Exhibit 10.1
Amended and Restated Loan ad Security Agreement, dated
August 1, 2003, by and amoung the Company, 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.
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and among
THE PEP BOYS - MANNY, MOE & XXXX
THE PEP BOYS XXXXX XXX & XXXX OF CALIFORNIA
PEP BOYS - MANNY, MOE & XXXX OF DELAWARE, INC.
PEP BOYS - MANNY, MOE & XXXX OF PUERTO RICO, INC.
as Borrowers
PBY CORPORATION
CARRUS SUPPLY CORPORATION
as Guarantors
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 HERETO
as Lenders
Dated: August 1, 2003
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
SECTION 2. CREDIT FACILITIES 33
2.1 Loans 33
2.2 Letter of Credit Accommodations 34
2.3 Joint and Several Liability 38
2.4 Commitments 39
SECTION 3. INTEREST AND FEES 39
3.1 Interest. 39
3.2 Fees 41
3.3 Changes in Laws and Increased Costs of Loans. 41
SECTION 4. CONDITIONS PRECEDENT 44
4.1 Conditions Precedent to Initial Loans and Letter of
Credit Accommodations 44
4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations 47
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST 48
SECTION 6. COLLECTION AND ADMINISTRATION 53
6.1 Borrowers= Loan Accounts 53
6.2 Statements 53
6.3 Collection of Accounts 53
6.4 Payments 56
6.5 Authorization to Make Loans 57
6.6 Use of Proceeds 57
6.7 Appointment of Administrative Borrower as Agent for
Requesting Loans and Receipts of Loans and Statements 58
6.8 Pro Rata Treatment 59
6.9 Sharing of Payments, Etc. 59
6.10 Settlement Procedures 60
6.11 Obligations Several; Independent Nature of Lenders= Rights 62
SECTION 7. COLLATERAL REPORTING AND COVENANTS 62
7.1 Collateral Reporting 62
7.2 Accounts Covenants 64
7.3 Inventory Covenants 67
7.4 Power of Attorney 67
7.5 Right to Cure 68
7.6 Access to Premises 69
SECTION 8. REPRESENTATIONS AND WARRANTIES 69
8.1 Corporate Existence, Power and Authority 69
8.2 Financial Statements; No Material Adverse Change. 70
8.3 Name; State of Organization; Chief Executive Office;
Collateral Locations. 70
8.4 Priority of Liens; Title to Properties 71
8.5 Tax Returns 71
8.6 Litigation 71
8.7 Compliance with Other Agreements and Applicable Laws 71
8.8 Environmental Compliance 72
8.9 Employee Benefits. 72
8.10 Bank Accounts 73
8.11 Intellectual Property 73
8.12 Interrelated Business 74
8.13 Capitalization 74
8.14 Labor Disputes 75
8.15 Restrictions on Subsidiaries 75
8.16 Material Contracts 75
8.17 Payable Practices 75
8.18 Accuracy and Completeness of Information. 76
8.19 Credit Card Agreements 76
8.20 Survival of Warranties; Cumulative 76
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 77
9.1 Maintenance of Existence. 77
9.2 New Collateral Locations 77
9.3 Compliance with Laws, Regulations, Etc. 77
9.4 Payment of Taxes and Claims 79
9.5 Insurance 79
9.6 Financial Statements and Other Information 80
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. 82
9.8 Encumbrances 84
9.9 Indebtedness 87
9.10 Loans, Investments, Etc. 97
9.11 Dividends and Redemptions 101
9.12 Transactions with Affiliates 102
9.13 Compliance with ERISA. 103
9.14 End of Fiscal Years; Fiscal Quarters 103
9.15 Change in Business 103
9.16 Limitation of Restrictions Affecting Subsidiaries 103
9.17 Adjusted Tangible Net Worth 104
9.18 Exempted Debt Limit 104
9.19 Credit Card Agreements 104
9.20 Sale and Leasebacks 105
9.21 Costs and Expenses 105
9.22 Further Assurances 106
9.23 Equipment and Real Property Covenants 106
SECTION 10. EVENTS OF DEFAULT AND REMEDIES 106
10.1 Events of Default 106
10.2 Remedies 109
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW 112
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver 112
11.2 Waiver of Notices 113
11.3 Amendments and Waivers. 114
11.4 Waiver of Counterclaims 116
11.5 Indemnification 116
SECTION 12. THE AGENT 116
12.1 Appointment, Powers and Immunities 116
12.2 Reliance by Agent 117
12.3 Events of Default 117
12.4 Congress in its Individual Capacity 118
12.5 Indemnification 118
12.6 Non-Reliance on Agent and Other Lenders 118
12.7 Failure to Act 119
12.8 Additional Loans 119
12.9 Concerning the Collateral and the Related Financing Agreements 119
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders 120
12.11 Collateral Matters 120
12.12 Agency for Perfection 122
12.13 Successor Agent 122
12.14 Co-Agent 122
SECTION 13. ACKNOWLEDGMENT AND RESTATEMENT 123
13.1 Existing Obligations 123
13.2 Acknowledgment of Security Interests 123
13.3 Existing Loan Agreement 123
13.4 Restatement 124
13.5 Release 124
SECTION 14. TERM OF AGREEMENT; MISCELLANEOUS 124
14.1 Term 124
14.2 Interpretative Provisions 127
14.3 Notices 128
14.4 Partial Invalidity 129
14.5 Confidentiality 129
14.6 Successors 130
14.7 Assignments; Participations. 131
14.8 Entire Agreement 133
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Exhibit D Form of Borrowing Base Certificate
Exhibit E Form of Weekly Collateral Report
Schedule 1 Commitments
Schedule 1.50 Equipment Term Loan Documents
Schedule 1.64 Existing Letters of Credit
Schedule 1.119 PNC Credit Card Documents
Schedule 1.138 Synthetic Lease Facility Agreements
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement dated August 1, 2003 is
entered into by and among The Pep Boys - Manny, Moe & Xxxx, a Pennsylvania
corporation ("Pep Boys"), The Pep Boys Xxxxx Xxx & Xxxx of California, a
California corporation ("PBY-California"), Pep Boys - Xxxxx Xxx & Xxxx of
Delaware, Inc., a Delaware corporation ("PBY-Delaware"), and Pep Boys - Manny,
Moe & Xxxx of Puerto Rico, Inc., a Delaware corporation ("PBY-Puerto Rico"; and
together with Pep Boys, PBY, PBY-California and PBY-Delaware, each
individually, a "Borrower" and collectively, "Borrowers"), PBY Corporation, a
Delaware corporation ("PBY") and Carrus Supply Corporation, a Delaware
corporation ("Carrus" and, together with PBY, each individually, a "Guarantor"
and collectively, "Guarantors"), the financial institutions from time to time
parties hereto as lenders, whether by execution of this Agreement or an
Assignment and Acceptance (each individually, a "Lender" and collectively,
"Lenders") and Congress Financial Corporation, a Delaware corporation, in its
capacity as agent for Lenders (in such capacity, "Agent") and The CIT
Group/Business Credit, Inc. and General Electric Capital Corporation (each
individually in such capacity, a "Documentation Agent" and collectively,
"Documentation Agents").
W I T N E S S E T H:
WHEREAS, Congress (as such term is defined below), Borrowers and Guarantors
have heretofore entered into certain financing arrangements as set forth in the
Existing Loan Agreement (as such term is defined below) pursuant to which
Congress has made loans and advances and provided other financial
accommodations to Borrowers;
WHEREAS, Borrowers and Guarantors have requested that Congress, the other
Lenders and Agent extend, modify and restate the existing financing
arrangements with Borrowers and Guarantors;
WHEREAS, Agent and Lenders (including Congress) are willing to extend, modify
and restate the existing financing arrangements, subject to the terms and
conditions contained herein and in the other Financing Agreements (as such term
is defined below);
WHEREAS, each Lender is willing to agree (severally and not jointly) to make
such loans and provide such financial accommodations to Borrowers on a pro rata
basis according to its Commitment (as such term is defined below) on the terms
and conditions set forth herein and Agent is willing to act as agent for
Lenders on the terms and conditions set forth herein and the other Financing
Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective
meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower and Guarantor, all present
and future rights of such Borrower and Guarantor to payment of a monetary
obligation in respect of Inventory and other Collateral, whether or not earned
by performance, which is not evidenced by chattel paper or an instrument,
(a) for Inventory and other Collateral that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (b) for services rendered or to
be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained
on or for use with the card.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, 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 foreign banking authority for determining
the reserve requirement which is or would be 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 Rate Loan or any Eurodollar Rate Loan
made with the proceeds of such deposit, whether or not the Reference Bank
actually holds or has made any such deposits or loans. The Adjusted Eurodollar
Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.
1.3 "Adjusted Tangible Net Worth" shall mean as to any Person, at any time,
in accordance with GAAP (except as otherwise specifically set forth below), on
a consolidated basis for such Person and its Subsidiaries (if any), the amount
equal to: the difference between: (a) the aggregate net book value of all
assets (excluding the value of patents, trademarks, trade names, copyrights,
licenses, goodwill, deferred tax assets, prepaid assets (including, without
limitation, prepaid insurance receivables of Colchester unless such receivables
are offset by an associated liability), investments (whether characterized as
loans or otherwise) to the Business Enterprises referred to in Section 9.10(o),
the cash surrender value of life insurance policies and other intangible
assets) of such Person and its Subsidiaries, calculating the book value of
inventory for this purpose on a last-in-first-out basis, after deducting from
such book values all appropriate reserves in accordance with GAAP (including
all reserves for doubtful receivables, obsolescence, depreciation and
amortization) and (b) the sum of: (i) the aggregate amount of the Indebtedness
and other liabilities of such Person and its Subsidiaries (including tax and
other proper accruals) and (ii) cash and investments of Colchester.
1.4 "Administrative Borrower" shall mean The Pep Boys - Manny, Moe & Xxxx,
a Pennsylvania corporation, in its capacity as Administrative Borrower on
behalf of itself and the other Borrowers pursuant to Section 6.7 hereof and it
successors and assigns in such capacity.
1.5 "Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with") when used with respect to any specified person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of Voting Stock, by agreement or otherwise.
1.6 "Agent" shall mean Congress Financial Corporation, in its capacity as
agent on behalf of Lenders pursuant to the terms hereof and any replacement or
successor agent hereunder.
1.7 "Agent Payment Account" shall mean account no.5000000030279 of Agent at
Wachovia Bank, National Association, Charlotte, North Carolina or such other
account of Agent as Agent may from time to time designate to Administrative
Borrower as the Agent Payment Account for purposes of this Agreement and the
other Financing Agreements.
1.8 "Applicable Margin" shall mean, at any time, as to the Interest Rate
for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if either the
Quarterly Average Excess Availability for the immediately preceding fiscal
quarter is in the amount indicated for such percentage or the Fixed Charge
Coverage Ratio as of the last day of the immediately preceding fiscal quarter
(which ratio for this purpose shall be calculated based on the four (4)
immediately preceding fiscal quarters) is at the level indicated for such
percentage:
Applicable Applicable
Quarterly Average Fixed Charge Prime Rate Eurodollar
Excess Availability Coverage Ratio Margin Rate Margin
(a) $50,000,000 1.75 or more 1/4% 2%
or more to 1
(b) Greater than 1.50 or more and 1/2% 2 1/4%
$25,000,000 and and less than
less than 1.75 to 1
$50,000,000
(c) Greater than 1.25 or more and 3/4% 2 1/2%
$10,000,000 and less than
equal to or less 1.50 to 1
than $25,000,000
(d) $10,000,000 or Less than 1% 2 3/4%
less 1.25 to 1
provided, that, the Applicable Margin shall be the lower percentage set forth
above based on the Quarterly Average Excess Availability or the Fixed Charge
Coverage Ratio.
1.9 "Applicable Unused Line Fee Percentage" shall mean, at any time, as to
the calculation of the Unused Line Fee set forth in Section 3.2 (a) hereof, the
Applicable Unused Line Fee Percentage as set forth below if either the
Quarterly Average Excess Availability for the immediately preceding fiscal
quarter is in the amount indicated for such percentage or the Fixed Charge
Coverage Ratio as of the last day of the immediately preceding fiscal quarter
(which ratio for this purpose shall be calculated based on the four (4)
immediately preceding fiscal quarters) is at the level indicated for such
percentage:
Quarterly Average Fixed Charge Applicable
Excess Availability Coverage Ratio Unused Line Fee
Percentage
(i) $50,000,000 or more 1.75 or more to 1 1/4%
(ii) Greater than $25,000,000 1.50 or more 1 1/4%
$25,000,000 and less and less than
Than $50,000,000 1.75 to 1
(iii) Greater than 1.25 or more 1 3/8%
$10,000,000 and equal to and less than
or less than 1.50 to 1
$25,000,000
(iv) $10,000,000 or less Less than 1.25 to 1 1/2%
or less
provided, that, (i) the Applicable Unused Line Fee Percentage shall be
calculated and established once each fiscal quarter and shall be effective as
of each January, April, July, and October of each calendar year, and (ii) the
Applicable Unused Line Fee Percentage shall be the lower percentage set forth
above based on the Quarterly Average Excess Availability or the Fixed Charge
Coverage Ratio.
1.10 "Asset Purchase Advances" shall have the meaning set forth in Section
4.2 (c) hereof.
1.11 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender=s interest hereunder in accordance with the provisions of Section 14.7
hereof.
1.12 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.13 "Borrowing Base" shall mean, at any time, as to each Borrower, the
amount equal to the lesser of:
(a) the sum of:
(i) eighty (80%) percent multiplied by the Net Amount of
Eligible Accounts of Borrowers; plus
(ii) the lesser of: (A) sixty-five (65%) percent multiplied
by the Value of Eligible Inventory of Borrowers or (B) ninety
(90%) percent of the Net Recovery Percentage multiplied by the
Value of the Eligible Inventory of Borrowers, provided, that,
in the event that Excess Availability is less than $50,000,000
(with Excess Availability calculated for this purpose without
regard to the Special Reserve) for more than five (5)
consecutive Business Days, Agent may at its option (or at the
direction of the Required Lenders), reduce such percentage to
eighty-five (85%) of the Net Recovery Percentage; less
(iii) any Reserves; or
(b) the Maximum Credit minus the Facility Reserve.
1.14 "Borrowing Base Certificate" shall mean a report, substantially in the
form of Exhibit E hereto, as the same may from time to time be modified by
Agent, which is duly completed as provided in Section 7.1 hereof and executed
by the chief financial officer or Vice President-Finance of Pep Boys on behalf
of each Borrower and delivered to Agent.
1.15 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York, or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
1.16 "Business Enterprise" shall have the meaning set forth in Section
9.10(o) hereof.
1.17 "Capital Expenditures" shall mean, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year
or years.
1.18 "Capital Leases" shall mean, as applied to any Person, any lease of (or
any agreement conveying the right to use) any property (whether real, personal
or mixed) by such Person as lessee which in accordance with GAAP, is required
to be reflected as a liability on the balance sheet of such Person.
1.19 "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 or partnership, limited liability company or other
equity 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).
1.20 "Carrus" shall mean Carrus Supply Corporation, a Delaware corporation,
and its successors and assigns.
1.21 "Cash Dominion Event" shall have the meaning set forth in Section
6.3(a)(i) hereof.
1.22 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof; provided, that, the full
faith and credit of the United States of America is pledged in support thereof;
(b) certificates of deposit or bankers' acceptances with a maturity of
one hundred eighty (180) days or less of any financial institution that is a
member of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $250,000,000; (c) commercial paper
(including variable rate demand notes) with a maturity of one hundred eighty
(180) days or less issued by a corporation (except an Affiliate of any Borrower
or Guarantor) organized under the laws of any State of the United States of
America or the District of Columbia and rated at least A-1 by Standard & Poor's
Ratings Service, a division of The
XxXxxx-Xxxx Companies, Inc. or at least P-1 by Xxxxx'x Investors Service, Inc.;
(d) repurchase obligations with a term of not more than thirty (30) days for
underlying securities of the types described in clause (a) above entered into
with any financial institution having combined capital and surplus and
undivided profits of not less than $250,000,000; (e) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within one hundred eighty (180)
days or less from the date of acquisition; provided, that, the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; and (f)
investments in money market funds and mutual funds which invest substantially
all of their assets in securities of the types described in clauses (a) through
(e) above.
1.23 "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
Borrower or Guarantor 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 hereof;
(b) the liquidation or dissolution of any Borrower or Guarantor or the adoption
of a plan by the stockholders of any Borrower or Guarantor relating to the
dissolution or liquidation of such Borrower or Guarantor other than as
permitted in Section 9.7 hereof; (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; (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 (together with any new directors
whose nomination for election by the stockholders of Pep Boys, 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
then still in office; or (e) the failure of Pep Boys to own one hundred (100%)
percent of the voting power of the total outstanding Voting Stock of any of the
Borrowers (other than Pep Boys), Guarantors and Colchester.
1.24 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.25 "Colchester" shall mean Colchester Insurance Company, a Vermont
insurance corporation, and its successors and assigns.
1.26 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.27 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance reasonably satisfactory to Agent in good faith, from any
lessor of premises to any Borrower or Guarantor, or any other person to whom
any Collateral is consigned or who has custody, control or possession of any
such Collateral or is otherwise the owner or operator of any premises on which
any of such Collateral is located.
1.28 "Commitment" shall mean, at any time, as to each Lender, the principal
amount set forth next to such Lender=s name on Schedule 1 hereto or on
Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of Section
14.7 hereof, as the same may be adjusted from time to time in accordance with
the terms hereof; sometimes being collectively referred to herein as
"Commitments".
1.29 "Congress" shall mean Congress Financial Corporation, a Delaware
corporation, in its individual capacity, and its successors and assigns.
1.30 "Consolidated Net Income" shall mean, with respect to any Person for
any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary and/or one time or unusual and non-recurring
gains and non-cash extraordinary losses) after deducting all charges which
should be deducted before arriving at the net income (loss) for such period
and, without duplication, after deducting the Provision for Taxes for such
period, all as determined in accordance with GAAP; provided, that, (a) the net
income of any Person that is not a wholly-owned Subsidiary or that is accounted
for by the equity method of accounting shall be included only to the extent of
the amount of dividends or distributions paid or payable to such Person or a
wholly-owned Subsidiary of such Person; (b) except to the extent included
pursuant to the foregoing clause, the net income of any Person accrued prior to
the date it
becomes a wholly-owned Subsidiary of such Person or is merged into or
consolidated with such Person or any of its wholly-owned Subsidiaries or that
Person's assets are acquired by such Person or by its wholly-owned Subsidiaries
shall be excluded; and (c) the net income (if positive) of any wholly-owned
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such wholly-owned Subsidiary to such Person or to any
other wholly-owned Subsidiary of such Person is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
wholly-owned Subsidiary shall be excluded. For the purposes of this
definition, (i) net income excludes any gain or non-cash loss together with any
related Provision for Taxes for any such gain or loss realized upon the sale or
other disposition of any assets that are not sold in the ordinary course of
business (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or of any Capital Stock of such Person or a Subsidiary
of such Person and any net income realized or loss incurred as a result of
changes in accounting principles or the application thereof to such Person, and
(ii) the term "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial,
county or local, and whether foreign or domestic, that are paid or payable by
any Person in respect of any period in accordance with GAAP.
1.31 "Consolidated Net Tangible Assets" shall have the meaning set forth in
the 1998 Senior Note Indenture, as in effect on the date hereof, or if such
1998 Senior Note Indenture is not in full force and effect, such other
equivalent term in any of the other Pep Boys Indentures, then in effect.
1.32 "Credit Card Acknowledgments" shall mean, with respect to each Borrower,
individually and collectively, the agreements in favor of Agent by Credit Card
Issuers or Credit Card Processors who are parties to Credit Card Agreements in
favor of Agent, in form and substance reasonably satisfactory to Agent.
1.33 "Credit Card Agreements" shall mean, with respect to each Borrower, all
agreements (other than Credit Card Acknowledgments) now or hereafter entered
into by such Borrower with any Credit Card Issuer or any Credit Card Processor,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, including, but not limited to, the
agreements set forth on Schedule 8.20 to the Information Certificate.
1.34 "Credit Card Issuer" shall mean any person (other than any Borrower) who
issues or whose members issue credit cards, including, without limitation,
MasterCard or VISA bank credit or debit cards or other bank credit or debit
cards issued through MasterCard International, Inc., VISA, U.S.A., Inc. or Visa
International and American Express, Discover, Diners Club, Xxxxx Xxxxxxx and
other non-bank credit or debit cards, including, without limitation, credit or
debit cards issued by or through American Express Travel Related Services
Company, Inc. and Novus Services, Inc.
1.35 "Credit Card Processor" shall mean, with respect to each Borrower, any
servicing or processing agent or any factor or financial intermediary who
facilitates, services, processes or manages the credit authorization, billing
transfer and/or payment procedures with respect to any of such Borrower's sales
transactions involving credit card or debit card purchases by customers using
credit cards or debit cards issued by any Credit Card Issuer.
1.36 "Credit Card Receivables" shall mean, with respect to each Borrower,
collectively, (a) all present and future rights of such Borrower to payment
from any Credit Card Issuer, Credit Card Processor or other third party arising
from sales of goods or rendition of services to customers who have purchased
such goods or services using a credit or debit card and (b) all present and
future rights of such Borrower to payment from any Credit Card Issuer, Credit
Card Processor or other third party in connection with the sale or transfer of
Accounts arising pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a credit card or a
debit card, including, but not limited to, all amounts at any time due or to
become due from any Credit Card Issuer or Credit Card Processor under the
Credit Card Agreements or otherwise.
