AGREEMENT
THIS AGREEMENT is made as of the 3rd day of October, 2001 by and among The Pep
Boys - Manny, Moe & Xxxx located at 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 ("Purchaser"), ICON INTERNATIONAL, INC., a Connecticut
corporation ("Icon"), and ICON VENDOR CORPORATION, a Connecticut corporation
("IVC").
WITNESSETH:
WHEREAS, Icon and IVC are engaged in the business of, among other things,
procuring media advertising for customers; and
WHEREAS, IVC is a wholly owned subsidiary of Icon;
WHEREAS, Pep Boys - Manny, Moe & Xxxx of Delaware, Inc., a wholly-owned
subsidiary of Purchaser ("Pep Boys-Delaware"), and affiliates of IVC and Icon
have entered into a separate arrangement whereby such affiliates agreed to
purchase from Pep Boys-Delaware, and Pep Boys-Delaware agreed to sell to such
affiliates, certain real property and improvements (collectively, the
"Property");
WHEREAS, Purchaser desires to engage IVC for the purpose of causing Icon to
sell certain media advertising to Purchaser; and
WHEREAS, Purchaser desires to enter into this Agreement in order to induce
IVC and Icon to maintain the resources and capabilities necessary to ensure
that they will have adequate funding commitments to enable them to acquire
media advertising services sufficient to satisfy certain of Purchaser's
advertising needs;
NOW THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending legally and equitably to be bound,
hereby agree as follows:
1. Engagement. Purchaser hereby engages IVC to cause Icon to sell to
Purchaser, and Purchaser hereby shall purchase from Icon, media advertising
services (collectively, "Media Advertising") pursuant to the Pro Forma Media
Purchase Plan attached as Exhibit A hereto and made a part hereof (the "Media
Plan").
2. Term. The Term of this Agreement shall be deemed effective as of
June 8, 2001 and shall include any Media Advertising purchased under that
certain Letter Agreement, dated June 8, 2001, between the parties (the "Letter
Agreement") and shall expire on November 30, 2005.
3. Agreement of Icon. Icon agrees to sell the Media Advertising to
Purchaser, upon IVC's request, pursuant to the Media Plan.
4. Consideration.
(a) In exchange for Media Advertising actually delivered pursuant to the
Media Plan (assuming a 60/40 Network Cable to Local Market Spot split),
Purchaser shall pay to IVC an aggregate net purchase price of up to $39,773,275
million (the "Target Purchase Price," and any portion thereof, the "Purchase
Price"). All Media Advertising purchases hereunder shall be
non-commissionable.
(b) Purchaser shall receive a credit against the Purchase
Price in an amount equal to one-half (1/2) of the amount by which the
aggregate net sales proceeds IVC and its affiliates receive from the sale of
the Property (the "Property Market Value") exceeds $2,000,000. For purposes
hereof, "net sales proceeds" shall mean the gross sales proceeds received by
IVC (or its affiliate) from the sale of the Property less (i) all documented
out-of-pocket costs incurred by IVC (or its affiliates) in connection with
acquiring the Property from Purchaser and selling the property to a third party
buyer, including without limitation due diligence expenses, legal fees,
commissions, title insurance, survey and recording costs, and conveyance or
similar taxes, and (ii) all documented out-of-pocket costs incurred in
connection with the Property between the date of acquisition from Purchaser and
the date of sale to a third party, including, without limitation, with respect
to property taxes, insurance,
security, improvements, repairs, and maintenance and utilities.
(c) Payment for the Media Advertising shall be as follows:
(i) Payment for each invoice shall be due
and payable in full within thirty (30) days after receipt by Purchaser of
undisputed written proof of performance. Amounts invoiced must reflect the
approved Media Advertising schedule. Any amount shown on the invoice, that is
not approved as part of the advertising procedure, will not be paid by
Purchaser. Media Advertising shall only be invoiced after the applicable
schedule has run. All invoices shall be sent to Purchaser via overnight or
regular mail, as facsimile invoice copies, except those which evidence overdue
amounts, will not be paid.
(ii) If any undisputed amount owed to IVC hereunder is overdue, IVC shall
send a reminder notice to Purchaser. If any such amount remains unpaid within
five (5) days of Purchaser's receipt of such reminder notice, Purchaser shall
pay to IVC interest at the rate of twelve percent (12%) per annum (or, if less,
the maximum rate allowed by law) on such amount.
