledge,
threatened to which it is or will be a party before any Governmental Authority
that, if adversely determined, would materially and adversely affect its
ability to perform its obligations under the Operative Agreements to which it
is a party or would question the validity or enforceability of any of the
Operative Agreements to which it is or will become a party;
(e) The Borrower has not assigned or transferred any of its right, title or
interest in or under the Lease or its interest in the Property or any portion
thereof, except in accordance with the Operative Agreements;
(f) No Default or Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative Agreements, the
proceeds of the Loans and the Lessor Advance shall not be applied by the
Borrower for any purpose other than the purchase and/or lease of the Property
or to pay Transaction Expenses, payable by the Lessor under Section 7.1 of
this Agreement;
(h) Neither the Borrower nor any Person authorized by the Borrower to act
on its behalf has offered or sold any interest in the Borrower's Interest or
the Notes, or in any similar security relating to the Property, or in any
security the offering of which for the purposes of the Securities Act would be
deemed to be part of the same offering as the offering of the aforementioned
securities to, or solicited any offer to acquire any of the same from, any
Person other than, in the case of the Notes, the Agent, the Lenders and twenty-
six (26) other institutional investors and neither the Borrower nor any Person
authorized by the Borrower to act on its behalf will take any action which
would subject, as a direct result of such action alone, the issuance or sale of
any interest in the Borrower's Interest or the Notes to the provisions of
Section 5 of the Securities Act or require the qualification of any Operative
Agreement under the Trust Indenture Act of 1939, as amended;
(i) The location of the Borrower for purposes of the UCC is North Carolina.
The Borrower's principal place of business, chief executive office and office
where the documents, accounts and records relating to the transactions
contemplated by this Agreement and each other Operative Agreement are kept are
located at One Wachovia Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
(j) The Borrower is not engaged principally in, and does not have as one
(1) of its important activities, the business of extending credit for the
purpose of purchasing or carrying any margin stock (within the meaning of
Regulation U), and no part of the proceeds from the Loans or the Lessor Advance
will be used by it to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock or for
any purpose that violates, or is inconsistent with, the provisions of
Regulations T, U, or X;
(k) The Borrower is not an "investment company" or a company controlled by
an "investment company" within the meaning of the Investment Company Act;
(l) The Property is free and clear of all Lessor Liens attributable to the
Lessor;
(m) The Borrower's true legal name as registered in the jurisdiction of its
organization is "Wachovia Development Corporation" and its Federal Employer
Identification Number is 56?1610288. During the five (5) year period
immediately prior to the Closing Date, the true legal name of the Borrower has
not been other than "Wachovia Development Corporation" or "First Union
Development Corporation". The Borrower does not use, or transact and has not
used, or transacted within the five (5) years immediately prior to the Closing
Date any business under, any trade name other than its current or prior legal
name referenced in the preceding sentence;
(n) The Borrower has filed all tax returns and all other material reports
that are required under applicable Law to be filed by them and has paid all
taxes or other charges of any Governmental Authority due pursuant to such
returns or other reports, except for any taxes or other charges that are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves have been set aside on the books and records of the Borrower;
6.2. Representations and Warranties of Each Credit Party.
Each Credit Party represents and warrants to each of the other parties
hereto that as of the date hereof and with respect to specific paragraphs, as
of the dates referenced therein:
(a) The Incorporated Representations and Warranties are
true and correct (unless such relate solely to an earlier point in time) and
the Lessee has delivered to the Agent the financial statements and other
reports referred to in Section 9.6 of the Lessee Credit Agreement;
(b) (i) Each Lessee is a corporation duly organized and validly
existing and in good standing under the laws of the State set forth after its
name: The Pep Boys - Manny, Moe & ▇▇▇▇, a Pennsylvania corporation, The Pep
Boys ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ of California, a California corporation and Pep Boys -
Manny, Moe & ▇▇▇▇ of Delaware, Inc., a Delaware corporation and each Guarantor,
except The Pep Boys - Manny, Moe & ▇▇▇▇, is a corporation duly organized and
validly existing and in good standing under the laws of the State of Delaware
and each Credit Party has the power and authority to enter into and perform its
obligations under the Operative Agreements to which it is a party and has the
corporate power and authority to act as the Lessee or the Guarantor, as the
case may be, and to enter into and perform the obligations under each of the
other Operative Agreements to which it is a party or will be a party and each
other agreement, instrument and document to be executed and delivered by it on
or before such date in connection with or as contemplated by each such
Operative Agreement to which it is a party or will be a party;
(ii) The execution and delivery by each Credit Party of this
Agreement and the other applicable Operative Agreements as of the Closing Date
and the performance by each Credit Party of its respective obligations under
this Agreement and the other applicable Operative Agreements are within the
corporate, partnership or limited liability company (as the case may be) powers
of each Credit Party, have been duly authorized by all necessary corporate,
partnership or limited liability company (as the case may be) action on the
part of each Credit Party (including without limitation any necessary
shareholder action), have been duly executed and delivered, have received all
necessary governmental approval, and do not and will not (A) violate any Legal
Requirement which is binding on any Credit Party or any of its Subsidiaries,
(B) contravene or conflict with, or result in a breach of, any provision of the
Articles of Incorporation, By-Laws or other organizational documents of any
Credit Party or any of its Subsidiaries or of any agreement, indenture,
instrument or other document which is binding on any Credit Party or any of its
Subsidiaries or (C) result in, or require, the creation or imposition of any
Lien (other than pursuant to the terms of the Operative Agreements) on any
asset of any Credit Party or any of its Subsidiaries;
(c) This Agreement and the other applicable Operative
Agreements, executed prior to and as of such date by any Credit Party,
constitute the legal, valid and binding obligation of such Credit Party, as
applicable, enforceable against such Credit Party, as applicable, in accordance
with their terms. Each Credit Party has executed the various Operative
Agreements required to be executed by such Credit Party as of such date;
(d) There are no material actions, suits or proceedings
pending or, to our knowledge, threatened against any Credit Party in any court
or before any Governmental Authority (nor shall any order, judgment or decree
have been issued or proposed to be issued by any Governmental Authority to set
aside, restrain, enjoin or prevent the full performance of any Operative
Agreement or any transaction contemplated thereby) that have or could
reasonably be expected to have a Material Adverse Effect; provided, for
purposes of disclosure, the Credit Parties have described the litigation set
forth on EXHIBIT K;
(e) No Governmental Action by any Governmental Authority or
other authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person pursuant to any Legal Requirement,
contract, indenture, instrument or agreement or for any other reason is
required to authorize or is required in connection with (i) the execution,
delivery or performance of any Operative Agreement, (ii) the legality,
validity, binding effect or enforceability of any Operative Agreement, (iii)
the acquisition, ownership, completion, occupancy, operation, leasing or
subleasing of any Property or (iv) any Advance, in each case, except those
which have been obtained and are in full force and effect;
(f) Upon the execution and delivery of each Lease
Supplement to the Lease, (i) the Lessee will have unconditionally accepted
the Property subject to the Lease Supplement and will have a valid and
subsisting leasehold interest in such Property, subject only to the Permitted
Liens, and (ii) no offset will exist with respect to any Rent or other sums
payable under the Lease;
(g) Each Credit Party has duly performed and complied with
all covenants, agreements and conditions contained in this Agreement or in any
other Operative Agreement required to be performed or complied with by it on or
prior to the date of this Agreement;
(h) All information heretofore or contemporaneously
herewith furnished by each Credit Party or its Subsidiaries to the Agent, any
Lender or the Lessor for purposes of or in connection with this Agreement and
the transactions contemplated hereby is, and all information hereafter
furnished by or on behalf of each Credit Party or its Subsidiaries to the
Agent, any Lender or the Lessor pursuant hereto or in connection herewith will
be, true and accurate in every material respect on the date as of which such
information is dated or certified, and such information, taken as a whole, does
not and will not omit to state any material fact necessary to make such
information, taken as a whole, not misleading;
(i) The principal place of business, chief executive
office, location for purposes of the UCC and office of the Lessee where the
documents, accounts and records relating to the transactions contemplated by
this Agreement and each other Operative Agreement are kept are located at ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and the states of formation,
location for purposes of the UCC and the chief executive offices and principal
places of business of each other Credit Party are located at the places set
forth in EXHIBIT L;
(j) The representations and warranties of each Credit Party
set forth in any of the Operative Agreements are true and correct in all
material respects on and as of each such date as if made on and as of such
date. Each Credit Party is in all material respects in compliance with its
obligations under the Operative Agreements and there exists no Default or Event
of Default under any of the Operative Agreements which is continuing and which
has not been cured within any cure period expressly granted under the terms of
the applicable Operative Agreement or otherwise waived in accordance with the
applicable Operative Agreement. No Default or Event of Default will occur
under any of the Operative Agreements as a result of, or after giving effect
to, the Loans or the Lessor Advance requested by the Requisition on the date
of such Loans and Lessor Advance;
(k) [Intentionally Reserved];
(l) The Lessor has good and marketable fee simple title to
the Property subject only to (i) such Liens referenced in the title exceptions
on the title commitment (issued in connection with Section 5.3(g)) and
reasonably acceptable to the Agent on the Closing Date and (ii) subject to
Section 5.7, Permitted Liens after the Closing Date;
(m) No portion of any Property is located in an area
identified as a special flood hazard area by the Federal Emergency Management
Agency or other applicable agency, or if any such Property is located in an
area identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, then flood insurance has been
obtained for such Property in accordance with Section 14.2(b) of the Lease and
in accordance with the National Flood Insurance Act of 1968, as amended;
(n) Each Property complies with all Insurance Requirements
and all standards of Lessee with respect to similar properties owned by Lessee;
(o) Each Property complies with all Legal Requirements in
all material respects as of such date (including without limitation all zoning
and land use laws and Environmental Laws), except to the extent that failure to
comply therewith, individually or in the aggregate, shall not have and could
not reasonably be expected to have a Material Adverse Effect; and
(p) All utility services and facilities necessary for the
operation of the Improvements and the operation of the Equipment regarding each
Property (including without limitation gas, electrical, water and sewage
services and facilities) are available at the applicable Land.
SECTION 6B. GUARANTY
6B.1. Guaranty of Payment and Performance.
Subject to Section 6B.7, each Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party the prompt payment and
performance of the Company Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) or when
such is otherwise to be performed; provided, notwithstanding the foregoing,
the obligations of the Guarantors under this Section 6B shall not constitute a
direct guaranty of the indebtedness of the Lessor evidenced by the Notes but
rather a guaranty of the Company Obligations arising under the Lease. This
Section 6B is a guaranty of payment and performance and not of collection and
is a continuing guaranty and shall apply to all Company Obligations whenever
arising. All rights granted to the Financing Parties under this Section 6B
shall be subject to the provisions of Section 8.2(h) and 8.6.
6B.2. Obligations Unconditional.
Each Guarantor agrees that the obligations of the Guarantors hereunder
are absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Operative Agreements, or
any other agreement or instrument referred to therein, or any substitution,
release or exchange of any other guarantee of or security for any of the
Company Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety, guarantor
or co-obligor, it being the intent of this Section 6B.2 that the obligations
of the Guarantors hereunder shall be absolute and unconditional under any and
all circumstances. Each Guarantor agrees that this Section 6B may be enforced
by the Financing Parties without the necessity at any time of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having recourse to the
Notes or any other of the Operative Agreements or any collateral, if any,
hereafter securing the Company Obligations or otherwise and each Guarantor
hereby waives the right to require the Financing Parties to proceed against the
Lessee or any other Person (including without limitation a co-guarantor) or to
require the Financing Parties to pursue any other remedy or enforce any other
right. Each Guarantor further agrees that it hereby waives any and all right
of subrogation, indemnity, reimbursement or contribution against the Lessee or
any other Guarantor of the Company Obligations for amounts paid under this
Section 6B until such time as the Loans, Lessor Advance, accrued but unpaid
interest, accrued but unpaid Lessor Yield and all other amounts owing under the
Operative Agreements have been paid in full. Without limiting the generality
of the waiver provisions of this Section 6B, each Guarantor hereby waives any
rights to require the Financing Parties to proceed against the Lessee or any
co-guarantor or
to require Lessor to pursue any other remedy or enforce any other right,
including without limitation, any and all rights under N.C. Gen. Stat. 26-7
through 26-9. Each Guarantor further agrees that nothing contained herein
shall prevent the Financing Parties from suing on any Operative Agreement or
foreclosing any security interest in or Lien on any collateral, if any,
securing the Company Obligations or from exercising any other rights available
to it under any Operative Agreement, or any other instrument of security, if
any, and the exercise of any of the aforesaid rights and the completion of any
foreclosure proceedings shall not constitute a discharge of any Guarantor's
obligations hereunder; it being the purpose and intent of each Guarantor that
its obligations hereunder shall be absolute, independent and unconditional
under any and all circumstances; provided that any amounts due under this
Section 6B which are paid to or for the benefit of any Financing Party shall
reduce the Company Obligations by
a corresponding amount (unless required to be rescinded at a later date).
Neither any Guarantor's obligations under this Section 6B nor any remedy for
the enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or limitation
of the liability of the Lessee or by reason of the bankruptcy or insolvency of
the Lessee. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Company Obligations and notice of or proof
of reliance by any Financing Party upon this Section 6B or acceptance of this
Section 6B. The Company Obligations shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Section 6B. All dealings between the Lessee and any of the
Guarantors, on the one hand, and the Financing Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Section 6B.
6B.3. Modifications.
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Company Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Company
Obligations or the properties subject thereto; (c) the time or place of payment
of the Company Obligations may be changed or extended, in whole or in part, to
a time certain or otherwise, and may be renewed or accelerated, in whole or in
part; (d) the Lessee and any other party liable for payment under the Operative
Agreements may be granted indulgences generally; (e) any of the provisions of
the Notes or any of the other Operative Agreements may be modified, amended or
waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Lessee or any other party liable for the payment of the
Company Obligations or liable upon any security therefor may be released, in
whole or in part, at, before or after the stated, extended or accelerated
maturity of the Company Obligations, all without notice to or further assent by
such Guarantor, which shall remain bound thereon, notwithstanding any such
exchange, compromise, surrender, extension, renewal, acceleration,
modification, indulgence or release.
6B.4. Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Loans and Lessor Advances to the
Lessee by the Lenders and the Lessor pursuant to the terms of the Operative
Agreements; (b) presentment and demand for payment or performance of any of the
Company Obligations; (c) protest and notice of dishonor or of default with
respect to the Company Obligations or with respect to any security therefor;
(d) notice of any Financing Party obtaining, amending, substituting for,
releasing, waiving or modifying any security interest, lien or encumbrance, if
any, hereafter securing the Company Obligations, or any Financing Party's
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; and (e) all other notices to which such
Guarantor might otherwise be entitled. Notwithstanding anything to the
contrary herein, each Guarantor's payments hereunder shall be due five (5)
Business Days after written demand by the Agent for such payment (unless the
Company Obligations are automatically accelerated pursuant to the applicable
provisions of the Operative Agreements in which case the Guarantors' payments
shall be automatically due).
6B.5. Reinstatement.
The obligations of the Guarantors under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Company Obligations is
rescinded or must be otherwise restored by any holder of any of the Company
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
each Financing Party on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by any
Financing Party in connection with such rescission or restoration, including
without limitation any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
6B.6. Remedies.
The Guarantors agree that, as between the Guarantors, on the one hand,
and each Financing Party, on the other hand, the Company Obligations may be
declared to be forthwith due and payable as provided in the applicable
provisions of the Operative Agreements (and shall be deemed to have become
automatically due and payable in the circumstances provided therein)
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Company Obligations from becoming automatically
due and payable) as against any other Person and that, in the event of such
declaration (or such Company Obligations being deemed to have become
automatically due and payable), such Company Obligations (whether or not due
and payable by any other Person) shall forthwith become due and payable by the
Guarantors in accordance with the applicable provisions of the Operative
Agreements.
6B.7. Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein or in
any of the other Operative Agreements, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including without limitation because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including without limitation
the Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Company
Obligations in full, regardless of the source of payment, the Guarantors'
obligations hereunder shall be deemed satisfied, discharged and terminated
other than indemnifications set forth herein that expressly survive.
6B.8. Payment of Amounts to the Agent.
Each Financing Party hereby instructs each Guarantor, and each
Guarantor hereby acknowledges and agrees, that until such time as the Loans
and the Lessor Advance are paid in full and the Liens evidenced by the Security
Agreement and the Mortgage Instruments have been released, any and all Rent
(excluding Excepted Payments which shall be payable to Lessor or other Person
as appropriate) and any and all other amounts of any kind or type under any of
the Operative Agreements due and owing or payable to any Person shall instead
be paid directly to the Agent (excluding Excepted Payments which shall be
payable to Lessor or other Person as appropriate) or as the Agent may direct
from time to time for allocation and distribution in accordance with the
procedures set forth in Section 8.7 hereof.
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. Transaction Expenses.
Except with respect to the matters addressed in the second paragraph of
this Section 7.1, the Lessor agrees on the Closing Date, to pay, or cause to be
paid, all Transaction Expenses arising from the transactions consummated on the
Closing Date, including without limitation all reasonable fees, expenses and
disbursements of the various legal counsels for the Lessor and the Agent in
connection with the transactions contemplated by the Operative Agreements, all
fees, taxes and expenses for the recording, registration and filing of
documents and all other reasonable fees, expenses and disbursements incurred in
connection with the Closing Date; provided, however, the Lessor shall pay such
amounts described in this Section 7.1 only from the proceeds of Loans and the
Lessor Advance. The Lessee agrees to timely pay all amounts referenced to in
this Section 7.1 to the extent not paid by the Lessor.
Notwithstanding the prior paragraph but subject to the following
proviso, the Lessor shall pay (with its own funds and not with proceeds of
Loans or the Lessor Advance) any filing fees payable to any Governmental
Authority (in a state where a Property is located) in order for the Lessor to
qualify to do business in such state and any fines, penalties and/or surcharges
imposed on the Lessor for failing to so qualify; provided, if a Default or
Event of Default shall have occurred and be continuing and the Lessor shall
determine that the Lessor should so qualify in order to pursue its rights and
remedies pursuant to the Operative Agreements or otherwise to protect the
interests of the Secured Parties in any of the Collateral, then the Lessor may
qualify to do business in each such state, as applicable, and the Lessee shall
pay all such filing fees, fines, penalties and/or surcharges referenced in this
sentence on behalf of the Lessor.
7.2. Brokers' Fees.
The Lessee agrees to pay or cause to be paid any and all brokers' fees,
if any, including without limitation any interest and penalties thereon, which
are payable in connection with the transactions contemplated by this Agreement
and the other Operative Agreements. Except fees due to Wachovia Securities,
Inc., no Financing Party has dealt with any broker in connection with the
transactions contemplated by the Operative Agreements.
7.3. Certain Fees and Expenses.
The Lessee agrees to pay or cause to be paid (a) all reasonable costs
and expenses (including without limitation, reasonable counsel fees and
expenses (but excluding, with respect to the Lessor, any filing fees payable to
any Governmental Authority in a state where a Property is located, in order for
the Lessor to qualify to do business in such state and, provided no Default or
Event of Default shall have occurred and be continuing, any fines, penalties or
surcharges imposed on Lessor for failing to qualify when it is later determined
by the applicable jurisdiction that Lessor should have qualified to do
business)) incurred by the Credit Parties, the Agent, the Lenders or the Lessor
in entering into any Lease Supplement, any of the Operative Agreements and any
future amendments, modifications, supplements, restatements and/or replacements
with respect to any of the Operative Agreements, whether or not such Lease
Supplement, amendments, modifications, supplements, restatements and/or
replacements are ultimately entered into, or giving or withholding of waivers
of consents hereto or thereto, which have been requested by any Credit Party,
the Agent, the Lenders or the Lessor, (b) all reasonable costs and expenses
(including without limitation, reasonable counsel fees and expenses) incurred
by the Credit Parties, the Agent, the Lenders or the Lessor in connection with
any exercise of remedies under any Operative Agreement or any purchase of any
Property by the Lessee or any third party and (c) all reasonable costs and
expenses (including without limitation, reasonable counsel fees and expenses)
incurred by the Credit Parties, the Agent, the Lenders or the Lessor in
connection with any transfer or conveyance of any Property, whether or not such
transfer or conveyance is ultimately accomplished.
7.4. [Intentionally Reserved].
7.5. Administrative and Up Front Fees.
The Lessee shall pay or cause to paid an administrative fee to the
Agent (for its individual account) and such other fees (for the account of the
person to whom it is owed) set forth in and on the terms and conditions set
forth in the engagement letter dated on or about May 13, 2003 addressed to ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President - Finance and Treasurer of The Pep Boys - Manny,
Moe & ▇▇▇▇ from ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director of the Agent (it being
understood that the Lessor and the Tranche B Lenders are to each receive an up
front fee on the Closing Date equal to the amount of their Commitment
multiplied by the percentage (expressed in basis points) set forth under the
heading "Lessor Advance" in the summary of terms and conditions attached to
such letter.
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. Cooperation with Lessee.
The Lenders, the Lessor and the Agent shall, at the expense of and to
the extent reasonably requested by Lessee (but without assuming additional
liabilities on account thereof and only to the extent such is acceptable to the
Lenders, the Lessor and the Agent in their reasonable discretion), cooperate
with Lessee in connection with Lessee satisfying its covenant obligations
contained in the Operative Agreements including without limitation at any time
and from time to time, promptly and duly executing and delivering any and all
such further instruments, documents and financing statements (and continuation
statements related thereto).