1.37 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of any Borrower pursuant to
Sections 2.1 and 2.2 hereof.
1.38 "Default" shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
1.39 "Defaulting Lender" shall have the meaning set forth in Section 6.10
hereof.
1.40 "Deposit Account Control Agreement" shall mean an agreement in writing,
in form and substance reasonably satisfactory to Agent, by and among Agent, the
Borrower or Guarantor with a deposit account at any bank into which Collateral
is deposited.
1.41 "Direct Competitor" shall mean any Person engaged principally in the
wholesale and/or retail sale of automotive parts, tires and/or accessories,
automotive maintenance and/or service and installation of parts.
1.42 "EBITDA" shall mean, as to any Person, with respect to any period, an
amount equal to: (a) the Consolidated Net Income of such Person and its
Subsidiaries for such period determined in accordance with GAAP, plus (b)
depreciation, amortization and other non-cash charges (including, but not
limited to, imputed interest and deferred compensation) for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
all in accordance with GAAP, plus (c) Interest Expense for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
plus (d) charges for Federal, State, local and foreign income taxes for such
period (to the extent deducted in the computation of Consolidated Net Income of
such Person).
1.43 "Eligible Accounts" shall mean, as to each Borrower, Accounts created
by a Borrower which are and continue to be acceptable to Agent based on the
criteria set forth below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such
Borrower in the ordinary course of its business which transactions are
completed in accordance with the terms and provisions contained in any
documents related thereto;
(b) such Accounts are not unpaid more than the earlier of (i) sixty
(60)
days after the original due date thereof or (ii) ninety (90) days after
the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the account debtor may be conditional or
contingent;
(e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America, Puerto
Rico or Canada (provided, that, at any time promptly upon Agent's
request, such Borrower shall execute and deliver, or cause to be
executed and delivered, such other agreements, documents and
instruments as may be required by Agent, in good faith, to perfect the
security interests of Agent in those Accounts of an account debtor with
its chief executive office or principal place of business in Canada in
accordance with the applicable laws of the Province of Canada in which
such chief executive office or principal place of business is located
and take or cause to be taken such other and further actions as Agent
may request, in good faith, to enable Agent as secured party with
respect thereto to collect such Accounts under the applicable Federal
or Provincial laws of Canada) or, at Agent's option, if the chief
executive office and principal place of business of the account
debtor with respect to such Accounts is located other than in the
United States of America or Canada, then if either: (i) the account
debtor has delivered to such Borrower an irrevocable letter of credit
issued or confirmed by a bank satisfactory to Agent and payable only
in the United States of America and in U.S. dollars, sufficient to
cover such Account, in form and substance satisfactory to Agent and if
required by Agent, the original of such letter of credit has been
delivered to Agent or Agent's agent, and such Borrower has complied
with the terms of Section 5.2(f) hereof with respect to the assignment
of the proceeds of such letter of credit to Agent or naming Agent as
transferee beneficiary thereunder, as Agent may specify, or (ii) such
Account is subject to credit insurance payable to Agent issued by an
insurer and on terms and in an amount acceptable to Agent, or (iii
such Account is otherwise acceptable in all respects to Agent, in its
good faith determination (subject to such lending formula with respect
thereto as Agent may determine, in good faith);
(f such Accounts do not consist of progress xxxxxxxx (such that
the obligation of the account debtors with respect to such Accounts is
conditioned upon such Borrower's satisfactory completion of any further
performance under the agreement giving rise thereto), xxxx and hold
invoices or retainage invoices, except as to xxxx and hold invoices, if
Agent shall have received an agreement in writing from the account
debtor, in form and substance satisfactory to Agent, confirming the
unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
(g the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and is not owed any amounts
that may give rise to any right of setoff or recoupment against such
Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by such
Borrower to such account debtor or claimed owed by such account debtor
may be deemed Eligible Accounts),
(h there are no facts, events or occurrences which would impair
the validity, enforceability or collectability of such Accounts or
reduce the amount payable or delay payment thereunder;
(i such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto
are not, and were not at the time of the sale thereof, subject to any
liens except those permitted in this Agreement;
(j neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee,
agent or other Affiliate of any Borrower or Guarantor;
(k the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if
the account debtor is the United States of America, any State,
political subdivision, department, agency or instrumentality thereof,
upon Agent's request, the Federal Assignment of Claims Act of 1940, as
amended or any similar State or local law, if applicable, has been
complied with in a manner satisfactory to Agent;
(l there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which
might result in any material adverse change in any such account
debtor's financial condition (including, without limitation, any
bankruptcy, dissolution, liquidation, reorganization or similar
proceeding);
(m such Accounts of a single account debtor or its Affiliates do not
constitute more than five (5%) percent of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of such
percentage may be deemed Eligible Accounts), provided, that, with
respect to Bridgestone/Firestone Inc. such percentage shall be ten
(10%) percent;
(n such Accounts are not owed by an account debtor who has
Accounts unpaid more than the earlier of (i) sixty (60) days after the
due date thereof and (ii) ninety (90) days after the date of the
original invoice for them, which constitute more than fifty (50%)
percent of the total Accounts of such account debtor;
(o the account debtor is not located in a state requiring the
filing of a Notice of Business Activities Report or similar report in
order to permit such Borrower to seek judicial enforcement in such
State of payment of such Account, unless such Borrower has qualified to
do business in such state or has filed a Notice of Business Activities
Report or equivalent report for the then current year or such failure
to file and inability to seek judicial enforcement is capable of being
remedied without any material delay or material cost;
(p such Accounts are owed by account debtors whose total
indebtedness to such Borrower does not exceed the credit limit with
respect to such account debtors as determined by such Borrower
substantially consistent with the current practices (taken as a whole)
as of the date hereof and such credit limit is reasonably acceptable to
Agent (but the portion of the Accounts not in excess of such credit
limit may be deemed Eligible Accounts);
(q such Accounts are not Credit Card Receivables; and
(r such Accounts are owed by account debtors deemed creditworthy
at all times by such Borrower consistent with its current practice and
who are reasonably acceptable to Agent.
General criteria for Eligible Accounts may be established and revised from time
to time by Agent in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Agent has no written notice thereof from such Borrower, which
adversely affects or would reasonably be expected to adversely affect the
Accounts in the good faith determination of Agent. Any Accounts which are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.44 "Eligible Inventory" shall mean, as to each Borrower, the Inventory of
such Borrower consisting of finished goods held for resale in the ordinary
course of the business of such Borrower, which are acceptable to Agent based on
the criteria set forth below. In general, Eligible Inventory shall not
include:
(a packaging and shipping materials;
(b supplies used or consumed in such Borrower's business;
(c Inventory at premises other than those owned and controlled
by such Borrower, except any Inventory which would otherwise be deemed
Eligible Inventory at locations in the United States of America and
Puerto Rico which are not owned and operated by such Borrower may
nevertheless be considered Eligible Inventory: (i) as to locations
which are leased by such Borrower if Agent shall have received a
Collateral Access Agreement from the owner and lessor of such
location, duly authorized, executed and delivered by such owner and
lessor, except that notwithstanding that Agent shall not have received
such an agreement for a particular leased location, Agent will consider
Inventory at such leased location which would otherwise be Eligible
Inventory to be Eligible Inventory, provided, that, (A) the other
conditions set forth in this Section 1.44 are satisfied, in the good
faith determination of Agent, and (B) Excess Availability is at least
$37,500,000, and in any event, Agent may at any time establish such
Reserves as Agent may determine in respect of amounts at any time
payable by such Borrower to the owner or lessor of such location,
without limiting any other rights and remedies of Agent under this
Agreement or under the other Financing Agreements with respect to the
establishment of Reserves or otherwise and (ii) as to premises of third
parties (including sales agents, consignees, warehouses and
processors), Agent shall have received a Collateral Access Agreement
duly authorized, executed and delivered by the owner and operator of
such premises (except that notwithstanding that Agent shall not have
received such an agreement as to a particular third party location,
Agent will consider Inventory at such location which would otherwise be
Eligible Inventory to be Eligible Inventory to the extent that (A) the
other conditions set forth with this Section 1.44 are satisfied in the
good faith determination of Agent, and (B) Excess Availability is at
least $37,500,000 and in such event, Agent may at any time establish
such Reserves as Agent may determine in respect of amounts at any time
payable by such Borrower to such third party, without limiting any
other rights or remedies of Agent under this Agreement or under the
other Financing Agreements with respect to the establishment of
Reserves or otherwise, and in addition, if required by Agent, as to
premises of third parties where assets of a Borrower are located:
(A) the owner and operator authorizes the filing of appropriate UCC-1
financing statements in favor of such Borrower, which are duly assigned
to Agent and (B) any secured lender to the owner and operator is
properly notified of the first priority lien on such Inventory of
Agent;
(d Inventory located outside the continental United States of
America or Puerto Rico;
(e Inventory subject to a security interest or lien in favor of
any person other than Agent except those permitted in this Agreement
(including those liens which are the subject of a Collateral Access
Agreement);
(f xxxx and hold goods;
(g unserviceable or obsolete Inventory;
(h Inventory which is not subject to the first priority, valid and
perfected security interest of Agent;
(i damaged and/or defective Inventory;
(j returned Inventory that is not held for resale;
(k Inventory to be returned to vendors;
(l Inventory subject to deposits made by customers for sales of
Inventory that has not been delivered; and
(m Inventory purchased or sold on consignment.
General criteria for Eligible Inventory may be established and revised from
time to time by Agent in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Agent has no written notice thereof from such Borrower, which
adversely affects or would reasonably be expected to adversely affect the
Inventory in the good faith determination of Agent. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.
1.45 "Eligible Transferee" shall mean (a) any Lender; (b) the parent company
of any Lender and/or any Affiliate of such Lender which is at least fifty (50%)
percent owned by such Lender or its parent company; (c) any person (whether a
corporation, partnership, trust or otherwise) that is engaged in the business
of making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by a Lender or with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent in its good faith determination;
and (d) any other commercial bank, financial institution or "accredited
investor" (as defined in Regulation D under the Securities Act of 1933)
approved by Agent in its good faith determination, provided, that, (i) neither
any Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor
shall qualify as an Eligible Transferee, (ii) no Person to whom any
Indebtedness which is in any way subordinated in right of payment to any other
Indebtedness of any Borrower or Guarantor shall qualify as an Eligible
Transferee, except as Agent may otherwise specifically agree and (iii) no
assignment shall be made or participation sold to any Direct Competitor of any
Borrower except after the occurrence of an Event of Default.
1.46 "Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), rules, codes, licenses, permits (including any
conditions imposed therein), authorizations, judicial or administrative
decisions, injunctions or agreements between Borrower and any Governmental
Authority, relating to emissions, discharges, releases or threatened releases,
of any Hazardous Materials into ambient air, surface water, groundwater,
publicly owned treatment works, septic system, or land, or otherwise relating
to the handling, storage, treatment, generation, use, or disposal of Hazardous
Materials, 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.
1.47 "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.
1.48 "Equipment" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor=s now owned and hereafter acquired equipment, wherever
located, including machinery, data processing and computer equipment (whether
owned or licensed and including embedded software), vehicles, tools, furniture,
fixtures, all attachments, accessions and property now or hereafter affixed
thereto or used in connection therewith, and substitutions and replacements
thereof, wherever located.
1.49 "Equipment Term Loan Agent" shall mean GMAC Business Credit, LLC, as
Agent, under the $90,000,000 Credit Agreement, dated as of June 29, 2001,
among Pep Boys and GMAC Business Credit, LLC, as agent and lender.
1.50 "Equipment Term Loan Documents" shall mean each of the documents listed
on Schedule 1.50 annexed hereto, each of such documents being dated as of June
29, 2001 between Equipment Term Loan Agent, and the Borrowers, as in effect on
June 29, 2001, and as such documents may be hereafter amended to the extent
permitted under the Intercreditor Agreement dated as of June 29, 2001 by and
between Equipment Term Loan Agent and Agent, as amended.
1.51 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.52 "ERISA Affiliate" shall mean any person required to be aggregated with
any Borrower, any Guarantor or any of its or their respective Subsidiaries
under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.53 "ERISA Event" shall mean any of the following, the occurrence of which
would have a reasonable likelihood of having a Material Adverse Effect (a) any
"reportable event", as defined in Section 4043(c) of ERISA or the regulations
issued thereunder, with respect to a Plan; (b) the adoption of any amendment
to a Plan that would require the provision of security pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect
to any Plan of an "accumulated funding deficiency" (as defined in Section 412
of the Code or Section 302 of ERISA), whether or not waived; (d) the filing
pursuant to Section 412 of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (e) the occurrence of a "prohibited transaction" with respect to which
any Borrower, Guarantor or any of its or their respective Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which any
Borrower, Guarantor or any of its or their respective Subsidiaries could
otherwise be liable; (f) a complete or partial withdrawal by any Borrower,
Guarantor or any ERISA Affiliate from a Multiemployer Plan or a cessation of
operations which is treated as such a withdrawal or notification that a
Multiemployer Plan is in reorganization; (g) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA, or the commencement of proceedings by the Pension
Benefit Guaranty Corporation to terminate a Plan or Multiemployer Plan;
(h) an event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan; (i) the imposition
of any liability under Title IV of ERISA, other than the Pension Benefit
Guaranty Corporation premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower, Guarantor or any ERISA Affiliate and (j) any other
event or condition with respect to a Plan or any Multiemployer Plan or any Plan
subject to Title IV of ERISA maintained, or contributed to, by any ERISA
Affiliate that could reasonably be expected to result in liability of any
Borrower.
1.54 "Eurodollar Rate" shall mean with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower or Administrative Borrower
on behalf of such Borrower and approved by Agent) on or about 9:00 a.m. (New
York time) two (2) Business Days prior to the commencement of such Interest
Period in amounts substantially equal to the principal amount of the Eurodollar
Rate Loans requested by and available to such Borrower in accordance with this
Agreement, with a maturity of comparable duration to the Interest Period
selected by or on behalf of a Borrower.
1.55 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.56 "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
1.57 "Excess Availability" shall mean, as to Borrowers, the amount, as
determined by Lender, calculated at any time, equal to: (a) the lesser of:
(i) the Borrowing Base and (ii) the Maximum Credit, minus (b) the sum of:
(i) the amount of all then outstanding and unpaid Obligations of Borrowers,
plus (ii) the aggregate amount of all then outstanding and unpaid trade
payables and other obligations of Borrowers which are more than forty-five (45)
days past due as of such time (unless the trade payables or the obligation is
being contested in good faith). For purposes of calculating Excess Availability
in connection with Sections 1.8, 1.9, 1.13(a)(ii)(B), 1.43(c), 6.3(a)(i) and
6.3(a)(ii) hereof, the Borrowing Base shall not be reduced by the Special
Reserve.
1.58 "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same now exists or may hereafter from time to time be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.59 "Exempted Debt" shall have the meaning set forth in the 1998 Senior
Note Indenture, as in effect on the date hereof, or if such 1998 Senior Note
Indenture is not in full force and effect, such other equivalent term in any of
the other Pep Boys Indentures, then in effect.
1.60 "Exempted Debt Limit" shall mean, on any date of determination, a
dollar amount equal to (a) the amount equal to 15% of Consolidated Net Tangible
Assets of Pep Boys and its Subsidiaries, less (b) $50,000,000.
1.61 "Exempted Debt Availability" shall mean, on any date of determination,
the amount of Exempted Debt which may be incurred by Pep Boys and its
Subsidiaries, which amount shall be equal to (a) the Exempted Debt Limit, less
(b) the sum of (i) the outstanding amount of Exempted Debt then being secured
by "Mortgages" (as such term is defined in the 1998 Senior Note Indenture, as
in effect on the date hereof), in accordance with Section 1004(b) of the 1998
Senior Note Indenture, as in effect on the date hereof, or if such 1998 Senior
Note Indenture is not in effect, such other equivalent or more restrictive
provision in any of the other Pep Boys Indentures, then in effect, and (ii) to
the extent not included in clause (b)(i) hereof, the amount of any Reserve
established by Agent herein, in respect of obligations, liabilities or
indebtedness (contingent or otherwise) of Borrowers or Guarantors to any
Affiliate of Agent or any other Person arising under or in connection with any
Hedge Agreement of any Borrower or Guarantor with such Affiliate or Person.
1.62 "Existing Financing Agreements" shall mean, individually and
collectively, each and all of the following (as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced): (1) the Existing Loan Agreement, and (2) all other agreements,
documents and instruments related thereto and executed prior to the date
hereof.
1.63 "Existing Loan Agreement" shall mean the Loan and Security Agreement,
dated September 22, 2000, by and among Congress, Borrowers and Guarantors, as
amended through the date hereof.
1.64 "Existing Letters of Credit" shall mean, collectively, the letters of
credit issued by Wachovia Bank, National Association for the account of
Borrowers or for which such Borrower or Guarantor is otherwise liable listed on
Schedule 1.64 hereto, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.65 "Existing Synthetic Lease Facility Agreements" shall mean,
collectively, the following (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced):
(a) Amended and Restated Trust Agreements, dated as of September 22, 2000, by
and between, the several holders from time to time parties thereto, and State
Street Bank and Trust Company of Connecticut, National Association, as Owner
Trustee, (b) the Credit Agreements, each dated as of September 22, 2000, by and
among, State Street Bank and Trust Company of Connecticut, National
Association, as Owner Trustee under the 1995 Pep Boys Leased Property Trust and
the 1997 Pep Boys II Leased Property Trust (as applicable), as borrower, the
several lenders, parties thereto, and Wachovia Bank, National Association, as
Agent with respect to each of Tranche A and Tranche B, (c) the Lease Agreement,
dated as of September 22, 2000, by and among State Street Bank and Trust
Company of Connecticut, National Association, as Owner Trustee under the 1995
Pep Boys Leased Property Trust and the 1997 Pep Boys Leased Property Trust
(as applicable), jointly and severally, as lessor, and Pep Boys, PBY-
California, and PBY-Delaware, as lessees, (d) Participation Agreement, dated as
of September 22, 2000, among Pep Boys, PBY-California, PBY- Delaware, as
lessee, various parties thereto, as guarantors, State Street Bank and Trust
Company of Connecticut, National Association, as Owner Trustee, the various
banks and other lending institutions parties thereto, as holders, the various
banks and other lending institutions parties thereto, as lenders, Wachovia
Bank, National Association, as Agent and Wachovia Securities, Inc., as
Arranger, and (e) all agreements, documents, mortgages and instruments executed
and/or delivered in connection with any of the foregoing.
1.66 "Facility Reserve" shall mean an amount equal to: (a) the lesser of (i)
$99,000,000 or (ii) the aggregate outstanding principal amount of Tranche A
Loans (as such term is defined in the Synthetic Lease Facility Agreements)
minus (b) the lesser of: (i) $10,000,000 or (ii) zero, unless Synthetic Lease
Facility Agent has received an appraisal pursuant to Section 4.4 of the Amended
and Restated Intercreditor and Lien Subordination Agreement, dated the date
hereof, by and among Borrowers, Guarantors, Wachovia Development Corporation,
Wachovia Bank, National Association, as Agent, under the Synthetic Lease
Facility Agreements, and Agent, then, an amount equal to (A) fifty (50%)
percent of the net forced liquidation value of the Properties (as such term is
defined in the Synthetic Lease Facility Agreements), set forth in the most
recent appraisal received by Synthetic Lease Facility Agent minus (B) the
aggregate principal amount of Loans and Lessor Advances (as such terms are
defined in the Synthetic Lease Facility Agreements) owing to any Lenders or
Lessor, as the case may be (as such term is defined in the Synthetic Lease
Facility Agreements) other than Tranche A Lenders (as such term is defined in
the Synthetic Lease Facility Agreements).
1.67 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and among Borrowers, Guarantors and Agent, setting forth certain
fees payable by Borrowers to Agent for the benefit of itself and Lenders, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.68 "Financing Agreements" shall mean, collectively, this Agreement and all
notes, guarantees, security agreements, deposit account control agreements,
investment property control agreements, intercreditor agreements and all other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Borrower or Obligor in connection with this Agreement.
The parties hereto agree that the Synthetic Lease Facility Agreements and any
Hedge Agreements are not Financing Agreements.
1.69 "Fixed Charges" for any period shall mean the sum of, without
duplication, (a) all Interest Expense, plus (b) all regularly scheduled (as
determined at the beginning of the respective period) principal payments of
Indebtedness for borrowed money and Indebtedness with respect to Capital Leases
(and without duplicating amounts in item (a) of this definition, the interest
component with respect to Indebtedness under Capital Leases) plus (c) the fees
paid to Agent in respect of the financing arrangements provided for herein
(other than the syndication fee) plus (d) fees payable to Persons in respect of
other Indebtedness permitted in accordance with Section 9.9 hereof. The
foregoing shall not be construed to include principal payments of Indebtedness
arising pursuant to revolving loans and advances.