(iii) The obligation of Purchaser to pay each invoice after delivery of the
applicable Media Advertising, on an individual transaction by transaction
basis, shall be absolute and unconditional, provided that such Media
Advertising invoiced has been provided by Icon in accordance with the terms of
this Agreement, and not subject to any offset or recoupment right or any other
defense or counterclaim which Purchaser may have against IVC, Icon or the
applicable media advertising provider now or in the future either hereunder or
otherwise.
(d) Notwithstanding the foregoing Section 4(c), IVC shall have the right,
in its sole discretion, to require that Purchaser pay in advance for Media
Advertising, if at any time Purchaser fails to pay two (2) two consecutive
undisputed invoices by their due date. If IVC so elects by delivering written
notice to Purchaser, then prior to the ordering by Icon or IVC of any Media
Advertising (or any portion thereof), Purchaser shall forward the Purchase
Price for such Media Advertising (or portion thereof) to IVC.
(e) All payments by Purchaser shall be by check or wire transfer made
payable to the order of Icon Vendor Corporation. Checks shall be addressed as
follows: Icon Vendor Corporation, X.X. Xxx 00000, Xxxxxxxx, Xxxxxxxxxxx
00000-0000. Wire transfers shall be sent as follows: Fleet Boston Financial,
0000 0xx Xxxxxx, Xxx Xxxx, XX 00000, ABA # 000000000, for the account of Icon
Vendor Corporation, Account # 9429124218.
5. Obligations and Acknowledgments of IVC and Icon
(a) IVC shall cause Icon to deliver the Media Advertising in accordance
with the Media Plan. Icon shall deliver all Media Advertising it is directed
by IVC to deliver in accordance with the Media Plan.
(b) IVC and Icon hereby acknowledge and agree that all advertisements and
other material to be used in connection with the Media Advertising
(collectively, the "Advertisements") furnished by Purchaser constitute the
property of Purchaser and that neither IVC nor Icon shall have claim or
proprietary interest in or to designs, patents, or trademarks pertaining to the
goods and/or services of Purchaser, including any and all packaging, labels,
and logos, as well as any copyrighted material contained in the Advertisements
or arising out of the services rendered to Purchaser hereunder.
(c) IVC and Icon acknowledge and agree that all media broadcasts or
publications secured under the terms of this Agreement shall be free and clear
of all liens, conflicting claims, or encumbrances.
6. Obligations and Acknowledgments of Purchaser
(a) All Advertisements will be furnished by Purchaser to IVC sufficiently
in advance of their scheduled use to permit IVC to cause Icon to fulfill its
commitments hereunder in the ordinary course of business.
(b) Purchaser acknowledges and agrees that Purchaser shall be solely
responsible for the content of each and every Advertisement and shall defend,
indemnify, and hold harmless IVC and Icon from and against any and all claims,
demands, damages, losses liabilities, expenses, actions or causes of action
(including reasonable attorneys' fees) arising out of the Advertisements or any
claims of infringement or violation of any third party's copyright, patent,
trademark or other property right in connection with the Advertisements.
(c) If any Media Advertising is canceled as a result of Purchaser's action
or inaction, Purchaser shall reimburse IVC or Icon (as applicable) for any out
of pocket costs or expenses incurred directly as a result of such
cancellation.
7. Guaranteed Minimum Payments.
(a) For purposes of this Agreement, the following definitions shall apply:
(i) "Agreement Year" means the period between the date of this Agreement
and the first Anniversary Date or between two immediately succeeding
Anniversary Dates.
(i) "Anniversary Dates" means November 30, 2002, 2003, 2004 and 2005.
(ii) "Carryover Minimum Credits" for a particular Anniversary Date shall
mean the amount by which Guaranteed Minimum Credits and Carryover Minimum
Credits applicable to the immediately preceding Anniversary Date exceeded the
Guaranteed Minimum Payment for such immediately preceding Anniversary Date.
(iii) "Guaranteed Minimum Credit" for any Media Advertising purchased shall
be equal to the Purchase Price of such Media Advertising multiplied by the
Minimum Credit Ratio for such Media Advertising. Guaranteed Minimum Credits
are applicable as and when the related Purchase Price is actually paid by
Purchaser.