8.2. Covenants of the Lessor.
The Lessor hereby agrees that so long as this Agreement is in effect:
(a) The Lessor will not create or permit to exist at any
time, and will, at its own cost and expense, promptly take such action as may
be necessary duly to discharge, or to cause to be discharged, all Lessor Liens
on the Properties attributable to it; provided, however, that the Lessor shall
not be required to so discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently prosecuted so
long as such proceedings shall not materially and adversely affect the rights
of the Lessee under the Lease and the other Operative Agreements or involve any
material danger of impairment of the Liens of the Security Documents or of the
sale, forfeiture or loss of, and shall not interfere with the use or
disposition of, any Property or title thereto or any interest therein or the
payment of Rent;
(b) The Lessor shall give the Lessee prompt written notice (a "Lessor
Notice") following the Lessor's knowledge of an event that would cause the Fair
Market Sales Value of the Property to exceed forty-five percent (45%) of the
fair market value of all of the property owned by the Lessor, as determined in
accordance with Lessor's financial reporting under GAAP (the "Forty-five
Percent FMV Event"). In the event that a Lessor Notice is given, the Lessor,
upon receipt of a written request from the Lessee, may, at Lessor's option,
elect (but Lessor shall have no obligation) to either (i) obtain additional
assets such that the gross asset value of the Property does not constitute more
than forty-five percent (45%) of the total assets of the Lessor or (ii)
transfer its interests in some or all of the Properties to another Affiliate of
the Lessor such that the representations set forth in the Lessor Confirmation
Letter remain correct. In the event that Lessor is unable or does elect to
pursue either option (i)
or (ii) above, Lessee may require, upon providing prompt and timely written
notice to the Lessor, that the Lessor (i) obtain, at the Lessee's sole cost and
expense, a SAS 97?type letter reasonably acceptable to the Lessee from the
Lessor's auditor to certify that the Lessor is a voting interest entity as that
term is contemplated by FASB Interpretation No. 46 (to be renewed as
required), (ii) permit (and the Lessor shall so permit) Lessee to deliver a
Termination Notice with respect to certain of the Properties identified by
Lessee such that upon the purchase of such Properties by the Lessee under the
Lease, the remaining Fair Market Value of the Properties then subject to the
Lease is less than 45% of the fair market value of all property then owned by
Lessor, or (iii) transfer its interest in all but not less than all the
Property and its rights and obligations under the Operative Agreements (arising
from and after the date of such transfer) to an Eligible Lessor selected by the
Lessee upon payment to the Lessor of the outstanding Lessor Advance, all
accrued and unpaid Lessor Yield and all other amounts then due and owing the
Lessor under the Operative Agreements. Nothing relating to the circumstances
surrounding or the physical delivery of the Lessor Notice will in any way
inhibit or prohibit the Lessee's right to replace the Lessor pursuant to
Section 10.1(d). Notwithstanding the foregoing but without limiting Lessor's
obligation to provide the Lessor Notice, in no event will the Lessor be
required to disclose or provide access to any information to the extent that
such disclosure or access would violate any law applicable to the Lessor or its
Affiliates, including without limitation banking regulations applicable to
national banks, or result in a breach of the Lessor's or any Affiliate's
confidentiality policies or agreements. The parties hereto agree that the
Lessee and their auditors are the sole beneficiary of the matters addressed in
this Section 8.2(b);
(c) Upon the Lessee's providing three Business Days prior written request
during any calendar quarter, the Lessor shall provide to the Lessee at least
fifteen (15) days prior to the end of each calendar quarter and at least forty-
five (45) days prior to the end of each calendar year, a confirmed and updated
copy of the Lessor Confirmation Letter. The parties hereto agree that the
Lessee and their auditors are the sole beneficiary of the matters addressed in
this Section 8.2(c);
(d) Lessor shall not finance any portion of the Lessor Advance with non-
recourse debt to the extent that such financing of the Lessor Advance will
cause more than 95% of the aggregate amount of the Financing to be funded with
non-recourse debt;
(e) [Intentionally Reserved];
(f) The Lessor shall not (i) commence any case, proceeding or other action
with respect to the Lessor under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, arrangement, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (ii) seek appointment of a
receiver, trustee, custodian or other similar official with respect to the
Lessor or for all or any substantial benefit of the creditors of the Lessor;
and the Lessor shall not take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in this
paragraph;
(g) The Lessor shall give prompt notice to the Lessee and the Agent if the
Lessor's location for purposes of the UCC shall cease to be North Carolina, or
if Lessor's principal place of business or chief executive office, or the
office where the records concerning the accounts or contract rights relating to
any Property are kept, shall cease to be located at One Wachovia Center, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or if it shall change
its name; and
(h) The Lessor shall take or refrain from taking such actions and grant or
refrain from granting such approvals with respect to the Operative Agreements
and/or relating to any Property in each case as directed in writing by the
Agent (until such time as the Loans are paid in full) or, in connection with
Sections 8.5 and 9.2 hereof, the Lessee; provided, however, that
notwithstanding the foregoing provisions of this subparagraph (h), (i) the
Agent, the Lenders and the Lessor each acknowledge, covenant and agree that
neither the Lessor nor the Agent shall act or refrain from acting, in a manner
inconsistent with the terms of the Intercreditor Agreement and (ii) Lessor
shall, or Agent on behalf of Lessor, shall during the continuance of an Event
of Default and immediately upon the request of Congress demand immediate
payment in full of all of the Company Obligations under the Lease (including
the payment in respect of the Termination Value).
8.3. Credit Party Covenants, Consent and Acknowledgment.
(a) Each Credit Party acknowledges and agrees that the
Borrower, pursuant to the terms and conditions of the Security Agreement and
the Mortgage Instruments, shall create Liens respecting the various personal
property, fixtures and real property described therein. Each Credit Party
hereby irrevocably consents to the creation, perfection and maintenance of such
Liens. Each Credit Party shall, to the extent reasonably requested by any of
the other parties hereto, cooperate with the other parties in connection with
their covenants herein or in the other Operative Agreements and shall from time
to time duly execute and deliver any and all such future instruments, documents
and financing statements (and continuation statements related thereto) as any
other party hereto may reasonably request.
(b) The Lessor hereby instructs each Credit Party, and each
Credit Party hereby acknowledges and agrees, that until such time as the Loans
and the Lessor Advance are paid in full and the Liens evidenced by the Security
Agreement and the Mortgage Instruments have been released (i) any and all Rent
(excluding Excepted Payments which shall be payable to each Lessor or other
Person as appropriate) and any and all other amounts of any kind or type under
any of the Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments which shall
be payable to each Lessor or other Person as appropriate) or as the Agent may
direct from time to time for allocation and distribution in accordance with the
procedures set forth in Section 8.7 hereof, (ii) all rights of the Lessor under
the Lease shall be exercised by the Agent in accordance with the terms of the
Intercreditor Agreement and (iii) each Credit Party shall cause all notices,
certificates, financial statements, communications and other information which
are delivered, or are required to be delivered, to the Lessor, to also be
delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any
amendment, supplement or other modification of the terms or provisions of any
Operative Agreement except in accordance with Section 12.4 of this Agreement.
(d) Each Credit Party hereby covenants and agrees that,
except for amounts payable as Basic Rent, any and all payment obligations owing
from time to time by any Credit Party under the Lease by any Person to the
Lessor, the Agent (whether as assignee of Lessor or otherwise), any Lender,
Lessor or any other Person shall (without further action) be deemed to be
Supplemental Rent obligations payable by the Lessee and guaranteed by the other
Credit Parties. Without limitation, such obligations of the Credit Parties
shall include without limitation arrangement fees, administrative fees, unused
fees, breakage costs, indemnities, trustee fees and transaction expenses
incurred by the parties hereto in connection with the transactions contemplated
by the Lease.
(e) The Lessee hereby covenants and agrees to cause an
Appraisal or reappraisal (in form and substance satisfactory to the Agent and
from an appraiser selected by the Agent) to be issued respecting any Property
as requested by the Agent from time to time (i) at each and every time as such
shall be required to satisfy any regulatory requirements imposed on the Agent,
the Lessor, and/or any Lender and (ii) after the occurrence and continue of an
Event of Default and for so long as the same is continuing.
(f) The Lessee hereby covenants and agrees that, except for
amounts payable as Basic Rent, any and all payment obligations owing from time
to time under the Lease by any Person to the Lessor, the Agent (whether as
assignee of Lessor or otherwise), any Lender or any other Person shall (without
further action) be deemed to be Supplemental Rent obligations payable by the
Lessee. Without limitation, such obligations of the Lessee shall include the
Supplemental Rent obligations pursuant to this Section 8.3(f), Section 3.3 of
the Lease, arrangement fees, administrative fees, participation fees,
commitment fees, prepayment penalties, breakage costs, indemnities, trustee
fees and transaction expenses incurred by the parties hereto in connection with
the transactions contemplated by the Lease.
(g) At any time the Lessor or the Agent is entitled under
the Operative Agreements to possession of a Property or any component thereof,
and the Lessee hereby covenants and agrees, at its own cost and expense, to
assemble and make the same available to the Agent (on behalf of the Lessor).
(h) [Intentionally Reserved].
(i) [Intentionally Reserved].
(j) The Lessee hereby covenants and agrees that it shall
give prompt notice to the Agent if the Lessee's principal place of business or
chief executive office, or the office where the records concerning the accounts
or contract rights relating to any Property are kept, shall cease to be located
at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or if it shall change its
name or jurisdiction of incorporation and/or location for purposes of the UCC.
(k) [Intentionally Reserved].
(l) [Intentionally Reserved].
(m) [Intentionally Reserved].
(n) Each Credit Party shall promptly notify the Agent, or
cause the Agent to be promptly notified, upon such Credit Party gaining
knowledge of the occurrence of any Default or Event of Default which is
continuing at such time. In any event, such notice shall be provided to the
Agent within ten (10) days of when such Credit Party gains such knowledge.
(o) Until all of the obligations under the Operative
Agreements have been finally and indefeasibly paid and satisfied in full and
the Lender Commitments and the Lessor Commitment terminated unless consent has
been obtained pursuant to the Intercreditor Agreement, each Credit Party will:
(i) except as permitted by the express provisions of the
Lessee Credit Agreement, preserve and maintain its separate legal existence and
all rights, franchises, licenses and privileges necessary to the conduct of its
business, and qualify and remain qualified as a foreign corporation (or
partnership, limited liability company or other such similar entity, as the
case may be) and authorized to do business in each jurisdiction in which the
failure to so qualify would have a Material Adverse Effect;
(ii) pay and perform all obligations of the Credit Parties
under the Operative Agreements and pay and perform (A) all taxes, assessments
and other governmental charges that may be levied or assessed upon it or any of
its property, and (B) all other indebtedness, obligations and liabilities in
accordance with customary trade practices, which if not paid would have a
Material Adverse Effect; provided that any Credit Party may contest any item
described in this Section 8.3(p)(ii) in good faith so long as adequate reserves
are maintained with respect thereto in accordance with GAAP;
(iii) to the extent failure to do so would have a Material
Adverse Effect, observe and remain in compliance with all applicable Laws and
maintain in full force and effect all Governmental Actions, in each case
applicable to the conduct of its business; keep in full force and effect all
licenses, certifications or accreditations necessary for any Property to carry
on its business; and not permit the termination of any insurance reimbursement
program available to any Property; and
(iv) provided that the Agent, the Lenders and the Lessor use
reasonable efforts to minimize disruption to the business of the Credit
Parties, permit representatives of the Agent or any Lender or Lessor, from time
to time, to visit and inspect its Properties; inspect, audit and make extracts
from its books, records and files, including without limitation management
letters prepared by independent accountants; and discuss with its principal
officers, and its independent accountants, its business, assets, liabilities,
financial condition, results of operations and business prospects.
8.4. Sharing of Certain Payments.
Except for Excepted Payments, the parties hereto acknowledge and agree
that all payments due and owing by any Credit Party to the Lessor under the
Lease or any of the other Operative Agreements shall be made by such Credit
Party directly to the Agent as more particularly provided in Section 8.3
hereof. The Lessor, the Agent, the Lenders and the Credit Parties acknowledge
the terms of Section 8.7 of this Agreement regarding the allocation of payments
and other amounts made or received from time to time under the Operative
Agreements and agree, that all such payments and amounts are to be allocated as
provided in Section 8.7 of this Agreement.
8.5. Grant of Easements, etc.
The Agent, the Lenders and the Lessor hereby agree that, so long as no
Event of Default shall have occurred and be continuing, the Lessor shall, from
time to time at the request of the Lessee (and with the prior consent of the
Agent), in connection with the transactions contemplated by the Lease or the
other Operative Agreements, (i) grant easements and other rights in the nature
of easements with respect to any Property, (ii) release existing easements or
other rights in the nature of easements which are for the benefit of any
Property, (iii) execute and deliver to any Person any instrument appropriate to
confirm or effect such grants or releases, and (iv) execute and deliver to any
Person such other documents or materials in connection with the acquisition,
testing or operation of any Property, including without limitation reciprocal
easement agreements, operating agreements, development agreements, plats,
replats or subdivision documents; provided, that each of the agreements
referred to in this Section 8.5 shall be of the type normally executed by the
Lessee in the ordinary course of the Lessee's business and shall be on
commercially reasonable terms so as not to diminish the value of any Property
in any material respect.
8.6. Appointment by the Agent, the Lenders and the Lessor.
Lessor hereby appoints the Agent to act as collateral agent for the
Lessor in connection with the Lien granted by the Security Documents to secure
the outstanding amount of the Lessor Advance. The Lenders and the Lessor
acknowledge and agree and direct that the rights and remedies of the
beneficiaries of the Lien of the Security Documents shall be exercised by the
Agent on behalf of the Lenders and the Lessor as determined in accordance with
the terms of the Intercreditor Agreement; provided, in all cases, the Agent
shall allocate payments and other amounts received in accordance with Section
8.7 or as may otherwise be required under the Intercreditor Agreement. The
Agent is further appointed to provide notices under the Operative Agreements
on behalf of the Lessor (as determined by the Agent, in its reasonable
discretion), to receive notices under the Operative Agreements on behalf of the
Lessor and (subject to Sections 8.5 and 9.2) to take such other action under
the Operative Agreements on behalf
of the Lessor as the Agent shall determine in its reasonable discretion from
time to time. The Agent hereby accepts such appointments. For purposes
hereof, the provisions of Section 7 of the Credit Agreement, together with such
other terms and provisions of the Credit Agreement and the other Operative
Agreements as required for the full interpretation and operation of Section 7
of the Credit Agreement are hereby incorporated by reference as if restated
herein for the mutual benefit of the Agent and Lessor as if Lessor were a
Lender thereunder. Further, the Agent shall be entitled to take such action on
behalf of the Lessor as is delegated to the Agent under any Operative Agreement
(whether express or implied) as may be reasonably incidental thereto. The
parties hereto hereby agree to the provisions contained in this Section 8.6.
Any appointment of a successor agent under Section 7.9 of the Credit Agreement
shall also be effective as an appointment of a successor agent for purposes of
this Section 8.6.
8.7. Collection and Allocation of Payments and Other Amounts.
(a) Each Credit Party has agreed pursuant to Section 5.8
and otherwise in accordance with the terms of this Agreement to pay to (i) the
Agent any and all Rent (excluding Excepted Payments) and any and all other
amounts of any kind or type under any of the Operative Agreements due and owing
or payable to any Person (including without limitation, payments in respect of
the Termination Value) and (ii) each Person as appropriate the Excepted
Payments. Promptly after receipt, the Agent shall apply and allocate, in
accordance with the terms of this Section 8.7, such amounts received from
any Credit Party and all other payments, receipts and other consideration of
any kind whatsoever received by the Agent pursuant to the Security Agreement
or otherwise received by the Agent, the Lessor or any of the Lenders in
connection with the Collateral, the Security Documents or any of the other
Operative Agreements. Subject to the terms and condition set forth below,
ratable distributions among the Lenders and the Lessor under this Section 8.7
shall be made based on (in the case of the Lenders) the ratio of the
outstanding Loans to the aggregate Property Cost and in the case of the Lessor
the ratio of the outstanding Lessor Advance to the aggregate Property Cost.
Ratable distributions among the Tranche A Lenders under this Section 8.7 shall
be made based on the ratio of the individual Tranche A Lender's Tranche A Loans
to the aggregate of all the Tranche A Loans. Ratable distributions among the
Tranche B Lenders under this Section 8.7 shall be made based on the ratio of
the individual Tranche B Lender's Tranche B Loans to the aggregate of all the
Tranche B Loans. Ratable distributions among the Lenders (in situations where
the Tranche A Lenders are not differentiated from the Tranche B Lenders) shall
be made based on the ratio of the individual Lender's Loans to the aggregate of
all the Loans.
(b) Payments and other amounts received by the Agent from
time to time in accordance with the terms of subparagraph (a) or otherwise
shall be applied and allocated as follows (subject in all cases to Section 8.7
(c)):
(i) Any such payment or amount identified as or deemed to
be Basic Rent and not otherwise required to be distributed pursuant to Sections
8.7(b)(iii) or 8.7(b)(iv) shall be applied and allocated by the Agent ratably
to the Lenders and the Lessor for application and allocation to the payment of
interest on the Loans and to the payment of accrued Lessor Yield with respect
to the Lessor Advance and thereafter to the principal of the Tranche B Loans
which are payable on each applicable date.
(ii) If on any date the Agent or the Lessor shall receive
any amount in respect of (A) any Casualty or Condemnation pursuant to Sections
15.1(a) or 15.1(g) of the Lease (excluding any payments in respect thereof
which are payable to the Lessee in accordance with the Lease), or (B) the
Termination Value in connection with the delivery of a Termination Notice
pursuant to Article XVI of the Lease, or (C) the Termination Value in
connection with the exercise of the Purchase Option under Section 20.1 of the
Lease or the exercise of the option of the Lessor to transfer the Properties to
the Lessee pursuant to Section 20.3 of the Lease, then in each case, the Lessor
shall be required to pay such amount received (1) if no Acceleration has
occurred, to prepay the principal balance of the Loans and the Lessor Advance,
on a pro rata basis, or (2) if an Acceleration has occurred, to apply and
allocate the proceeds respecting Sections 8.7(b)(ii)(A) through 8.7(b)(ii)(C)
in accordance with Sections 8.7(b)(iii) and 8.7(b)(iv) hereof.
(iii) Any proceeds of the sale or other disposition (or lease
upon the exercise of remedies) of the Properties or any portion thereof,
whether pursuant to Article XXII of the Lease or the exercise of remedies under
the Security Documents or otherwise, the execution of remedies set forth in the
Lease and any payment in respect of excess wear and tear pursuant to Section
22.3 of the Lease shall be applied and allocated by the Agent first, ratably to
the payment of the principal and interest of the Tranche B Loans then
outstanding, second, to any and all other amounts owing under the Operative
Agreements to the Lenders under or in connection with the Tranche B Loans,
third, to the payment to the Lessor of the outstanding principal balance of all
the Lessor Advance plus all outstanding Lessor Yield with respect to such
outstanding Lessor Advance, fourth, to any and all other amounts owing under
the Operative Agreements to the Lessor, fifth, to the extent such amount
exceeds the maximum amount to be returned pursuant to the foregoing provisions
of this paragraph (iii), ratably to the payment of the principal and interest
of the Tranche A Loans then outstanding, sixth, to any and all other amounts
owing under the Operative Agreements to the Tranche A Lenders under or in
connection with the Tranche A Loans, and seventh, to the extent moneys remain
after application and allocation pursuant to clauses first through sixth above,
to the Lessor for application and allocation to any and all other amounts owing
to any other Financing Party pursuant to the Operative Agreements and in
accordance with the Operative Agreements; provided, where no Event of Default
shall exist and be continuing and a prepayment is made for any reason with
respect to less than the full amount of the outstanding principal amount of the
Loans and the outstanding Lessor Advance, the proceeds shall be applied and
allocated ratably to the Lenders and to the Lessor.
(iv) (A) Any such payment pursuant to Section 22.1(b) of the
Lease (or otherwise) of the Maximum Residual Guarantee Amount (and any such
lesser amount as may be required by Section 22.1(b) of the Lease) in respect of
the Properties, (B) any other amount payable upon any exercise of remedies
after the occurrence of an Event of Default not covered by Sections 8.7(b)(i)
or 8.7(b)(iii) or otherwise under this Section 8.7(b)(iv) (including without
limitation any amount received in connection with an Acceleration which does
not represent proceeds from the sale or liquidation of the Properties) (C) any
proceeds from the sale or other disposition of the Tranche A Priority
Collateral, and (D) any other amount payable by any Guarantor, not otherwise
covered by Sections 8.7(b)(i) or 8.7(b)(iii) or otherwise under this Section
8.7(b)(iv), pursuant to Section 6B shall be applied and allocated by the Agent
first, ratably, to the payment of the principal and interest balance of Tranche
A Loans then
outstanding (and to the extent amounts received are received pursuant to 8.7(b)
(iv)(C), to the payment of the Revolving Loan Obligations, as Congress may
determine), second, to any and all other amounts owing under the Operative
Agreements to the Tranche A Lenders under or in connection with the Tranche A
Loans, third, ratably to the payment of the principal and interest balance of
the Tranche B Loans then outstanding, fourth, to the payment of any other
amounts owing under the Operative Agreements to the Tranche B Lenders under or
in connection with the Tranche B Loans, fifth, to the extent amounts received
are not received pursuant to 8.7(b)(iv)(C), to the payment of the principal
balance of the Lessor Advance plus all outstanding Lessor Yield with respect to
such outstanding Lessor Advance, sixth, to the extent amounts received are not
received pursuant to 8.7(b)(iv)(C), to any and all other amounts owing under
the Operative Agreements to the Lessor, and seventh, to the extent moneys
remain after application and allocation pursuant to clauses first through sixth
above, to the Lessor for application and allocation to Lessor Advance and
Lessor Yield and any other amounts owing to any other Financing Party pursuant
to the Operative Agreements as the Lessor shall determine in accordance with
the Operative Agreements.