1.70 "Fixed Charge Coverage Ratio" shall mean, with respect to Pep Boys and
its Subsidiaries, on a consolidated basis inclusive of Colchester, the ratio of
(a) EBITDA during the four (4) full fiscal quarters immediately preceding the
determination date with respect to the calculation of the Fixed Charge Coverage
Ratio less Capital Expenditures for such period to (b) Fixed Charges of Pep
Boys and its Subsidiaries for such four (4) fiscal quarter period.
1.71 "Flexi-Trust" shall mean the Trust established pursuant to the
Flexi-Trust Agreement.
1.72 "Flexi-Trust Agreement" shall mean the Trust Agreement, effective as of
April 29, 1994, between Pep Boys and Wachovia Bank, National Association, as
Trustee, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.73 "GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except
that, if any change in generally accepted accounting principles after the date
hereof affects the calculation of compliance with the covenants in Sections
9.17 and 9.18 hereof or the calculation of the Fixed Charge Coverage Ratio or
any component thereof, Pep Boys may by notice to Lender, or Agent may, by
notice to Pep Boys, require that such covenants thereafter be calculated in
accordance with generally accepted accounting principles as in effect and
applied by Pep Boys immediately before such change in generally accepted
accounting principles occurred. If such notice is given by Pep Boys (or if
such notice is given by Agent then only upon Agent's request), the compliance
certificate delivered pursuant to Section 9.6 hereof after such change occurs
shall be accompanied by a calculation of such covenant and ratio made in
accordance with generally accepted accounting principles as in effect from time
to time after such change occurs.
1.74 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.75 "Guarantors" shall mean, collectively, the following (together with
their respective successors and assigns): (a) PBY Corporation, a Delaware
corporation; and (b) Carrus Supply Corporation, a Delaware corporation; each
sometimes being referred to herein individually as a "Guarantor".
1.76 "Hazardous Materials" 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.
1.77 "Hedge Agreement" shall mean an agreement between any Borrower or
Guarantor and any Affiliate of Agent or any other financial institution
reasonably acceptable to Agent that is a rate swap agreement, basis swap,
forward rate agreement, commodity swap, interest rate option, forward foreign
exchange agreement, spot foreign exchange agreement, rate cap agreement rate,
floor agreement, rate collar agreement, currency swap agreement, cross-currency
rate swap agreement, currency option, any other similar agreement (including
any option to enter into any of the foregoing or a master agreement for any the
foregoing together with all supplements thereto) for the purpose of protecting
against or managing exposure to fluctuations in interest or exchange rates,
currency valuations or commodity prices; sometimes being collectively referred
to herein as "Hedge Agreements".
1.78 "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such Person or only
to a portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an
account payable to a trade creditor (whether or not an Affiliate) created,
incurred, assumed or guaranteed by such Person in the ordinary course of
business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of
such Person to pay or be liable
for the payment of any indebtedness described in this definition of another
Person, including, without limitation, any such indebtedness, directly or
indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person; (f all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances, drafts or similar documents or instruments issued for
such Person's account; (g) all indebtedness of such Person in respect of
indebtedness of another Person for borrowed money or indebtedness of another
Person otherwise described in this definition which is secured by any
consensual lien, security interest, collateral assignment, conditional sale,
mortgage, deed of trust, or other encumbrance on any asset of such Person,
whether or not such obligations, liabilities or indebtedness are assumed by or
are a personal liability of such Person, all as of such time; and (h) all
obligations, liabilities and indebtedness of such Person (marked to market)
arising under swap agreements, cap agreements and collar agreements and other
agreements or arrangements designed to protect such person against fluctuations
in interest rates or currency or commodity values. Any funds borrowed by Pep
Boys against the cash surrender value of any "key-man" insurance policies (and
which do not exceed such cash surrender value), which is not treated as
indebtedness under GAAP shall not be deemed to be Indebtedness for purposes of
this Agreement and the other Financing Agreements.
1.79 "Information Certificate" shall mean, collectively, the Information
Certificates of Borrowers and Guarantors constituting Exhibit B hereto
containing material information with respect to Borrowers and Guarantors, their
respective businesses and assets provided by or on behalf of Borrowers and
Guarantors to Agent in connection with the preparation of this Agreement and
the other Financing Agreements and the financing arrangements provided for
herein.
1.80 "Intellectual Property@ shall mean, as to each Borrower and Guarantor,
such Borrower's and Guarantor=s now owned and hereafter arising or acquired:
patents, patent rights, patent applications, copyrights, works which are the
subject matter of copyrights, copyright registrations, trademarks, trade names,
trade styles, trademark and service xxxx applications, and licenses and rights
to use any of the foregoing; all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing; all rights to
xxx for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill
(including any goodwill associated with any trademark or the license of any
trademark); customer and other lists in whatever form maintained; trade secret
rights, copyright rights, rights in works of authorship, domain names and
domain name registrations; software and contract rights relating to computer
software programs, in whatever form created or maintained.
1.81 "Interest Expense" shall mean, for any period, as to any Person, all of
the following as determined in accordance with GAAP: (a) total interest
expense, whether paid or accrued during such period (including the interest
component of Capital Leases for such period), including, without limitation,
all bank fees, commissions, discounts and other fees and charges owed with
respect to letters of credit, banker=s acceptances or similar instruments but
excluding (b) amortization of discount and amortization of deferred financing
fees paid in cash in connection with the transactions contemplated hereby and
(c) any other interest expense not payable in cash.
1.82 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), or three (3) months duration as any Borrower
(or Administrative Borrower on behalf of such Borrower) may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, such Borrower (or
Administrative Borrower on behalf of such Borrower) may not elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.
1.83 "Interest Rate" shall mean,
(a Subject to clauses (b) and (c) of this definition below:
(i as to Prime Rate Loans, a rate equal to one quarter of
one (.25%) percent per annum in excess of the Prime Rate, and
(ii as to Eurodollar Rate Loans, a rate equal to two (2%)
percent per annum in excess of the Adjusted Eurodollar Rate
(in each case, based on the Eurodollar Rate applicable for the
Interest Period selected by a Borrower or by an Administrative
Borrower on behalf of such Borrower as in effect three (3)
Business Days after the date of receipt by Agent of the request
of such Borrower for such Eurodollar Rate Loans in accordance
with the terms hereof, whether such rate is higher or lower
than any rate previously quoted to such Borrower).
(b Subject to clause (c) of this definition below, effective as of
the first (1st) day of the third month of each fiscal quarter, the
Interest Rate payable by Borrowers shall be increased or decreased, as
the case may be,
(i) as to Prime Rate Loans, to the rate equal to the Applicable
Margin on a per annum basis in excess of the Prime Rate, and
(ii) as to Eurodollar Rate Loans, to the rate equal to the
Applicable Margin on a per annum basis in excess of the
Adjusted Eurodollar Rate.
(c Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this definition, the Applicable Margin otherwise used
to calculate the Interest Rate for Prime Rate Loans and Eurodollar
Rate Loans shall be the then applicable percentage set forth in the
definition of the term Applicable Margin for each category of Loans
(without regard to the amount of Excess Availability or the Fixed
Charge Coverage Ratio) plus two (2%) percent per annum, at Agent's
option or at the written direction of the Required Lenders, after five
(5) Business Days= notice to any Borrower, (i) for the period (A) from
and after the effective date of termination or non-renewal hereof
(including any termination of the initial term or any renewal term)
until Agent has received full and final payment of all outstanding and
unpaid Obligations or as to contingent Obligations, cash collateral in
the amount and on the terms required under Section 14.1 hereof
(notwithstanding entry of a judgment against a Borrower) and (B) from
and after the date of the occurrence of an Event of Default for so long
as such Event of Default is continuing as determined by Agent, and (ii)
on Loans at any time outstanding in excess of the Borrowing Base
(whether or not such excess(es), arise or are made with or without
Agent's or any Lender's knowledge or consent and whether made before or
after an Event of Default).
1.84 "Inventory" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor=s now owned and hereafter existing or acquired goods,
wherever located, which (a) are leased by such Borrower or Guarantor as lessor;
(b) are held by such Borrower for sale or lease or to be furnished under a
contract of service; (c) are furnished by such Borrower or Guarantor under a
contract of service; or (d) consist of raw materials, work in process, finished
goods and all other inventory of whatsoever kind or nature.
1.85 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, by and among
Agent, any Borrower or Guarantor (as the case may be) and any securities
intermediary, commodity intermediary or other person who has custody, control
or possession of any investment property of such Borrower or Guarantor.
1.86 "Lenders" shall mean the financial institutions who are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Section 14.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
1.87 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Agent or any Lender for the account of
any Borrower or (b) with respect to which Agent or Lenders have agreed to
indemnify the issuer or guaranteed to the issuer the performance by any
Borrower or Obligor of its obligations to such issuer; sometimes being referred
to herein individually as ALetter of Credit Accommodation@.
1.88 "Loans" shall mean, the loans made to or for the benefit of any
Borrower by or on behalf of Lender on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.89 "XXXXX Indenture" shall mean the Indenture, dated as of September 20,
1996, by and between Pep Boys and Wachovia Bank, National Association, as
Trustee, with respect to the holders of Pep Boys Liquid Yield Option Notes due
2011 in the principal amount (at maturity) of $271,704,000, with an initial
price to the public of $153,000,000, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.90 "Material Adverse Effect" shall mean a material adverse effect on (a)
the financial condition, business, performance or operations of Borrowers and
Guarantors (taken as a whole) or (b the legality, validity or enforceability
of this Agreement or any of the other Financing Agreements; (c) the legality,
validity, enforceability, perfection or priority of the security interests and
liens of Agent or any Lender upon the Collateral; (d) the Collateral of
Borrowers (taken as a whole) or the aggregate value of the Collateral (taken as
a whole); (e) the ability of Borrowers (taken as a whole) to repay the
Obligations or of Borrowers to perform their obligations under this Agreement
or any of the other Financing Agreements; or (f) the ability of Agent to
enforce the Obligations or realize upon the Collateral or otherwise with
respect to the rights and remedies of Agent under this Agreement or any of the
other Financing Agreements.
1.91 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower
(i) relating to the purchase of merchandise involving monetary liability of or
to any Person in an amount in excess of $5,000,000 in any fiscal year, or (ii)
relating to any other matter involving monetary liability of or to any Person
in an amount in excess of $5,000,000 in any fiscal year, and (b) any other
contract or other agreement (other than the Financing Agreements), whether
written or oral, to which Borrower is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would
have a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of any Borrower or Guarantor or the
validity or enforceability of this Agreement, any of the other Financing
Agreements, or any of the rights and remedies of Agent and Lenders hereunder or
thereunder.
1.92 "Maximum Credit" shall mean the amount of $325,000,000.
1.93 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Borrower,
Guarantor or any ERISA Affiliate.
1.94 "Net Amount of Eligible Accounts" shall mean, the gross amount of the
Eligible Accounts of Borrowers less (a) sales, excise or similar taxes included
in the amount thereof and (b returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed with respect thereto.
1.95 "Net Recovery Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at such time on a "going out of business
sale" basis as set forth in the most recent acceptable appraisal of Inventory
received by Agent in accordance with Section 7.3, net of operating expenses,
liquidation expenses and commissions, and (b) the denominator of which is the
applicable original cost of the aggregate amount of the Inventory subject to
such appraisal.
1.96 "1998 Senior Note Indenture" shall mean the Indenture, dated as of
February 18, 1998, by and between Pep Boys, and PNC Bank, National Association,
as Trustee, with respect to Pep Boys Medium Term Notes in the aggregate
principal amount of $100,000,000, and Term Enhanced Remarketable Securities in
the aggregate principal amount of $100,000,000, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.97 "1998 Subordinated Note Indenture" shall mean the Indenture, dated as
of February 18, 1998, by and between Pep Boys, and PNC Bank, National
Association, as Trustee, with respect to Pep Boys Subordinated Notes in the
aggregate principal amount of $-0-, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.98 "1995 Senior Note Indenture" shall mean the Indenture, dated as of June
12, 1995, by and between Pep Boys and Wachovia Bank, National Association, as
Trustee, with respect to Pep Boys 7% Notes due 2005 in the aggregate principal
amount of $100,000,000, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.99 "1999 Note Purchase Agreement" shall mean the Note Purchase Agreement,
dated as of January 26, 1999, by and between Pep Boys and the purchasers listed
in Schedule A annexed thereto in respect of Pep Boys 7.80% Series A Senior
Notes due 2009 in the aggregate principal amount of $25,000,000, and 7.95%
Series B Senior Notes due 2011 in the aggregate principal amount of $45,000,000,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.100 Intentionally deleted.
1.101 "1997 Senior Note Indenture" shall mean the Indenture, dated as of July
15, 1997 by and between Pep Boys and PNC Bank, National Association, as
Trustee, in respect of the Holders of Pep Boys Medium Term Notes issued between
July and October 1997 in the aggregate principal amount of $150,000,000, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.102 "1997 Subordinated Note Indenture" shall mean the Indenture, dated as
of June 15, 1997, by and between Pep Boys, and PNC Bank, National Association,
as Trustee, with respect to Pep Boys Subordinated Notes in the aggregate
principal amount of $-0-, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.103 "Obligations" shall mean (a) any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all of Borrowers and Guarantors to
Agent or any Lender and/or any of their Affiliates, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, arising under this
Agreement or any of the other Financing Agreements, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to such Borrower under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue
and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, or secured or
unsecured, and (b) for purposes only of Section 5.1 hereof and subject to the
priority in right of payment set forth in Section 6.4 hereof, all obligations,
liabilities and indebtedness of every kind, nature and description owing by any
or all of Borrowers or Guarantors to an Affiliate of Agent, or another
financial institution reasonably acceptable to Agent, arising under or pursuant
to a Hedge Agreement in each case reasonably acceptable to Agent, whether now
existing or hereafter arising, provided, that, (i) such obligations,
liabilities and indebtedness shall only be included within the Obligations if
upon Agent=s request, Agent shall have entered into an agreement, in form and
substance satisfactory to Agent, with such Affiliate or other Person that is a
counterparty to such Hedge Agreement, as acknowledged and agreed to by
Borrowers and Guarantors, providing for the delivery to Agent by such
counterparty of information with respect to the amount of such obligations and
providing for the other rights of Agent and such Affiliate or other Person in
connection with such arrangements and (ii) in no event shall the party to such
Hedge Agreement to whom such obligations, liabilities or indebtedness are owing
be deemed a Lender for purposes hereof to the extent of and as to such
obligations, liabilities or indebtedness other than for purposes of Section 5.1
hereof and other than for purposes of Sections 14.1, 14.2, 14.5, 14.6 and 14.7
hereof.
1.104 "Obligor" shall mean any guarantor, endorser, acceptor, surety or other
person liable on or with respect to the Obligations or who is the owner of any
property which is security for the Obligations (including, without limitation,
Guarantors), other than Borrowers.
1.105 "Operating Assets" shall mean all merchandise inventories, furniture,
fixtures and equipment (including all transportation and warehousing equipment
and excluding office equipment and data processing equipment) owned or leased
pursuant to Capital Leases by Borrowers, Guarantors or any of their respective
Subsidiaries.
1.106 "Operating Property" shall mean all real property and improvements
thereon owned or leased pursuant to Capital Leases by a Borrower, Guarantor or
any of its Subsidiaries constituting, without limitation, any store, warehouse,
service center or distribution center wherever located, provided that such term
shall not include any store, warehouse, service center or distribution center
which any Borrower=s, Guarantor=s or any Subsidiary=s Board of Directors (or
any Committee thereof) declares by resolution not to be of material importance
to the business of such Borrower, Guarantor or Subsidiary. Operating Property
is treated as having been Aacquired@ on the date the Operating Property is
placed in operation by a Borrower, Guarantor or any of its Subsidiaries after
the later of (a) its acquisition from a third party, (b) completion of its
original construction or (c) completion of its substantial reconstruction,
renovation, remodeling or expansion (whether or not constituting an Operating
Property prior to such reconstruction, renovation, remodeling or expansion).
1.107 "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
14.7 of this Agreement governing participations.
1.108 "Permits" shall have the meaning set forth in Section 8.7 hereof.
1.109 "PBY" shall mean PBY Corporation, a Delaware corporation, and its
successors and assigns.
1.110 "PBY-California" shall mean The Pep Boys Xxxxx Xxx & Xxxx of
California, a California corporation, and its successors and assigns.
1.111 "PBY-Delaware" shall mean Pep Boys - Manny, Moe & Xxxx of Delaware,
Inc., a Delaware corporation, and its successors and assigns.
1.112 "PBY-Puerto Rico" shall mean Pep Boys - Manny, Moe & Xxxx of Puerto
Rico, Inc., a Delaware corporation, and its successors and assigns.
1.113 "Pep Boys" shall mean The Pep Boys - Manny, Moe & Xxxx, a Pennsylvania
corporation, and its successors and assigns.
1.114 "Pep Boys Indentures" shall mean, collectively, (a) Pep Boys Senior
Indentures, and (b) Pep Boys Subordinated Indentures.
1.115 "Pep Boys Senior Indentures" shall mean, collectively, the following
(as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (a) the 1995 Senior Note Indenture,
(b) the 1997 Senior Note Indenture, (c) the 1998 Senior Note Indenture, (d) the
2002 Senior Note Indenture and (e) all agreements, documents and instruments
executed and/or delivered in connection with any of the foregoing.
1.116 "Pep Boys Subordinated Indentures" shall mean, collectively, the
following (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the 1998
Subordinated Note Indenture, (b) the 1997 Subordinated Note Indenture, (c) the
XXXXX Indenture, and (d) all agreements, documents and instruments executed
and/or delivered in connection with any of the foregoing.
1.117 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.118 "Plan@ means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years.
1.119 "PNC Credit Card Documents" shall mean, collectively, each of the
documents listed on Schedule 1.119 hereto, and the Intercreditor Agreement
dated as of December 13, 2001 by and between PNC Bank, National Association and
Agent, each as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced in accordance with the
terms of such Intercreditor Agreement.
1.120 "Prime Rate" shall mean 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.
1.121 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.122 "Pro Rata Share" shall mean as to any Lender, the fraction (expressed
as a percentage) the numerator of which is such Lender's Commitment and the
denominator of which is the aggregate amount of all of the Commitments of
Lenders, as adjusted from time to time in accordance with the provisions of
Section 14.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its
interest in the Letter of Credit Accommodations and the denominator shall be
the aggregate amount of all unpaid Loans and Letter of Credit Accommodations.
1.123 "Provision for Taxes" shall mean an amount equal to all taxes imposed
on or measured by net income, whether Federal, State, Provincial, county or
local, and whether foreign or domestic, that are paid or payable by any Person
in respect of any period in accordance with GAAP.
1.124 "Quarterly Average Excess Availability" shall mean, at any time, the
daily average of the Excess Availability for the immediately preceding fiscal
quarter as calculated by Agent in good faith.
1.125 "Real Property" shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests,
together with all buildings, structures, and other improvements located thereon
and all licenses, easements and appurtenances relating thereto, wherever
located.
1.126 "Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of each Borrower and Guarantor: (a) all Accounts;
(b) all amounts at any time payable to any Borrower or Guarantor in respect of
the sale or other disposition by such Borrower or Guarantor of (i) any Account
or (ii) any other obligation for the payment of money arising from or in
connection with the sale or other disposition of Inventory or any other
Collateral; (c) all interest, fees, late charges, penalties, collection fees
and other amounts due or to become due or otherwise payable in connection with
(i) any Account or (ii) any other obligation for the payment of money arising
from or in connection with the sale or other disposition of Inventory or any
other Collateral; (d) all payment intangibles of such Borrower or Guarantor;
(e) letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued payable to any Borrower or Guarantor or otherwise in
favor of or
delivered to any Borrower or Guarantor in connection with (i) any Account or
(ii) any other obligation for the payment of money arising from or in
connection with the sale or other disposition of Inventory or any other
Collateral; or (f) all other accounts, contract rights, chattel paper,
instruments, notes, general intangibles and other forms of obligations owing
to any Borrower or Guarantor, arising from or in connection with the sale of
Inventory or any other Collateral, or the leasing, licensing or other
disposition of any Inventory or other Collateral(including Intellectual
Property or other general intangibles), rendition of services or from loans or
advances by any Borrower or Guarantor or to or for the benefit of any third
person (including loans or advances to any Affiliates or Subsidiaries of any
Borrower or Guarantor) or otherwise associated with any Accounts, Inventory or
other Collateral of any Borrower or Guarantor (including, without limitation,
choses in action, causes of action, tax refunds, tax refund claims, rights and
claims against carriers and shippers, and rights to indemnification, casualty
or any similar types of insurance and any proceeds thereof.
1.127 "Records" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor=s present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit
files and other data relating to the Collateral or any account debtor, together
with the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of any Borrower or Guarantor with respect to the
foregoing maintained with or by any other person).
1.128 "Reference Bank" shall mean Wachovia Bank, National Association, or
such other bank as Agent may from time to time designate.
1.129 "Refinancing Indebtedness" shall have the meaning set forth in
Section 9.9 hereof.
1.130 "Renewal Date" shall the meaning set forth in Section 14.1 hereof.
1.131 "Register" shall have the meaning set forth in Section 14.7 hereof.
1.132 "Required Lenders" shall mean, at any time, those Lenders whose Pro
Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or more of the
aggregate of the Commitments of all Lenders, or if the Commitments shall have
been terminated, Lenders to whom at least sixty-six and two-thirds (66 2/3%)
percent of the then outstanding Obligations are owing.