(iv) "Guaranteed Minimum Payment" for each Anniversary Date shall be
$1,805,306.
(v) "Minimum Credit Ratio" shall be as set forth in the Media Plan.
(vi) "Minimum Payment" for a particular Anniversary Date shall mean the
Guaranteed Minimum Payment for such Anniversary Date, less (i) the Guaranteed
Minimum Credits applicable with respect to such Anniversary Date, and (ii) any
Carryover Minimum Credits applicable with respect to such Anniversary Date.
(b) As an inducement to IVC and Icon to enter into this Agreement, and to
any third party to take an assignment of the right to receive the Minimum
Payments, Purchaser agrees that five (5) business days after IVC has supplied
Purchaser with a written calculation specifying the Minimum Payment Due,
Purchaser will pay the Minimum Payment due with respect to such Anniversary
Date regardless of the reason that sufficient Guaranteed Minimum Credits have
not been accumulated in an amount sufficient to eliminate such Minimum Payment.
(c) In the event that Purchaser is required to make a Minimum Payment
pursuant to subparagraph (b) hereof, Purchaser shall be entitled to a credit in
the amount of such Minimum Payments against future Media Advertising payable
hereunder at such time thereafter, if ever, that the total of all Guaranteed
Minimum Credits from Media Advertising purchases equals or exceeds the total of
all Guaranteed Minimum Payments required to be made hereunder. Under no other
circumstances whatsoever, shall Purchaser be entitled to a credit for Minimum
Payments made.
(d) Notwithstanding anything herein to the contrary other than subsection
(c) of this Section 7, Purchaser's obligation to pay for Media Advertising that
has been delivered to Purchaser pursuant to the Media Plan shall be and remain
an obligation of Purchaser independent of and in addition to any Minimum
Payments due.
(e) It will be a requirement of any third party assignees that Purchaser's
obligation to pay the Minimum Payments be and remain absolute, unconditional
and irrevocable, regardless of the reason or reasons that Purchaser does not
acquire or take delivery of any or all of the Media Advertising. Without
limiting the generality of the foregoing, and to induce any such third party to
pay a purchase price, or to provide loans or other financial accommodations to
IVC, and thereby assist IVC in providing the Media Advertising to Purchaser,
Purchaser agrees that IVC's or Icon's default under this or any other
agreement, including IVC's or Icon's failure to provide the Media Advertising,
shall not relieve Purchaser of its obligation to pay the Minimum Payments; and
in furtherance hereof, Purchaser agrees to limit its rights and remedies as
more fully described in Section 10 below.
8. Representations and Warranties.
(a) IVC and Icon hereby represents and warrants to Purchaser that:
(i) IVC and Icon are duly organized and validly existing under the laws of
the State of Connecticut and have the capacity to enter into this Agreement,
and execution and delivery of this Agreement has been duly authorized by IVC
and Icon; and
(ii) Neither IVC nor Icon are subject to any restriction, contractual or
otherwise, which prevents them from entering into and carrying out its
obligations under this Agreement, and neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will constitute a violation or default of any term or provision of any
contract, commitment, indenture, or other agreement or restriction (including
statutory, regulatory, administrative, or judicial restrictions) to which IVC
or Icon is a party or is otherwise subject.
(b) Purchaser hereby represents and warrants to IVC and Icon that:
(i) Purchaser is duly organized and validly existing under the laws of the
state of its organization and has the capacity to enter into this Agreement,
and execution and delivery of this Agreement has been duly authorized by
Purchaser; and
(ii) Purchaser is not subject to any restriction, contractual or otherwise,
which prevents Purchaser from entering into and carrying out its obligations
under this Agreement, and neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will constitute a
violation or default of any term or provision of any contract, commitment,
indenture, or other agreement or restriction (including statutory, regulatory,
administrative, or judicial restrictions) to which Purchaser is a party or is
otherwise subject.
9. Purchaser's Default.
(a) The following events shall constitute "Purchaser Defaults:"
(i) Purchaser shall fail to pay all or any portion of the Minimum
Payments when due.