(v) Any payment identified as Supplemental Rent shall be
applied and allocated by the Agent to the payment of any amounts then owing to
the Agent, the Lenders, the Lessor and the other parties to the Operative
Agreements (or any of them) (other than any such amounts payable pursuant to
the preceding provisions of this Section 8.7(b)) as shall be determined by the
Agent in its reasonable discretion; provided, however, that Supplemental Rent
received upon the exercise of remedies after the occurrence and continuance of
an Event of Default in lieu of or in substitution of the Maximum Residual
Guarantee Amount or as a partial payment thereon shall be applied and allocated
as set forth in Section 8.7(b)(iv).
(vi) The Agent in its reasonable judgment shall identify the
nature of each payment or amount received by the Agent and apply and allocate
each such amount in the manner specified above.
(c) Upon the payment in full of the Loans, the Lessor
Advances and all other amounts then due and owing by the Lessor hereunder or
under any Credit Document and the payment in full of all other amounts then due
and owing to the Lenders, the Lessor, the Agent and the other Financing Parties
pursuant to the Operative Agreements, any moneys remaining with the Agent shall
be returned to the Lessee except as may otherwise be required by applicable
law. It is agreed that, prior to the application and allocation of amounts
received by the Agent in the order described in Section 8.7(b) above or any
distribution of money to the Lessee, any such amounts shall first be applied
and allocated to the payment of (i) any and all sums advanced by the Agent in
order to preserve the Collateral or to preserve its Lien thereon, (ii) the
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing or realizing on the Collateral, or of any exercise by the
Agent of its rights under the Security Documents, together with reasonable
attorneys' fees and expenses and court costs and (iii) any and all other
amounts reasonably owed to the Agent under or in connection with the
transactions contemplated by the Operative Agreements (including without
limitation any accrued and unpaid administration fees).
8.8. Release of Properties, etc.
If the Lessee shall at any time purchase any Property pursuant to the
Lease, or if any Property shall be sold in accordance with Article XXII of the
Lease, then, upon satisfaction by the Lessor of its obligation to prepay the
Loans and all other amounts owing to the Lenders under the Operative
Agreements, the repayment of the Lessor Advance and the payment to the Lessor
of all other amounts owing to the Lessor under the Operative Agreements, the
Agent is hereby authorized and directed to release such Property from the Liens
created by the Security Documents to the extent of its interest therein. In
addition, upon the termination of the Lender Commitments and the Lessor
Commitment and the payment in full of the Loans, the Lessor Advance and all
other amounts owing by the Lessor and the Lessee hereunder or under any other
Operative Agreement the Agent is hereby authorized and directed to release all
of the Properties from the Liens created by the Security Documents to the
extent of its interest therein. Upon request of the Lessor following any such
release, the Agent shall, at the sole cost and expense of the Lessee, execute
and deliver to the Lessor and the Lessee such documents as the Lessor or the
Lessee shall reasonably request to evidence such release.
8.9. Lessee.
The parties hereto acknowledge and agree that the term "Lessee" includes Pep
Boys Parent, Pep Boys California and Pep Boys Delaware jointly and severally as
co-lessees. The parties further acknowledge and agree that the multi-Person
Lessee provided for in the Operative Agreements was implemented at the request
of and as an accommodation to the Credit Parties. Accordingly, the use of such
structure shall not be interpreted or construed in any manner (and no Credit
Party shall take any action or make any claim or counterclaim as a result of
such structure) that would be disadvantageous to or would result in any cost or
expense to, the Agent, any Lender, the Lessor, or any other Financing Party or
that would limit the responsibility of any Credit Party under the Operative
Agreements that would not have resulted had the multi-Person Lessee structure
not been implemented, and Lessee agrees to indemnify and hold harmless each
such party from any such cost or expense. Notwithstanding the foregoing, at
the direction of the Lessee, on behalf of Credit Parties, each of the foregoing
parties agrees to take such action but at the risk, cost and expense of the
Lessee as reasonably requested by the Lessee, on behalf of Credit Parties, in
order to minimize any incremental cost and expenses inherent in the multi-
Person Lessee structure provided for in the Operative Agreements.
8.10. Distribution of Proceeds from the Properties.
Each of the Financing Parties hereby agrees that to the extent any
amounts that are to be distributed pursuant to Section 8.7(b)(iii) have been
received, such amounts shall be applied in the order set forth in such Section
8.7(b)(iii) but subject to the procedure for distribution set forth in this
Section 8.10. All amounts owing to the Tranche B Lenders pursuant to Section
8.7(b)(iii) shall be distributed to the Tranche B Lenders, in accordance with
Section 8.7(b)(iii), as such amounts are received. All amounts to be
distributed pursuant to third through seventh of Section 8.7(b)(iii) shall be
deposited into an account controlled by the Agent and held for the benefit of
the parties to which amounts are due pursuant to third through seventh of
Section 8.7(b)(iii) until such time as all of the Tranche A Lenders provide the
Agent written notice that either (a) each Tranche A Lenders' Loan, interest
and all other amounts due and owing or accrued in favor of any Tranche A Lender
with respect to the
Operative Agreements have been fully satisfied or (b) the Tranche A Lenders
have substantially completed, in each Tranche A Lender's reasonable judgment,
the exercise of remedies against the Tranche A Priority Collateral and all
other remedies other than remedies against the Property. After such written
notice has been provided to the Agent, then the Agent shall distribute the
funds held in the account in accordance with Section 8.7(b)(iii). The Tranche
A Lenders covenant to exercise all remedies, whether provided by the Operative
Agreements, at law or equity, which are reasonably available to them, other
than remedies against the Properties, available to the Tranche A Lenders to
collect all amounts owed to the Tranche A Lenders under any Operative Agreement
prior to receiving any distribution of proceeds pursuant to Section 8.7(b)
(iii). To the extent practicable in the reasonable judgment of the Agent, all
amounts deposited into such account shall be invested by the Agent in
investments backed by the United States government or in certificates of
deposit issued by Wachovia Bank, National Association provided the term of such
investments shall not exceed thirty (30) days. The Agent shall be entitled to
draw the account for its reasonable fees and out of pocket expenses incurred
with respect to the administration of such account.
8.11. Limitation of Lessor's Obligations.
(a) The Lessor shall not have any duty or obligation to manage,
control, use, make any payment in respect of, register, record, insure,
inspect, sell, dispose of or otherwise deal with the Property or any other part
of the Borrower's Interest, or to otherwise take or refrain from taking any
action under or in connection with any Operative Agreement to which the Lessor
is a party, except as expressly provided by the terms of the Operative
Agreements or in written instructions from all the Financing Parties and/or the
Majority Secured Parties, as applicable, received pursuant to Section 8.6; and
no implied duties or obligations shall be read into the Operative Agreements
against the Lessor. The Lessor nevertheless agrees that it will promptly take
all action as may be necessary to discharge any Lessor Liens on any part of the
Property.
(b) Except in accordance with written instructions furnished
pursuant to an applicable provision of the Operative Agreements (expressly
cited in such instructions), and without limitation of the generality of
Section 8.9(a), the Lessor shall not have any duty to (i) file, record or
deposit any Operative Agreement or any other document, or to maintain any such
filing, recording or deposit or to refile, rerecord or redeposit any such
document; (ii) obtain insurance on the Property or effect or maintain any such
insurance, other than to receive and forward to each Financing Party and the
Agent any notices, policies, certificates or binders furnished to the Lessor
pursuant to the Lease; (iii) maintain the Property; (iv) pay or discharge any
Tax or any Lien owing with respect to or assessed or levied against any part of
the Borrower's Interest, except as provided in the last sentence of Section 8.9
(a), other than to forward notice of such Tax or Lien received by the Lessor to
the Lessee, each Financing Party and the Agent; (v) confirm, verify,
investigate or inquire into the failure to receive any reports or financial
statements of Lessee or any other Person; (vi) inspect the Property at any time
or ascertain or inquire as to the performance or observance of any of the
covenants of Lessee or any other Person under any Operative Agreement with
respect to the Property; or (vii) manage, control, use, sell, dispose of or
otherwise deal with the Property or any part thereof or any other part of the
Borrower's Interest, except as provided in Section 8.9(b).
(c) The Lessor, in the exercise or administration of its powers
pursuant to the Operative Agreements, may, at the expense and, so long as no
Lease Default or Lease Event of Default shall have occurred and be continuing,
with the consent of Lessee employ agents, attorneys, accountants, and auditors
and enter into agreements with any of them and the Lessor shall not be liable
for the default or misconduct of any such agents, attorneys, accountants or
auditors if such agents, attorneys, accountants or auditors shall have been
selected by it with reasonable care.
8.12. No Representations or Warranties as to the Property or Operative
Agreements.
THE LESSOR MAKES (I) NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED, AS TO THE TITLE, VALUE, USE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR
ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND THE LESSOR SHALL NOT
BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF
THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT EXCEPT
AS EXPRESSLY SET FORTH IN THE OPERATIVE AGREEMENTS, INCLUDING SECTION 6.1(l)
AND THE LAST SENTENCE OF SECTION 8.11(a) HEREOF, AND (II) NO REPRESENTATION OR
WARRANTY AS TO THE VALIDITY OR ENFORCEABILITY OF ANY OPERATIVE AGREEMENT AS
AGAINST ANY PERSON OTHER THAN THE LESSOR OR AS TO THE CORRECTNESS OF ANY
STATEMENT MADE BY A PERSON OTHER THAN THE LESSOR CONTAINED IN ANY THEREOF.
8.13. Reliance; Advice of Counsel.
The Lessor shall not incur any liability to any Person in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and believed by it in good faith to be signed by
the proper party or parties. The Lessor may accept and rely upon a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the manner of ascertainment of which is not specifically
prescribed herein, the Lessor may for all purposes of the Operative Agreements
rely on an Officer's Certificate of the relevant party, as to such fact or
matter, and such certificate shall constitute full protection to the Lessor for
any action taken or omitted to be taken by it reasonably in good faith in
reliance thereon. In the administration of the Lessor's duties, the Lessor may
execute and perform its powers and duties directly or through agents or
attorneys and may consult with counsel, accountants and other skilled Persons
to be selected and employed by it, and the Lessor shall not be liable for
anything done, suffered or omitted reasonably in good faith by it in accordance
with the advice or opinion of any such counsel, accountants or other skilled
Persons and not contrary to the Operative Agreements.
8.14. Delayed Recordation of Certain Memoranda of the Lease and Certain Lease
Supplements.
There shall be no filing or recordation in the applicable local filing
offices in the State of Maryland of the Memorandum of Lease Agreement and Lease
Supplement No. 22 or the Memorandum of Lease Agreement and Lease Supplement No.
23 (collectively, the "Maryland Lease Memoranda") unless and until a Default
shall have occurred. Upon the occurrence of a Default, the Agent in its
discretion may (and upon instruction from either the Majority Secured Parties
or the Tranche B Lenders shall) submit the Maryland Lease Memoranda for filing
and recordation in the applicable local filing offices in the State of
Maryland.
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. The Lessee's Credit Agreement Rights.
Notwithstanding anything to the contrary contained in the Credit
Agreement, the Agent, the Lenders, the Borrower and the Credit Parties hereby
agree that, prior to the occurrence and continuation of any Default or Event of
Default, Lessee shall have the following rights:
(a) the right to receive any notice and any certificate,
in each case issued pursuant to Section 2.8(a)of the Credit Agreement;
(b) the right to replace any Lender pursuant to Section
2.8(b) of the Credit Agreement; and
(c) the right to approve any successor agent pursuant to
Section 7.9 of the Credit Agreement.
9.2. [Intentionally Reserved].
SECTION 10. TRANSFER OF INTEREST.
10.1. Restrictions on Transfer.
(a) Each Lender may participate, assign or transfer all or
a portion of its interest hereunder and under the other Operative Agreements in
accordance with Sections 9.7 and 9.8 of the Credit Agreement; provided, that
each Lender that assigns or transfers all or a portion of its interest
hereunder and under the other Operative Agreements (but not in the case of a
participation) shall (i) deliver to the Agent a copy of each Assignment and
Acceptance (as referenced in Section 9.8 of the Credit Agreement) for purposes
of maintaining the Register and (ii) cause the assignee or transferee to
execute a joinder to the Intercreditor Agreement reasonably acceptable to the
Agent. In addition to the foregoing, provided no Default or Event of Default
has occurred and is continuing, no Lender may assign, transfer or participate
all or any portion of its interest to any Person engaged principally in the
wholesale or retail sale of automotive parts, tires or automotive accessories,
automotive maintenance or service and installation of automotive parts without
the prior written consent of the Lessee.
(b) (i) The Lessor may, subject to the rights of the
Lessee under the Lease and the other Operative Agreements, the rights of the
other Financing Parties under the Operative Agreements and to the Lien of the
applicable Security Documents, directly or indirectly, assign, convey, or
otherwise transfer all but not less than all of its right, title and interest
in or to the Property, the Lease and the other Operative Agreements (including
without limitation any right to indemnification thereunder), and any other
document relating to the Property or any interest in the Property as provided
in the Lease to any Eligible Lessor for any reason, but only with the prior
written consent of the Majority Secured Parties (the consent of any individual
Secured Party not to be unreasonably withheld or delayed) and (provided, no
Lease Default or Lease Event of Default has occurred and is continuing) with
the consent of the Lessee (not to be unreasonably withheld or delayed);
provided, however, in the
event Lessee shall not so consent because of the circumstances set forth in
clause (y) of the next succeeding sentence, (i) Lessor shall not be required to
comply with Section 8.2(d) hereof and (ii) provided that the Lessor retains
title to the Property, Lessor may sell or assign participation interests in its
right to receive Rent (subject to the rights of the Lenders and Section 8.7
hereof) to one or more banks, financial institutions or other entities
substantially in accordance with the provisions of Section 9.7 of the Credit
Agreement (without regard to the dollar limitations on transfer set forth
therein). The Lessor hereby agrees that the Lessee shall be deemed to have
acted reasonably and shall have exercised reasonable discretion in the event
and to the extent the Lessee has withheld its consent to or refused to approve
any requested transfer, assignment, conveyance or appointment by the Lessor
under this Section 10.1(b)(i) based on a reasonable belief that the requested
transfer, assignment, conveyance or appointment will (x) adversely affect the
accounting by the Lessee of the transactions contemplated hereunder and under
the other Operative Agreements in accordance with GAAP or (y) result in a
significant amount of costs and expenses payable by Lessee under the Lease and/
or other Operative Agreements. The provisions of the first sentence of this
Section 10.1(b)(i) shall not apply to the obligations of the Lessor to transfer
the Property to the Lessee or a third party purchaser pursuant to Article XXII
of the Lease upon payment for the Property in accordance with the terms and
conditions of the Lease.
(ii) Notwithstanding anything to the contrary in Section
10.1(b)(i), no consent shall be required from the Agent, the Lessee or any
Lender (but Lessor shall provide ninety (90) days (or such shorter period as
required by the Legal Requirement giving rise to the assignment, conveyance,
appointment or transfer contemplated by this Section 10.1(b)(ii)) written
notice to the Agent and the Lessee) in connection with any assignment,
conveyance, appointment or transfer by the Lessor required by any Legal
Requirement (including pursuant to the direction or recommendation of any
Governmental Authority) of all or any of its right, title or interest in or to
the Property, the Lease and the other Operative Agreements (including without
limitation any right to indemnification thereunder), or any other document
relating to the Property or any interest in the Property as provided in the
Lease to an Eligible Lessor; provided, in such case, so long as no Lease
Default or Lease Event of Default shall have occurred and be continuing, Lessee
shall have the right to require the Lessor (unless such transfer or conveyance
has already occurred, in which case the Lessee shall have the right to require
such transferee) to transfer its interest to an Eligible Lessor selected by the
Lessee, in its reasonable discretion; provided, further, Lessee shall be
responsible for any cost or expense incurred by the Lessor in connection with
any assignment, conveyance, appointment or transfer by the Lessor pursuant to
this Section 10.1(b)(ii). In connection with any such assignment, conveyance,
appointment or transfer by the Lessor as referenced in this Section 10.1(b)
(ii), all obligations of the Lessor pursuant to the Operative Agreements shall
either be expressly assumed by the Eligible Lessor (which is the assignee) or
retained by the Lessor (which is the assignor).
(c) No Credit Party may assign any of the Operative Agreements or
any of their respective rights or obligations thereunder or with respect to any
Property in whole or in part to any Person without the prior written consent of
the Agent, each of the Lenders and the Lessor.
(d) (i) The Lessee and the Lessor shall give the other prompt
notice ("GAAP Change Notice") after the Lessee or the Lessor, as applicable,
has knowledge of a proposed change in GAAP that might reasonably result in an
adverse effect on Lessor in regard to its treatment of the Properties, or any
of the other Collateral or the transactions described in the Operative
Agreements. Such GAAP Change Notice shall include, if reasonably determinable,
the anticipated impact of such proposed change in GAAP on the Lessor. The
Lessee and the Lessor shall consult with each other with respect to such
anticipated impact.
(ii) The Lessee agrees to indemnify the Lessor for any loss, claim
or increased costs incurred by the Lessor and quantified to Lessee in writing
by Lessor in reasonable detail as a result of any change in GAAP that adversely
affects the Lessor with respect to the treatment of the transactions
contemplated by the Operative Agreements, the Properties or any of the other
Collateral; provided, however, (A) in the case of such a change in GAAP that
adversely affects the Lessor, as described above, as long as no Default or
Event of Default shall have occurred and be continuing, Lessee shall have the
right to require the Lessor to transfer its interest to an Eligible Lessor
selected by the Lessee, in its reasonable discretion and (B) Lessor shall upon
becoming aware, but in any event within thirty (30) days of a Responsible
Officer of Lessor having notice of a loss, claim or increased cost pursuant
to this Section 10.1, provide written notice to Lessee thereof; provided,
further, nothing in the preceding proviso shall limit the obligation of the
Lessee to provide the indemnity set forth in this Section 10.1(d); and
provided, further, that nothing in this Section 10.1(d) shall require Lessee
to indemnify Lessor for any loss, claim or increased costs incurred by Lessor
as a result of a change in GAAP as described above if Lessor is in breach of
any of its obligations under any of the Operative Agreements and such breach
causes any such loss, claim or increased cost.
10.2. Effect of Transfer.
From and after any transfer effected in accordance with this Section
10, the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Lessor
or a Lender as above provided, any such transferee shall assume the obligations
of the Lessor or the Lender, as the case may be, and shall be deemed an
"Lessor", or "Lender", as the case may be, for all purposes of such documents
and each reference herein to the transferor shall thereafter be deemed a
reference to such transferee for all purposes, except as provided in the
preceding sentence. Notwithstanding any transfer of all or a portion of the
transferor's interest as provided in this Section 10, the transferor shall be
entitled to all benefits accrued and all rights vested prior to such transfer
including without limitation rights to indemnification under any such document.
SECTION 11. INDEMNIFICATION.
11.1. General Indemnity.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Indemnity Provider hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified Person itself, as determined by a court of competent
jurisdiction, as opposed to gross negligence or willful misconduct imputed to
such Indemnified Person) in any way relating to or arising or alleged to arise
out of the execution, delivery, performance or enforcement of this Agreement,
the Lease or any other Operative Agreement or on or with respect to any
Property or any component thereof, including without limitation Claims in any
way relating to or
arising or alleged to arise out of (a) the financing, refinancing, purchase,
acceptance, rejection, ownership, design, delivery, acceptance, nondelivery,
leasing, subleasing, possession, use, occupancy, operation, maintenance repair,
modification, transportation, condition, sale, return, repossession (whether by
summary proceedings or otherwise), or any other disposition of any Property or
any part thereof, including without limitation the acquisition, holding or
disposition of any interest in the Property, lease or agreement comprising a
portion of any thereof; (b) any latent or other defects in any Property or any
portion thereof whether or not discoverable by an Indemnified Person or the
Indemnity Provider; (c) a violation of Environmental Laws, Environmental Claims
or other loss of or damage to any Property or the environment relating to the
Property, the Lease, or the Indemnity Provider; (d) the Operative Agreements,
or any transaction contemplated thereby; (e) any breach by the Indemnity
Provider of any
of its representations or warranties under the Operative Agreements to which
the Indemnity Provider is a party or failure by the Indemnity Provider to
perform or observe any covenant or agreement to be performed by it under any of
the Operative Agreements; (f) the transactions contemplated hereby or by any
other Operative Agreement, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA; (g) personal injury, death or property damage,
including without limitation Claims based on strict or absolute liability in
tort; and (h) any fees, expenses and/or other assessments by any business park
or any other applicable entity with oversight responsibility for the applicable
Property; provided, however, this Section 11.1 shall not be applicable to
Claims arising from Taxes (except to the extent that any payment hereunder is
required to be made on an After Tax Basis) and Indemnified Persons acknowledge
that the Indemnified Provider's obligations for Taxes is set forth in Section
11.2.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including
without limitation a written notice of such proceeding), for any Claim, such
Indemnified Person shall promptly notify the Indemnity Provider in writing and
shall not take action with respect to such Claim without the consent of the
Indemnity Provider for thirty (30) days after the receipt of such notice by the
Indemnity Provider; provided, however, that in the case of any such Claim, if
action shall be required by law or regulation to be taken prior to the end of
such period of thirty (30) days, such Indemnified Person shall endeavor to, in
such notice to the Indemnity Provider, inform the Indemnity Provider of such
shorter period, and no action shall be taken with respect to such Claim without
the consent of the Indemnity Provider before seven (7) days before the end of
such shorter period; provided, further, that the failure of such Indemnified
Person to give the notices referred to in this sentence shall not diminish the
Indemnity Provider's obligation hereunder except to the extent such failure
precludes in all respects the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the
Indemnified Person (or such shorter period as the Indemnified Person has
notified the Indemnity Provider is required by law or regulation for the
Indemnified Person to respond to such Claim), the Indemnity Provider shall
request in writing that such Indemnified Person respond to such Claim, the
Indemnified Person shall, at the expense of the Indemnity Provider, in good
faith conduct and control such action (including without limitation by pursuit
of appeals) (provided, however, that (A) if such Claim, in the Indemnity
Provider's reasonable discretion, can be pursued by the Indemnity Provider on
behalf of or in the name of such Indemnified Person, the Indemnified Person, at
the Indemnity Provider's request, shall allow the Indemnity Provider to conduct
and control the response to such Claim and (B) in the case of any Claim (and
notwithstanding the provisions of the foregoing subsection (A)), the
Indemnified Person may request the Indemnity Provider to conduct and control
the response to such Claim (with counsel to be selected by the Indemnity
Provider and consented to by such Indemnified Person, such consent not to be
unreasonably withheld, delayed or conditioned; provided, however, that any
Indemnified Person may retain separate counsel at the expense of the Indemnity
Provider in the event of a conflict of interest between such Indemnified Person
and the Indemnity Provider)) by, in the sole discretion of the Person
conducting and controlling the response to such Claim (1) resisting payment
thereof, (2) not paying the same except under protest, if protest is necessary
and proper, (3) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings, or (4)
taking such other action as is reasonably requested by the Indemnity Provider
from time to time.