1.133 "Reserves" shall mean as of any date of determination, such amounts as
Agent may from time to time establish and revise in good faith reducing the
amount of Loans and Letter of Credit Accommodations which would otherwise be
available to any Borrower under the lending formula(s) provided for herein:
(a) to reflect events, conditions, contingencies or risks which, as determined
by Agent in good faith, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value or (ii) the assets
or business of any Borrower or Obligor or (iii) the security interests and
other rights of Agent or any Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect Agent's good
faith belief that any collateral report or financial information furnished by
or on behalf of any Borrower or Obligor to Agent is or may have been
incomplete, inaccurate or misleading in any
material respect or (c) to reflect outstanding Letter of Credit Accommodations
as provided in Section 2.2 hereof or (d) in respect of any state of facts which
Agent determines in good faith constitutes a Default or an Event of Default or
(e) to reflect inventory shrinkage, or (f) to reflect the aggregate amount of
deposits, if any, received by any Borrower from its customers, or (g) to
reflect amounts due or to become due in respect of sales, use and/or
withholding taxes, or (h) to reflect amounts owing by such Borrower to Credit
Card Issuers or Credit Card Processors in connection with the Credit Card
Agreements, or (i) any rental payments, service charges or other amounts due to
lessors of real or personal property to the extent Inventory or Records are
located in or on property or such Records are needed to monitor or otherwise
deal with Collateral. Without limiting the generality of the foregoing,
Reserves may be established to reflect (i) that dilution with respect to the
Accounts (based on the ratio of
the aggregate amount of non-cash reductions in Accounts for any period to the
aggregate dollar amount of the sales of Borrower for such period) as calculated
by Agent for any period is or is reasonably anticipated to be greater than ten
(10%) percent and (ii) obligations, liabilities or indebtedness (contingent or
otherwise) of Borrowers or Guarantors to any Affiliate of Agent or any other
Person arising under or in connection with any Hedge Agreement of any Borrower
or Guarantor with such Affiliate or Person or as such Affiliate or Person may
otherwise require in connection therewith to the extent that such obligations,
liabilities or indebtedness constitute Obligations as such term is defined
herein or otherwise receive the benefit of the security interest of Agent in
any Collateral. In addition to the foregoing Reserves, Agent shall establish
and maintain (A) the Facility Reserve, and (B) at any time that the Adjusted
Tangible Net Worth of Pep Boys and its Subsidiaries is less than the amount
equal to the sum of (x) the TNW Minimum Amount plus (y) $10,000,000, the
Special Reserve. To the extent Agent may revise the lending formulas used to
determine the Borrowing Base or establish new criteria or revise existing
criteria for Eligible Accounts or Eligible Inventory so as to address any
circumstances, condition, event or contingency in a manner satisfactory to
Agent, Agent shall not establish a Reserve for the same purpose. The amount of
any Reserve established by Agent shall have a reasonable relationship to the
event, condition or other matter which is the basis for such reserve as
determined by Agent in good faith.
1.134 "Solvent" shall mean, at any time with respect to any Person, that at
such time (a) such Person is able to pay its debts as they mature and has
(and has reason to believe it will continue to have) sufficient capital (and
not unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation and at their present fair salable value are greater
than the Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, to the best of such Person=s
knowledge, represents an amount which can reasonably be expected to become an
actual or matured liability.
1.135 "Special Agent Advances" shall have the meaning set forth in Section
12.11 hereof.
1.136 "Special Reserve" shall mean the amount equal to $25,000,000.
1.137 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business
entity of which an aggregate of at least a majority of the outstanding Capital
Stock or other interests entitled to vote in the election of the board of
directors of such corporation (irrespective of whether, at the time, Capital
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), managers,
trustees or other controlling persons, or an equivalent controlling interest
therein, of such Person is, at the time, directly or indirectly, owned by such
Person and/or one or more subsidiaries of such Person.
1.138 "Synthetic Lease Facility Agreements" shall mean, collectively, the
following (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the agreements and
documents listed on Schedule 1.138 hereto, and (b) all agreements, documents,
mortgages and instruments executed and/or delivered in connection with any of
the foregoing.
1.139 "TNW Minimum Amount" shall have the meaning set forth in Section 9.17
hereof.
1.140 "2002 Senior Notes" shall mean the 4.25% Convertible Senior Notes due
June 1, 2007 issued pursuant to the 2002 Senior Note Indenture.
1.141 "2002 Senior Note Indenture" shall mean the Indenture, dated as of May
21, 2002, by and between Pep Boys, PBY-California, PBY-Delaware and PBY-Puerto
Rico, and Wachovia Bank, National Association, as Trustee, with respect to Pep
Boys' 4.25% Convertible Senior Notes due June 1, 2007 in the aggregate
principal amount of $150,000,000, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.142 "UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York, and any successor statute, as in effect from time to time (except
that terms used herein which are defined in the Uniform Commercial Code as in
effect in the State of New York on the date hereof shall continue to have the
same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.143 "Value" shall mean, as determined by Agent in good faith, with respect
to Inventory, the lower of (a) cost computed on a last-in first-out basis in
accordance with GAAP or (b) market value as determined in accordance with GAAP,
provided, that, for purposes of the calculation of the Borrowing Base, the
Value of the Inventory shall not include: (A) the portion of the value of
Inventory equal to the profit earned by any Affiliate on the sale thereof to
any Borrower or (B) write-ups in value with respect to currency exchange rates.
1.144 "Voting Stock" shall mean with 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.
1.145 "Weekly Collateral Report" shall mean a report, substantially in the
form of Exhibit D hereto, as the same may from time to time be modified by
Lender, which is duly completed as provided in Section 7.1 hereof and executed
by the chief financial officer or Vice President-Finance of Pep Boys on behalf
of each Borrower and delivered to Lender.
1.146 "Weighted Average Life to Maturity" shall mean when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the product obtained
by multiplying (i) the amount of each then outstanding installment, sinking
fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment.
1.147 "Working Capital Advances" shall have the meaning set forth in Section
4.2 (c) hereof.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained herein, each
Lender severally (and not jointly) agrees to make its Pro Rata Share of Loans
to each Borrower from time to time in amounts requested by such Borrower (or
Administrative Borrower on behalf of such Borrower) up to the Borrowing Base.
(b) Agent may, in its discretion, from time to time, upon not less than ten
(10) days prior notice to a Borrower or Administrative Borrower on behalf of
such Borrower, reduce the lending formula(s) with respect to Eligible Inventory
to the extent that Agent determines in good faith that without duplication: (i)
the number of days of the turnover of the Inventory for any period has
adversely changed in any material respect or (ii) the nature, quality or mix of
the Inventory has deteriorated. In determining whether to reduce the lending
formula(s), Agent may consider events, conditions, contingencies or risks which
are also considered in determining Eligible Accounts, Eligible Inventory or in
establishing Reserves. To the extent Agent shall have established a Reserve
which is sufficient to address an event, condition or matter described in this
Section 2.1(b) in a manner satisfactory to Agent in good faith, Agent shall not
exercise its rights under this Section 2.1(b) to reduce the lending formulas to
address such event, condition or matter. The amount of any reduction in the
lending formula by Agent pursuant to this Section 2.1(b) shall have a
reasonable relationship to the matter which is the basis for such a reduction.
(c) Except in Agent's discretion, with the consent of all Lenders, or as
otherwise provided herein, (i) the aggregate amount of the Loans and the
Letter of Credit Accommodations outstanding at any time shall not exceed the
Maximum Credit, (ii) the aggregate amount of outstanding Working Capital
Advances at any time when taken together with the aggregate amount of all other
then outstanding Exempted Debt (including any amounts owing by Borrowers and
Guarantors to counterparties in respect of Hedge Agreements which are secured
by Collateral hereunder) shall not exceed the Exempted Debt Limit and (iii) the
aggregate principal amount of the Loans and the Letter of Credit Accommodations
outstanding at any time plus the aggregate principal amount of Tranche A Loans
(as such term is defined in the Synthetic Lease Facility Agreements)
outstanding at any time shall not exceed $325,000,000.
(d) In the event that the aggregate principal amount of the Loans and
Letter of Credit Accommodations outstanding exceed the Borrowing Base, or the
aggregate amount of Working Capital Advances outstanding at any time when taken
together with the aggregate amount of all other then outstanding Exempted Debt
exceeds the Exempted Debt Limit, or the aggregate amount of the outstanding
Letter of Credit Accommodations exceed the sublimit for Letter of Credit
Accommodations set forth in Section 2.2(e), or the aggregate amount of the
Loans and Letter of Credit Accommodations exceed the Maximum Credit, such event
shall not limit, waive or otherwise affect any rights of Agent or Lenders in
such circumstances or on any future occasions and Borrowers shall, upon demand
by Agent, which may be made at any time or from time to time, immediately repay
to Agent the entire amount of any such excess(es) for which payment is
demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained herein, at the
request of a Borrower (or Administrative Borrower on behalf of such Borrower),
Agent agrees, for the ratable risk of each Lender according to its Pro Rata
Share, to provide or arrange for Letter of Credit Accommodations for the
account of such Borrower with Wachovia Bank, National Association or such other
national bank with whom Agent has established a business relationship
containing terms and conditions acceptable to Agent and the issuer thereof. Any
payments made by or on behalf of Agent or any Lender to any issuer thereof
and/or related parties in connection with the Letter of Credit Accommodations
provided to or for the benefit of a Borrower shall constitute additional Loans
to such Borrower pursuant to this Section 2 (or Special Agent Advances as the
case may be).
(b) In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations, Borrowers shall
pay to Agent, for the benefit of Lenders, a letter of credit fee at a rate
equal to one and one-half (1.50%) percent per annum, on the daily outstanding
balance of the Letter of Credit Accommodations for the immediately preceding
month (or part thereof), payable in arrears as of the first day of each
succeeding month, except that Agent may, and upon the written direction of
Required Lenders shall, require Borrowers to pay to Agent for the ratable
benefit of Lenders such letter of credit fee, at a rate equal to three and
one-half (3.50%) percent per annum on such daily outstanding balance for: (i)
the period from and after the date of termination hereof until Agent and
Lenders have received full and final payment of all Obligations
(notwithstanding entry of a judgment against any Borrower) and (ii) the period
from and after the date of the occurrence of an Event of Default for so long as
such Event of Default is continuing as determined by Agent. Such letter of
credit fee shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed and the obligation of Borrowers to pay such fee
shall survive the termination of this Agreement.
(c) The Borrower requesting such Letter of Credit Accommodation (or
Administrative Borrower on behalf of such Borrower) shall give Agent two (2)
Business Days= prior written notice of such Borrower=s request for the issuance
of a Letter of Credit Accommodation. Such notice shall be irrevocable and
shall specify the original face amount of the Letter of Credit Accommodation
requested, the effective date (which date shall be a Business Day and in no
event shall be a date less than ten (10) days prior to the end of the then
current term of this Agreement) of issuance of such requested Letter of Credit
Accommodation, whether such Letter of Credit Accommodations may be drawn in a
single or in partial draws, the date on which such requested Letter of Credit
Accommodation is to expire (which date shall be a Business Day), the purpose
for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. The Borrower
requesting the Letter of Credit Accommodation (or Administrative Borrower on
behalf of such Borrower) shall attach to such notice the proposed terms of or
form of the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Agent: (i) the Borrower requesting such Letter of
Credit Accommodation (or Administrative Borrower on behalf of such Borrower)
shall have delivered to the proposed issuer of such Letter of Credit
Accommodation at such times and in such manner as such proposed issuer may
require, an application, in form and substance satisfactory to such proposed
issuer and Agent, for the issuance of the Letter of Credit Accommodation and
such other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of
issuance, no order of any court, arbitrator or
other Governmental Authority shall purport by its terms to enjoin or restrain
money center banks generally from issuing letters of credit of the type and in
the amount of the proposed Letter of Credit Accommodation, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit,
or request that the proposed issuer of such Letter of Credit Accommodation
refrain from, the issuance of letters of credit generally or the issuance of
such Letters of Credit Accommodation; and (iii) the Excess Availability of
Borrowers, prior to giving effect to any Reserves with respect to such Letter
of Credit Accommodations, on the date of the proposed issuance of any Letter of
Credit Accommodations, shall be equal to or greater than: (A) if the proposed
Letter of Credit Accommodation is for the purpose of purchasing Eligible
Inventory and the documents
of title with respect thereto are consigned to the issuer, the sum of (1) the
percentage equal to one hundred (100%) percent minus the then applicable
percentage with respect to Eligible Inventory set forth in the definition of
the term Borrowing Base multiplied by the Value of such Eligible Inventory,
plus (2) freight, taxes, duty and other amounts which Agent estimates must be
paid in connection with such Inventory upon arrival and for delivery to one of
such Borrower's locations for Eligible Inventory within the United States of
America and (B) if the proposed Letter of Credit Accommodation is for any other
purpose or the documents of title are not consigned to the issuer in connection
with a Letter of Credit Accommodation which is for the purpose of purchasing
Inventory, an amount equal to one hundred (100%) percent of the face amount
thereof and all other commitments and obligations made or incurred by Agent
with respect thereto. Effective on the issuance of each Letter of Credit
Accommodation, a Reserve shall be established in the applicable amount set
forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all Lenders, the
amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed $50,000,000.
(f) Borrowers and Guarantors shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or wilful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Borrower and Guarantor assumes all risks with respect to
the acts or omissions of the drawer under or beneficiary of any Letter of
Credit Accommodation and for such purposes the drawer or beneficiary shall be
deemed such Borrower's agent. Each Borrower and Guarantor assumes all risks
for, and agrees to pay, all foreign, Federal, State and local taxes, duties and
levies relating to any goods subject to any Letter of Credit Accommodations or
any documents, drafts or acceptances thereunder. Each Borrower and Guarantor
hereby releases and holds Agent and Lenders harmless from and against any acts,
waivers, errors, delays or omissions, whether caused by any Borrower,
Guarantor, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation, except for the gross negligence
or wilful misconduct of Agent or any Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The provisions of
this Section 2.2(f) shall survive the payment of Obligations and the
termination of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of Credit
Accommodations, Borrowers shall, at Agent=s request, instruct all suppliers,
carriers, forwarders, customs brokers, warehouses or others receiving or
holding cash, checks, Inventory, documents or instruments in which Agent holds
a security interest to deliver them to Agent and/or subject to Agent's order,
and if they shall come into such Borrower=s possession, to deliver them, upon
Agent's request, to Agent in their original form. Borrowers shall also, at
Agent=s request, designate Agent as the consignee on all bills of lading and
other negotiable and non-negotiable documents.
(h) Each Borrower hereby irrevocably authorizes and directs any issuer of a
Letter of Credit Accommodation to name such Borrower as the account party
therein and to deliver to Agent all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations
and to accept and rely upon Agent=s instructions and agreements with respect to
all matters arising in connection with the Letter of Credit Accommodations or
the applications therefor. Nothing contained herein shall be deemed or
construed to grant any Borrower any right or authority to pledge the credit of
Agent or any Lender in any manner. Agent and Lenders shall have no liability
of any kind with respect to any Letter of Credit Accommodation provided by an
issuer other than Agent or any Lender unless Agent has duly executed and
delivered to such issuer the application or a guarantee or indemnification in
writing with respect to such Letter of Credit Accommodation. Borrowers and
Guarantors shall be bound by any reasonable interpretation made in good faith
by Agent, or any other issuer or correspondent under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower or Guarantor.
(i) So long as no Event of Default exists or has occurred and is
continuing, a Borrower may (i) approve or resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications
for steamship or airway guaranties, indemnities or delivery orders, and (iv)
with Agent's consent, grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances, or documents, and
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letter of Credit Accommodations, or documents, drafts or acceptances thereunder
or any letters of credit included in the Collateral.
(j) At any time an Event of Default exists or has occurred and is
continuing, Agent shall have the right and authority to, and Borrowers shall
not, without the prior written consent of Agent, (i) approve or resolve any
questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery
orders, (iv) grant any extensions of the maturity of, time of payments for, or
time of presentation of, any drafts, acceptances, or documents, and (v) agree
to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letter of Credit Accommodations, or documents, drafts or acceptances thereunder
or any letters of credit included in the Collateral. Agent may take such
actions either in its own name or in any Borrower's name.
(k) Any rights, remedies, duties or obligations granted or undertaken by
any Borrower or Guarantor to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall
be deemed to have been granted or undertaken by such Borrower or Guarantor to
Agent for the ratable benefit of Lenders. Any duties or obligations undertaken
by Agent to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers and Guarantors to Agent
for the ratable benefit of Lenders and to apply in all respects to Borrowers
and Guarantors.
(l) Immediately upon the issuance or amendment of any Letter of Credit
Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender=s Pro Rata
Share of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).
(m) Each Borrower is irrevocably and unconditionally obligated, without
presentment, demand or protest, to pay to Agent any amounts paid by an issuer
of a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Loans in accordance with
Section 2.2(a) or otherwise). In the event that any Borrower fails to pay
Agent on the date of any payment under a Letter of Credit Accommodation in an
amount equal to the amount of such payment, Agent (to the extent it has actual
notice thereof) shall promptly notify each Lender of the unreimbursed amount of
such payment and each Lender agrees, upon one (1) Business Day=s notice, to
fund to Agent the purchase of its participation in such Letter of Credit
Accommodation in an amount equal to its Pro Rata Share of the unpaid amount.
The obligation of each Lender to deliver to Agent an amount equal to its
respective participation pursuant to the foregoing sentence is absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuance of any Event of Default, the failure to satisfy any other
condition set forth in Section 4 or any other event or circumstance. If such
amount is not made available by a Lender when due, Agent shall be entitled to
recover such amount on demand from such Lender with interest thereon, for each
day from the date such amount was due until the date such amount is paid to
Agent at the interest rate then payable by any Borrower in respect of Loans
that are Prime Rate Loans as set forth in Section 3.1(a) hereof.
2.3 Joint and Several Liability. Borrowers shall be, jointly and
severally, liable for all amounts due to Agent and Lenders under this
Agreement, regardless of which Borrower actually receives the Loans or other
extensions of credit hereunder or the amount of such Loans received or the
manner in which Lender accounts for such Loans, Letter of Credit Accommodations
or other extensions of credit on its books and records. The Obligations with
respect to Loans made to a Borrower, and the Obligations arising as a result of
the joint and several liability of a Borrower hereunder, with respect to Loans
made to the other Borrower hereunder, shall be separate and distinct
obligations, but all such other Obligations shall be primary obligations of all
Borrowers. The Obligations arising as a result of the joint and several
liability of a Borrower hereunder with respect to Loans, Letter of Credit
Accommodations or other extensions of credit made to the other Borrower
hereunder shall, to the fullest extent
permitted by law, be unconditional irrespective of (a) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrowers, (b) the absence of any attempt to
collect the Obligations from the other Borrower, any Obligor or any other
security therefor, or the absence of any other action to enforce the same, (c)
the waiver, consent, extension, forbearance or granting of any indulgence by
Agent, Required Lenders or all Lenders, as applicable with respect to any
provisions of any instrument evidencing the Obligations of the other Borrower,
or any part thereof, or any other agreement now or hereafter executed by the
other Borrower and delivered to Agent or Lenders, as applicable, (d) the
failure by Agent or Lender to take any steps to perfect and maintain its
security interest in, or to preserve its rights and maintain its security or
collateral for the Obligations of the
other Borrower, (e) the election of Agent in any proceeding instituted under
the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (f) the disallowance of all or any portion of the claim(s) of Agent and
Lenders for the repayment of the Obligations of the other Borrower under
Section 502 of the Bankruptcy Code, or (g) any other circumstances which might
constitute a legal or equitable discharge or defense of any Obligor or of the
other Borrower, other than the wilful misconduct, gross negligence or bad faith
of Agent as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction. With respect to the Obligations arising as a result of
the joint and several liability of a Borrower hereunder with respect to Loans,
Letter of Credit Accommodations or other extensions of credit made to the other
Borrower hereunder, each Borrower waives, until the Obligations shall have been
paid in full and this Agreement shall have been terminated, any right to
enforce any right of subrogation or any remedy which Agent and Lenders (subject
to Section 14 hereof, as between Agent and Lenders) now has or may hereafter
have against Borrowers, any endorser or any guarantor of all or any part of the
Obligations, and any benefit of, and any right to participate in, any security
or collateral given to Agent. Upon any Event of Default and for so long as the
same is continuing, Agent may proceed directly and at once, without notice,
against any Borrower to collect and recover the full amount, or any portion of
the Obligations, without first proceeding against the other Borrower or any
other Person, or against any security or collateral for the Obligations. Each
Borrower consents and agrees that Agent shall be under no obligation to
xxxxxxxx any assets in favor of Borrower(s) or against or in payment of any or
all of the Obligations.
2.4 Commitments. The aggregate amount of each Lender's Pro Rata Share of
the Loans and Letter of Credit Accommodations shall not exceed the amount of
such Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on
the outstanding principal amount of the Loans at the Interest Rate. All
interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.