(ii) Purchaser shall fail to perform any terms, covenants or agreements
contained in this Agreement or in any other document or instrument executed or
delivered in connection herewith, including Purchaser's obligation to pay the
Purchase Price (on the payment terms set forth in Section 4 above) for Media
Advertising provided pursuant to the Media Plan, and any such failure to
perform shall remain uncured for a period of thirty (30) days from Purchaser's
receipt of written notice of such failure to perform.
(iii) Any representation or warranty of Purchaser in this Agreement or in any
other document or instrument executed or delivered in connection herewith shall
have been false in any material respect upon the date when made or deemed to
have been made or repeated.
(iv) The occurrence of any default in the payment or performance, and the
subsequent acceleration, of any debt or other obligations owed by Purchaser to
any other person or entity unaffiliated with IVC or Icon with an outstanding
principal balance in excess of $5,000,000.
(v) Purchaser shall make an assignment for the benefit of creditors, or admit
in writing its general inability to pay or generally fail to pay its debts as
they mature or become due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver of Purchaser or of any
substantial part of Purchaser's assets or shall commence any case or other
proceeding relating to Purchaser under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any the foregoing, or if any such
petition or application shall be filed or any such case or other proceeding
shall be commenced against Purchaser and such filing, case or proceeding shall
not have been bonded against, vacated or dismissed within forty-five (45) days
of its effective date.
(b) Upon the occurrence of a Purchaser Default, IVC may, at its option,
upon written notice and demand to Purchaser, declare all Minimum Payments to
be immediately due and payable in full, whereupon IVC's and Icon's obligations
to supply the Media Advertising set forth in the Pro Forma Media Purchase Plan
shall thereupon terminate, and neither IVC nor Icon shall have any further
obligations to Purchaser under this Agreement.
10. IVC Default.
(a) The following events shall constitute "IVC Defaults".
(i) IVC or Icon shall fail to perform any terms, covenants or agreements
contained in this Agreement or in any other document or instrument executed or
delivered in connection herewith, other than Icon's obligation to deliver
Media Advertising pursuant to the Media Plan, and any such failure to perform
shall remain uncured for a period of thirty (30) days from IVC or Icon's, as
the case may be, receipt of written notice of such failure to perform.
(ii) Icon shall fail to deliver Media Advertising, on an annual basis,
substantially in accordance with the material aspects of the Media Plan.
(iii) Any representation or warranty of IVC or Icon in this Agreement or in
any other document or instrument executed or delivered in connection herewith
shall have been false in any material respect upon the date when made or
deemed to have been made or repeated.
(iv) IVC or Icon shall make an assignment for the benefit of creditors, or
admit in writing its general inability to pay or generally fail to pay its
debts as they mature or become due, or shall petition or apply for the
appointment of a trustee or other custodian, liquidator or receiver of IVC or
Icon or of any substantial part of IVC's or Icon's assets or shall commence
any case or other proceeding relating to IVC or Icon under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect, or
shall take any action to authorize or in furtherance of any the foregoing, or
if any such petition or application shall be filed or any such case or other
proceeding shall be commenced against IVC or Icon and such filing, case or
proceeding shall not have been bonded against, vacated or dismissed within
forty-five (45) days of its effective date.
(b) Upon the occurrence of an IVC Default, Purchaser may, at its option,
upon written notice to IVC, terminate this Agreement and all of its obligations
hereunder, except for its obligation to make the Minimum Payments on their
scheduled due dates. Upon the termination of this Agreement following the
occurrence of an IVC Default, IVC and Icon, jointly and severally, shall be
obligated to pay to Purchaser, within thirty (30) days of such termination
an amount equal to:
P x (1 - (DPP / TPP))
where,
P = the Property Market Value up to $2,000,000 + one half of the amount, if
any, by which the Property Market Value exceeds $2,000,000
DPP = the Purchase Price for the Media Advertising actually delivered pursuant
to the Media Plan
TPP = the Targeted Purchase Price (i.e., $39,773,275)
(c) No breach of this Agreement, including the failure to provide the Media
Advertising pursuant to the Media Plan, by IVC or Icon shall relieve or excuse
Purchaser from its obligation to make the Minimum Payments. Purchaser
expressly acknowledges and agrees that IVC's rights to the Minimum Payments
are freely assignable and that Purchaser's obligations to make the Minimum
Payments shall not be subject to any rights of set off or recoupment, or
subject to any counterclaim or defense which Purchaser may claim to have for
the breach by IVC or Icon of this Agreement; and Purchaser agrees that in any
legal or equitable proceeding to enforce Purchaser's obligation to make the
Minimum Payments, Purchaser shall not interpose any claim for setoff or
recoupment or attempt to avoid its obligation to make the Minimum Payments
based, in whole or in part, upon IVC's or Icon's breach of this Agreement.