The party controlling the response to any Claim shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
that all decisions ultimately shall be made in the discretion of the
controlling party. The parties agree that an Indemnified Person may at any
time decline to take further action with respect to the response to such Claim
and may settle such Claim if (i) such Indemnified Person shall waive its rights
to any indemnity from the Indemnity Provider that otherwise would be payable in
respect of such Claim (and any future Claim, the pursuit of which is precluded
by reason of such resolution of such Claim) and shall pay to the Indemnity
Provider any amount previously paid or advanced by the Indemnity Provider
pursuant to this Section 11.1 by way of indemnification or advance for the
payment of an amount regarding such Claim and (ii) such settlement would not
adversely affect the rights or increase the obligations of the Indemnity
Provider.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and the Indemnity
Provider shall not be permitted to respond to any Claim in its own name or that
of the Indemnified Person unless (A) the Indemnity Provider shall have agreed
to pay and shall pay to such Indemnified Person on demand and on an After Tax
Basis all reasonable costs, losses and expenses that such Indemnified Person
actually incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and the
Indemnity Provider shall have agreed that the Claim is an indemnifiable Claim
hereunder, (B) in the case of a Claim that must be pursued in the name of an
Indemnified Person (or an Affiliate thereof), the amount of the potential
indemnity (taking into account all similar or logically related Claims that
have been or could be raised for which the Indemnity Provider may be liable
to pay an indemnity
under this Section 11.1) exceeds $25,000 (or such lesser amount as may be
subsequently agreed between the Indemnity Provider and the Indemnified Person),
(C) the Indemnified Person shall have reasonably determined that the action to
be taken will not result in any material danger of sale, forfeiture or loss of
the Property, or any part thereof or interest therein, will not interfere with
the payment of Rent, and will not result in risk of criminal liability, (D) if
such Claim shall involve the payment of any amount prior to the resolution of
such Claim, the Indemnity Provider shall provide to the Indemnified Person an
interest-free advance in an amount equal to the amount that the Indemnified
Person is required to pay (with no additional net after-tax cost to such
Indemnified Person) prior to the date such payment is due, (E) in the case of a
Claim that must be pursued in the name of an Indemnified Person (or an
Affiliate thereof), the Indemnity Provider shall have provided to such
Indemnified Person an
opinion of independent counsel selected by the Indemnity Provider and
reasonably satisfactory to the Indemnified Person stating that a reasonable
basis exists to contest such Claim (or, in the case of an appeal of an adverse
determination, an opinion of such counsel to the effect that the position
asserted in such appeal will more likely than not prevail) and (F) no Event of
Default shall have occurred and be continuing. In no event shall an
Indemnified Person be required to appeal an adverse judicial determination to
the United States Supreme Court. In addition, an Indemnified Person shall not
be required to contest any Claim in its name (or that of an Affiliate) if the
subject matter thereof shall be of a continuing nature and shall have
previously been decided adversely by a court of competent jurisdiction pursuant
to the contest provisions of this Section 11.1, unless there shall have been a
change in law (or interpretation thereof) and the Indemnified Person shall have
received, at the Indemnity Provider's expense, an opinion of independent
counsel selected by the Indemnity Provider and reasonably acceptable to the
Indemnified Person stating that as a result of such change in law (or
interpretation thereof), it is more likely than not that the Indemnified Person
will prevail in such contest. In no event shall the Indemnity Provider be
permitted to adjust or settle any Claim without the consent of the Indemnified
Person to the extent any such adjustment or settlement involves, or is
reasonably likely to involve, an adverse admission by or with respect to the
Indemnified Person.
11.2. General Tax Indemnity.
(a) The Indemnity Provider shall pay and assume liability
for, and does hereby agree to indemnify, protect and defend each Property and
all Indemnified Persons, and hold them harmless against, all Impositions on an
After Tax Basis, and all payments by or on behalf of the Indemnity Provider or
the Lessor or in respect of any of the obligations of the Indemnity Provider or
the Lessor pursuant to the Operative Agreements shall be made free and clear of
and without deduction for any and all present and future Impositions.
(b) Notwithstanding anything to the contrary in Section
11.2 (a) hereof, the following shall be excluded from the indemnity required by
Section 11.2(a):
(i) Taxes (other than Taxes that are, or are in the
nature of, sales, use, rental, value added, transfer or property taxes) that
are imposed on a Indemnified Person by the United States federal government (or
with respect to any Indemnified Person any foreign jurisdiction in which such
Indemnified Person is organized or from which such Indemnified Person books,
maintains and administers its Loans; provided, that this provision shall not be
construed to supersede Section 11.2(e) hereof) that are based on or measured by
the net income (including without limitation taxes based on capital gains and
minimum taxes) of such Person; provided, that this clause (i) shall not be
interpreted to prevent a payment from being made on an After Tax Basis if such
payment is otherwise required to be so made;
(ii) Taxes (other than Taxes that are, or are in the
nature of, sales, use, rental, value added, transfer or property taxes) that
are imposed on any Indemnified Person by any state or local jurisdiction or
taxing authority within any state or local jurisdiction and that are based upon
or measured by the gross (to the extent in lieu of a net income tax) or net
income (including without limitation taxes based on capital gains and minimum
taxes) or are franchise Taxes of such Person (or with respect to any
Indemnified Person and solely with respect to net income taxes, any state or
local jurisdiction or taxing authority within any state or local jurisdiction,
in which case within a foreign jurisdiction in which such Indemnified Person
books, maintains and administers its Loans; provided, that this provision shall
not be construed to supersede Section 11.2(e) hereof); provided that such Taxes
shall not be excluded under this subparagraph (ii) to the extent such Taxes
would have been imposed had the location, possession or use of any Property in,
the location or the operation of the Lessee in, or the Lessee's making payments
under the Operative Agreements from, the jurisdiction imposing such Taxes been
the sole connection between such Indemnified Person and the jurisdiction
imposing such Taxes; provided, further, that this clause (ii) shall not be
interpreted to prevent a payment from being made on an After Tax Basis if such
payment is otherwise required to be so made;
(iii) any Tax to the extent it relates to any act,
event or omission that occurs after the termination of the Lease and redelivery
or sale of the Property in accordance with the terms of the Lease (but not any
Tax that relates to such termination, redelivery or sale and/or to any period
prior to such termination, redelivery or sale); and
(iv) any Taxes which are imposed on an Indemnified
Person as a result of the gross negligence or willful misconduct of such
Indemnified Person itself, as determined by a court of competent jurisdiction
(as opposed to gross negligence or willful misconduct imputed to such
Indemnified Person), but not Taxes imposed as a result of ordinary negligence
of such Indemnified Person;
(c) (i) Subject to the terms of Section 11.2(f), the Indemnity
Provider shall pay or cause to be paid all Impositions directly to the taxing
authorities where feasible and otherwise to the Indemnified Person, as
appropriate, and the Indemnity Provider shall at its own expense, upon such
Indemnified Person's reasonable request, furnish to such Indemnified Person
copies of official receipts or other satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest
is conducted pursuant to Section 11.2(f) and which the Indemnity Provider pays
directly to the taxing authorities, the Indemnity Provider shall pay such
Impositions prior to the latest time permitted by the relevant taxing authority
for timely payment. In the case of Impositions for which the Indemnity
Provider reimburses an Indemnified Person, the Indemnity Provider shall do so
within thirty (30) days after receipt by the Indemnity Provider of demand by
such Indemnified Person describing in reasonable detail the nature of the
Imposition and the basis for the demand (including without limitation the
computation of the amount payable), accompanied by receipts or other reasonable
evidence of such demand. In the case of Impositions for which a contest is
conducted pursuant to Section 11.2(f), the Indemnity Provider shall pay such
Impositions or reimburse such Indemnified Person for such Impositions, to the
extent not previously paid or reimbursed pursuant to subsection (a), prior to
the latest time permitted by the relevant taxing authority for timely payment
after conclusion of all contests under Section 11.2(f).
(iii) At the Indemnity Provider's request, the amount
of any indemnification payment by the Indemnity Provider pursuant to subsection
(a) shall be verified and certified by an independent public accounting firm
mutually acceptable to the Indemnity Provider and the Indemnified Person. The
fees and expenses of such independent public accounting firm shall be paid by
the Indemnity Provider unless such verification shall result in an adjustment
in the Indemnity Provider's favor of fifteen percent (15%) or more of the
payment as computed by the Indemnified Person, in which case such fee shall be
paid by the Indemnified Person.
(d) The Indemnity Provider shall be responsible for
preparing and filing any real and personal property or ad valorem tax returns
in respect of each Property and any other tax returns required for the Lessor
respecting the transactions described in the Operative Agreements. In case any
other report or tax return shall be required to be made with respect to any
obligations of the Indemnity Provider under or arising out of subsection (a)
and of which the Indemnity Provider has knowledge or should have knowledge, the
Indemnity Provider, at its sole cost and expense, shall notify the relevant
Indemnified Person of such requirement and (except if such Indemnified Person
notifies the Indemnity Provider that such Indemnified Person intends to prepare
and file such report or return) (A) to the extent required or permitted by and
consistent with Legal Requirements, make and file in the Indemnity Provider's
name such return, statement or report; and (B) in the case of any other such
return, statement or report required to be made in the name of such Indemnified
Person, advise such Indemnified Person of such fact and prepare such return,
statement or report for filing by such Indemnified Person or, where such
return, statement or report shall be required to reflect items in addition to
any obligations of the Indemnity Provider under or arising out of subsection
(a), provide such Indemnified Person at the Indemnity Provider's expense with
information sufficient to permit such return, statement or report to be
properly made with respect to any obligations of the Indemnity Provider under
or arising out of subsection (a). Such Indemnified Person shall, upon the
Indemnity Provider's request and at the Indemnity Provider's expense, provide
any data maintained by such Indemnified Person (and not otherwise available to
or within the control of the Indemnity Provider) with respect to each Property
which the Indemnity Provider may reasonably require to prepare any required tax
returns or reports.
(e) As between the Indemnity Provider on one hand, and each
Financing Party on the other hand, the Indemnity Provider shall be responsible
for, and the Indemnity Provider shall indemnify and hold harmless each
Financing Party (without duplication of any indemnification required by
subsection (a)) on an After Tax Basis against, any obligation for United States
or foreign withholding taxes or similar levies, imposts, charges, fees,
deductions or withholdings (collectively, "Withholdings") imposed in respect of
the interest payable on the Notes, Lessor Yield payable on the Lessor Advance
or with respect to any other payments under the Operative Agreements (all such
payments being referred to herein as "Exempt Payments") which are intended to
be made without deduction, withholding or set off (and, if any Financing Party
receives a demand for such payment from any taxing authority or a Withholding
is otherwise required with respect to any Exempt Payment, the Indemnity
Provider shall discharge such demand on behalf of such Financing Party);
provided, however, that the obligation of the Indemnity Provider under this
Section 11.2 shall not apply to:
(i) Withholdings on any Exempt Payment to any Financing Party which is a
non-U.S. Person unless such Financing Party is, on the date hereof (or on the
date it becomes a Financing Party hereunder) and on the date of any change in
the principal place of business or the lending office of such Financing Party
(provided that this Section 11.2(e)(i) shall not apply with respect to any
change in a Financing Party's principal place or Lending Office unless such
change subjects such Financing Party to additional U.S. Withholdings), entitled
to and does timely submit to the Agent two (2) complete original signed copies
of either (a) Form W-8BEN, (c) Form W-8ECI, or (b) other documentation
supporting such Financing Party's exemption from Withholdings with respect to
such payment, in each case certifying that (y) such party is entitled under
Section 1442 of the Code or any other applicable Code provision or under any
applicable tax treaty or convention to receive payments pursuant to the
Operative Agreements without deduction or withholding of United States federal
income tax and (z) is a foreign Person thereby entitled to an exemption from
United States backup withholding taxes (except where the failure of the
exemption results from a change in the principal place of business of the
Lessee); provided, however, if a failure of the exemption is due to a change in
law after the date hereof or in the case of a Financing Party that acquires its
interest after the date hereof, a change in law occurring after such date, then
the Indemnity Provider shall be liable for any withholding resulting therefrom;
or
(iv) Any Withholdings of U.S. Taxes imposed solely by reason of the
failure by a non-U.S. Person to comply with applicable certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States of
America of such non-U.S. Person if such compliance is required by statute or
regulation of the United States of America as a precondition to relief or
exemption from such U.S. Taxes if the Indemnity Provider has provided such
certification, information, documentation or other reporting requirements to
the Financing Party and the Financing Party is eligible for such relief or
exemption.
For the purposes of this Section 11.2(e), (A) "U.S. Person" shall mean a
citizen, national or resident of the United States of America, a corporation,
partnership or other entity created or organized in or under any laws of the
United States of America or any State thereof, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income, (B)
"U.S. Taxes" shall mean any present or future tax, assessment or other charge
or levy imposed by or on behalf of the United States of America or any taxing
authority thereof or therein, (C) "Form W-8BEN" shall mean Form W-8BEN
(Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding) of the Department of the Treasury of the United States of America
and (D) "Form W-8ECI" shall mean Form W-8ECI (Certificate of Foreign Person's
Claim for Exemption from Withholding on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America. Each of the Forms referred to in the
foregoing clauses (C) and (D) shall include such successor and related forms as
may from time to time be adopted by the relevant taxing authorities of the
United States of America to document a claim to which such Form relates.
If a Financing Party or an Affiliate with whom such Financing Party
files a consolidated tax return (or equivalent) subsequently receives the
benefit in any country of a tax credit or an allowance resulting from U.S.
Taxes with respect to which it has received a payment of an additional amount
under this Section 11.2(e), such Financing Party will pay to the Indemnity
Provider such part of that benefit as in the opinion of such Financing Party
will leave it (after such payment) in a position no more and no less favorable
than it would have been in if no additional payment had been required to be
paid, provided always that (i) such Financing Party will be the sole judge of
the amount of any such benefit and of the date on which it is received, (ii)
such Financing Party will have the absolute discretion as to the order and
manner in which it employs or claims tax credits and allowances available to it
and (iii) such Financing Party will not be obliged to disclose to the Borrower
any information regarding its tax affairs or tax computations.
Each non-U.S. Person that shall become a Financing Party after the date
hereof shall, upon the effectiveness of the related transfer or otherwise upon
becoming a Financing Party hereunder, be required to provide all of the forms
and statements referenced above or other evidences of exemption from
Withholdings.
(f) If a written Claim is made against any Indemnified
Person or if any proceeding shall be commenced against such Indemnified Person
(including without limitation a written notice of such proceeding), for any
Impositions, the provisions in Section 11.1 relating to notification and rights
to contest shall apply; provided, however, that the Indemnity Provider shall
have the right to conduct and control such contest only if such contest
involves a Tax other than a Tax on net income of the Indemnified Person and can
be pursued independently from any other proceeding involving a Tax liability of
such Indemnified Person.
11.3. Increased Costs, Illegality, etc.
(a) If, due to either (i) the introduction of or any change
in or in the interpretation of any law or regulation or (ii) the compliance
with any guideline or request hereafter adopted, promulgated or made by any
central bank or other governmental authority (whether or not having the force
of law), there shall be any increase in the cost to any Financing Party of
agreeing to make or making, funding or maintaining Advances, then the Lessee
shall from time to time, upon demand by such Financing Party (with a copy of
such demand to the Agent but subject to the terms of Section 2.8 of the Credit
Agreement), pay to the Agent for the account of such Financing Party additional
amounts sufficient to compensate such Financing Party for such increased cost.
A certificate as to the amount of such increased cost, submitted to the Lessee
and the Agent by such Financing Party, shall be conclusive and binding for all
purposes, absent manifest error.
(b) If any Financing Party determines that compliance with
any law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law, but in
each case promulgated or made after the date hereof) affects or would affect
the amount of capital required or expected to be maintained by such Financing
Party or any corporation controlling such Financing Party and that the amount
of such capital is increased by or based upon the existence of such Financing
Party's commitment to make Advances and other commitments of this type or upon
the Advances, then, upon demand by such Financing Party (with a copy of such
demand to the Agent but subject to the terms of Section 2.8 of the Credit
Agreement), the Lessee shall pay to the Agent for the account of such
Financing Party, from time to time as specified by such Financing Party,
additional amounts sufficient to compensate such Financing Party or such
corporation in the light of such circumstances, to the extent that such
Financing Party reasonably determines such increase in capital to be allocable
to the existence of such Financing Party's commitment to make such Advances.
A certificate as to such amounts submitted to the Lessee and the Agent by such
Financing Party shall be conclusive and binding for all purposes, absent
manifest error.
(c) Without limiting the effect of the foregoing, the
Lessee shall pay to each Financing Party on the last day of the Interest
Period therefor so long as such Financing Party is maintaining reserves against
"Eurocurrency liabilities" under Regulation D an additional amount (determined
by such Financing Party and notified to the Lessee through the Agent) equal to
the product of the following for each Eurodollar Loan or Eurodollar Lessor
Advance, as the case may be, for each day during such Interest Period:
(i) the principal amount of such Eurodollar Loan or
Eurodollar Lessor Advance, as the case may be, outstanding on such day; and
(ii) the remainder of (x) a fraction the numerator of which
is the rate (expressed as a decimal) at which interest accrues on such
Eurodollar Loan or Eurodollar Lessor Advance, as the case may be, for such
Interest Period as provided in the Credit Agreement or the Participation
Agreement, as the case may be (less the Applicable Percentage), and the
denominator of which is one (1) minus the effective rate (expressed as a
decimal) at which such reserve requirements are imposed on such Financing
Party on such day minus (y) such numerator; and
(iii) 1/360.
(d) Without affecting its rights under Sections 11.3(a),
11.3(b) or 11.3(c) or any other provision of any Operative Agreement, each
Financing Party agrees that if there is any increase in any cost to or
reduction in any amount receivable by such Financing Party with respect to
which the Lessee would be obligated to compensate such Financing Party pursuant
to Sections 11.3(a) or 11.3(b), such Financing Party shall use reasonable
efforts to select an alternative office for Advances which would not result in
any such increase in any cost to or reduction in any amount receivable by such
Financing Party; provided, however, that no Financing Party shall be obligated
to select an alternative office for Advances if such Financing Party determines
that (i) as a result of such selection such Financing Party would be in
violation of any applicable law, regulation, treaty, or guideline, or would
incur additional costs or expenses or (ii) such selection would be inadvisable
for regulatory reasons or materially inconsistent with the interests of such
Financing Party.
(e) With reference to the obligations of the Lessee set
forth in Sections 11.3(a) through 11.3(d), the Lessee shall not have any
obligation to pay to any Financing Party amounts owing under such Sections for
any period which is more than one (1) year prior to the date upon which the
request for payment therefor is delivered to the Lessee.
(f) Notwithstanding any other provision of this Agreement,
if any Financing Party shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is
unlawful, for any Financing Party to perform its obligations hereunder to make
or maintain Eurodollar Loans or Eurodollar Lessor Advances, as the case may be,
then (i) each Eurodollar Loan or Eurodollar Lessor Advance, as the case may be,
will automatically, at the earlier of the end of the Interest Period for such
Eurodollar Loan or Eurodollar Lessor Advance, as the case may be, or the date
required by law, convert into an ABR Loan or an ABR Holder Advance, as the case
may be, and (iii) the obligation of the Financing Parties to make, convert or
continue Eurodollar Loans or Eurodollar Lessor Advances, as the case may be,
shall be suspended until the Agent shall notify the Lessee that such Financing
Party has determined that the circumstances causing such suspension no longer
exist.