(b) Each Borrower (or Administrative Borrower on behalf of such Borrower)
may from time to time request Eurodollar Rate Loans or may request that Prime
Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from a Borrower (or Administrative Borrower on behalf of such Borrower) shall
specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate
Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar
Rate Loans to be continued (subject to the limits set forth below) and the
Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the
terms and conditions contained herein, three (3) Business Days after receipt by
Agent of such a request from a Borrower (or Administrative Borrower on behalf
of such Borrower), such Eurodollar Rate Loans shall be made or Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
continue, as the case may be, provided, that, (i) no Default or Event of
Default shall exist or have occurred and be continuing, (ii) no party hereto
shall have sent any notice of termination of this Agreement, such Borrower (or
Administrative Borrower on behalf of such Borrower) shall have complied with
such customary procedures as are established by Agent and specified by Agent to
Administrative Borrower from time to time for requests by Borrowers for
Eurodollar Rate Loans, (iii) Borrowers shall have complied with such customary
procedures as are established by Agent and specified by Agent to Borrowers from
time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no more
than four (4) Interest Periods may be in effect at any one time, (v) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less
than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi)
in the event that Excess Availability, at any time, shall be less than
$37,500,000, then, the
maximum amount of the Eurodollar Rate Loans at any time requested by Borrowers
shall not exceed the amount equal to eighty-five (85%) percent of the lowest
principal amount of the Loans which it is anticipated will be outstanding
during the applicable Interest Period, in each case as determined in good faith
by Agent (but with no obligation of Agent or Lenders to make such Loans), and
(vii) Agent and each Lender shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to Agent and such Lender and can be
readily determined as of the date of the request for such Eurodollar Rate Loan
by such Borrower. Any request by or on behalf of a Borrower for Eurodollar
Rate Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to
continue any existing Eurodollar Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Agent and Lenders
shall not be required to purchase United States Dollar deposits in the London
interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if
Agent and Lenders had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by
Agent to Administrative Borrower, be subsequently converted to Prime Rate Loans
in the event that this Agreement shall terminate or not be renewed. Borrowers
shall pay to Agent, for the benefit of Lenders, upon demand by Agent (or Agent
may, at its option, charge any loan account of any Borrower) any amounts
required to compensate any Lender or Participant for any loss (including loss
of anticipated profits), cost or expense incurred by such person, as a result
of the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any
of the foregoing (other than at the end of an Interest Period).
(d) Interest shall be payable by Borrowers to Agent, for the account of
Lenders, monthly in arrears not later than the first day of each calendar month
and shall be calculated on the basis of a three hundred sixty (360) day year
and actual days elapsed. The interest rate on non-contingent Obligations
(other than Eurodollar Rate Loans) shall increase or decrease by an amount
equal to each increase or decrease in the Prime Rate effective on the first day
of the month after any change in such Prime Rate is announced based on the
Prime Rate in effect on the last day of the month in which any such change
occurs.
(e) No agreements, conditions, provisions or stipulations contained in this
Agreement or any of the other Financing Agreements or any Event of Default, or
the exercise by Agent and Lenders of the right to accelerate the payment or
the maturity of all or any portion of the Obligations, or the exercise by Agent
of any option whatsoever contained in this Agreement or any of the other
Financing Agreements, or the prepayment by or on behalf of a Borrower of any of
the Obligations, or the occurrence of any event or contingency whatsoever,
shall entitle Agent to contract for, charge or receive, in any event, interest
exceeding the maximum non-usurious rate of interest under applicable Federal or
State Law as in effect from time to time that may be contracted for, taken,
reserved, charged or received in respect of Indebtedness of any Borrower to
Agent and Lenders (the "Maximum Interest Rate"). In no event shall a Borrower
be obligated to pay interest exceeding such Maximum Interest Rate. All
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel such Borrower to pay
a rate of interest exceeding the Maximum Interest Rate shall be without binding
force or effect, at law or in equity, to the extent of the excess of interest
over such Maximum Interest Rate. In the event any interest is contracted for,
charged or received in excess of the Maximum Interest Rate ("Excess"), each
Borrower acknowledges and stipulates that any such contract, charge or receipt
shall be the result of an accident and bona fide error, and that any Excess
received by Agent or any Lender shall be applied, first, to the payment of the
then outstanding and unpaid principal hereunder; second, to the payment of the
other Obligations then outstanding and unpaid; and third, returned to such
Borrower (or Administrative Borrower on behalf of such Borrower), it being the
intent of the parties hereto not to enter at any time into a usurious or
otherwise illegal relationship. Each Borrower recognizes that, with
fluctuations in the rate of interest set forth in this Section 3.1 and the
Maximum Interest Rate, such an unintentional result could inadvertently occur.
By the execution of this Agreement, each Borrower agrees that (i) the credit or
return of any Excess shall constitute the acceptance by such Borrower of such
Excess, and (ii) each Borrower shall not seek or pursue any other remedy, legal
or equitable, against Agent or Lenders, based in whole or in part upon
contracting for, charging or receiving of any interest in excess of the Maximum
Interest Rate. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by Agent or any Lender, all interest
at any time contracted for, charged or received by Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements shall
e amortized, prorated, allocated and spread in equal parts during the entire
term of this Agreement.
3.2 Fees.
(a) While this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding, Borrowers shall pay to Agent for the account of
Lenders, monthly, an unused line fee at a rate equal to the Applicable Unused
Line Fee Percentage per annum calculated upon the amount by which $225,000,000
exceeds the average daily principal balance of the outstanding Loans and Letter
of Credit Accommodations during the immediately preceding month (or part
thereof); such unused line fee shall be payable on the first day of each month
in arrears.
(b) Borrowers agree to pay to Agent the other fees and amounts set forth in
the Fee Letter in the amounts and at the times specified therein.
3.3 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, either (i) any change (other than any change
by way of imposition of an increase in reserve requirements included in the
calculation of Adjusted Eurodollar Rate) in, or in the interpretation of, any
law or regulation is implemented, including, without limitation, with respect
to capital adequacy, reserve requirements or similar requirements, applicable
to any Lender or any banking or financial institution from whom any Lender
borrows funds or obtains credit (a "Funding Bank"), or (ii) a Funding Bank or
any Lender complies with any future directive or request with respect to
capital adequacy, reserve requirements or similar requirements from any central
bank or other Governmental Authority or (iii) a Funding Bank or any Lender
determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency
charged with the interpretation or administration thereof has or would have the
effect described below, or a Funding Bank or any Lender complies with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, and in
the case of any event set forth in this clause (iii), such adoption, change or
compliance has or would have the direct or indirect effect of reducing the rate
of return on any Lender=s capital as a consequence of its obligations hereunder
to a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration the Funding Bank=s or Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, and the result of any of the foregoing events described in
clauses (i), (ii) or (iii) is or results in an increase in the cost to any
Lender of funding or maintaining the Loans, the Letter of Credit Accommodations
or its Commitment, then Borrowers and Guarantors shall from time to time within
fifteen (15) days after notice (which notice shall not be effective unless
delivered within thirty (30) days after such Lender has begun to incur such
costs) and upon demand by Agent pay to Agent for the benefit of the affected
Lenders additional amounts sufficient to indemnify such Lenders against such
increased cost on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified). A certificate
stating the basis for such demand and showing in reasonable detail the
calculation as to the amount of such increased cost shall be submitted to
Administrative Borrower by Agent and shall be conclusive, absent manifest
error.
(b) If prior to the first day of any Interest Period, (i) Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon Borrowers and Guarantors) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, (ii) Agent has received notice
from the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to Lenders of making or maintaining Eurodollar Rate Loans during such
Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not
generally available in the London interbank market, Agent shall give telecopy
or telephonic notice thereof to Administrative Borrower as soon as practicable
thereafter, and will also give prompt written notice to Administrative Borrower
when such conditions no longer exist. If such notice is given (A) any
Eurodollar Rate Loans requested to be made on the first day of such Interest
Period shall be made as Prime Rate Loans, (B) any Loans that were to have been
converted on the first day of such Interest Period to or continued as
Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans
and (C) each outstanding Eurodollar Rate Loan shall be converted, on the last
day of the then-current Interest Period thereof, to Prime Rate Loans. Until
such notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall
be made or continued as such, nor shall any Borrower (or Administrative
Borrower on behalf of any Borrower) have the right to convert Prime Rate Loans
to Eurodollar Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption of or any
change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or
in the interpretation or application thereof occurring after the date hereof
shall make it unlawful for Agent or any Lender to make or maintain Eurodollar
Rate Loans as contemplated by this Agreement, (i) Agent or such Lender shall
promptly give written notice of such circumstances to Administrative Borrower
(which notice shall be withdrawn whenever such circumstances no longer exist),
(ii) the commitment of such Lender hereunder to make Eurodollar Rate Loans,
continue Eurodollar Rate Loans as such and convert Prime Rate Loans to
Eurodollar Rate Loans shall forthwith be suspended and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate
Loans, such Lender shall then have a commitment only to make a Prime Rate Loan
when a Eurodollar Rate Loan is requested and (iii) such Lender=s Loans then
outstanding as Eurodollar Rate Loans, if any, shall be converted automatically
to Prime Rate Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is
not the last day of the then current Interest Period with respect thereto,
Borrowers and Guarantors shall pay to such Lender such amounts, if any, as may
be required pursuant to Section 3.3(d) below.
(d) Borrowers and Guarantors shall indemnify Agent and each Lender and hold
Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence of (i) default by Borrower in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after such Borrower (or Administrative Borrower on behalf of such Borrower) has
given a notice requesting the same in accordance with the provisions of this
Loan Agreement, (ii) default by any Borrower in making any prepayment of a
Eurodollar Rate Loan after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Rate Loans,
such indemnification may include an amount equal to the excess, if any, of (A)
the amount of interest which would have accrued on the amount so prepaid, or
not so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein over (B) the amount of interest (as determined
by such Agent or such Lender) which would have accrued to Agent or such Lender
on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. This covenant shall survive
the termination or non-renewal of this Loan Agreement and the payment of the
Obligations.
(e) If a Borrower is required to pay additional amounts to any Lender pursuant
to Section 3.3(a) that increase the effective lending rate of such Lender with
respect to its share of the Loans to greater than one-eighth (1/8%) percent in
excess of the percentage of the effective lending rate of the other Lenders,
then such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its lending office with
respect to making Eurodollar Rate Loans so as to eliminate any such additional
payment by any Borrower which may thereafter accrue, if such change in the
judgment of such Lender is not otherwise disadvantageous to such Lender. In
the event that any one or more Lenders, pursuant to Section 3.3(a) hereof,
incur any increased costs (other than increased costs to the extent such
increased costs are not a recurring cost) for which any such Lender demands
compensation pursuant to Section 3.3(a) hereof which increases the effective
lending rate of such
Lender with respect to its share of the Loans to greater than one-eighth (1/8%)
percent in excess of the percentage of the effective lending rate of the other
Lenders and such Lender has not mitigated such costs within sixty (60) days
after receipt by such Lender from Administrative Borrower of a written notice
that such Lender=s effective lending rate has so exceeded the effective lending
rate of the other Lenders, then and in any such event, Borrowers may
substitute another financial institution which is an Eligible Transferee
acceptable to Agent for such Lender to assume the Commitment of such Lender and
to purchase the Loans of such Lender hereunder, without recourse to or warranty
by, or expense to, such Lender for a purchase price equal to the outstanding
principal amount of the Loans owing to such Lender plus any accrued but unpaid
interest on such Loans and accrued but unpaid fees and other amounts in respect
of such Lender=s Commitment and share of the Loans. Upon such purchase such
Lender shall no longer be a party hereto or have any rights or benefits
hereunder (except for rights or benefits that such Lender would retain
hereunder and under the other Financing Agreements upon payment in full of all
of the Obligations other than as to any early termination fee) and the
replacement Lender shall succeed to the rights and benefits, and shall assume
the obligations, of such Lender hereunder and thereunder. Agent and Lenders
shall cooperate with Borrowers to amend the Financing Agreements to reflect
such substitution. In no event may Borrowers replace a Lender that is also
Agent or an issuer of an outstanding Letter of Credit Accommodation.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to the amendment
and restatement of the Obligations under the Existing Loan Agreement and the
initial Loans and LC Accommodations to Borrowers pursuant to this Agreement
and the other Financing Agreements:
(a) Agent shall have received, in form and substance satisfactory
to Agent, all releases, terminations and such other documents as Agent may
request to evidence and effectuate the termination of the Existing Synthetic
Lease Facility Agreements and the termination by the respective lenders and
release by it or them, as the case may be, of any interest in and to any assets
and properties of each Borrower and Guarantor, duly authorized, executed and
delivered by it or each of them, including, but not limited to, (i) UCC
termination statements for all UCC financing statements previously filed by it
or any of them or their predecessors, as secured party and any Borrower or
Guarantor, as debtor; and (ii) satisfactions and discharges of any mortgages,
deeds of trust or deeds to secure debt by any Borrower or Guarantor in favor of
it or any of them, in form acceptable for recording with the appropriate
Governmental Authority;
(b) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Agent, and Agent shall have received all information and
copies of all documents, including records of requisite corporate action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by
appropriate corporate officers or Governmental Authority (and including a copy
of the certificate of incorporation of each Borrower and Guarantor certified by
the Secretary of State (or equivalent Governmental Authority) which shall set
forth the same complete corporate name of such Borrower or Guarantor as is set
forth herein and such document as shall set forth the organizational
identification number of each Borrower or Guarantor, if one is issued in its
jurisdiction of incorporation);
(c) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral, subject only to the security interests and
liens permitted herein or in the other Financing Agreements;
(d) no material adverse change shall have occurred in the assets,
business or prospects of Borrowers since the date of Agent's latest field
examination (not including for this purpose the field review referred to in
clause (d) below) and no change or event shall have occurred which would impair
the ability of any Borrower or Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
or any Lender to enforce the Obligations or realize upon the Collateral;
(e) Agent shall have completed a field review of the Records and
such other information with respect to the Collateral as Agent may require to
determine the amount of Loans available to Borrowers (including, without
limitation, current perpetual inventory records and/or roll-forwards of
Accounts and Inventory through the date of closing and test counts of the
Inventory in a manner satisfactory to Agent, together with such supporting
documentation as may be necessary or appropriate, and other documents and
information that will enable Agent to accurately identify and verify the
Collateral), the results of which in each case shall be satisfactory to Agent,
not more than three (3) Business Days prior to the date hereof;
(f) Agent shall have received, in form and substance satisfactory
to Agent, all consents, waivers, acknowledgments and other agreements from
third persons which Agent may deem necessary or desirable in order to permit,
protect and perfect its security interests in and liens upon the Collateral or
to effectuate the provisions or purposes of this Agreement and the other
Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of each Borrower and by
processors, if any, and warehouses at which Collateral is located;
(g) A certificate of the chief financial officer or Vice
President-Finance of Pep Boys setting forth, in form and substance,
satisfactory to Agent, among other things, a calculation of the Exempted Debt
Limit which certificate shall also include a calculation of Exempted Debt
Availability after giving effect to the Loans and Letter of Credit
Accommodations outstanding as of the date hereof;
(h) Agent shall have received true and correct copies of all of the
Pep Boys Indentures;
(i) the Synthetic Lease Facility Agreements and all instruments an
documents thereunder, shall have been duly executed and delivered by all of
the parties thereto, each in form and substance satisfactory to Agent;
(j) Agent shall have received, in form and substance satisfactory
to Agent, Deposit Account Control Agreements by and among Agent, each Borrower
and Guarantor, as the case may be and each bank where such Borrower (or
Guarantor) has a deposit account, in each case, duly authorized, executed and
delivered by such bank and Borrower or Guarantor, as the case may be (or Agent
shall be the bank=s customer with respect to such deposit account as Agent may
specify);
(k) Agent shall have received and reviewed lien and judgement
search results for the jurisdiction of incorporation of each Borrower and
Guarantor, the jurisdiction of the chief executive office of each Borrower and
Guarantor and all jurisdictions in which assets of Borrowers and Guarantors are
located as determined by Agent, which search results shall be in form and
substance satisfactory to Agent;
(l) Agent shall have received Credit Card Acknowledgments in each
case, duly authorized, executed and delivered by the Credit Card Issuers and
Credit Card Processors;
(m) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance
policies and/or endorsements naming Agent as loss payee;
(n) Agent shall have received from Pep Boys, in form satisfactory
to Agent, financial projections, on a quarterly basis for fiscal year 2003.
(o) Agent shall have received, in form and substance satisfactory
to Agent, such opinion letters of counsel to Borrowers and Guarantors with
respect to the Financing Agreements and such other matters as Agent may
reasonably request; and
(p) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to the Loans and/or
providing Letter of Credit Accommodations to Borrowers, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on and as of the date of the making of each such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto, except to
the extent that such representations and warranties expressly relate solely to
an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise adversely affect (A) the making of the Loans or
providing the Letter of Credit Accommodations, or (B) the consummation of the
transactions contemplated pursuant to the terms hereof or the other Financing
Agreements or (ii) has or could reasonably be expected to have a Material
Adverse Effect;
(c) At any time during which the limitations with respect to secured
indebtedness and limitation on liens set forth in any of the Pep Boys
Indentures remain in effect, Pep Boys shall, together with any request for a
Loan or Letter of Credit Accommodation, deliver a certificate of its chief
financial officer or Vice President-Finance to Agent stating (i) whether the
Loan or Letter of Credit Accommodation requested shall be used (A) to pay all
or any part of the purchase price or construction costs in respect of property
(including, without limitation, Inventory) or properties acquired by Pep Boys
or any other Borrower (each an "Asset Purchase Advance"), or (B) used for
purposes other than to pay all or any part of the purchase price or
construction costs in respect of property or properties acquired by Pep Boys or
any other Borrower (each a "Working Capital Advance"), and (ii) if the Loan
and/or Letter of Credit Accommodation is a Working Capital Advance, that (A)
the Exempted Debt Availability is at least equal to the amount of the requested
Working Capital Advance, and (B) prior to and after giving effect to the making
of such Working Capital Advance, the aggregate amount of outstanding Exempted
Debt shall not exceed the Exempted Debt Limit and setting forth the
calculations with respect thereto; and
(d) no Default or Event of Default shall exist or have occurred and
be continuing on and as of the date of the making of such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest. To secure payment and performance of all
Obligations, each Borrower and Guarantor, grants, pledges and assigns to Agent
for itself and the ratable benefit of Lenders, and confirms, reaffirms and
restates its prior grant to Agent (as successor to Congress) of, a continuing
security interest in, a lien upon, and a right of set off against, and hereby
assigns to Agent, for itself and the benefit of Lenders, as security, the
following property and interests in property, of each Borrower and Guarantor,
whether now owned or hereafter acquired or existing, and wherever located
(together with all other collateral security for the Obligations at any time
granted to or held or acquired by Agent or any Lender, collectively, the
"Collateral"), including:
(a) Receivables;
(b) all other present and future (i) general intangibles (including
Intellectual Property), chattel paper, documents, instruments, credit card
sales drafts, credit card sales slips or charge slips or receipts and other
forms of store receipts, investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts), and (ii) letters of credit,
bankers' acceptances and guaranties in each case, as to clauses (b)(i) and
(b)(ii), relating to Receivables, Inventory or other Collateral;
(c) all present and future (i) monies, securities and other investment
property, credit balances, deposits, deposit accounts and other property of
such Borrower or Guarantor now or hereafter held or received by or in transit
to Lender or its Affiliates or at any other depository or other institution
from or for the account of such Borrower, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and (ii) liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (A) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (B) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of
an unpaid vendor, lienor or secured party, (C) goods described in invoices,
documents, credit card sales drafts, credit card sale slips or charge slips or
receipts and other forms of store receipts, contracts or instruments with
respect to, or otherwise representing or evidencing, Receivables or other
Collateral, including returned, repossessed and reclaimed goods, and (D)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
(d) Inventory;
(e) Intellectual Property;
(f) all deposit accounts into which Receivables and other
Collateral are deposited to the extent of such Receivables and other Collateral
deposited therein;
(g) Records; and
(h) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of any or all of the foregoing.
5.2 Perfection of Security Interests.
(a) Each Borrower and Guarantor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its
designee as the secured party and such Borrower or Guarantor as debtor, as
Agent may reasonably require, and including any other information with respect
to such Borrower or Guarantor or otherwise required by part 5 of Article 9 of
the Uniform Commercial Code of such jurisdiction as Agent may in good faith
determine, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Each Borrower and Guarantor hereby ratifies and
approves all financing statements naming Agent or its designee as secured party
and such Borrower or Guarantor, as the case may be, as debtor with respect to
the Collateral (and any amendments with respect to such financing statements)
filed by or on behalf of Agent prior to the date hereof and ratifies and
confirms the authorization of Agent to file such financing statements (and
amendments, if any). Each Borrower and Guarantor hereby authorizes Agent to
adopt on behalf of such Borrower and Guarantor any symbol required for
authenticating any electronic filing. In no event shall any Borrower or
Guarantor at any time file, or permit or cause to be filed, any correction
statement or termination statement with respect to any financing statement (or
amendment or continuation with respect thereto) naming Agent or its designee as
secured party and such Borrower or Guarantor as debtor.