(d) Except with respect to an IVC Default under Section 10(a)(ii) for
which Purchaser's remedy set forth in Section 10(b) shall be exclusive, the
remedies of Purchaser set forth in this Section 10 shall be in addition to,
and shall not in any way prejudice, any other remedies available to Purchaser
at law or equity on account of damages caused by IVC's or Icon's failure to
perform under this Agreement; provided, however, that Purchaser may not assert
any such claim or cause of action as a set off or recoupment, defense or
counterclaim to the Purchaser's obligation to make the Minimum Payments; but
rather Purchaser may only assert such claim or cause of action against IVC or
Icon in an action that is separate and independent from any action to recover
the Minimum Payments.
11. Assignment. This Agreement shall become effective when it shall have
been executed by IVC, Icon and Purchaser and thereafter shall be binding upon,
inure to the benefit of and be enforceable by IVC, Icon and Purchaser, and
their respective permitted successors and assigns. IVC may assign any or all
of its rights and interest (but not its obligations) under this Agreement,
without the prior written consent of Purchaser. Purchaser may assign any or
all of its rights or interest, but not its obligations, under this Agreement.
Not by way of limitation of the foregoing, Purchaser acknowledges that IVC may
freely assign to any third party IVC's rights to receive the Minimum Payments.
Any assignment in violation of this Agreement shall be void.
12. Miscellaneous.
(a) Notices. All notices required to be given pursuant to this Agreement
shall be deemed given when actually delivered, if delivered in person, or three
(3) days after being deposited in the United States certified mail service,
postage prepaid, and addressed to the receiving party as follows:
For IVC: Icon Vendor Corporation
000 Xxx Xxxxxx/0 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxxxx X. Xxx III, EVP/CFO
For Icon: Icon International, Inc.
000 Xxx Xxxxxx/0 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Mr. Xxxx Xxxxxx, President
For Purchaser: The Pep Boys - Manny, Moe & Xxxx
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: SVP - Chief Administrative Officer
cc: Chief Legal Officer
(b) Severability. The invalidity, illegality, or unenforceability of any
provisions of this Agreement shall not affect the validity, legality, and
enforceability of the remaining provisions of this Agreement.
(c) Waiver. Any waiver (whether express or implied) by any party hereto of
the breach of any term or condition of this Agreement shall not constitute a
waiver of any subsequent breach of the same or any other term or condition of
this Agreement.
(d) Governing Law; Jurisdiction. This Agreement shall be interpreted in
its entirety in accordance with the laws of the State of Connecticut. Each of
IVC, Icon and Purchaser hereby submit to the exclusive jurisdiction of the
state or federal courts resident in the State of Connecticut, if IVC or Icon is
the defendant, or in the County of Philadelphia, Commonwealth of Pennsylvania,
if Purchaser is the defendant, for purposes of resolving any disputes arising
under this Agreement. EACH PARTY EXPRESSLY WAIVES ITS RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LITIGATION OVER A DISPUTE UNDER THIS AGREEMENT.
(e) No Joint Venture. Nothing contained herein shall be construed to
constitute or deem either party as a partner, joint venturer, employee,
associate, or agent of the other.
(f) Entire Agreement. This Agreement is the entire agreement between the
parties relating to the subject matter hereof and supersedes all prior
agreements (including the Letter Agreement), proposals, letters of intent,
representations and commitments. This Agreement may be amended only by an
instrument executed by the authorized representatives of all parties.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
Signed, Sealed, and Delivered
in the Presence of: ICON INTERNATIONAL, INC.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxxxx X. Xxx, III
Its: /s/ EVP/CFO
ICON VENDOR CORPORATION
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxxxx X. Xxx, III
Its: EVP/CFO
THE PEP BOYS - MANNY, MOE & XXXX
/s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxxxxxx X. Xxxxxxxx
Its: SVP - Chief Administrative Officer