11.4. Funding/Contribution Indemnity.
Subject to the provisions of Section 2.8(a) of the Credit Agreement, as
the case may be, the Lessee agrees to indemnify each Financing Party and to
hold each Financing Party harmless from any loss or reasonable expense which
such Financing Party may sustain or incur as a consequence of (a) any default
in connection with the drawing of funds for any Advance, (b) any default in
making any prepayment after a notice thereof has been given in accordance with
the provisions of the Operative Agreements or (c) the making of a voluntary or
involuntary payment of Eurodollar Loans or Eurodollar Lessor Advances, as the
case may be, on a day which is not the last day of an Interest Period with
respect thereto. Such indemnification shall be in an amount equal to the
excess, if any, of (x) the amount of interest or Lessor Yield, as the case may
be, which would have accrued on the amount so paid, or not so borrowed,
accepted, converted or continued for the period from the date of such payment
or of such failure to
borrow, accept, convert or continue to the last day of such Interest Period
(or, in the case of a failure to borrow, accept, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable Eurodollar Rate plus the Applicable Percentage for such
Loan or Lessor Advance, as the case may be, for such Interest Period over (y)
the amount of interest (as determined by such Financing Party in its reasonable
discretion) which would have accrued to such Financing Party on such amount by
(i) (in the case of the Lenders) reemploying such funds in loans of the same
type and amount during the period from the date of payment or failure to borrow
to the last day of the then applicable Interest Period (or, in the case of a
failure to borrow, the Interest Period that would have commenced on the date of
such failure) and (ii) (in the case of the Lessor) placing such amount on
deposit for a comparable period with leading banks in the relevant interest
rate market. This covenant shall survive the termination of the Operative
Agreements and the payment of all other amounts payable hereunder.
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY, ETC.
WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION PROVISIONS OF
ANY AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING INDEMNIFICATION
OF ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER EXPRESSLY
RELEASES EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS FOR LOSS
OR DAMAGE, DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR OMISSION
ON THE PART OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE
(WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY,
AND INDEMNIFIES, EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE AND HARMLESS
FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, CLAIMS, LOSSES,
COSTS, LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT LIMITATION
ATTORNEY'S FEES AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH
BENEFICIARY (IRRESPECTIVE OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE
ACTION FOR WHICH INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE
AGREEMENT IS SOUGHT) ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR
CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY.
SECTION 12. MISCELLANEOUS.
12.1. Survival of Agreements.
The representations, warranties, covenants, indemnities and agreements
of the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Lessor, the acquisition
of any Property (or any of its components), any disposition of any interest of
the Lessor in any Property, the payment of the Notes and any disposition
thereof and shall be and continue in effect notwithstanding any investigation
made by any party and the fact that any party may waive compliance with any of
the other terms, provisions or conditions of any of the Operative Agreements.
Except as otherwise expressly set forth herein or in other Operative
Agreements, the indemnities of the parties provided for in the Operative
Agreements shall survive the expiration or termination of any thereof.
12.2. Notices.
All notices required or permitted to be given under any Operative
Agreement shall be in writing. Notices may be served by certified or
registered mail, postage paid with return receipt requested; by private
courier, prepaid; by facsimile, or other telecommunication device capable of
transmitting or creating a written record; or personally. Mailed notices shall
be deemed delivered five (5) days after mailing, properly addressed. Couriered
notices shall be deemed delivered when delivered as addressed, or if the
addressee refuses delivery, when presented for delivery notwithstanding such
refusal. Telecommunicated notices shall be deemed delivered when receipt is
either confirmed by confirming transmission equipment or acknowledged by the
addressee or its office. Personal delivery shall be effective when
accomplished. Unless a party changes its address by giving notice to the other
party as provided herein, notices shall be delivered to the parties at the
following addresses:
If to Lessee, to such entity at the following address:
The Pep Boys - Manny, Moe & ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Legal Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to any Guarantor, to such entity in care of The Pep Boys - Manny, Moe & ▇▇▇▇
at the following address:
The Pep Boys - Manny, Moe & ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to the Borrower or the Lessor, to such entity at the
following address:
Wachovia Development Corporation
c/o Wachovia Securities
One Wachovia Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Agent, to it at the following address:
Wachovia Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ Abessinso
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachovia Securities
One Wachovia Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender, to it at the address set forth for such Lender in Schedule
2.1 of the Credit Agreement.
From time to time any party may designate additional parties
and/or another address for notice purposes by notice to each of the other
parties hereto. Each notice hereunder shall be effective upon receipt or
refusal thereof.
12.3. Counterparts.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one (1) and
the same instrument.
12.4. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters.
Each Operative Agreement may be terminated, amended, supplemented,
waived or modified only by an instrument in writing signed by the Agent (as
directed by the Secured Parties in accordance with the terms of the
Intercreditor Agreement) and each Credit Party that is a party to such
Operative Agreement; provided, that the consent of the Credit Parties shall not
be required to the extent any Default or Event of Default shall have occurred
and be continuing. Without limiting the generality of the foregoing, no
provision of the Lease or any other Operative Agreement affecting (i) any
payment obligations of the Lessee, (ii) the material rights of Lessor or Agent
to demand or receive any payment thereunder or (iii) any provision of any
Security Document with respect to the Tranche A Priority Collateral, may be
terminated, amended, supplemented, waived or modified without the prior written
consent of Congress.
12.5. Headings, etc.
The Table of Contents and headings of the various Articles and Sections
of this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
12.6. Parties in Interest.
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; VENUE.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN
SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAWS). Any legal action
or proceeding with respect to this Agreement or any other Operative Agreement
may be brought in the courts of the State of New York in the borough of
Manhattan or of the United States for the Southern District of New York, and,
by execution and delivery of this Agreement, each of the parties to this
Agreement hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of such courts.
Each of the parties to this Agreement further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to Section
12.2, such service to become effective three (3) days after such mailing.
Nothing herein shall affect the right of any party to serve process in any
other manner permitted by Law or to commence legal proceedings or to otherwise
proceed against any party in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO ANY DISPUTE OR THIS
AGREEMENT, ANY OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(c) Each of the parties to this Agreement hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of
or in connection with this Agreement or any other Operative Agreement brought
in the courts referred to in subsection (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
12.8. Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.9. Liability Limited.
(a) Anything to the contrary contained in this Agreement,
the Credit Agreement, the Notes or in any other Operative Agreement
notwithstanding, no Exculpated Person shall be personally liable in any respect
for any liability or obligation arising hereunder or in any other Operative
Agreement including without limitation the payment of the principal of, or
interest on, the Notes, or for monetary damages for the breach of performance
of any of the covenants contained in the Credit Agreement, the Notes, this
Agreement, the Security Agreement or any of the other Operative Agreements.
The Lenders, the Lessor and the Agent agree that, in the event any remedies
under any Operative Agreement are pursued, neither the Lenders, the Lessor nor
the Agent shall have any recourse against any Exculpated Person, for any
deficiency, loss or Claim for monetary damages or otherwise resulting
therefrom and recourse shall be had solely and exclusively against the
Borrower's Interest (excluding Excepted
Payments) and the Credit Parties (with respect to the Credit Parties'
obligations under the Operative Agreements); but nothing contained herein shall
be taken to prevent recourse against or the enforcement of remedies against the
Borrower's Interest (excluding Excepted Payments) in respect of any and all
liabilities, obligations and undertakings contained herein and/or in any other
Operative Agreement. Notwithstanding the provisions of this Section, nothing
in any Operative Agreement shall: (i) constitute a waiver, release or
discharge of any indebtedness or obligation evidenced by the Notes arising
under any Operative Agreement or secured by any Operative Agreement, but the
same shall continue until paid or discharged; (ii) relieve any Exculpated
Person from liability and responsibility for (but only to the extent of the
damages arising by reason of): active waste knowingly committed by any
Exculpated Person with respect to any Property, any fraud, gross negligence or
willful misconduct on the part of any
Exculpated Person; (iii) relieve any Exculpated Person from liability and
responsibility for (but only to the extent of the moneys misappropriated,
misapplied or not turned over) (A) except for Excepted Payments,
misappropriation or misapplication by the Lessor (i.e., application in a manner
contrary to any of the Operative Agreements) of any insurance proceeds or
condemnation award paid or delivered to the Lessor by any Person other than the
Agent, (B) except for Excepted Payments, any deposits or any escrows or amounts
owed by Lessee held by the Lessor or (C) except for Excepted Payments, any rent
or other income received by the Lessor from any Credit Party that is not turned
over to the Agent; or (iv) affect or in any way limit the Agent's rights and
remedies under any Operative Agreement with respect to the Rents and rights and
powers of the Agent under the Operative Agreements or to obtain a judgment
against the Lessee's interest in the Properties or the Agent's rights and
powers to obtain a judgment against the Lessor or any Credit Party (provided,
that no deficiency judgment or other money judgment shall be enforced against
any Exculpated Person except to the extent of Borrower's Interest (excluding
Excepted Payments) or to the extent the Lessor may be liable as otherwise
contemplated in clauses (ii) and (iii) of this Section 12.9(b)).
12.10. Rights of the Credit Parties.
If at any time all obligations (i) of the Borrower under the Credit
Agreement, the Security Documents and the other Operative Agreements and (ii)
of the Credit Parties under the Operative Agreements have in each case been
satisfied or discharged in full and all amounts due and payable to the Agent,
the Lessor and the Lenders under the Operative Agreements are paid in full,
then the Credit Parties shall be entitled, to the extent permitted under
applicable law, to (a) terminate the Lease and guaranty obligations under
Section 6B and (b) receive all amounts then held under the Operative Agreements
and all proceeds with respect to any of the Properties. Upon the termination
of the Lease and Section 6B pursuant to the foregoing clause (a), the Lessor
shall transfer to the Lessee all of its right, title and interest free and
clear of the Lien of the Lease, the Lien of the Security Documents and all
Lessor Liens in and to any Properties then subject to the Lease and any amounts
or proceeds referred to in the foregoing clause (b) shall be paid over to the
Lessee.
12.11. Further Assurances.
The parties hereto shall promptly cause to be taken, executed,
acknowledged or delivered, at the sole expense of the Lessee, all such further
acts, conveyances, documents and assurances as the other parties may from time
to time reasonably request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative Agreements and
the transactions contemplated hereby and thereby (including without limitation
the preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be
filed or effected). The Lessee, at its own expense and without need of any
prior request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Lessor shall so request) as so requested, in order to maintain and
protect all security interests provided for hereunder or under any other
Operative Agreement. In addition, in connection with the sale or other
disposition of any Property or any portion thereof, the Lessee agrees to
execute such instruments of conveyance as reasonably required in connection
therewith.
12.12. Calculations under Operative Agreements.
The parties hereto agree that all calculations and numerical
determinations to be made under the Operative Agreements by the Lessor shall be
made by the Agent and that such calculations and determinations shall be
conclusive and binding on the parties hereto in the absence of manifest error.
12.13. Confidentiality.
Each Financing Party severally agrees to use reasonable efforts to keep
confidential all non-public information pertaining to any Credit Party or any
of its Subsidiaries which is provided to it by any Credit Party or any of its
Subsidiaries and which an officer of any Credit Party or any of its
Subsidiaries has requested in writing be kept confidential, and shall not
intentionally disclose such information to any Person except:
(a) to the extent such information is public when received
by such Person or becomes public thereafter due to the act or omission of any
party other than such Person;
(b) to the extent such information is independently
obtained from a source other than any Credit Party or any of its Subsidiaries
and such information from such source is not, to such Person's knowledge,
subject to an obligation of confidentiality or, if such information is subject
to an obligation of confidentiality, that disclosure of such information is
permitted;
(c) to counsel, auditors or accountants retained by any
such Person or any Affiliates of any such Person (if such Affiliates are
permitted to receive such information pursuant to clause (f) or (g) below),
provided they agree to keep such information confidential as if such Person
or Affiliate were party to this Agreement and to financial institution
regulators, including examiners of any Financing Party or any Affiliate thereof
in the course of examinations of such Persons;
(d) in connection with any litigation or the enforcement or
preservation of the rights of any Financing Party under the Operative
Agreements;
(e) to the extent required by any applicable statute, rule
or regulation or court order (including without limitation, by way of subpoena)
or pursuant to the request of any regulatory or Governmental Authority having
jurisdiction over any such Person; provided, however, that such Person shall
endeavor (if not otherwise prohibited by Law) to notify the Lessee prior to any
disclosure made pursuant to this clause (e), except that no such Person shall
be subject to any liability whatsoever for any failure to so notify the Lessee;
(f) any Financing Party may disclose such information to
another Financing Party or to any Affiliate of a Financing Party that is a
direct or indirect owner of any Financing Party;
(g) any Financing Party may disclose such information to an
Affiliate of any Financing Party to the extent required in connection with the
transactions contemplated hereby or to the extent such Affiliate is involved
in, or provides advice or assistance to such Person with respect to, such
transactions (provided, in each case that such Affiliate has agreed in writing
to maintain confidentiality as if it were such Financing Party (as the case may
be)); or
(h) to the extent disclosure to any other financial
institution or other Person is appropriate in connection with any proposed or
actual (i) assignment or grant of a participation by any of the Lenders of
interests in the Credit Agreement or any Note to such other financial
institution (who will in turn be required by the Agent to agree in writing to
maintain confidentiality as if it were a Lender originally party to this
Agreement) or (ii) assignment by Lessor of Borrower's Interest to another
Person (who will in turn be required by the Lessor to agree in writing to
maintain confidentiality as if it were the Lessor originally party to this
Agreement).
Subject to the terms of Sections 12.13(a)-12.13(h), under the terms of
any one or more of which circumstances disclosure shall be permitted, each
Financing Party severally agrees to use reasonable efforts to keep confidential
all non-public information pertaining to the financing structure described in
the unrecorded Operative Agreements.
12.14. Financial Reporting/Tax Characterization.
All parties hereto intend and agree to consistently treat, for all US
federal and state income tax purposes, the Lessee as the owner of the Property.
Lessee agrees to obtain advice from its own accountants and tax counsel
regarding the financial reporting treatment and the tax characterization of the
transactions described in the Operative Agreements. Lessee further agrees that
except as hereafter provided in this Section 12.14, Lessee shall not rely upon
any statement of any Financing Party or any of their respective Affiliates and/
or Subsidiaries regarding any such financial reporting treatment and/or tax
characterization. The Lessor acknowledges that the Lessee and its auditors
will be relying upon the information provided pursuant to Sections 8.2(b), (c)
and (d) hereof, the representation of the Lessor contained in the last sentence
of Section 6.1(a) hereof, and the Lessor Confirmation Letters for purposes of
determining consolidation under FASB Interpretation No. 46.
12.15. Set-off.
In addition to any rights now or hereafter granted under applicable Law
and not by way of limitation of any such rights, upon and after the occurrence
of any Event of Default and during the continuance thereof, the Lenders, the
Lessor, their respective Affiliates and any assignee or participant of a
Lender or the Lessor in accordance with the applicable provisions of the
Operative Agreements are hereby authorized by the Credit Parties at any time or
from time to time, without notice to the Credit Parties or to any other Person,
any such notice being hereby expressly waived, to set-off and to appropriate
and to apply any and all deposits (general or special, time or demand,
including without limitation indebtedness evidenced by certificates of deposit,
whether matured or unmatured) and any other indebtedness at any time held or
owing by the Lenders, the Lessor, their respective Affiliates or any assignee
or participant of a Lender or the Lessor in accordance with the applicable
provisions of the
Operative Agreements to or for the credit or the account of any Credit Party
against and on account of the obligations of any Credit Party under the
Operative Agreements irrespective of whether or not (a) the Lenders or the
Lessor shall have made any demand under any Operative Agreement or (b) the
Agent shall have declared any or all of the obligations of any Credit Party
under the Operative Agreements to be due and payable and although such
obligations shall be contingent or unmatured. Notwithstanding the foregoing,
neither the Agent nor any other Financing Party shall exercise, or attempt to
exercise, any right of setoff, banker's lien, or the like, against any deposit
account or property of any Credit Party held by the Agent or any other
Financing Party, without the prior written consent pursuant to the
Intercreditor Agreement, and any Financing Party violating this provision shall
indemnify the Agent and the other Financing Parties from any and all costs,
expenses, liabilities and damages resulting therefrom. The contractual
restriction on the exercise of setoff rights provided in the foregoing sentence
is solely for the benefit of the Agent and the Financing Parties and may not be
enforced by any Credit Party.
12.16. Approval of Exhibits.
Each Lender and the Lessor has reviewed and hereby consents to and approves
each of the exhibits attached to any Operative Agreement and each Mortgage
Instrument.
12.17. Filing of Security Documents.
Lessee and the Lessor each hereby: (i) stipulates and agrees that it intends
for the security interests, including without limitation the interests
referenced in the Mortgage Instruments or any other Security Document, granted
pursuant to any Operative Agreement to or for the benefit of any Financing
Party to be substantially contemporaneous with the value received in connection
with and arising from the execution and delivery of, and performance under this
Agreement and the other Operative Agreements, notwithstanding any delay in the
filing of any document, statement, instrument, including without limitation any
Mortgage Instrument, any UCC financing statement, any Security Document, any
assignment and any termination of previous filings, necessary or otherwise, for
the perfection of any such security interest; (ii) waives, on its own behalf
and on behalf of any successor or assign, its right to assert that the granting
or perfection of such security interests, in whole or in part, was not
substantially contemporaneous with the value received in connection with and
arising from the execution and delivery of, and performance under, this
Agreement and the other Operative Agreements; and (iii) agrees that it will use
its best efforts to cooperate with the Agent and each other Financing Party to
ensure that the security interests granted pursuant to any Operative Agreement
are timely and properly perfected.
[signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
LESSEE:
THE PEP BOYS - MANNY, MOE & ▇▇▇▇, a Pennsylvania corporation
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
THE PEP BOYS ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ OF CALIFORNIA, a California corporation
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
PEP BOYS - MANNY, MOE & ▇▇▇▇ OF DELAWARE, Inc., a Delaware corporation
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
GUARANTORS:
THE PEP BOYS - MANNY, MOE & ▇▇▇▇, a Pennsylvania corporation
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
PEP BOYS - MANNY, MOE & ▇▇▇▇ OF PUERTO RICO, INC.
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
[signature pages continue]
PBY CORPORATION
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
[signature pages continue]
CARRUS SUPPLY CORPORATION
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
[signature pages continue]
LESSOR AND BORROWER:
WACHOVIA DEVELOPMENT CORPORATION
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President
[signature pages continue]
AGENT AND
LENDERS: WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender and as the
Agent
By:
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
[signature pages continue]
WACHOVIA CAPITAL INVESTMENTS, INC., as a Lender
By:
Name:
Title:
[signature pages continue]
▇▇▇▇▇ FARGO FOOTHILL, LLC, as a Lender
By:
Name:
Title:
[signature pages continue]
WHITEHALL BUSINESS CREDIT CORPORATION, as a Lender
By:
Name:
Title:
[signature pages continue]
THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By:
Name:
Title:
[signature pages continue]
GE CAPITAL CORPORATION, as a Lender
By:
Name:
Title:
[signature pages continue]
RZB FINANCE LLC, as a Lender
By:
Name:
Title:
[signature pages continue]
GMAC COMMERCIAL FINANCE LLC, as a Lender
By:
Name:
Title:
[signature pages continue]
LASALLE BUSINESS CREDIT LLC, as a Lender
By:
Name:
Title:
[signature pages continue]
PNC BANK, NATIONAL ASSOCIATION, as a Lender
By:
Name:
Title:
[signature pages continue]
UPS CAPITAL CORPORATION, as a Lender
By:
Name:
Title:
[signature pages continue]
SIEMENS FINANCIAL SERVICES, INC., as a Lender
By:
Name:
Title:
[signature pages continue]
ORIX FINANCIAL SERVICES, INC., as a Lender
By:
Name:
Title:
[signature pages end]
SCHEDULE 1
Repayment of Certain Tranche B Loans
The Tranche B Loans regarding the Properties subject to Lease Supplement Nos.
19 and 20 shall amortize, and a partial repayment of principal made with
respect thereto, in accordance with this Schedule 1. There shall be forty-
eight (48) such partial repayments of principal regarding such Tranche B Loans.
The partial repayments of principal regarding such Tranche B Loans shall be
made at the end of each monthly Interest Period as long as the applicable
Tranche B Loans are Eurodollar Loans and on the first Business Day of each
month at any time that the applicable Tranche B Loans are not Eurodollar
Loans. Each partial repayment of principal regarding such Tranche B Loans
shall be made in an amount as described in the following pages of this Schedule
1.
Equipment Amortization Schedule(Applicable to Tranche B Loans Only)
Interest Store # 6121 Store # 6123
Period Plainfield, INLease ▇▇▇▇▇▇▇, NYLease
Supplement ▇▇. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇
▇ $78,901.00 $108,107.58
2 78,901.00 108,107.58
3 78,901.00 108,107.58
4 78,901.00 108,107.58
5 78,901.00 108,107.58
6 78,901.00 108,107.58
7 78,901.00 108,107.58
8 78,901.00 108,107.58
9 78,901.00 108,107.58
10 78,901.00 108,107.58
11 78,901.00 108,107.58
12 78,901.00 108,107.58
13 78,901.00 108,107.58
14 78,901.00 108,107.58
15 78,901.00 108,107.58
16 78,901.00 108,107.58
17 78,901.00 108,107.58
18 78,901.00 108,107.58
19 78,901.00 108,107.58
20 78,901.00 108,107.58
21 78,901.00 108,107.58
22 78,901.00 108,107.58
23 78,901.00 108,107.58
24 78,901.00 108,107.58
25 78,901.00 108,107.58
26 78,901.00 108,107.58
27 78,901.00 108,107.58
28 78,901.00 108,107.58
29 78,901.00 108,107.58
30 78,901.00 108,107.58
31 78,901.00 108,107.58
32 78,901.00 108,107.58
33 78,901.00 108,107.58
34 78,901.00 108,107.58
35 78,901.00 108,107.58
36 78,901.00 108,107.58
37 78,901.00 108,107.58
38 78,901.00 108,107.58
39 78,901.00 108,107.58
40 78,901.00 108,107.58
41 78,901.00 108,107.58
42 78,901.00 108,107.58
43 78,901.00 108,107.58
44 78,901.00 108,107.58
45 78,901.00 108,107.58
46 78,901.00 108,107.58
47 78,901.00 108,107.58
48 78,901.00 108,107.58
EXHIBIT A
REQUISITION FORM
[_______________, a __________] corporation (the "Company") hereby
certifies as true and correct and delivers the following Requisition to
WACHOVIA BANK, NATIONAL ASSOCIATION, as the agent for the Lenders
(hereinafter defined) and respecting the Security Documents, as the
agent for the Secured Parties (the "Agent"):
Reference is made herein to that certain Participation Agreement dated
as of August 1, 2003 (as amended, modified, extended, supplemented,
restated and/or replaced from time to time, the "Participation
Agreement") The Pep Boys - Manny, Moe & ▇▇▇▇, The Pep Boys ▇▇▇▇▇ ▇▇▇ &
▇▇▇▇ of California, Pep Boys - Manny, Moe & ▇▇▇▇ of Delaware, Inc., as
Lessees, The Pep Boys - Manny, Moe & ▇▇▇▇ and the various parties
thereto from time to time, as the Guarantors, Wachovia Development
Corporation (the "Lessor") the various banks and other lending
institutions which are parties thereto from time to time, as lenders
(the "Lenders"), and the Agent. Capitalized terms used herein but not
otherwise defined herein shall have the meanings set forth therefor in
the Participation Agreement.