(b) Each Borrower and Guarantor does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event that any Borrower or
Guarantor shall be entitled to or shall receive any chattel paper or instrument
in respect of (i) any Account or (ii) any other obligation for the payment of
money arising from or in connection with the sale or other disposition of
Inventory or any other Collateral, Borrowers and Guarantors shall promptly
notify Agent thereof in writing. Promptly upon the receipt thereof by or on
behalf of any Borrower or Guarantor (including by any agent or representative),
such Borrower or Guarantor shall deliver, or cause to be delivered to Agent,
all such tangible chattel paper and instruments that such Borrower or Guarantor
has or may at any time acquire, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may, in good faith, from time to
time specify, in each case except as Agent may otherwise agree. At Agent's
option, each Borrower and Guarantor shall, or Agent may at any time on behalf
of any Borrower or Guarantor, cause the original of any such instrument or
chattel paper to be conspicuously marked in a form and manner acceptable to
Agent with the following legend referring to chattel paper or instruments as
applicable: "This [chattel paper][instrument] is subject to the security
interest of Congress Financial Corporation, as Agent and any sale, transfer,
assignment or encumbrance of this [chattel paper][instrument] violates the
rights of such secured party."
(c) In the event that any Borrower or Guarantor shall at any time hold or
acquire an interest in any electronic chattel paper or any Atransferable record
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction) in respect of (i)
any Account or (ii) any other obligation for the payment of money arising from
or in connection with the sale or other disposition of Inventory or any other
Collateral, such Borrower or Guarantor shall promptly notify Agent thereof in
writing. Promptly upon Agent=s request, such Borrower or Guarantor shall take,
or cause to be taken, such actions as Agent may request to give Agent control
of such electronic chattel paper under Section 9-105 of the UCC and control of
such transferable record under Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or, as the case may be, Section
16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) Each Borrower and Guarantor does not have any deposit accounts as of
the date hereof, except as set forth in the Information Certificate. Borrowers
and Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account into which (i) the payment of any
Account or (ii) any other obligation for the payment of money arising from or
in connection with the sale or other disposition of Inventory or any other
Collateral shall be deposited unless each of the following conditions is
satisfied (or waived by Agent): (i) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of any Borrower
or Guarantor to open or establish such account which notice shall specify in
detail reasonably acceptable to Agent the name of the account, the owner of the
account, the name and address of the bank at which such account is to be opened
or established, the individual at such bank with whom such Borrower or
Guarantor is dealing and the purpose of the account, (ii) the bank where such
account is opened or maintained shall be reasonably acceptable to Agent, and
(iii) on or before the opening of such deposit account, such Borrower or
Guarantor shall as Agent may specify either (A) deliver to Agent a Deposit
Account Control Agreement with respect to such deposit account duly authorized,
executed and delivered by such Borrower or Guarantor and the bank at which such
deposit account is opened and maintained or (B) arrange for Agent to become the
customer of the bank with respect to the deposit account on terms and
conditions reasonably acceptable to Agent. The terms of this subsection (d)
shall not apply to deposit accounts specifically and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of any Borrower=s or Guarantor=s salaried employees.
(e) No Borrower or Guarantor owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the
date hereof, or have any investment account, securities account, commodity
account or other similar account with any bank or other financial institution
or other securities intermediary or commodity intermediary as of the date
hereof, in each case except as set forth in the Information Certificate.
(i) In the event that any Borrower or Guarantor shall be entitled
to or shall at any time after the date hereof hold or acquire any certificated
securities in respect of (i) any Account or (ii) any other obligation for the
payment of money arising from or in connection with the sale or other
disposition of Inventory or any other Collateral, such Borrower or Guarantor
shall, at the request of Agent, promptly endorse, assign and deliver the same
to Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as Agent may from time to time specify. If any securities,
now or hereafter acquired by any Borrower or Guarantor are uncertificated and
are issued to such Borrower or Guarantor or its nominee directly by the issuer
thereof, such Borrower or Guarantor shall promptly notify Agent thereof and
shall, at the request of Agent, as Agent may reasonably specify, either (A)
cause the issuer to agree to comply with instructions from Agent as to such
securities, without further consent of any Borrower or Guarantor or such
nominee, or (B) arrange for Agent to become the registered owner of the
securities.
(ii) Borrowers and Guarantors shall not, directly or indirectly,
after the date hereof open, establish or maintain any investment account,
securities account, commodity account or any other similar account (other than
a deposit account) in respect of (i) any Account or (ii) any other obligation
for the payment of money arising from or in connection with the sale or other
disposition of Inventory or any other Collateral with any securities
intermediary or commodity intermediary unless each of the following conditions
is satisfied (or waived by Agent): (A) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of such Borrower
or Guarantor to open or establish such account which notice shall specify in
detail reasonably acceptable to Agent the name of the account, the owner of the
account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom such Borrower or Guarantor is dealing
and the purpose of the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be reasonably acceptable to Agent, and (C) on or before the opening of
such investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, such Borrower or Guarantor
shall as Agent may specify either (1) execute and deliver, and cause to be
executed and delivered to Agent, an Investment Property Control Agreement with
respect thereto duly authorized, executed and delivered by such Borrower or
Guarantor and such securities intermediary or commodity intermediary or (2)
arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions reasonably acceptable to Agent.
(f) Borrowers and Guarantors are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's
acceptance or similar instrument as of the date hereof, except as set forth in
the Information Certificate. In the event that any Borrower or Guarantor shall
be entitled to or shall receive any right to payment under any letter of
credit, banker=s acceptance or any similar instrument, whether as beneficiary
thereof or otherwise in respect of (i) any Account or (ii) any other obligation
for the payment of money arising from or in connection with the sale or other
disposition of Inventory or any other Collateral, such Borrower or Guarantor
shall promptly notify Agent thereof in writing. Such Borrower or Guarantor
shall, at the request of Agent, as Agent may reasonably specify, either (i)
deliver, or cause to be delivered to Agent, with respect to any such letter of
credit, banker=s acceptance or similar instrument, the written agreement of
the issuer and any other nominated person obligated to make any payment in
respect thereof (including any confirming or negotiating bank), in form and
substance reasonably satisfactory to Agent, consenting to the assignment of the
proceeds of the letter of credit to Agent by such Borrower or Guarantor and
agreeing to make all payments thereon directly to Agent or as Agent may
otherwise direct or (ii) cause Agent to become, at Borrowers= expense, the
transferee beneficiary of the letter of credit, banker=s acceptance or similar
instrument (as the case may be).
(g) Intentionally deleted.
(h) Borrowers and Guarantors do not have any goods, documents of
title or other Collateral in the custody, control or possession of a third
party as of the date hereof, except as set forth in the Information Certificate
and except for goods located in the United States in transit to a location of a
Borrower or Guarantor permitted herein in the ordinary course of business of
such Borrower or Guarantor in the possession of the carrier transporting such
goods. In the event that any goods, documents of title or other Collateral are
at any time after the date hereof in the custody, control or possession of any
other person not referred to in the Information Certificate or such carriers,
Borrowers and Guarantors shall promptly notify Agent thereof in writing.
Promptly upon Agent=s request, Borrowers and Guarantors shall deliver to Agent
a Collateral Access Agreement duly authorized, executed and delivered by such
person and the Borrower or Guarantor that is the owner of such Collateral.
(i) Borrowers and Guarantors shall take any other actions
reasonably requested by Agent from time to time to cause the attachment,
perfection and first priority of, and the ability of Agent to enforce, the
security interest of Agent in any and all of the Collateral, including, without
limitation, (i) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the UCC or other applicable
law, to the extent, if any, that any Borrower's or Guarantor=s signature
thereon is required therefor, (ii) causing Agent=s name to be noted as secured
party on any certificate of title for a titled good if such notation is a
condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, (iii) complying
with any provision of any statute, regulation or treaty of the United States as
to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iv) obtaining the consents and
approvals of any Governmental Authority or third party, including, without
limitation, any consent of any licensor, lessor or other person obligated on
Collateral, and taking all actions required by any law, as applicable in any
relevant jurisdiction.
5.3 Notwithstanding anything to the contrary set forth in Section 5.1
above, the types or items of Collateral described in such Section shall not
include any rights or interests in any contract, lease, permit, license,
charter or license agreement covering real or personal property, as such, if
under the terms of such contract, lease, permit, license, charter or license
agreement, or applicable law with respect thereto, the valid grant of a
security interest or lien therein to Agent is prohibited and such prohibition
has not been or is not waived or the consent of the other party to such
contract, lease, permit, license, charter or license agreement has not been or
is not otherwise obtained or under applicable law such prohibition cannot be
waived; provided, that, the foregoing exclusion shall in no way be construed
(a) to apply if any such prohibition is unenforceable under Sections 9-406,
9-407, and 9-408 of the UCC or other applicable law or (b) so as to limit,
impair or otherwise affect Lender's unconditional continuing security interests
in and liens upon any rights or interests of any Borrower in or to monies due
or to become due under any such contract, lease, permit, license, charter or
license agreement (including any Receivables).
5.4 Notwithstanding anything to the contrary set forth in Section 5.1 above,
the types or items of Collateral described in such Section shall not include
any of the real and personal property (including, without limitation, the
"Improvements" and "Equipment") and fixtures of Wachovia Development
Corporation, whether now owned or hereafter acquired upon which a lien is
purported to be created by one or more of the "Mortgage Instruments" and/or the
"Security Agreement." The quoted terms used in this Section shall have the
meanings set forth in the Synthetic Lease Facility Agreements.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers= Loan Accounts. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all
payments made by or on behalf of any Borrower or Guarantor and (c) all other
appropriate debits and credits as provided in this Agreement, including fees,
charges, costs, expenses and interest. All entries in the loan account(s)
shall be made in accordance with Agent's customary practices as in effect from
time to time.
6.2 Statements. Agent shall render to Administrative Borrower each month a
statement setting forth the balance in the Borrowers= loan account(s)
maintained by Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers and
Guarantors and conclusively binding upon Borrowers and Guarantors as an account
stated except to the extent that Agent receives a written notice from
Administrative Borrower of any specific exceptions of Administrative Borrower
thereto within thirty (30) days after the date such statement has been received
by Administrative Borrower. Until such time as Agent shall have rendered to
Administrative Borrower a written statement as provided above, the balance in
any Borrower's loan account(s) shall be presumptive evidence of the amounts due
and owing to Agent and Lenders by Borrowers and Guarantors.
6.3 Collection of Accounts.
(a) (i) Each Borrower shall deposit all proceeds from sales of Inventory
in every form, including, without limitation, cash, checks, and other forms of
daily store receipts, from each location of such Borrower no less than twice
weekly into the deposit accounts of Borrower used solely for such purpose and
identified to each location as set forth on Schedule 6.3 to the Information
Certificate (together with any other deposit accounts at any time established
or used by such Borrower for receiving such proceeds from any location,
collectively, the "Local Bank Accounts") or as otherwise provided in Section
6.3(a)(ii) below. Each Borrower shall, on each Business Day, authorize and
direct, and shall use its best efforts to cause, all available funds deposited
into the Local Bank Accounts to be sent by wire transfer or by transfer using
the automated clearinghouse network ("ACH transfer") on each Business Day, and
all other proceeds of Collateral to be sent by wire transfer or by ACH
transfer, to the Blocked
Account as provided in Section 6.3(a)(ii) below (except nominal amounts which
are required to be maintained in such Local Bank Accounts under the terms of
such Borrower's arrangements with the bank at which such Local Bank Accounts
are maintained as in effect on the date hereof and amounts which Borrowers may
require to operate such retail locations, not to exceed $10,000,000, in the
aggregate in all such Local Bank Accounts at any time). In the event that
either (A) a Default or an Event of Default shall exist or have occurred and be
continuing ( an "Event of Default Cash Dominion Event"), or (B) the Excess
Availability of Borrowers shall be less than $37,500,000 (an "Excess
Availability Cash Dominion Event"; each being a "Cash Dominion Event"); each
Borrower shall, at the request of Agent, irrevocably authorize and direct in
writing, in form and substance satisfactory to Agent (and to the extent
Borrowers have already delivered executed direction letters to Agent, each
Borrower irrevocably authorizes Agent
to send such direction letters upon the occurrence of a Cash Dominion Event),
each of the banks into which proceeds from sales of Inventory from each
location of such Borrower are at any time deposited as provided above to (a)
honor all wire or ACH transfer requests, provided that any and all amounts
released and/or transferred by such bank pursuant to such requests are sent to
the Blocked Account and (b) follow any contrary instructions sent to such
banks by Agent; provided, that, in the event that (1) the Cash Dominion Event
which occurred was an Event of Default Cash Dominion Event, and such Event of
Default Cash Dominion Event has been cured to the satisfaction of Agent, or (2)
the Cash Dominion Event which occurred was an Excess Availability Cash Dominion
Event and after the occurrence of such Cash Dominion Event, Excess
Availability shall be equal to or greater than $37,500,000, for forty-five (45)
consecutive days, then Agent shall instruct the depository banks at which the
Local Bank Accounts are
maintained to commence following the instructions of Borrowers. In the event
any of such banks fails to send such funds to the Blocked Account as provided
herein either prior to or after the occurrence of a Cash Dominion Event, such
Borrower shall pursue all of its rights and remedies, as reasonably requested
by Agent, as a result of such failure. Notwithstanding the foregoing, for
those Local Bank Accounts that transfer funds by ACH transfer initiated by each
Borrower's store management notifying a third party processor, each Borrower
shall irrevocably authorize and direct in writing, in form and substance
satisfactory to Agent, the third party processor that establishes the routing
and executes the ACH transfer to send funds only to the Blocked Accounts and to
agree to do so at any time upon Agent's request and Agent shall receive an
agreement from such third party processor confirming its agreement to do so.
Such authorization and direction shall not be rescinded, revoked or modified
without the prior written consent of Agent.
(ii) Pep Boys shall establish and maintain, at its expense, deposit
accounts with Wachovia Bank, National Association or such other banks as are
reasonably acceptable to Agent (the "Blocked Accounts") into which each
Borrower shall promptly either cause all amounts on deposit in their respective
Local Bank Accounts to be sent as provided in Section 6.3(a)(i) above or shall
itself deposit or cause to be deposited all payments on Receivables, all
amounts payable to Borrowers from Credit Card Issuers and Credit Card
Processors, and all payments constituting proceeds of Inventory or other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance satisfactory
to Agent, providing that all items received or deposited in the Blocked
Accounts are the property of Agent, that the depository bank has no lien upon,
or right to setoff against, the Blocked Accounts,
the items received for deposit therein, or the funds from time to time on
deposit therein and that the depository bank will wire, or otherwise transfer,
in immediately available funds, on a daily basis, all funds received or
deposited into the Blocked Accounts to the Agent Payment Account. Subject to
the terms and conditions contained herein, Agent shall instruct the depository
banks at which the Blocked Accounts are maintained to transfer the funds on
deposit in the Blocked Accounts to such operating bank account of each Borrower
as such Borrower (or Administrative Borrower on behalf of such Borrower) may
specify in writing to Agent until such time as Agent shall notify the
depository bank otherwise. Agent will only instruct the depository banks at
which the Blocked Accounts are maintained to transfer all funds received or
deposited into the Blocked Accounts to the Payment Account at any time that
either: (A) an Event of Default Cash Dominion Event shall exist or have
occurred and be continuing, or (B) a
Excess Availability Cash Dominion Event has occurred; provided, that, in the
event that (1) the Cash Dominion Event is an Event of Default Cash Dominion
Event and such Event of Default Cash Dominion Event has been cured to the
satisfaction of Agent, or (2) the Cash Dominion Event is an Excess
Availability Cash Dominion Event, and after the occurrence of such Cash
Dominion Event, Excess Availability shall be equal to or greater than
$37,500,000, for forty-five (45) consecutive days, then Agent shall instruct
the depository banks at which the Blocked Accounts are maintained to transfer
the funds on deposit in the Blocked Accounts to such operating bank account of
each Borrower as such Borrower (or Administrative Borrower on behalf of such
Borrower) may specify in writing to Agent until such time as Agent shall notify
the depository bank otherwise. Each Borrower agrees that all payments made to
such Blocked Accounts or other funds received and collected by Agent or any
Lender, whether in respect of the Receivables, as proceeds of Inventory or
other Collateral or otherwise shall be treated as payments to Agent and Lenders
in respect of the Obligations and therefore shall constitute the property of
Agent and Lenders to the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans available
to each Borrower, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Agent Payment Account provided such payments
and notice thereof are received in accordance with Agent=s usual and customary
practices as in effect from time to time and within sufficient time to credit
such Borrower's loan account on such day, and if not, then on the next Business
Day.
(c) Each Borrower and Guarantor and their respective shareholders,
directors, employees, agents, Subsidiaries or other Affiliates shall, acting as
trustee for Agent, receive, as the property of Agent, any monies, checks,
notes, drafts or any other payment relating to and/or proceeds of Accounts or
other Collateral which come into their possession or under their control and
immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Agent. In no event shall the same be commingled with any
Borrower's or Guarantor=s own funds. Borrowers agree to reimburse Agent on
demand for any amounts owed or paid to any bank or other financial institution
at which a Blocked Account or any other deposit account or investment account
is established or any other bank, financial institution or other person
involved in the transfer of funds to or from the Blocked Accounts arising out
of Agent's payments to or indemnification of such bank, financial institution
or other person. The obligations of Borrowers to reimburse Agent for such
amounts pursuant to this Section 6.3 shall survive the termination of this
Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment Account
as provided in Section 6.3 or such other place as Agent may designate from time
to time. Agent shall apply payments received or collected from Borrowers or
for the account of Borrowers (including the monetary proceeds of collections or
of realization upon any Collateral) as follows: first, to pay any fees,
indemnities or expense reimbursements then due to Agent and Lenders from any
Borrower or Guarantor; second, to pay interest due in respect of any Loans (and
including any Special Agent Advances); third, to pay principal in respect of
Special Agent Advances; fourth, to pay principal in respect of the Loans and to
pay or prepay Obligations arising under or pursuant to any Hedge Agreements of
a Borrower or Guarantor with an Affiliate of Agent (up to the amount of any
then effective Reserve established in respect of such Obligations), on a pro
rata basis; fifth, to pay or prepay any other Obligations whether or not then
due, in such order
and manner as Agent determines or to be held as cash collateral in connection
with any Letter of Credit Accommodations or other contingent Obligations (but
not including for this purpose any Obligations arising under or pursuant to any
Hedge Agreements) and sixth, to pay or prepay any Obligations arising under or
pursuant to Hedge Agreements (other than to the extent provided for above) on a
pro rata basis provided, that, (i) all such payments shall be applied to Prime
Rate Loans before being applied to Eurodollar Rate Loans, (ii) all such
payments shall be applied to Working Capital Advances before being applied to
Asset Purchase Advances, and (iii) unless so directed by the Administrative
Borrower, or unless a Default or Event of Default shall exist or have occurred
and be continuing, Agent shall not apply any payments which it receives to any
Eurodollar Rate Loans, other than on the expiration date of the Interest Period
applicable to any such Eurodollar Rate Loans. Any payments received by Agent
which are
not applied to the Obligations shall, at Agent=s option, be held as cash
collateral for the Obligations. Such cash collateral shall constitute part of
the Collateral. Such cash collateral shall be held by Agent in an account
designated by Agent for such purposes in its books and records and may be
commingled with Agent=s own funds. Borrowers shall receive a credit on a
monthly basis to its loan account maintained by Agent on the funds so held by
Agent at a rate equal to three and one-half (3 2%) percent per annum less than
the Prime Rate (adjusted effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs) as calculated by Agent.
So long as no Default or Event of Default shall exist or have occurred and be
continuing and Excess Availability is at least $37,500,000, amounts received by
Agent from Borrowers pursuant to the foregoing which are not applied to the
Obligations or at the option of Agent, held as cash collateral pursuant to the
provisions of this Section 6.4 shall, upon the request of Pep Boys received by
Agent on or before 11:00 a.m. New York City time on any Business Day, be
remitted to Pep Boys.
(b) At Agent's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other
Financing Agreements may be charged directly to the loan account(s) of any
Borrower maintained by Agent. Borrowers and Guarantors shall make all payments
to Agent and Lenders on the Obligations free and clear of, and without
deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, withholding,
restrictions or conditions of any kind. If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of the Obligations, Agent
or any Lender is required to surrender or return such payment or proceeds to
any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Agent or such Lender. Borrowers and Guarantors shall be liable
to pay to Agent for the ratable benefit of the affected Lenders, and do hereby
indemnify and hold Agent and Lenders harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4(b) shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender
in reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination of this Agreement.
6.5 Authorization to Make Loans. Agent and Lenders are authorized to make
the Loans and provide the Letter of Credit Accommodations based upon telephonic
or other instructions received from anyone purporting to be an officer of
Administrative Borrower or any Borrower or other authorized person or, at the
discretion of Agent, if such Loans are necessary to satisfy any Obligations.
All requests for Loans or Letter of Credit Accommodations hereunder shall
specify the date on which the requested advance is to be made or Letter of
Credit Accommodations established (which day shall be a Business Day) and the
amount of the requested Loan. Requests received after 11:00 a.m. New York City
time on any day shall be deemed to have been made as of the opening of business
on the immediately following Business Day. All Loans and Letter of Credit
Accommodations under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, any Borrower when
deposited to the credit of any Borrower or otherwise disbursed or established
in accordance with the instructions of any Borrower or in accordance with the
terms and conditions of this Agreement.