In connection with this Requisition, the Company hereby requests that
the Lenders make Loans to the Lessor in the amount of $______________
and that the Lessor make the Lessor Advance in the amount of
$________________. The Company hereby certifies that each of the
provisions of the Participation Agreement applicable to the Loans and
the Lessor Advance requested hereunder have been complied with as of
the date of this Requisition.
The Company requests the Loans be allocated as follows:
$______________ Eurodollar Loans
The Company requests the Lessor Advance be allocated as follows:
$______________ Eurodollar Lessor Advance
The Company hereby acknowledges and agrees that (a) $___________ (which
is the amount paid by the Financing Parties pursuant to the Assignment
and Recharacterization Agreement) shall constitute Loans and Lessor
Advances and (b) such amount referenced in the foregoing subsection (a)
plus the Loans and Lessor Advances referenced above in this Requisition
shall constitute the aggregate Property Cost, allocable to individual
Properties in accordance with Exhibit M of the Participation Agreement.
The Company has caused this Requisition to be executed by its duly
authorized officer as of this _____ day of __________, ______.
THE PEP BOYS - MANNY, MOE & ▇▇▇▇ a Pennsylvania corporation,
By:
Name:
Title:
THE PEP BOYS ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ OF CALIFORNIA, a California corporation
By:
Name:
Title:
PEP BOYS - MANNY, MOE & ▇▇▇▇ OF DELAWARE, Inc., a Delaware corporation
By:
Name:
Title:
EXHIBIT B
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(j) of the
Participation Agreement)
[TO BE PROVIDED]
[Intentionally Reserved]
EXHIBIT D
[NAME OF CREDIT PARTY]
SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(x) of the Participation Agreement)
[NAME OF CREDIT PARTY], a [__________] corporation (the "Company")
DOES HEREBY CERTIFY as follows:
1. Attached hereto as Schedule 1 is a true, correct and complete copy of
the resolutions of the Board of Directors of the Company duly adopted
by the Board of Directors of the Company on __________. Such
resolutions have not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as of the date
hereof.
2. Attached hereto as Schedule 2 is a true, correct and complete copy of
the Articles of Incorporation of the Company on file in the Office of
the Secretary of State of __________. Such Articles of Incorporation
have not been amended, modified or rescinded since their date of
adoption and remain in full force and effect as of the date hereof.
3. Attached hereto as Schedule 3 is a true, correct and complete copy of
the Bylaws of the Company. Such Bylaws have not been amended, modified
or rescinded since their date of adoption and remain in full force and
effect as of the date hereof.
4. The persons named below now hold the offices set forth opposite their
names, and the signatures opposite their names and titles are their
true and correct signatures.
Name Office Signature
___________________ _______________________ _________________________
___________________ _______________________ _________________________
IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be
duly executed and delivered as of this _____ day of ___________, ______.
[NAME OF CREDIT PARTY]
By:
Name:
Title:
Schedule 1
Board Resolutions
Schedule 2
Articles of Incorporation
Schedule 3
Bylaws
EXHIBIT E
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(z) of the Participation Agreement)
WACHOVIA DEVELOPMENT CORPORATION
OFFICER'S CERTIFICATE
WACHOVIA DEVELOPMENT CORPORATION, a North Carolina corporation (the
"Lessor"), DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of the Lessor contained in
the Operative Agreements to which it is a party is true and correct on
and as of the date hereof.
2. Each Operative Agreement to which the Lessor is a party is in full
force and effect with respect to it.
3. The Lessor is duly performing and in compliance in all material
respects with all covenants, agreements and conditions contained in the
Participation Agreement (hereinafter defined) or in any Operative
Agreement required to be performed or complied with by it on the date
hereof, other than those conditions which have been expressly waived.
4. No Default or Event of Default attributable solely to the Lessor has
occurred and is continuing under any Operative Agreement.
5. The Lessor is not an entity which (a) is or holds itself out as being
engaged primarily, or proposes to engage primarily, in the business of
investing, reinvesting or trading in securities; (b) is engaged or
proposes to engage in the business of issuing face-amount certificates
of the installment type, or has been engaged in such business and has
any such certificate outstanding; or (c) is engaged or proposes to
engage in the business of investing, reinvesting, owning, holding or
trading in securities, and owns or proposes to acquire "investment
securities" having a value exceeding 40 per centum of the value of its
total assets (exclusive of government securities and cash items) on an
unconsolidated basis. As used in this paragraph, "investment
securities" includes all securities except (i) government securities,
(ii) securities issued by employees' securities companies, and (iii)
securities issued by majority-owned subsidiaries of the owner which are
not investment companies. As used in this paragraph, "government
securities" means any security issued or guaranteed as to principal or
interest by the United States, or by a person controlled or supervised
by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United
States; or any certificate of deposit for any of the foregoing.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of ________ __, 2003 among The Pep Boys - Manny, Moe & ▇▇▇▇,
The Pep Boys ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ of California, Pep Boys - Manny, Moe & ▇▇▇▇ of
Delaware, Inc., jointly and severally as the Lessee, The Pep Boys - Manny, Moe
& ▇▇▇▇ and the various parties thereto from time to time guarantors, the
Lessor, the various banks and other lending institutions which are parties
thereto from time to time as lenders (subject to the definition of Lenders in
Appendix A to the Participation Agreement, individually, a "Lender" and
collectively, the "Lenders") and Wachovia Bank, National Association, a
national banking association, as the agent for the Lessor and the Lenders and
respecting the Security Documents, as the agent for the Secured Parties (as
defined therein).
IN WITNESS WHEREOF, the Lessor has caused this Officer's Certificate to be duly
executed and delivered as of this _____ day of ________________, ______.
WACHOVIA DEVELOPMENT CORPORATION
By:
Name:
Title:
EXHIBIT F
SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(aa) of the Participation Agreement)
WACHOVIA DEVELOPMENT CORPORATION
CERTIFICATE OF SECRETARY
I, ______________________, duly elected and qualified Secretary of
Wachovia Development Corporation (the "Company"), hereby certify as
follows:
1. Attached hereto as Schedule 1 is a true, correct and complete copy of
the resolutions of the Board of Directors of the Company duly adopted
by the Board of Directors of the Company on __________. Such
resolutions have not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as of the date
hereof.
2. Attached hereto as Schedule 2 is a true, correct and complete copy of
the Articles of Incorporation of the Company on file in the Office of
the Secretary of State of North Carolina. Such Articles of
Incorporation have not been amended, modified or rescinded since their
date of adoption and were in full force and effect on the date of the
resolutions referenced in paragraph 1 and remain in full force and
effect as of the date hereof.
3. Attached hereto as Schedule 3 is a true, correct and complete copy of
the Bylaws of the Company. Such Bylaws have not been amended, modified
or rescinded since their date of adoption and remain in full force and
effect as of the date hereof.
4. The persons named below now hold the offices set forth opposite their
names, and the signatures opposite their names and titles are their
true and correct signatures.
Name Office Signature
___________________ _______________________ _________________________
___________________ _______________________ _________________________
IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate
to be duly executed and delivered as of this _____ day of ___________,
______.
WACHOVIA DEVELOPMENT CORPORATION
By:
Name:
Title:
Schedule 1
Board Resolutions
Schedule 2
Articles of Incorporation
Schedule 3
Bylaws
EXHIBIT G
[Outside Counsel Opinion for the Lessor]
(Pursuant to Section 5.3(bb) of the
Participation Agreement)
EXHIBIT H
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(cc) of the Participation Agreement)
EXHIBIT K
Description of Material Litigation
(Pursuant to Section 6.2(d) of the Participation Agreement)
The California subsidiary of The Pep Boys - Manny, Moe & ▇▇▇▇ (the
"Company") is a defendant in a consolidated action entitled "▇▇▇▇▇▇ et al vs.
The Pep Boys - ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇" that is currently pending in the California
Superior Court in Orange County. The two consolidated actions were originally
filed on March 29, 2000 and July 25, 2000. Plaintiffs are former and current
store management employees who claim that they were improperly classified as
exempt from the overtime provisions of California law and seek to be
compensated for all overtime hours worked. Plaintiffs' motion to certify the
case as a class action to represent all persons employed in California since
March 29, 1996 as salaried store managers, assistant store managers, service
managers and assistant service managers was previously granted by the trial
court. The Company's appeals of that decision through the California Supreme
Court were unsuccessful. The Company is now preparing to move the trial court
for reconsideration of its decision to certify the class. No trial date has
been set for the underlying case. The Company is currently engaged in
settlement negotiations to resolve this action. If such negotiations are
unsuccessful, the Company intends to continue to vigorously defend this action.
While the Company believes that this action is not material to its financial
position, an adverse outcome exceeding the amount accrued therefore may have a
material adverse effect on the Company's results of operations for the year in
which this action is ultimately resolved.
An action entitled "▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇; Energy Tech Corporation v. Pep Boys
Corporation; Manny, Moe & ▇▇▇▇ Corp. Puerto Rico, Inc. d/b/a Pep Boys" was
previously instituted against the Company in the Court of First Instance of
Puerto Rico, Bayamon Superior Division on March 15, 2002. The action was
subsequently removed to, and is currently pending in, the United States
District Court for the District of Puerto Rico. Plaintiffs are distributors of
a product that claims to improve gas mileage. The plaintiffs allege that the
Company entered into an agreement with them to act as the exclusive retailer of
the product in Puerto Rico that was breached when the Company determined to
stop selling the product. The Company became aware of a Federal Trade
Commission investigation regarding the accuracy of advertising claims
concerning the product's effectiveness. The plaintiffs further allege that
they were negotiating with the manufacturer of the product to obtain the
exclusive distribution rights throughout the United States and that those
negotiations failed. Plaintiffs are seeking damages including payment for the
product that they allege Pep Boys ordered and expenses and loss of sales in
Puerto Rico and the United States resulting from the alleged breach. The
Company believes that the claims are without merit and continues to vigorously
defend this action.
EXHIBIT L
States of Incorporation/Formation and Chief Executive Office
and Principal Place of Business of Each Credit Party
(Pursuant to Section 6.2(i) of the Participation Agreement)
Credit Party State of Formation Address of ChiefExecutive Office and
Principal Place of Business The Pep Boys - Manny, Moe & ▇▇▇▇
Pennsylvania ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ a/k/a 32nd &
Allegheny ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Pep Boys - Manny, Moe & ▇▇▇▇ of
Delaware, Inc. Delaware ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
a/k/a 32nd &Allegheny ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ The Pep Boys - Manny,
Moe and ▇▇▇▇ of California California ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ 19132a/k/a 32nd &Allegheny ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Pep Boys - Manny, Moe & ▇▇▇▇ of Puerto Rico, Inc. Delaware
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ 19132a/k/a ▇▇▇▇ &▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Carrus Supply Corporation Pennsylvania ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ 19132a/k/a 32nd &Allegheny ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PBY Corporation Delaware ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
EXHIBIT M
Store # City State Loan Property Cost Lessor Property Cost Property Cost
562 Lodi CA $2,657,674.40 $139,877.60 $2,797,552.00
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $4,500,637.35 $236,875.65 $4,737,513.00
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ $3,490,689.50 $183,720.50 $3,674,410.00
▇▇▇ ▇▇▇▇▇▇ ▇▇ $2,759,877.30 $145,256.70 $2,905,134.00
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ $3,884,118.70 $204,427.30 $4,088,546.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ $2,248,859.95 $118,361.05 $2,367,221.00
▇▇▇ ▇▇▇▇▇▇ ▇▇ $2,965,155.20 $156,060.80 $3,121,216.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ $2,870,247.35 $151,065.65 $3,021,313.00
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ $2,729,828.80 $143,675.20 $2,873,504.00
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $2,965,451.60 $156,076.40 $3,121,528.00
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ $2,709,842.70 $142,623.30 $2,852,466.00
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $2,987,323.45 $157,227.55 $3,144,551.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ IN $2,654,798.75 $139,726.25 $2,794,525.00
6121 Plainfield IN $17,421,544.60 $916,923.40 $18,338,468.00
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ MD $2,509,724.25 $132,090.75 $2,641,815.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ MD $3,132,327.65 $164,859.35 $3,297,187.00
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $2,678,139.30 $140,954.70 $2,819,094.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ $2,697,416.70 $141,969.30 $2,839,386.00
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ $2,763,679.20 $145,456.80 $2,909,136.00
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ $2,661,334.75 $140,070.25 $2,801,405.00
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ $3,590,544.00 $188,976.00 $3,779,520.00
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ $3,893,970.20 $204,945.80 $4,098,916.00
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $2,629,694.05 $138,404.95 $2,768,099.00
▇▇▇ ▇▇▇▇▇▇ ▇▇ $4,409,794.55 $232,094.45 $4,641,889.00
▇▇▇ ▇▇▇▇▇▇ ▇▇ $3,893,970.20 $204,945.80 $4,098,916.00
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ $2,629,694.05 $138,404.95 $2,768,099.00
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $20,918,205.80 $1,100,958.20 $22,019,164.00
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ $2,511,048.55 $132,160.45 $2,643,209.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ $2,476,160.75 $130,324.25 $2,606,485.00
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ $2,326,267.85 $122,435.15 $2,448,703.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ $2,831,978.50 $149,051.50 $2,981,030.00
Total $125,400,000.00 $6,600,000.00 $132,000,000.00
EXHIBIT N
INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT
Appendix A
Rules of Usage and Definitions
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions set
forth herein or in any other document shall be equally applicable to the
singular and plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any
document to articles, sections, paragraphs, clauses, annexes, appendices,
schedules or exhibits are references to articles, sections, paragraphs,
clauses, annexes, appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any
document are solely for convenience of reference and shall not constitute a
part of any such document nor shall they affect the meaning, construction or
effect of any provision thereof.
(d) References to any Person shall include such Person, its
successors, permitted assigns and permitted transferees.
(e) Except as otherwise expressly provided, reference to any
agreement means such agreement as amended, modified, extended, supplemented,
restated and/or replaced from time to time in accordance with the applicable
provisions thereof.
(f) Except as otherwise expressly provided, references to any law
includes any amendment or modification to such law and any rules or regulations
issued thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of the applicable
document and not to any particular article, section, subsection, paragraph or
clause thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
(i) References herein to "attorney's fees", "legal fees", "costs of
counsel" or other such references shall be deemed to include the allocated cost
of in-house counsel.
(j) Each of the parties to the Operative Agreements and their
counsel have reviewed and revised, or requested revisions to, the Operative
Agreements, and the usual rule of construction that any ambiguities are to be
resolved against the drafting party shall be inapplicable in the construction
and interpretation of the Operative Agreements and any amendments or exhibits
thereto.
(k) Capitalized terms used in any Operative Agreements which are
not defined in this Appendix A but are defined in another Operative Agreement
shall have the meaning so ascribed to such term in the applicable Operative
Agreement.
(l) In computing any period of time for purposes of any Operative
Agreement, the mechanics for counting the number of days set forth in Rule 6 of
the Federal Rules of Civil Procedure shall be observed.
II. Definitions
"1995 Pep Boys Leased Property Trust" shall mean the grantor trust
amended and restated pursuant to the terms and conditions of the Trust
Agreement (1995).
"1997 Pep Boys II Leased Property Trust" shall mean the grantor trust
amended and restated pursuant to the terms and conditions of the
Trust Agreement (1997).
"ABR" shall mean, for any day, the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.
"ABR Lessor Advance" shall mean a Lessor Advance bearing a Lessor Yield
based on the ABR.
"ABR Loans" shall mean Loans the rate of interest applicable to which
is based upon the ABR.
"Acceleration" shall have the meaning given to such term in Section 6
of the Credit Agreement.
"Accounts" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Additional Incorporated Terms" shall have the meaning given to such
term in Section 28.1 of the Lease.
"Advance" shall mean the Loans and the Lessor Advance made on the
Closing Date.
"Affiliate" shall mean, with respect to any Person, any Person or
group acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
"After Tax Basis" shall mean, with respect to any payment to be
received, the amount of such payment increased so that, after deduction of the
amount of all taxes required to be paid by the recipient calculated at the then
maximum marginal rates generally applicable to Persons of the same type as the
recipients with respect to the receipt by the recipient of such amounts (less
any tax savings realized as a result of the payment of the indemnified amount),
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agent" shall mean Wachovia Bank, National Association, as agent for
the Lenders pursuant to the Credit Agreement, or any successor agent appointed
in accordance with the terms of the Credit Agreement and respecting the
Security Documents, as agent for the Secured Parties.
"Applicable Percentage" shall mean (a) the Applicable Margin (as such
term is defined in the Lessee Credit Agreement (without giving effect to any
amendment, modification, waiver or supplement thereto unless agreed to by the
Agent under Section 28.1 of the Lease) and calculated in accordance with the
terms and conditions set forth in the Lessee Credit Agreement) for Tranche A
Eurodollar Loans and all ABR Loans, (b) two and twenty-five hundredths percent
(2.25%) for Tranche B Eurodollar Loans, and (c) two and twenty-five hundredths
percent (2.25%) for Eurodollar Lessor Advances and ABR Lessor Advances.
"Appraisal" shall mean, with respect to any Property, an appraisal to
be delivered in connection with the Participation Agreement or in accordance
with the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent, complies with all of the provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, as amended, the rules and
regulations adopted pursuant thereto, and all other applicable Legal
Requirements.
"Appraisal Procedure" shall have the meaning given such term in Section
22.4 of the Lease.
"Appurtenant Rights" shall mean (a) all agreements, easements, rights
of way or use, rights of ingress or egress, privileges, appurtenances,
tenements, hereditaments and other rights and benefits at any time belonging
or pertaining to the Land underlying the Improvements or the Improvements,
including without limitation the use of any streets, ways, alleys, vaults or
strips of land adjoining, abutting, adjacent or contiguous to the Land and (b)
all permits, licenses and rights, whether or not of record, appurtenant to such
Land or the Improvements.
"Assignment and Acceptance" shall mean the Assignment and Acceptance in
the form attached to the Credit Agreement as EXHIBIT B.
"Assignment and Recharacterization Agreement" shall mean that certain
Assignment and Recharacterization Agreement dated as of the Closing Date among
the Lessee, the Guarantors, the Trust Company as owner trustee, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
as co?owner trustee, State Street Bank and Trust Company of California, the
holders of the Existing Holder Certificates, the holders of the Existing Notes,
Wachovia Bank, National Association as agent, Lessor, the Lenders and the
Agent.
"Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.
"Bankruptcy Event" shall have the meaning given to such term in Section
1.1 of the Intercreditor Agreement.
"Base Amount" shall have the meaning given to such term in Section 10.1
(e) of the Lease.
"Basic Documents" shall mean the following: the Participation
Agreement, the Credit Agreement, the Notes, the Lease, the Intercreditor
Agreement and the Security Agreement.
"Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b) the
Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is
due.
"Benefitted Lender" shall have the meaning specified in Section 9.10(a)
of the Credit Agreement.
"▇▇▇▇ of Sale" shall mean a ▇▇▇▇ of Sale regarding Equipment in form
and substance satisfactory to the Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrower" shall mean Wachovia Development Corporation, a North
Carolina Corporation.
"Borrower's Interest" shall mean the Borrower's rights in, to and under
the Properties, the Operative Agreements, any other property contributed on
behalf of the Lessee and any and all other property or assets from time to time
of the Borrower obtained with respect to the Operative Agreements, including,
without limitation, Modifications, and all amounts of Rent, insurance proceeds
and condemnation awards, indemnity or other payments of any kind received by
the Borrower pursuant to the Operative Agreements; provided, the term
"Borrower's Interest" shall not include the Lessor Advance or any Lessor Yield.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Charlotte, North Carolina or any other states
from which the Agent, any Lender or Lessor funds or engages in administrative
activities with respect to the transactions under the Operative Agreements are
authorized or required by law to close; provided, however, that when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
property (whether real, personal, tangible, intangible or mixed of such Person)
by such Person as the lessee which would be capitalized on a balance sheet of
such Person prepared in accordance with GAAP.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock, partnership interests or limited liability company
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
"Casualty" shall mean any damage or destruction of all or any portion
of the Property as a result of a fire or other casualty.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. 9601 et seq., as amended
by the Superfund Amendments and Reauthorization Act of 1986.
"Change of Control" shall mean (a) the transfer (in one transaction or
a series of transactions) of all or substantially all of the assets of any
Credit Party to any Person or group (as such term is used in Section 13(d)(3)
of the Exchange Act other than as permitted in Section 9.7 of the Lessee Credit
Agreement); (b) the liquidation or dissolution of any Credit Party or the
adoption of a plan by the stockholders of any Credit Party relating to the
dissolution or liquidation of such Credit Party other than as permitted in
Section 9.7 of the Lessee Credit Agreement, (c) the acquisition by any Person
or group (as such term is used in Section 13(d)(3) of the Exchange Act), of
beneficial ownership, directly or indirectly, of fifty (50%) percent or more of
the voting power of the total outstanding Voting Stock of Pep Boys Parent; (d)
during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Pep Boys Parent
(together with any new directors whose nomination for election by the
stockholders of Pep Boys Parent was approved by a vote of at least sixty-six
and two thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Pep Boys Parent then still
in office; or (e) the failure of Pep Boys Parent to own one hundred percent
(100%) of the voting power of the total outstanding Voting Stock of any Credit
Party other than Pep Boys Parent.
"Chattel Paper" shall have the meaning given to such term in Section 1
of the Security Agreement.
"Claims" shall mean any and all obligations, liabilities, losses,
actions, suits, penalties, claims, demands, costs and expenses (including
without limitation reasonable attorney's fees and expenses) of any nature
whatsoever.
"Closing Date" shall mean August 1, 2003.
"Code" shall mean the Internal Revenue Code of 1986 together with rules
and regulations promulgated thereunder, as amended from time to time, or any
successor statute thereto.
"Collateral" shall mean the assets of the Lessor, now owned or
hereafter acquired, upon which a Lien is purported to be created by one or more
of the Security Documents.
"Commencement Date" shall have the meaning specified in Section 2.2 of
the Lease.
"Commitment" shall mean, as to any Lender, the Tranche A Commitment and
the Tranche B Commitment of such Lender, and as to the Lessor, the Lessor
Commitment.
"Company Obligations" shall mean all present and future obligations
(whether contingent or otherwise) of The Pep Boys - Manny, Moe & ▇▇▇▇, a
Pennsylvania corporation, The Pep Boys ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ of California, a
California corporation, Pep Boys - Manny, Moe & ▇▇▇▇ of Delaware, Inc., a
Delaware corporation, Pep Boys - Manny, Moe & ▇▇▇▇ of Puerto Rico, Inc., a
Delaware corporation, PBY Corporation, a Delaware corporation and Carrus Supply
Corporation, a Delaware corporation, each in any and all capacities under and
with respect to the Operative Agreements and each Property.
"Condemnation" shall mean any taking or sale of the use, access,
occupancy, easement rights or title to any Property or any part thereof, wholly
or partially (temporarily or permanently), by or on account of any actual or
threatened eminent domain proceeding or other taking of action by any Person
having the power of eminent domain, including without limitation an action by a
Governmental Authority to change the grade of, or widen the streets adjacent
to, any Property or alter the pedestrian or vehicular traffic flow to any
Property so as to result in a change in access to such Property, or by or on
account of an eviction by paramount title or any transfer made in lieu of any
such proceeding or action.
"Congress" shall mean the Revolving Loan Agent, as such term is defined
in the Intercreditor Agreement.
"Consolidated Subsidiary" shall mean, as to any Person, any Subsidiary
of such Person which under the rules of GAAP consistently applied should have
its financial results consolidated with those of such Person for purposes of
financial accounting statements.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414 of the Code.
"Credit Agreement" shall mean, collectively or individually as the
context requires, the Tranche A Credit Agreement and the Tranche B Credit
Agreement.
"Credit Agreement Default" shall mean any event or condition which,
with the lapse of time or the giving of notice, or both, would constitute a
Credit Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Section 6 of the Credit Agreement.
"Credit Documents" shall mean the Participation Agreement, the Credit
Agreement, the Notes, the Intercreditor Agreement and the Security Documents.
"Credit Parties" shall mean each Lessee and each Guarantor.
"Deed" shall mean a special or limited warranty deed regarding the Land
and/or Improvements in form and substance satisfactory to the Agent.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Debt Rating" shall mean, as of any date of determination thereof and
with respect to any Person, the ratings most recently published by the Rating
Agencies relating to the unsecured, unsupported senior long-term debt
obligations of such Person.
"Deficiency Balance" shall have the meaning given in Section 22.1(b) of
the Lease Agreement.
"Documents" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Election Date" shall have the meaning given to such term in Section
20.1 of the Lease.
"Election Notice" shall have the meaning given to such term in Section
20.1 of the Lease.
"Eligible Lessor" shall mean a Person not affiliated with the Lessee
with a Debt Rating from a Rating Agency of "A" or higher and with assets
(excluding those assets that are financed with 100% non-recourse debt) with a
total gross fair value of $200,000,000 or more, or any Affiliate of such a
Person if such Person otherwise agrees in writing to indemnify the Lenders in a
manner reasonably satisfactory to the Lenders for any Claim arising solely as a
result of a Bankruptcy Event respecting such Affiliate.
"Employee Benefit Plan" or "Plan" shall mean an employee benefit plan
(within the meaning of Section 3(3) of ERISA, including without limitation any
Multiemployer Plan), or any "plan" as defined in Section 4975(e)(1) of the Code
and as interpreted by the Internal Revenue Service and the Department of Labor
in rules, regulations, releases or bulletins in effect on any Closing Date.
"Environmental Claims" shall mean any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Substance, (c) from any abatement, removal, remedial, corrective, or
other response action in connection with a Hazardous Substance, Environmental
Law, or other order of a Tribunal or (d) from any actual or alleged damage,
injury, threat, or harm to health, safety, natural resources, or the
environment.
"Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. 6901,
et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or
condition that violates or threatens (if the threat requires remediation under
any Environmental Law and must be remediated during any grace period allowed
under such Environmental Law) to violate or results in or threatens (if the
threat requires remediation under any Environmental Law and must be remediated
during any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Lessor Advance by
Lessee or the Lessor and all improvements and modifications thereto and
replacements thereof, whether or not now owned or hereafter acquired or now or
subsequently attached to, contained in or used or usable in any way in
connection with any operation of any Improvements, including but without
limiting the generality of the foregoing, all equipment described in the
Appraisal and any and all equipment described in any Lease Supplement
(including without limitation Lease Supplement Nos. 1 through 31) including
without limitation all heating, electrical, and mechanical equipment, lighting,
switchboards, plumbing, ventilation, air conditioning and air-cooling
apparatus, refrigerating, and incinerating equipment, escalators, elevators,
loading and unloading equipment and systems, cleaning systems (including
without limitation window cleaning apparatus), (but excluding telephones,
communication systems, satellite dishes, antennae, televisions and computers),
sprinkler systems and other fire prevention and extinguishing apparatus and
materials, security systems, motors, engines, machinery, pipes, pumps, tanks,
conduits, appliances, fittings and fixtures of every kind and description.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean each entity required to be aggregated with
any Credit Party pursuant to the requirements of Section 414(b) or (c) of the
Code.
"Eurocurrency Reserve Requirements" shall mean for any day as applied
to a Eurodollar Loan or Eurodollar Lessor Advance, the aggregate (without
duplication) of the maximum rates (expressed as a decimal) of reserve
requirements in effect on such day (including without limitation basic,
supplemental, marginal and emergency reserves under any regulations of the
Board or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed on eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D) maintained by a
member bank of the Federal Reserve System.
"Eurodollar Lessor Advance" shall mean a Lessor Advance bearing a
Lessor Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to each Interest Period for each
Eurodollar Loan or Eurodollar Lessor Advance, the rate per annum (rounded
upwards, if necessary, to the next one sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b)
a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For
purposes hereof, "Reserve Percentage" shall mean the reserve percentage,
expressed as a decimal, prescribed by any United States or applicable to
deposits of United States dollars in a non-United States or an international
banking office of Reference Bank used to fund a Eurodollar Loan or Eurodollar
Lessor Advance or any Eurodollar Loan or Eurodollar Lessor Advance made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Eurodollar Rate shall be adjusted
on and as of the effective day of any change in the Reserve Percentage.
"Event of Default" shall mean a Lease Event of Default or a Credit
Agreement Event of Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including without limitation
indemnity payments made pursuant to Section 11 of the Participation Agreement),
whether made by adjustment to Basic Rent or otherwise, to which the Lessor or
any of its respective Affiliates, agents, officers, directors or employees is
entitled;
(b) any amounts (other than Basic Rent or Termination
Value) payable under any Operative Agreement to reimburse the Lessor or any of
its respective Affiliates (including without limitation the reasonable expenses
of the Lessor incurred in connection with any such payment) for performing or
complying with any of the obligations of any Credit Party under and as
permitted by any Operative Agreement;
(c) any amount payable to the Lessor by any transferee of
such interest of Lessor as the purchase price of such Lessor's interest in the
Borrower's Interest (or a portion thereof);
(d) any insurance proceeds (or payments with respect to
risks self-insured or policy deductibles) under liability policies other than
such proceeds or payments payable to the Agent or any Lender;
(e) any insurance proceeds under policies maintained by the
Lessor for its own benefit;
(f) Transaction Expenses or other amounts, fees,
disbursements or expenses paid or payable to or for the benefit of the Lessor;
(g) any payments in respect of interest to the extent
attributable to payments referred to in clauses (a) through (f) above; and
(h) any rights of either the Lessor to demand, collect, ▇▇▇
for or otherwise receive and enforce payment of any of the foregoing amounts,
provided that such rights shall not include the right to terminate the Lease.
"Excess Proceeds" shall mean the excess, if any, of the aggregate of
all awards, compensation or insurance proceeds payable in connection with a
Casualty or Condemnation over the Termination Value paid by the Lessee pursuant
to the Lease with respect to such Casualty or Condemnation.
"Exculpated Persons" shall mean the Lessor, its Affiliates and their
officers, directors, shareholders and partners.
"Existing Holder Certificates" shall have the meaning specified in
Section 2 of the Participation Agreement.
"Existing Notes" shall have the meaning specified in Section 2 of the
Participation Agreement.
"Existing Operative Agreements" shall mean the Operative Agreements as
such term is defined in the Existing Participation Agreement.
"Existing Participation Agreement" shall mean that certain
Participation Agreement dated as of September 22, 2000 among the Lessee, the
Guarantors, the Trust Company, as the owner trustee under the Trust, the
various banks and other lending institutions which are parties thereto from
time to time, as holders of the certificates issued with respect to the Trust,
the various banks and other lending institutions which are parties thereto from
time to time, as lenders, and Wachovia Bank, National Association, N.A., as the
agent for the lenders party thereto and respecting the Security Documents, as
the agent for the secured parties thereunder.
"Exempt Payments" shall have the meaning specified in Section 11.2(e)
of the Participation Agreement.
"Expiration Date" shall mean the last day of the Term; provided, in no
event shall the Expiration Date be later than August 1, 2008, unless such later
date has been expressly agreed to in writing by each of the Lessor, the Lessee,
the Agent and the Lenders.
"Fair Market Sales Value" shall mean, with respect to any Property, the
amount, which in any event, shall not be less than zero (0), that would be paid
in cash in an arms-length transaction between an informed and willing purchaser
and an informed and willing seller, neither of whom is under any compulsion to
purchase or sell, respectively, such Property. Fair Market Sales Value of any
Property shall be determined based on the assumption that, except for purposes
of Section 17 of the Lease, such Property is in the condition and state of
repair required under Section 10.1 of the Lease and each Credit Party is in
compliance with the other requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such
term in the definition of ABR.
"Financing Parties" shall mean the Lessor, the Agent and the Lenders.
First Priority Real Estate Liens" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.
"Fixtures" shall mean all fixtures relating to the Improvements,
including without limitation all components thereof, located in or on the
Improvements, together with all replacements, modifications, alterations and
additions thereto.
"Form W-8BEN" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"Form W-8ECI" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the accounting principles board of the
American Institute of Certified Public Accountants, and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, that are applicable to the circumstances as of the
date of determination.
"GAAP Change Notice" shall have the meaning specified in Section 10.1
(d)(i) of the Participation Agreement.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions,
publications, filings, notices to and declarations of or with, or required by,
any Governmental Authority, or required by any Legal Requirement, and shall
include, without limitation, all environmental and operating permits and
licenses that are required for the full use, occupancy, zoning and operating of
the Property.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantors" shall mean the various parties to the Participation
Agreement from time to time, as guarantors of the Lessee with respect to the
Operative Agreements and the Properties.
"Hazardous Substance" shall mean any of the following: (a) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (b) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste, or pollutant, in each case whether naturally occurring, man
-made or the by-product of any process, that is toxic, harmful or hazardous to
the environment or human health or safety as determined in accordance with any
Environmental Law; or (c) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.
"Impositions" shall mean any and all liabilities, losses, expenses,
costs, charges and Liens of any kind whatsoever for fees, taxes, levies,
imposts, duties, charges, assessments or withholdings ("Taxes") including but
not limited to (i) real and personal property taxes, including without
limitation personal property taxes on any property covered by the Lease that is
classified by Governmental Authorities as personal property, and real estate or
ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes
and other similar taxes (including rent taxes and intangibles taxes); (iii)
excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp taxes
and documentary recording taxes and fees; (v) taxes that are or are in the
nature of franchise, income, value added, privilege and doing business taxes,
license and registration fees; (vi) assessments on any Property, including
without limitation all assessments for public Improvements or benefits, whether
or not such improvements
are commenced or completed within the Term; and (vii) taxes, Liens, assessments
or charges asserted, imposed or assessed by the PBGC or any governmental
authority succeeding to or performing functions similar to, the PBGC; and in
each case all interest, additions to tax and penalties thereon, which at any
time prior to, during or with respect to the Term or in respect of any period
for which the Lessee shall be obligated to pay Supplemental Rent, may be
levied, assessed or imposed by any Governmental Authority upon or with respect
to (a) any Property or any part thereof or interest therein; (b) the leasing,
financing, refinancing, substitution, subleasing, assignment, control,
condition, occupancy, servicing, maintenance, repair, ownership, possession,
activity conducted on, delivery, insuring, use, operation, improvement, sale,
transfer of title, return or other disposition of such Property or any part
thereof or interest therein; (c) the Notes, the Lessor Advance, other
indebtedness with respect to any Property or any part thereof or interest
therein; (d) the rentals, receipts or earnings arising from any Property or any
part thereof or interest therein; (e) the Operative Agreements, the performance
thereof, or any payment made or accrued pursuant thereto; (f) the income or
other proceeds received with respect to any Property or any part thereof or
interest therein upon the sale or disposition thereof; (g) any contract
relating to the acquisition or delivery of the Improvements or any part thereof
or interest therein; (h) the issuance of the Notes; (i) the Borrower or the
Borrower's Interest; or (j) otherwise in connection with the transactions
contemplated by the Operative Agreements.
"Improvements" shall mean, with respect to the construction,
renovations and/or Modifications on any Land, all buildings, structures,
Fixtures, and other improvements of every kind existing at any time and from
time to time on or under the Land refinanced or otherwise acquired using the
proceeds of the Loans or the Lessor Advance together with any and all
appurtenances to such buildings, structures or improvements, including without
limitation sidewalks, utility pipes, conduits and lines, parking areas and
roadways, and including without limitation all Modifications and other
additions to or changes in the Improvements at any time, including without
limitation any Improvements existing as of the Closing Date.
"Incorporated Covenants" shall have the meaning given to such term in
Section 28.1 of the Lease.
"Incorporated Representations and Warranties" shall have the meaning
given to such term in Section 28.1 of the Lease.
"Indebtedness" of a Person shall mean, without duplication, such
Person's:
(a) obligations for borrowed money;
(b) obligations representing the deferred purchase price of
Property (whether real, personal, tangible, intangible or mixed) or services
(other than accounts payable arising in the ordinary course of such Person's
business payable on terms customary in the trade);
(c) obligations, whether or not assumed, secured by liens
or payable out of the proceeds or production from property now or hereafter
owned or acquired by such Person;
(d) obligations which are evidenced by notes, acceptances
or other instruments;
(e) Capitalized Lease obligations and the principal balance
outstanding under any synthetic lease, tax retention operating lease, off-
balance sheet loan or similar off-balance sheet financing product to which such
Person is a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP;
(f) net liabilities under interest rate swap, exchange or
cap agreements; and
(g) contingent obligations.
"Indemnified Person" shall mean the Lessor, the Agent, Wachovia
Securities, Inc., the Lenders and their respective successors, assigns,
directors, shareholders, partners, officers, employees, agents and Affiliates.
"Indemnity Provider" shall mean, respecting each Property, the Lessee.
"Instruments" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee,
and all requirements of the issuer of any such policy and, regarding self
insurance, any other requirements of the Lessee.
"Intercreditor Agreement" shall mean the Amended and Restated
Intercreditor and Lien Subordination Agreement, dated on or about the Closing
Date, among each of the parties to the Participation Agreement.
"Interest Period" shall mean as to any Eurodollar Loan or Eurodollar
Lessor Advance (i) with respect to the initial Interest Period, the period
beginning on the date of the first Eurodollar Loan and Eurodollar Lessor
Advance and ending on September 1, 2003 and (ii) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Eurodollar Loan or Eurodollar Lessor Advance and ending one (1) month
thereafter; provided, however, that all of the foregoing provisions relating to
Interest Periods are subject to the following: (A) if any Interest Period
would end on a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that where the next
succeeding Business Day falls in the next succeeding calendar month, then on
the next preceding Business Day), (B) no Interest Period shall extend beyond
the Maturity Date or the Expiration Date, as the case may be, (C) where an
Interest Period begins on a day for which there is no numerically corresponding
day in the calendar month in which the Interest Period is to end, such Interest
Period shall end on the last Business Day of such calendar month, and (D) there
shall not be more than one (1) Interest Period outstanding at any one (1) time.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, together with the rules and regulations promulgated thereunder.
"Joinder Agreement" shall mean a joinder agreement, in the form of
EXHIBIT J to the Participation Agreement, executed from time to time between a
Domestic Subsidiary of any Credit Party and the Agent.
"Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Lessee on the Closing Date relating to such parcel
and (b) the schedules to each applicable Lease Supplement executed and
delivered in accordance with the requirements of Section 2.4 of the Lease.
"Law" shall mean any statute, law, ordinance, regulation, rule,
directive, order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement dated on or
about the Closing Date, between the Lessor and the Lessee, together with any
Lease Supplements thereto.
"Lease Default" shall mean any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" shall have the meaning specified in Section
17.1 of the Lease.
"Lease Supplement" shall mean each Amended and Restated Lease
Supplement substantially in the form of EXHIBIT A to the Lease, together with
all attachments and schedules thereto.
"Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Lessor, any Credit
Party, the Agent, any Lender or any Property, Land, Improvement, Equipment or
the taxation, use of such Improvements, whether now or hereafter enacted and in
force, including without limitation any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and enjoyment
thereof (including without limitation all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et. seq., and
any other similar federal, state or local laws or ordinances and the
regulations promulgated thereunder) and any that may relate to environmental
requirements (including without limitation all Environmental Laws), and all
permits, certificates of occupancy, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments which are either of record or known to any Credit
Party affecting any Property or the Appurtenant Rights.
"Lender Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to procure a security interest in favor of the
Agent in the Collateral subject to the Security Documents.
"Lenders" shall mean the Tranche A Lenders and the Tranche B Lenders.
"Lessee" shall have the meaning set forth in the Lease.
"Lessee Credit Agreement" shall mean that certain Amended and Restated
Loan and Security Agreement dated as of a date on or about the Closing Date by
and among the Lessee, certain of its subsidiaries, Congress Financial
Corporation, as Agent, the CIT Group/Business Credit, Inc. and General Electric
Capital Corporation, as co-documentation agents, and the Lenders from time to
time party thereto as Lenders (as defined therein), as such may hereafter be
amended, modified, supplemented, restated and/or replaced from time to time.
"Lessee Credit Agreement Event of Default" shall mean an Event of
Default as defined in Section 10.1 of the Lessee Credit Agreement.
"Lessee Security Agreement" shall mean that certain Amended and
Restated Lessee Security Agreement dated as of the Closing Date among the
Lessee, the Guarantors and Lessor, as assigned by Lessor as collateral to
Agent, as such may hereafter be amended, modified, supplemented, restated and/
or replaced from time to time.
"Lessor" shall mean Wachovia Development Corporation, a North Carolina
corporation.
"Lessor Advance" shall mean the advance of funds by the Lessor pursuant
to the terms of the Participation Agreement.
"Lessor Basic Rent" shall mean the scheduled Lessor Yield due on the
Lessor Advance on any Scheduled Interest Payment Date.
"Lessor Commitments" shall mean the obligation of the Lessor to make
the Lessor Advance in an amount not to exceed $6,600,000.00.
"Lessor Confirmation Letter" shall mean that certain letter dated the
Closing Date to the Lessee confirming certain facts and each subsequent such
letter issued pursuant to Section 8.2(c) of the Participation Agreement.
"Lessor Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the Lessor
not resulting from the transactions contemplated by the Operative Agreements,
(b) any act or omission of the Lessor which is not required by the Operative
Agreements or is in violation of any of the terms of the Operative Agreements,
(c) any claim against the Lessor with respect to Taxes or Transaction Expenses
against which the Lessee is not required to indemnify the Lessor pursuant to
Section 11 of the Participation Agreement or (d) any claim against the Lessor
arising out of any transfer by the Lessor of all or any portion of the interest
of the Lessor in the Properties, the Borrower's Interest or the Operative
Agreements other than the transfer of title to or possession of any Properties
by the Lessor pursuant to and in accordance with the Lease, the Credit
Agreement, the Security Agreement or the Participation Agreement or pursuant to
the exercise of the remedies set forth in Article XVII of the Lease.