6.6 Use of Proceeds. All Loans made or Letter of Credit Accommodations
provided by Lenders to Borrowers pursuant to the provisions hereof shall be
used by Borrowers only (i) to pay all or any part of the purchase price or
construction costs in respect of property or properties acquired by Pep Boys or
any other Borrower, and (ii) for other working capital purposes (which may
include the payment of current maturities of long-term Indebtedness permitted
to be incurred and repaid hereunder). At any time during which the limitation
regarding secured Indebtedness set forth in Section 1004 of the 1998 Senior
Note Indenture remains in effect (or such other equivalent provision in any of
the other Pep Boys Indentures, then in effect), both before and after giving
effect to the making of any Working Capital Advances, the outstanding amount of
Exempted Debt will not exceed the Exempted Debt Limit without the prior written
consent of the Required Lenders. None of the proceeds will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin security or
for the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose
which might cause any of the Loans to be considered a "purpose credit" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, as amended.
6.7 Appointment of Administrative Borrower as Agent for Requesting Loans
and Receipts of Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to request and receive Loans and Letter of
Credit Accommodations pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Subject to the terms and conditions contained herein, Agent and Lenders may
disburse the Loans to such bank account of Administrative Borrower or a
Borrower or otherwise make such Loans to a Borrower and provide such Letter of
Credit Accommodations to a Borrower as Administrative Borrower may designate
or direct, without notice to any other Borrower or Obligor. Notwithstanding
anything to the contrary contained herein, Agent may at any time and from time
to time require that Loans to or for the account of any Borrower be disbursed
directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by
Borrowers to act as the agent of Borrowers pursuant to this Section 6.7.
Administrative Borrower shall ensure that the disbursement of any Loans to each
Borrower requested by or paid to or for the account of such Borrower, or the
issuance of any Letter of Credit Accommodations for a Borrower hereunder, shall
be paid to or for the account of such Borrower.
(c) Each Borrower and other Guarantor hereby irrevocably appoints
and constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower or any Guarantor by
Administrative Borrower shall be deemed for all purposes to have been made by
such Borrower or Guarantor, as the case may be, and shall be binding upon and
enforceable against such Borrower or Guarantor to the same extent as if made
directly by such Borrower of Guarantor.
(e) No purported termination of the appointment of Administrative=
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
6.8 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of
Lenders in respect of any Obligations due on a particular day shall be
allocated among the Lenders entitled to such payments based on their respective
Pro Rata Shares and shall be distributed accordingly.
6.9 Sharing of Payments, Etc.
(a) Each Borrower and Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
case it shall promptly notify Administrative Borrower and Agent thereof;
provided, that, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from any Borrower
or Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower or
Guarantor to such Lender than the percentage thereof received by any other
Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount
of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such
other Lenders (or such interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Lender in obtaining
or preserving such excess payment) in accordance with their respective Pro Rata
Shares or as otherwise agreed by Lenders. To such end all Lenders shall make
appropriate adjustments among themselves (by the resale of participation sold
or otherwise) if such payment is rescinded or must otherwise be restored.
(c) Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as
if such Lender were a direct holder of Loans or other amounts (as the case may
be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any right
of setoff, banker=s lien, counterclaims or similar rights or shall affect the
right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other Indebtedness or obligation of any Borrower
or Guarantor. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.10 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient
manner and to minimize the transfer of funds between Agent and Lenders, Agent
may, at its option, subject to the terms of this Section, make available, on
behalf of Lenders, the full amount of the Loans requested or charged to any
Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to
the terms hereof, without requirement of prior notice to Lenders of the
proposed Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section, the amount of each Lender=s Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
New York City time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the
summary statement is sent by Agent and received by a Lender prior to 12:00 noon
New York City time, then
such Lender shall make the settlement transfer described in this Section by no
later than 3:00 p.m. New York City time on the same Business Day and if
received by a Lender after 12:00 noon New York City time, then such Lender
shall make the settlement transfer by not later than 3:00 p.m. New York City
time on the next Business Day following the date of receipt. If, as of the end
of any Settlement Period, the amount of a Lender's Pro Rata Share of the
outstanding Loans is more than such Lender's Pro Rata Share of the outstanding
Loans as of the end of the previous Settlement Period, then such Lender shall
forthwith (but in no event later than the time set forth in the preceding
sentence) transfer to Agent by wire transfer in immediately available funds the
amount of the increase. Alternatively, if the amount of a Lender's Pro Rata
Share of the outstanding Loans in any Settlement Period is less than the amount
of such Lender's Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent
shall forthwith transfer to such Lender by wire transfer in immediately
available funds the amount of the decrease. The obligation of each of the
Lenders to transfer such funds and effect such settlement shall be irrevocable
and unconditional and without recourse to or warranty by Agent. Agent and each
Lender agrees to xxxx its books and records at the end of each Settlement
Period to show at all times the dollar amount of its Pro Rata Share of the
outstanding Loans and Letter of Credit Accommodations. Each Lender shall only
be entitled to receive interest on its Pro Rata Share of the Loans to the
extent such Loans have been funded by such Lender. Because the Agent on behalf
of Lenders may be advancing and/or may be repaid Loans prior to the time when
Lenders will actually advance and/or be repaid such Loans, interest with
respect to Loans shall be allocated by Agent in accordance with the amount of
Loans actually advanced by and repaid to each Lender and the Agent and shall
accrue from and including the date such Loans are so advanced to but
excluding the date such Loans are either repaid by Borrowers or actually
settled with the applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts available
and the settlement described above shall not yet have occurred, upon repayment
of any Loans by a Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
In such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall
be responsible for any default by any other Lender in the other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender be increased or decreased as a result of the default by any other Lender
in the other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to
a Borrower (or Administrative Borrower for the benefit of such Borrower)
pursuant to this Section on any day, Agent may assume that each Lender will
make available to Agent such Lender's Pro Rata Share of the Loan requested or
otherwise made on such day and Agent may, in its discretion, but shall not be
obligated to, cause a corresponding amount to be made available to or for the
benefit of such Borrower on such day. If Agent makes such corresponding amount
available to a Borrower and such corresponding amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent=s option based on
the arithmetic mean determined by Agent of the
rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of the three leading brokers
of Federal funds transactions in New York City selected by Agent) and if such
amounts are not paid within three (3) days of Agent=s demand, at the highest
Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate
Loans. During the period in which such Lender has not paid such corresponding
amount to Agent, notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, the amount so advanced by
Agent to or for the benefit of any Borrower shall, for all purposes hereof, be
a Loan made by Agent for its own account. Upon any such failure by a Lender to
pay Agent, Agent shall promptly thereafter notify Administrative Borrower of
such failure and Borrowers shall pay such corresponding amount to Agent for its
own account within five (5) Business Days of Administrative Borrower=s receipt
of such
notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans made
available by the Agent on such Lender=s behalf, or any Lender who fails to pay
any other amount owing by it to Agent, is a "Defaulting Lender". Agent shall
not be obligated to transfer to a Defaulting Lender any payments received by
Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder (including any principal,
interest or fees). Amounts payable to a Defaulting Lender shall instead be
paid to or retained by Agent. Agent may hold and, in its discretion, relend to
a Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Lender. For purposes of voting or consenting to
matters with respect to this Agreement and the other Financing Agreements and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero (0). This
Section shall remain effective with respect to a Defaulting Lender until such
default is cured. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or relieve or excuse
the performance by any Borrower or Obligor of their duties and obligations
hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds
on behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Commitment hereunder or to prejudice any rights that any Borrower
may have against any Lender as a result of any default by any Lender hereunder
in fulfilling its Commitment.
6.11 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements
and no action taken by the Lenders pursuant hereto or thereto shall be deemed
to constitute the Lenders to be a partnership, an association, a joint venture
or any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent with the following documents in a
form satisfactory to Agent (and Agent shall provide to each Lender, the reports
and information referred to in Section 7.1(a)(ii)hereof):
(i) after the end of each calendar week, as soon
as available, but in any event no later than five (5) days after the end of
such week, a Weekly Collateral Report, as of the last business day of the
immediately preceding week as to the Accounts and Inventory balances, duly
completed and executed by the chief financial officer, Vice President-Finance
of Pep Boys, or such other financial officer of Pep Boys reasonably acceptable
to the Agent on behalf of Borrowers; provided, that, without limiting any other
rights of Agent, upon Agent's request, Borrower shall provide Agent on a daily
basis with a schedule of Accounts, collections received and credits issued and
on a weekly basis with an inventory report in the event that at any time
either: (1) a Default or an Event of Default, shall exist or have occurred, or
(2) Borrowers shall have failed to deliver any Borrowing Base Certificate in
accordance with the terms hereof, or (3) upon Agent's good faith belief, any
information contained in any Borrowing Base Certificate is incomplete,
inaccurate or misleading, or (4) Excess Availability shall be less than
$37,500,000;
(ii) as soon as possible after the end of each month (but in
any event within ten (10) Business Days after the end of each month) so long as
Excess Availability is greater than $37,500,000, or more frequently as Agent
may in good faith request if at any time Excess Availability is equal to or
less than $37,500,000,
(A) a Borrowing Base Certificate setting forth
Borrowers= calculation of the Loans and Letter of Credit Accommodations
available to Borrowers, duly completed and executed by the chief financial
officer or Vice President-Finance of Pep Boys, on behalf of Borrowers;
(B) a schedule of sales made, credits issued and cash
received, together with such supporting documentation and detail with respect
thereto as Agent may request;
(C) perpetual inventory reports, including inventory
reports by location, category and a gross margin report by category,
(D) reports with respect to Inventory sold or
purchased on consignments,
(E) a schedule detailing use of Loan (whether Working
Capital Advances or Asset Purchase Advances) proceeds and Letter of Credit
Accommodations; provided, that, Borrowers shall make available to Agent such
supporting documentation with respect to the use of Loan proceeds and Letter of
Credit Accommodations (including without limitation, vendor invoices, copies
of cancelled checks, disbursement receiving journals, purchase journals) and
detail with respect thereto as Agent may request, from time to time,
(F) agings of accounts payable (and including
information indicating the status of payments to owners and lessors of the
leased premises of Borrowers), and
(G) agings of accounts receivable (together with a
reconciliation to the then current month's general ledger);
(iii) upon Agent's request, (A) copies of customer statements and
credit memos, remittance advices and reports, and copies of deposit slips and
bank statements, (B) copies of shipping and delivery documents, and (C) copies
of purchase orders, invoices and delivery documents for property acquired by a
Borrower;
(iv) as soon as available, but in any event not later than five (5)
Business Days after receipt by any Borrower, the monthly statements received by
any Borrower from any Credit Card Issuers or Credit Card Processors, together
with such additional information with respect thereto as shall be sufficient to
enable Agent to monitor the transactions pursuant to the Credit Card
Agreements; and
(v) such other reports as to the Collateral as Agent shall
reasonably request from time to time.
(b) Nothing contained in any Borrowing Base Certificate shall be deemed to
limit, impair or otherwise affect the rights of Agent contained herein and in
the event of any conflict or inconsistency between the calculation of the Loans
and Letter of Credit Accommodations available to Borrowers as set forth in any
Borrowing Base Certificate and as determined by Agent, the determination of
Agent shall govern and be conclusive and binding upon Borrowers. Without
limiting the foregoing, Borrowers shall furnish to Agent any information which
Agent may reasonably request regarding the determination and calculation of any
of the amounts set forth in the Borrowing Base Certificate. If any Borrower's
records or reports of the Collateral are prepared or maintained by an
accounting service, contractor, shipper or other agent, such Borrower hereby
irrevocably authorizes such service, contractor, shipper or agent to deliver
such records, reports, and related documents to Agent and to follow Agent's
instructions with respect to further services at any time that an Event of
Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrowers shall notify Agent promptly of: (i) (A) any material delay in
a Borrower's performance of any of its obligations to any account debtor in
respect to an Account or Accounts representing at least five (5%) percent of
the then Eligible Accounts in the aggregate (including any Credit Card Issuer
or Credit Card Processor) or (B) the assertion of any claims, offsets, defenses
or counterclaims by any account debtor (including any Credit Card Issuer or
Credit Card Processor) or (C) any disputes with account debtors (including any
Credit Card Issuer or Credit Card Processor) with respect to such Eligible
Accounts, or (D) any settlement, adjustment or compromise thereof, provided,
that, in the case of clauses (B), (C) and (D), the amount of such claim,
dispute, settlement, adjustment or compromise is in excess of $50,000 , (ii)
all material adverse information relating to the financial condition of any
account debtor in respect to an Account or Accounts representing at least five
(5%) percent of the
then Eligible Accounts in the aggregate (including any Credit Card Issuer or
Credit Card Processor) and (iii) any event or circumstance which, to a
Borrower's knowledge would cause Agent to consider any then existing Accounts
as no longer constituting Eligible Accounts. No credit, discount, allowance
or extension or agreement for any of the foregoing shall be granted to any
account debtor without Agent's consent, except in the ordinary course of such
Borrower's business in accordance with practices and policies substantially
consistent with current practices of such Borrower (taken as a whole) as of the
date hereof. So long as no Event of Default exists or has occurred and is
continuing, Borrowers shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor (including any Credit Card
Issuer or Credit Card Processor). At any time that an Event of Default exists
or has occurred and is continuing, Agent shall, at its option, have the
exclusive right to settle, adjust or compromise any claim, offset, counterclaim
or dispute with account debtors (including any Credit Card Issuer or Credit
Card Processor) or grant any credits, discounts or allowances. For purposes of
this Section, a Borrower shall be deemed to have "knowledge" of any information
or events or circumstances set forth in clauses (ii) and (iii) of this Section
7.2 , if such information, events or circumstances, as the case may be, is
known by any of the Vice President -Finance, Assistant Vice
President- Controller, Director of Treasury, Director of Credit or Credit
Manager of such Borrower or Pep Boys.
(b) Each Borrower shall notify Agent promptly of: (i) any notice of a
material default by such Borrower under any of the Credit Card Agreements or of
any default which has a reasonable likelihood of resulting in the Credit Card
Issuer or Credit Card Processor ceasing to make payments or suspending payments
to such Borrower, (ii) any notice from any Credit Card Issuer or Credit Card
Processor that such person is ceasing or suspending, or will cease or suspend,
any present or future payments due or to become due to such Borrower from such
person, or that such person is terminating or will terminate any of the Credit
Card Agreements, and (iii) the failure of such Borrower to comply with any
material terms of the Credit Card Agreements or any terms thereof which has a
reasonable likelihood of resulting in the Credit Card Issuer or Credit Card
Processor ceasing or suspending payments to such Borrower.
(c) Without limiting the obligation of Borrowers to deliver any other
information to Agent, Borrowers shall promptly report to Agent any return of
Inventory by any one account debtor if the Inventory so returned in such case
has a value in excess of $1,000,000. At any time that Inventory is returned,
reclaimed or repossessed, the Account (or portion thereof) which arose from the
sale of such returned, reclaimed or repossessed Inventory shall not be deemed
an Eligible Account. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrowers shall,
upon Agent's request, (i) hold the returned Inventory in trust for Agent and
Lenders, (ii) segregate all returned Inventory from all of its other property,
(iii) dispose of the returned Inventory solely according to Agent's
instructions, and (iv) not issue any credits, discounts or allowances with
respect thereto without Agent's prior written consent.
(d) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of a Borrower's business in accordance with
current practices and policies of Borrowers in effect on the date hereof, (iv)
there shall be no setoffs, deductions, or contras existing or asserted with
respect thereto except as reported to Agent in accordance with Section 7.1 of
this Agreement, (v) none of the transactions giving rise thereto will violate
any applicable State or Federal laws or regulations, all documentation relating
thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.
(e) Agent shall have the right at any time or times (i) prior to the
occurrence of an Event of Default, in the name of a nominee of Agent, and
without disclosing that such verification is being made by Agent, and (ii) upon
the occurrence and during the continuation of an Event of Default, in Agent's
name or in the name of a nominee of Agent, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise. Prior to the occurrence of an
Event of Default, Agent shall use its best efforts to notify Pep Boys promptly
after any such verification is made.
(f) Borrowers shall deliver or cause to be delivered to Agent, with
appropriate endorsement and assignment, with full recourse to Borrowers, any
chattel paper or instrument which a Borrower now owns or may at any time
acquire within five (5) Business Days after such Borrower's receipt thereof,
prior to the earlier to occur of a Default or an Event of Default,, if the
amount of any such chattel paper or instrument equals or exceeds $100,000, or
all chattel paper and instruments if the aggregate amount of all such chattel
paper and instruments equals or exceeds $1,000,000, and after the earlier to
occur of a Default or Event of Default, all such chattel paper and other
instruments regardless of the amount thereof, in each case except as Agent may
otherwise agree.
(g) Agent may, at any time or times that an Event of Default exists or has
occurred and is continuing, (i) notify any or all account debtors (including
any Credit Card Issuer or Credit Card Processor) or other obligors that the
Receivables have been assigned to Agent and that Agent has a security interest
therein and Agent may direct any or all accounts debtors and other obligors to
make payment of Receivables directly to Agent, (ii) extend the time of payment
of, compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Receivables or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Receivables or such other obligations, but without any
duty to do so, and Agent shall not be liable for its failure to collect or
enforce the payment thereof nor for the negligence of its agents or attorneys
with respect thereto and (iv) take whatever other action Agent may deem
necessary or desirable for the protection of its interests. At any time that
an Event of Default exists or has occurred and is continuing, at Agent's
request, all invoices and statements sent to any account debtor shall state
that the Receivables and such other obligations have been assigned to Agent and
are payable directly and only to Agent and Borrowers shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Receivables as Agent may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower
and Guarantor shall at all times maintain inventory records reasonably
satisfactory to Agent, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, such Borrower's
or Guarantor=s cost therefor and daily withdrawals therefrom and additions
thereto; (b) Borrowers and Guarantors shall conduct a physical count of the
Inventory at least once each year but at any time or times as Agent may request
on or after an Event of Default, and promptly following such physical inventory
shall supply Agent with a report in the form and with such specificity as may
be reasonably satisfactory to Agent concerning such physical count; (c)
Borrowers and Guarantors shall not remove any Inventory from the locations set
forth or permitted herein, without the prior written consent of Agent, except
for sales of Inventory in the ordinary course of its business and except to
move Inventory directly from
one location set forth or permitted herein to another such location and except
for Inventory shipped from the manufacturer thereof to such Borrower or
Guarantor which is in transit to the locations set forth or permitted herein;
(d) upon Agent's request, Borrowers shall, at their expense, no more than three
(3) times in any twelve (12) month period, but at any time or times as Agent
may request on or after an Event of Default, deliver or cause to be delivered
to Agent written appraisals as to the Inventory in form, scope and methodology
reasonably acceptable to Agent and by an appraiser reasonably acceptable to
Agent, addressed to Agent and Lenders and upon which Agent and Lenders are
expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use,
store and maintain the Inventory with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including the requirements of the Federal Fair Labor Standards
Act of 1938, as
amended and all rules, regulations and orders related thereto); (f) none of the
Inventory or other Collateral constitutes farm products or the proceeds
thereof; (g) each Borrower and Guarantor assumes all responsibility and
liability arising from or relating to the production, use, sale or other
disposition of the Inventory; (h) Borrowers and Guarantors shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate any Borrower or Guarantor to repurchase such
Inventory except (i) for the right of return given by Borrowers to its
customers in the ordinary course of business consistent with the current
practices of Borrowers as of the date hereof; and (ii) sales to customers on
consignment in the ordinary course of business of such Borrower consistent with
the current practices of Borrowers in effect on the date hereof, provided,
that, (A) a report of such Inventory is provided by Borrowers to Agent pursuant
to Section 7.1 hereof and (B) in no
event shall the aggregate dollar amount of all such Inventory so sold exceed
$2,500,000 at any time; (i) each Borrower and Guarantor shall keep the
Inventory in good and marketable condition; and (j) each Borrower shall not
acquire or accept any Inventory on consignment or approval without including
such Inventory in a report of such Inventory provided by Borrowers to Agent
pursuant to Section 7.1 hereof.
7.4 Power of Attorney. Each Borrower and Guarantor hereby irrevocably
designates and appoints Agent (and all persons designated by Agent) as such
Borrower's and Guarantor=s true and lawful attorney-in-fact, and authorizes
Agent, in such Borrower's, Guarantor=s or Agent's name, to: (a) at any time an
Event of Default exists or has occurred and is continuing (i) demand payment on
Receivables or other Collateral, (ii) enforce payment of Receivables by legal
proceedings or otherwise, (iii) exercise all of such Borrower's or Guarantor's
rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or
times as the Agent deems advisable, (v) settle, adjust, compromise, extend or
renew an Account, (vi) discharge and release any Receivable, (vii) prepare,
file and sign such Borrower's or Guarantor=s name on any proof of claim in
bankruptcy or other similar document against an account debtor or other
obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an
address designated by Agent, and open and dispose of all mail addressed to such
Borrower or Guarantor and handle and store all mail relating to the Collateral;
and (ix) do all acts and things which are necessary, in Agent's, in good faith,
determination, to fulfill such Borrower's or Guarantor=s obligations under this
Agreement and the other Financing Agreements and (b) at any time to (i) take
control in any manner of any item of payment in respect of Receivables or
constituting Collateral or otherwise received in or for deposit in the Blocked
Accounts or otherwise received by Agent or any Lender, (ii) have access to any
lockbox or postal box into which remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral are sent or
received,
(iii) endorse such Borrower's or Guarantor=s name upon any items of payment in
respect of Receivables or constituting Collateral or otherwise received by
Agent and any Lender and deposit the same in Agent's account for application to
the Obligations, (iv) endorse such Borrower's or Guarantor=s name upon any
chattel paper, document, instrument, invoice, or similar document or agreement
relating to any Receivable or any goods pertaining thereto or any other
Collateral, including any warehouse or other receipts, or bills of lading and
other negotiable or non-negotiable documents, (v) clear Inventory the purchase
of which was financed with Letter of Credit Accommodations through U.S. Customs
or foreign export control authorities in such Borrower=s or Guarantor=s name,
Agent's name or the name of Agent=s designee, and to sign and deliver to
customs officials powers of attorney in such Borrower=s or Guarantor's name for
such purpose, and to complete in such Borrower=s or Guarantor=s or Agent's
name, any order, sale or transaction, obtain the necessary documents in
connection therewith and collect the proceeds thereof, and (vi) sign such
Borrower's or Guarantor=s name on any verification of Receivables and notices
thereof to account debtors or any secondary obligors or other obligors in
respect thereof. Each Borrower and Guarantor hereby releases Agent and Lenders
and their respective officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in furtherance
thereof, whether of omission or commission, except as a result of Agent's or
any Lender=s own gross negligence or wilful misconduct as determined pursuant
to a final non-appealable order of a court of competent jurisdiction.