"Lessor Mortgage Instrument" shall have the meaning given to such term in
Section 1.1 of the Intercreditor Agreement.
"Lessor Overdue Rate" shall mean the lesser of (a) the ABR plus four
percent (4%) and (b) the highest rate permitted by applicable law.
"Lessor Property Cost" shall mean, with respect to each Property the
amount set forth in the column labeled "Lessor Property Cost" opposite such
Property's location in Exhibit M to the Participation Agreement.
"Lessor Yield" shall mean with respect to the Lessor Advance from time
to time either the Eurodollar Rate plus the Applicable Percentage or the ABR
plus the Applicable Percentage as elected by the Lessee; provided, however, (a)
in the event the Agent is unable to determine the Eurodollar Rate as provided
in Section 5B.5(c) of the Participation Agreement, the outstanding Lessor
Advance shall bear a yield at the ABR applicable from time to time from and
after the dates and during the periods specified in Section 5B.5(c) of the
Participation Agreement plus the Applicable Percentage, and (b) upon the
delivery by Lessor of the notice described in Section 11.3(f) of the
Participation Agreement, the Lessor Advance shall bear a yield at the ABR
applicable from time to time after the dates and during the periods specified
in Section 11.3(f) of the Participation Agreement plus the Applicable
Percentage.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, option or charge of any kind.
"Limited Recourse Amount" shall mean with respect to all the Properties
on an aggregate basis, an amount equal to the sum of the Termination Values
with respect to all the Properties on an aggregate basis on each Payment Date,
less the Maximum Residual Guarantee Amount as of such date with respect to all
the Properties on an aggregate basis.
"Loan Basic Rent" shall mean the scheduled repayment of the Tranche B
Loans on the dates and in the manner specified therefor in Schedule 1 to the
Participation Agreement and the scheduled interest due on the Loans on any
Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including any overdue amounts under Section 2.8(b) of the Credit Agreement or
otherwise).
"Loan Property Cost" shall mean, with respect to each Property the
amount set forth in the column labeled "Loan Property Cost" opposite such
Property's location in Exhibit M to the Participation Agreement.
"Loans" shall mean the loans extended pursuant to the Tranche A Credit
Agreement or the Tranche B Credit Agreement and shall include both the Tranche
A Loans and the Tranche B Loans.
"Majority Secured Parties" shall have the meaning given to such term in Section
1.1 of the Intercreditor Agreement.
"Marketing Period" shall mean, if the Lessee has given a Sale Notice in
accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the Expiration Date.
"Maryland Lease Memoranda" shall have the meaning given to such term in
Section 8.14 of the Participation Agreement.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, condition (financial or otherwise), assets, liabilities or
operations of the Credit Parties (on a consolidated basis), (b) the ability of
any Credit Party to perform its respective obligations under any Operative
Agreement to which it is a party, (c) the validity or enforceability of any
Operative Agreement or the rights and remedies of the Agent, the Lenders or the
Lessor thereunder, (d) the validity, priority or enforceability of any Lien on
any Property created by any of the Operative Agreements, or (e) the value,
utility or useful life of any Property or the use, or ability of the Lessee to
use, any Property for the purpose for which it was intended.
"Maturity Date" shall mean the Expiration Date.
"Maximum Residual Guarantee Amount" shall mean an amount equal to seventy-nine
and three fourths percent (79.75%) of the aggregate Property Cost on the
Closing Date for all Properties subject to the Lease as of the date of
calculation of such amount.
"Modifications" shall have the meaning specified in Section 11.1(a) of
the Lease.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Services, Inc.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any other
instrument executed by the Lessor in favor of the Agent (for the benefit of the
Secured Parties) and evidencing a Lien on any Property, in form and substance
reasonably acceptable to the Agent.
"Mortgage Obligations" means the collective reference to all obligations, now
existing or hereafter arising, owing by the Lessee and/or any of its affiliates
(including the Guarantors) to the Lessor (or the Agent, on behalf of the
Lessor) under or pursuant to the Operative Agreements whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, which may arise under, out of, or in connection with the
Participation Agreement, the Lease Agreement, or any of the other Operative
Agreements, whether on account of principal, advanced amounts, interest, yield,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all reasonable fees and disbursements of
counsel to the Agent or to the Lessor) that are required to be paid by the
Lessee and/or of its affiliates (including the Guarantors) pursuant to the
terms of the Operative Agreements.
"Multiemployer Plan" shall mean any plan described in Section 4001(a)
(3) of ERISA to which contributions are or have been made or required by any
Credit Party or any of its Subsidiaries or ERISA Affiliates.
"Multiple Employer Plan" shall mean a plan to which any Credit Party or
any ERISA Affiliate and at least one (1) other employer other than an ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued
an obligation to make, contributions.
"New Facility" shall have the meaning given to such term in Section
28.1 of the Lease.
"Notes" shall mean those notes issued to the Lenders pursuant to the
Credit Agreement and shall include both the Tranche A Notes and the Tranche B
Notes.
"Obligations" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Officer's Certificate" with respect to any person shall mean a
certificate executed on behalf of such person by a Responsible Officer who has
made or caused to be made such examination or investigation as is necessary to
enable such Responsible Officer to express an informed opinion with respect to
the subject matter of such Officer's Certificate.
"Operative Agreements" shall mean the following: the Participation
Agreement, the Credit Agreement, the Notes, the Lease, the Lease Supplements
(and memoranda of the Lease and each Lease Supplement in a form reasonably
acceptable to the Agent), the Security Agreement, the Mortgage Instruments,
the Intercreditor Agreement, the other Security Documents, the Deeds, the
Assignment and Recharacterization Agreement and any and all other agreements,
documents and instruments executed in connection with any of the foregoing.
"Original Executed Counterpart" shall have the meaning given to such term in
Section 5 of EXHIBIT A to the Lease.
"Overdue Interest" shall mean any interest payable pursuant to Section
2.8(b) of the Credit Agreement.
"Overdue Rate" shall mean (a) with respect to the Loan Basic Rent, and
any other amount owed under or with respect to the Credit Agreement or the
Security Documents, the rate specified in Section 2.8(b) of the Credit
Agreement, (b) with respect to the Lessor Basic Rent, the Lessor Yield and any
other amount owed to the Lessor under the Security Documents or the other
Operative Agreements, the Lessor Overdue Rate, and (c) with respect to any
other amount, the amount referred to in clause (y) of Section 2.8(b) of the
Credit Agreement.
"Participant" shall have the meaning given to such term in Section 9.7
of the Credit Agreement.
"Participation Agreement" shall mean the Participation Agreement dated
on or about the Closing Date, among the Lessee, the Guarantors, the Lessor, the
Lenders and the Agent.
"Payment Date" shall mean any date on which the amounts described in
Schedule 1 to the Participation Agreement are to be paid in accordance with
such Schedule 1, any Scheduled Interest Payment Date and any date on which
interest or Lessor Yield in connection with a prepayment of principal on the
Loans or of the Lessor Advance is due under the Credit Agreement or the
Participation Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any successor thereto.
"Pension Plan" shall mean a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may
have any liability, including without limitation any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five (5) years, or by reason of being deemed
to be a contributing sponsor under section 4069 of ERISA.
"Pep Boys California" shall mean The Pep Boys ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ of
California, a California corporation.
"Pep Boys Delaware" shall mean Pep Boys - Manny, Moe & ▇▇▇▇ of
Delaware, Inc., a Delaware corporation.
"Pep Boys Parent" shall mean The Pep Boys - Manny, Moe & ▇▇▇▇, a
Pennsylvania corporation.
"Permitted Facility" shall mean a retail outlet or distribution center,
as applicable, of the type and size customarily used and operated by the Lessee
in its ordinary course of business as of the Closing Date.
"Permitted Liens" shall mean:
(a) the respective rights and interests of the parties to
the Operative Agreements as provided in the Operative Agreements;
(b) the rights of any sublessee or assignee under a
sublease or an assignment expressly permitted by the terms of the Lease for no
longer than the duration of the Lease;
(c) Liens for Taxes that either are not yet due or are
being contested in accordance with the provisions of Section 13.1 of the Lease;
(d) Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', carriers', warehousemen's and
other like Liens relating to the construction of the Improvements or in
connection with any Modifications or arising in the ordinary course of business
for amounts that either are not more than thirty (30) days past due or are
being diligently contested in good faith by appropriate proceedings, so long as
such proceedings satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease;
(e) Liens of any of the types referred to in clause (d)
above that have been bonded for not less than the full amount in dispute (or as
to which other security arrangements satisfactory to the Lessor and the Agent
have been made), which bonding (or arrangements) shall comply with applicable
Legal Requirements, and shall have effectively stayed any execution or
enforcement of such Liens;
(f) Liens arising out of judgments or awards with respect
to which appeals or other proceedings for review are being prosecuted in good
faith and for the payment of which adequate reserves have been provided as
required by GAAP or other appropriate provisions have been made, so long as
such proceedings have the effect of staying the execution of such judgments or
awards and satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease;
(g) Liens in favor of municipalities to the extent agreed
to by the Lessor;
(h) to the extent agreed to by the Lessor, easements,
rights of way, covenants, restrictions and similar liens and encumbrances which
do not individually or in the aggregate have a material adverse effect on the
value of the Property as currently used; and
(i) any other Liens approved or otherwise permitted by the
Agent.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, governmental authority or any other entity.
"Prime Lending Rate" shall have the meaning given to such term in the
definition of ABR.
"Property" shall mean the properties, including any equipment and
fixtures, described on the schedules to the Lease Supplements and in the
attachments to the Mortgage Instruments (including, without limitation, all
Improvements and Equipment related thereto).
"Property Cost" shall mean, with respect to each Property the amount
set forth in the column labeled "Property Cost" opposite such Property's street
address in Exhibit M to the Participation Agreement.
"Purchase Option" shall have the meaning given to such term in Section
20.1 of the Lease.
"Purchasing Lender" shall have the meaning given to such term in
Section 9.8(a) of the Credit Agreement.
"Rating Agencies" shall mean ▇▇▇▇▇'▇, S&P and Fitch Investors Service,
L.P. or, in each case, any successor nationally recognized statistical rating
organization.
"Reference Bank" shall mean Wachovia Bank, National Association or such
other bank as the Agent may from time to time designate.
"Register" shall have the meaning given to such term in Section 9.9(a)
of the Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental
Rent, in each case payable under the Lease.
"Reportable Event" shall have the meaning specified in ERISA.
"Requested Funds" shall mean any funds requested by the Lessee, as
applicable, in accordance with Section 5 of the Participation Agreement.
"Requisition" shall have the meaning specified in Section 4 of the
Participation Agreement.
"Responsible Officer" shall mean the Chairman or Vice Chairman of the
Board of Directors, the Chairman or Vice Chairman of the Executive Committee
of the Board of Directors, the President, any Senior Vice President or
Executive Vice President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer, or any Assistant Treasurer.
"Restoration" shall have the meaning given to such term in Section 15.1
(e) of the Lease.
"Revolving Loan Agreements" shall have the meaning given to such term
in Section 1.1 of the Intercreditor Agreement.
"Revolving Loan Lender" shall have the meaning given to such term in
Section 1.1 of the Intercreditor Agreement.
"Revolving Loan Obligations" shall have the meaning given to such term
in Section 1.1 of the Intercreditor Agreement.
"S&P" shall mean Standard & Poor's Rating Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Sale Date" shall have the meaning given to such term in Section 20.3
(a) of the Lease.
"Sale Notice" shall mean a notice given to the Lessor in connection
with the election by the Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section 20.1
of the Lease.
"Sale Proceeds Shortfall" shall mean the amount by which the proceeds
of a sale described in Section 22.1 of the Lease are less than the Limited
Recourse Amount with respect to the Properties if it has been determined that
the Fair Market Sales Value of the Properties at the expiration of the term of
the Lease has been impaired by greater than ordinary wear and tear during the
Term of the Lease.
"Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar
Loan or Eurodollar Lessor Advance, the first day of each calendar month, unless
such day is not a Business Day and in such case on the immediately preceding
Business Day, (b) as to any ABR Loan or any ABR Lessor Advance, the first day
of each calendar month, unless such day is not a Business Day and in such case
on the immediately preceding Business Day and (c) as to all Loans and Lessor
Advance, the date of any voluntary or involuntary payment, prepayment, return
or redemption, and the Maturity Date or the Expiration Date, as the case may
be.
"Second Priority Real Estate Liens" shall have the meaning given to
such term in Section 1.1 of the Intercreditor Agreement.
"Secured Parties" shall have the meaning given to such term in the
Security Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Amended and Restated Security
Agreement dated on or about the Closing Date between the Lessor and the Agent,
for the benefit of the Secured Parties, and accepted and agreed to by the
Lessee.
"Security Documents" shall mean the collective reference to the
Security Agreement, the Lessee Security Agreement, the Mortgage Instruments,
(to the extent the Lease is construed as a security instrument) the Lease, the
UCC Financing Statements and all other security documents hereafter delivered
to the Agent granting a lien on any asset or assets of any Person to secure the
obligations and liabilities of the Lessor under the Credit Agreement and/or
under any of the other Credit Documents or to secure any guarantee of any such
obligations and liabilities.
"Soft Costs" shall mean all costs which are ordinarily and reasonably
incurred in relation to the acquisition of the Property other than hard costs,
including without limitation structuring fees, administrative fees, legal fees,
upfront fees, fees and expenses related to appraisals, title examinations,
title insurance, document recordation, surveys, environmental site assessments,
geotechnical soil investigations and similar costs and professional fees
customarily associated with a real estate closing, fees and expenses of the
Lessor payable or reimbursable under the Operative Agreements and costs and
expenses incurred pursuant to Sections 7.3 of the Participation Agreement.
"Subsidiary" shall mean, as to any Person, any corporation of which at
least a majority of the outstanding 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 owned by such Person, or by one
(1) or more Subsidiaries, or by such Person and one (1) or more Subsidiaries.
"Supplemental Amounts" shall have the meaning given to such term in
Section 9.18 of the Credit Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to the
Lessor, the Agent, the Lenders or any other Person under the Lease or under any
of the other Operative Agreements including without limitation payments of the
Termination Value and the Maximum Residual Guarantee Amount and all
indemnification amounts, liabilities and obligations.
"Taxes" shall have the meaning specified in the definition of
"Impositions".
"Term" shall have the meaning specified in Section 2.2 of the Lease.
"Termination Date" shall have the meaning specified in Section 16.2(a)
of the Lease.
"Termination Event" shall mean (a) with respect to any Pension Plan,
the occurrence of a Reportable Event or an event described in Section 4062(e)
of ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial
employer (as such term is defined in Section 4001(a)(2) of ERISA), or the
termination of a Multiple Employer Plan, (c) the distribution of a notice of
intent to terminate a Plan or Multiemployer Plan pursuant to Section 4041(a)(2)
or 4041A of ERISA, (d) the institution of proceedings to terminate a Plan or
Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any other event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (f) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from a Multiemployer Plan.
"Termination Notice" shall have the meaning specified in Section 16.1
of the Lease.
"Termination Value" shall mean the sum of (a) either (i) with respect
to all Properties, an amount equal to the aggregate outstanding Property Cost
for all the Properties, in each case as of the last occurring Payment Date, or
(ii) with respect to a particular Property, an amount equal to the Property
Cost allocable to such Property, plus (b) respecting the amounts described in
each of the foregoing subclause (i) or (ii), as applicable, any and all accrued
but unpaid interest on the Loans and any and all Lessor Yield on the Lessor
Advance related to the applicable Property Cost, plus (c) to the extent the
same is not duplicative of the amounts payable under clause (b) above, all
other Rent and other amounts then due and payable or accrued under the Lease
and/or under any other Operative Agreement (including without limitation
amounts under Sections 11.1 and 11.2 of the Participation Agreement and all
costs and expenses referred to in clause FIRST of Section 22.2 of the Lease).
"Third Priority Real Estate Liens" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.
"Tranche A Commitments" shall mean the obligation of the Tranche A
Lenders to make the Tranche A Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche A Lender's name on Schedule 2.1 to the
Credit Agreement, provided, no Tranche A Lender shall be obligated to make
Tranche A Loans in excess of such Tranche A Lender's share of the Tranche A
Commitments as set forth adjacent to such Tranche A Lender's name on Schedule
2.1 to Credit Agreement.
"Tranche A Credit Agreement" shall mean the Amended and Restated Credit
Agreement, dated on or about the Closing Date, among the Lessor, the Agent and
the Tranche A Lenders, as specified therein.
"Tranche A Indebtedness" shall have the meaning given to such term in
Section 1.1 of the Intercreditor Agreement.
"Tranche A Lenders" shall mean Wachovia Capital Investments, Inc. and
shall include the several banks and other financial institutions from time to
time party to the Credit Agreement that commit to make the Tranche A Loans.
"Tranche A Loans" shall mean the Loans made pursuant to the Tranche A
Commitments.
"Tranche A Mortgage Instrument" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.
"Tranche A Note" shall have the meaning given to it in Section 2.2 of
the Credit Agreement.
"Tranche A Priority Collateral" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.
"Tranche B Commitments" shall mean the obligation of the Tranche B
Lenders to make the Tranche B Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche B Lender's name on Schedule 2.1 to the
Credit Agreement, provided, no Tranche B Lender shall be obligated to make
Tranche B Loans in excess of such Tranche B Lender's share of the Tranche B
Commitments as set forth adjacent to such Tranche B Lender's name on Schedule
2.1 to Credit Agreement.
"Tranche B Credit Agreement" shall mean the Amended and Restated Credit
Agreement, dated on or about the Closing Date, among the Lessor, the Agent and
the Tranche B Lenders, as specified therein.
"Tranche B Credit Agreement Event of Default" shall have the meaning
given to such term in Section 1.1 of the Intercreditor Agreement.
"Tranche B Indebtedness" shall have the meaning given to such term in
Section 1.1 of the Intercreditor Agreement.
"Tranche B Lenders" shall mean Wachovia Bank, National Association and
shall include the several banks and other financial institutions from time to
time party to the Credit Agreement that commit to make the Tranche B Loans.
"Tranche B Loans" shall mean the Loans made pursuant to the Tranche B
Commitments.
"Tranche B Mortgage Instrument" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.
"Tranche B Note" shall have the meaning given to it in Section 2.2 of
the Credit Agreement.
"Tranche B Priority Collateral" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.
"Transaction Expenses" shall mean all Soft Costs and all other costs
and expenses incurred in connection with the preparation, execution and
delivery of the Operative Agreements and the transactions contemplated by the
Operative Agreements including without limitation all costs and expenses
described in Section 7.1 of the Participation Agreement and the following:
(a) the reasonable fees, out-of-pocket expenses and
disbursements of counsel in negotiating the terms of the Operative Agreements
and the other transaction documents, preparing for the closings under, and
rendering opinions in connection with, such transactions and in rendering other
services customary for counsel representing parties to transactions of the
types involved in the transactions contemplated by the Operative Agreements;
(b) the reasonable fees, out-of-pocket expenses and
disbursements of accountants for any Credit Party in connection with the
transaction contemplated by the Operative Agreements;
(c) any and all other reasonable fees, charges or other
amounts payable to the Lenders, the Agent, the Lessor or any broker which
arises under any of the Operative Agreements;
(d) any other reasonable fee, out-of-pocket expenses,
disbursement or cost of any party to the Operative Agreements or any of the
other transaction documents; and
(e) any and all Taxes and fees incurred in recording or
filing any Operative Agreement or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement with
any public office, registry or governmental agency in connection with the
transactions contemplated by the Operative Agreements.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.
"Trust" shall mean the 1995 Pep Boys Leased Property Trust and the 1997
Pep Boys II Leased Property Trust (as applicable).
"Trust Agreement" shall mean, collectively or individually as the
context requires, the Trust Agreement (1995) and the Trust Agreement (1997).
"Trust Agreement (1995)" shall mean the Amended and Restated Trust
Agreement dated on or about the September 22, 2000 between the Lessor, as a
holder, and the Trust Company, as the owner trustee, under the 1995 Pep Boys
Leased Property Trust.
"Trust Agreement (1997)" shall mean the Amended and Restated Trust
Agreement dated on or about September 22, 2000 between the Lessor, as a holder,
and the Trust Company, as the owner trustee under, the 1997 Pep Boys II Leased
Property Trust.
"Trust Company" shall mean State Street Bank and Trust Company of
Connecticut, National Association, in its individual capacity, and any
successor owner trustee under the Trust Agreement in its individual capacity.
"Type" shall mean, as to any Loan, whether it is an ABR Loan or a
Eurodollar Loan.
"UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.
"Unanimous Vote Matters" shall have the meaning given it in Section
12.4 of the Participation Agreement.
"Unfunded Liability" shall mean, with respect to any Plan, at any time,
the amount (if any) by which (a) the present value of all benefits under such
Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Company or any member of the Controlled Group to the PBGC or such Plan
under Title IV of ERISA.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial
Code as in effect in any applicable jurisdiction.
"United States Bankruptcy Code" shall mean Title 11 of the United
States Code.
"U.S. Person" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"U.S. Taxes" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Voting Stock" shall mean respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect
at least a majority of the board of directors, managers or trustees of such
Person, irrespective of whether at the time Capital Stock of any other class or
classes have or might have voting power by reason of the happening of any
contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
"Wachovia Wholly-Owned Entity" shall mean a Person, all of the shares
of capital stock or other ownership interest of which are owned by Wachovia
Bank, National Association and/or one or more of its wholly-owned Subsidiaries
or other wholly-owned entities.
"Withholdings" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"Wholly-Owned Entity" shall mean a Person all of the shares of capital
stock or other ownership interest of which are owned by Pep Boys Parent and/or
one of its wholly-owned Subsidiaries or other wholly-owned entities.