7.5 Right to Cure. Agent may, at its option, upon notice to Administrative
Borrower, (a) cure any default by any Borrower or Guarantor under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge taxes (subject to each
Borrower's right to contest such taxes pursuant to Section 9.4 hereof), liens,
security interests or other encumbrances (other than as permitted under Section
9.8 hereof) at any time levied on or existing with respect to the Collateral
and pay any amount, incur any expense or perform any act which, in Agent's good
faith judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Agent and Lenders with respect
thereto. Agent may add any amounts so expended to the Obligations and charge
any Borrower's account therefor, such amounts to be repayable by Borrowers on
demand. Agent and Lenders shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of any Borrower or Guarantor. Any payment made or
other action taken by Agent or any Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.6 Access to Premises. From time to time as reasonably requested by
Agent, at the cost and expense of Borrowers, (a) Agent or its designee
(accompanied by no more than one (1) representative of each Lender, which shall
be at no additional expense to Borrowers) shall have complete access to all of
each Borrower's and Guarantor=s premises during normal business hours and after
reasonable notice to Administrative Borrower, or at any time and without notice
to Administrative Borrower if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of each Borrower's and Guarantor=s books and records,
including the Records, and (b) each Borrower and Guarantor shall promptly
furnish to Agent (and Agent shall provide copies to each Lender) such copies of
such books and records or extracts therefrom as Agent may request, and Agent or
Agent=s designee may, after reasonable notice to Pep Boys, use during normal
business hours such of any Borrower's and Guarantor=s personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and, at
any time (without notice), if an Event of Default exists or has occurred and is
continuing for the collection of Receivables and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and Guarantor hereby, jointly and severally, represents and
warrants to Agent and Lenders the following (which shall survive the execution
and delivery of this Agreement), the truth and accuracy of which are a
continuing condition of the making of Loans and providing Letter of Credit
Accommodations to Borrowers:
8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor
is a corporation duly organized and in good standing under the laws of its
state of incorporation and is duly qualified as a foreign corporation and in
good standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect. The execution, delivery
and performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (a) are all within each
Borrower's or Guarantor=s corporate powers, as the case may be, (b) have been
duly authorized, (c) are not in contravention of law or the terms of any
Borrower's or Guarantor=s certificate of incorporation, by?laws, or other
organizational documentation, or any indenture (including without limitation,
the Pep Boys Indentures), or other material mortgage, agreement, instrument or
undertaking to which any Borrower or Guarantor is a party or by which a
Borrower or Guarantor or any of their property are bound and (d) will not
result in, require or give rise to the creation or imposition of any lien,
security interest, charge or encumbrance upon any property of Borrowers or
Guarantors under the Pep Boys Indentures or otherwise upon any property of any
Borrower or Guarantor (other than in favor of Agent pursuant to the terms of
the Financing Agreements). This Agreement and the other Financing Agreements
to which any Borrower or Guarantor is a party constitute legal, valid and
binding obligations of such Borrower and Guarantor enforceable in accordance
with their respective terms.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers and Guarantors which have been or may
hereafter be delivered by Borrowers or Guarantors to Agent and Lenders have
been prepared in accordance with GAAP (subject, as to all interim statements,
to normal year-end adjustments) and fairly present the financial condition and
the results of operation of Borrowers and Guarantors as at the dates and for
the periods set forth therein. Except as disclosed in any interim financial
statements furnished by Borrowers or Guarantors to Agent prior to the date of
this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of Borrowers or
Guarantors, since the date of the most recent audited financial statements
furnished by Borrower to Agent prior to the date of this Agreement.
8.3 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of each Borrower and Guarantor is as set
forth on the signature page of this Agreement and in the Information
Certificate. No Borrower or Guarantor has, during the five years prior to the
date of this Agreement, been known by or used any other corporate or fictitious
name or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
or assets out of the ordinary course of business, except as set forth in the
Information Certificate.
(b) Each Borrower and Guarantor is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower and Guarantor or accurately states that such Borrower
or Guarantor has none and accurately sets forth the federal employer
identification number of each Borrower and Guarantor.
(c) The chief executive office and mailing address of each Borrower
and Guarantor and each Borrower's and Guarantor=s Records concerning Accounts
are located only at the address identified as such in Schedule 8.2 to the
Information Certificate and its only other places of business and the only
other locations of Collateral, if any, are the addresses set forth in Schedule
8.2 to the Information Certificate, subject to the rights of any Borrower or
Guarantor to establish new locations in accordance with Section 9.2 below. The
Information Certificate correctly identifies any of such locations which are
not owned by a Borrower or Guarantor and sets forth the owners and/or operators
thereof.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 to
the Information Certificate and the other liens permitted under Section 9.8
hereof. Each Borrower and Guarantor has good fee simple title to or valid
leasehold interests in all of its Real Property and good and valid title to all
of its other properties and assets subject to no liens, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those granted
to Agent and such others as are specifically listed on Schedule 8.4 to the
Information Certificate or permitted under Section 9.8 hereof.
8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be
filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
and Guarantor has paid or caused to be paid all taxes due and payable or
claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower or Guarantor and with respect
to which adequate reserves have been set aside on its books. Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, county, local, foreign and other taxes whether or not yet due and
payable and whether or not disputed.
8.6 Litigation. Except for the actions listed on Schedule 8.6 to the
Information Certificate, (a) there is no present investigation by any
Governmental Authority pending, or to the best of each Borrower's and
Guarantor's knowledge threatened, against or affecting any Borrower or
Guarantor, its or their assets or business and (b) there is no action, suit,
proceeding or claim by any Person pending, or to the best of any Borrower's or
Guarantor=s knowledge threatened, against any Borrower or Guarantor or its or
their assets or goodwill, or against or affecting any transactions contemplated
by this Agreement, which, in each or any case, if adversely determined against
such Borrower and Guarantor would have a reasonable likelihood of having a
Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) No Borrower, Guarantor or any of their Subsidiaries is in
default in any respect under, or in violation in any respect of any of the
terms of, any agreement, contract, instrument, lease or other commitment to
which it is a party or by which it or any of its assets are bound where such
default or violation would have a reasonable likelihood of having a Material
Adverse Effect. Each Borrower, Guarantor and their Subsidiaries is in
compliance with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority relating to its business, including,
without limitation, those set forth in or promulgated pursuant to the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor
Standards Act of 1938, as amended, ERISA, the Code, as amended, and the rules
and regulations thereunder, and all Environmental Laws, where the failure to so
comply would have a Material Adverse Effect.
(b) Each Borrower, Guarantor and their Subsidiaries has obtained all
material permits, licenses, approvals, consents, certificates, orders or
authorizations of any Governmental Authority (the "Permits") required for the
lawful conduct of its business. The Permits constitute all permits, licenses,
approvals, consents, certificates, orders or authorizations necessary for each
Borrower, Guarantor and their Subsidiaries to own and operate its business as
presently conducted or proposed to be conducted. All of the Permits are valid
and subsisting and in full force and effect. There are no actions, claims or
proceedings pending or to the best of each Borrower=s and Guarantor=s
knowledge, threatened that seek the revocation, cancellation, suspension or
modification of any of the Permits which would have a Material Adverse Effect.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, no investigation (of which any Borrower or Guarantor is aware),
proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person is pending or to the best of each
Borrower's and Guarantor's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any applicable
Environmental Law by any Borrower, Guarantor or Subsidiary (of which any
Borrower or Guarantor is aware) or the release, spill or discharge, threatened
or actual, of any Hazardous Material or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of
any Hazardous Materials by any Borrower, Guarantor or Subsidiary which if
adversely determined would have a reasonable likelihood of having a Material
Adverse Effect.
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantors and their Subsidiaries have no material
liability (contingent or otherwise) in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials, which liability would have a reasonable
likelihood of having a Material Adverse Effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other federal or state law except where such failure to
comply would not have a reasonable likelihood of having a Material Adverse
Effect. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service and to the best of any Borrower's or Guarantor=s knowledge, nothing has
occurred which would cause the loss of such qualification. Each Borrower and
its ERISA Affiliates have made all required contributions to any Plan subject
to Section 412 of the Code, except where the failure to contribute would not
have a reasonable likelihood of having a Material Adverse Effect, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending, or to the best of any Borrower's or
Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which would have a reasonable likelihood of having a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) do not exceed such Plan's liabilities under Section 4001(a)(16) of ERISA;
(iii) each Borrower, Guarantor and its ERISA Affiliates have not incurred and
do not reasonably expect to incur, any liability under Title IV of ERISA with
respect to any Plan (other than premiums due and not delinquent under Section
4007 of ERISA which would have a reasonable likelihood of having a Material
Adverse Effect); (iv) each Borrower, Guarantor and its ERISA Affiliates have
not incurred and do not reasonably expect to incur, any liability (and no event
has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multiemployer Plan which would have a reasonable likelihood of
having a Material Adverse Effect; and (v) each Borrower, Guarantor and its
ERISA Affiliates have not engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA which would have a reasonable likelihood of
having a Material Adverse Effect.
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Borrower or Guarantor maintained
at any bank or other financial institution are set forth on Schedule 8.10 to
the Information Certificate, subject to the rights of each Borrower and
Guarantor to establish new accounts in accordance with Section 5.2 hereof.
8.11 Intellectual Property. Each Borrower and Guarantor owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted.
As of the date hereof, Borrowers and Guarantors do not own any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 to the Information
Certificate and have not granted any licenses with respect thereto which would
have a reasonable likelihood of having a Material Adverse Effect. No event has
occurred which permits or would permit after notice or passage of time or both,
the revocation, suspension or termination of such rights. To the best of each
Borrower's and Guarantor=s knowledge, no slogan or other advertising device,
product, process,
method, substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by any
Borrower or Guarantor infringes any patent, trademark, servicemark, tradename,
copyright, license or other Intellectual Property owned by any other Person
presently and no claim or litigation is pending or threatened against or
affecting any Borrower or Guarantor contesting its right to sell or use any
such Intellectual Property. Schedule 8.11 to the Information Certificate sets
forth all of the agreements or other arrangements of Borrowers and Guarantors
pursuant to which a Borrower or Guarantor has a license or other right to use
any trademarks, logos, designs, representations or other Intellectual Property
owned by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of a Borrower or Guarantor
as in effect on the date hereof.
8.12 Interrelated Business. Pep Boys is the direct and beneficial owner and
holder of all of the issued and outstanding shares of Capital Stock of the
other Borrowers (except PBY-California), Guarantors and Colchester. PBY, a
wholly-owned subsidiary of Pep Boys is the direct and beneficial owner of
PBY-California. Borrowers and Guarantors share an identity of interests such
that any benefit received by any one of them benefits the others. Borrowers,
Guarantors and the other Subsidiaries render services to or for the benefit of
the other Borrowers and/or Guarantors and other Subsidiaries, as the case may
be, purchase or sell and supply goods to or from or for the benefit of the
others, make loans, advances and provide other financial accommodations to or
for the benefit of the other Borrowers, Guarantors and the other Subsidiaries
(including inter alia, the payment by Borrowers and Guarantors of creditors of
the other Borrowers or Guarantors and guarantees by Borrowers and Guarantors of
indebtedness of the other Borrowers and Guarantors and provide administrative,
marketing, payroll and management services to or for the benefit of the other
Borrowers and Guarantors). Borrowers have centralized accounting and legal
services, and are identified to creditors as a single economic and business
enterprise.
8.13 Capitalization.
(a) All of the issued and outstanding shares of Capital Stock of each
Borrower (other than Pep Boys), Guarantors and Colchester are directly or
indirectly and beneficially owned and held by Pep Boys, and in each case as to
all of such shares have been duly authorized and are fully paid and
non-assessable, free and clear of all claims, liens, pledges and encumbrances
of any kind, except as set forth on the Information Certificate.
(b) Each Borrower and Guarantor is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Agent and
Lenders and the other transaction contemplated hereunder, the amendment and
restatement of the Existing Loan Agreement, and the consummation of the
Synthetic Lease Facility Agreements.
(c) Each Borrower and Guarantor does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information
Certificate.
(d) Each Borrower and Guarantor is the record and beneficial owner of all
of the issued and outstanding shares of Capital Stock of each of the
Subsidiaries listed on Schedule 8.12 to the Information Certificate as being
owned by such Borrower or Guarantor and there are no proxies, irrevocable or
otherwise, with respect to such shares and no equity securities of any of the
Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature
and there are no contracts, commitments, understandings or arrangements by
which any Subsidiary is or may become bound to issue additional shares of its
Capital Stock or securities convertible into or exchangeable for such shares.
8.14 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificate is a list
(including dates of termination) of all collective bargaining or similar
agreements between or applicable to each Borrower and Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of any
Borrower or Guarantor on the date hereof.
(b) There is (i) no significant unfair labor practice complaint pending
against any Borrower or Guarantor or, to the best of any Borrower's or
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against any Borrower or Guarantor or, to best of any
Borrower's or Guarantor=s knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against any
Borrower or Guarantor or, to the best of any Borrower's or Guarantor's
knowledge, threatened against any Borrower or Guarantor.
8.15 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof,
there are no contractual or consensual restrictions on any Borrower or
Guarantor or any of its respective Subsidiaries which prohibit or otherwise
restrict (a) the transfer of cash or other assets (i) between any Borrower or
Guarantor and any of its or their Subsidiaries or (ii) between any Subsidiaries
of any Borrower or Guarantor or (b) the ability of any Borrower or Guarantor or
any of its or their Subsidiaries to incur Indebtedness or grant security
interests to Agent or any Lender in the Collateral.
8.16 Material Contracts. Schedule 8.15 to the Information Certificate sets
forth all Material Contracts to which any Borrower or Guarantor is a party or
is bound as of the date hereof. Borrowers and Guarantors shall update the
Schedule 8.15 to the Information Certificate on an annual basis, no later than
ninety (90) days after the end of each fiscal year of Borrowers, and deliver
true and correct copies of each new Material Contract with such updated
Schedule. Each Borrower and Guarantor has delivered true, correct and complete
copies of such Material Contracts to Lender on or before the date hereof. Each
Borrower and Guarantor is not in breach of or in default under any Material
Contract where such default would have a reasonable likelihood of having a
Material Adverse Effect and has not received any notice of the intention of
any other party thereto to terminate any Material Contract.
8.17 Payable Practices. Each Borrower and Guarantor have not made any
material change in the historical accounts payable practices from those in
effect immediately prior to the date hereof.
8.18 Accuracy and Completeness of Information. All information furnished by
or on behalf of any Borrower or Guarantor in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the
date as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be
expected to have a Material Adverse Effect, which has not been fully and
accurately disclosed to Agent in writing.
8.19 Credit Card Agreements. Set forth in Schedule 8.19 to the Information
Certificate is a correct and complete list of (a) all of the Credit Card
Agreements and all other agreements, documents and instruments existing as of
the date hereof between or among any Borrower, any of its affiliates, the
Credit Card Issuers, the Credit Card Processors and any of their affiliates,
(b) the percentage of each sale payable to the Credit Card Issuer or Credit
Card Processor under the terms of the Credit Card Agreements, (c) all other
fees and charges payable by each Borrower under or in connection with the
Credit Card Agreements and (d) the term of such Credit Card Agreements. The
Credit Card Agreements constitute all of such agreements necessary for each
Borrower to operate its business as presently conducted with respect to credit
cards and debit cards and no Accounts of Borrower arise from purchases by
customers of Inventory with credit cards or debit cards, other than those which
are issued by Credit Card
Issuers with whom any Borrower has entered into one of the Credit Card
Agreements set forth on Schedule 8.19 to the Information Certificate or with
whom each Borrower has entered into a Credit Card Agreement in accordance with
Section 9.19 hereof. Each of the Credit Card Agreements constitutes the legal,
valid and binding obligations of such Borrower and to the best of Borrower's
knowledge, the other parties thereto, enforceable in accordance with their
respective terms and are in full force and effect. No default or event of
default, or act, condition or event which after notice or passage of time or
both, would constitute a default or an event of default under any of the Credit
Card Agreements exists or has occurred and is continuing which would have the
reasonable likelihood of having a Material Adverse Effect. Each Borrower and,
to the best of such Borrower=s knowledge, the other parties thereto have
complied with all of the terms and conditions of the Credit Card Agreements to
the extent necessary for such Borrower to be entitled to receive all payments
thereunder. Each Borrower has delivered, or caused to be delivered to Agent,
true, correct and complete copies of all of the Credit Card Agreements.
8.20 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to
have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower or
Guarantor shall now or hereafter give, or cause to be given, to Agent or any
Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times preserve, renew and keep in full, force and effect
its corporate existence and rights and franchises with respect thereto (other
than pursuant to a merger or liquidation permitted hereunder) and maintain in
full force and effect all Permits, licenses, trademarks, tradenames, approvals,
authorizations, leases and contracts necessary to carry on the business as
presently or proposed to be conducted where the failure to so maintain the same
would have a Material Adverse Effect.
(b) No Borrower or Guarantor shall change its name unless each of
the following conditions is satisfied: (i) Agent shall have received not less
than twenty (20) days prior written notice from Administrative Borrower of such
proposed change in its corporate name, which notice shall accurately set forth
the new name; and (ii) Agent shall have received a copy of the amendment to the
Certificate of Incorporation of such Borrower or Guarantor providing for the
name change certified by the Secretary of State of the jurisdiction of
incorporation or organization of such Borrower or Guarantor as soon as it is
available.
(c) No Borrower or Guarantor shall change its chief executive
office or its mailing address or organizational identification number (or if it
does not have one, shall not acquire one) unless Agent shall have received not
less than thirty (30) days= prior written notice from Administrative Borrower
of such proposed change, which notice shall set forth such information with
respect thereto as Agent may require and Agent shall have received such
agreements as Agent may reasonably require in connection therewith. No
Borrower or Guarantor shall change its type of organization, jurisdiction of
organization or other legal structure.
9.2 New Collateral Locations. Each Borrower and Guarantor may only open
any new location within the continental United States and Puerto Rico provided
such Borrower or Guarantor (a) gives Agent twenty (20) days prior written
notice of the intended opening of any such new location and (b) executes and
delivers, or causes to be executed and delivered, to Agent such agreements,
documents, and instruments as Agent may deem reasonably necessary or desirable
to protect its interests in the Collateral at such location. For purposes
hereof, a "new location" shall mean any location of Collateral other than those
set forth in the Information Certificate.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower and Guarantor shall, and shall cause its
Subsidiaries to, at all times, comply in all material respects with all laws,
rules, regulations, licenses, Permits, approvals and orders of any Governmental
Authority applicable to it, including ERISA, the Code, the Occupational Safety
and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and the rules and regulations thereunder, all Federal, State and local
statutes, regulations, rules and orders relating to consumer credit (including,
without limitation, as each has been amended, the Truth-in-Lending Act, the
Fair Credit Billing Act, the Equal Credit Opportunity Act and the Fair Credit
Reporting Act, and regulations, rules and orders promulgated thereunder), all
Federal, State and local statutes, regulations, rules and orders pertaining to
sales of consumer goods (including, without limitation, the Consumer Products
Safety Act of 1972, as amended, and the Federal Trade Commission Act of 1914,
as amended, and all regulations, rules and orders promulgated thereunder) and
all statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including, without
limitation, all Environmental Laws where the failure to so comply would have a
Material Adverse Effect.
(b) Promptly upon any Borrower=s or Guarantor=s actual knowledge of
the presence of Hazardous Materials in any portion of any Real Property in
concentrations and conditions that constitute an Environmental Violation and
which, in the reasonable opinion of such Borrower or Guarantor, the cost to
undertake any legally required response, clean up, remedial or other action
will or might reasonably result in a cost to any Borrower or Guarantor of more
than $50,000, Borrowers shall notify Agent in writing of such condition. In
the event of any Environmental Violation (regardless of whether notice thereof
must be given), Borrowers shall, not later than thirty (30) days after
Borrowers or Guarantors have actual knowledge of such Environmental Violation,
at their sole cost and expense, promptly and diligently undertake and
diligently complete any response, clean up, remedial or other action (including
without limitation the pursuit by such Borrower or Guarantor of appropriate
action against any off-site or third
party source for contamination) necessary to remove, cleanup or remediate the
Environmental Violation in accordance with all Environmental Laws. Any such
undertaking shall be timely completed in accordance with all applicable
Environmental Laws. Borrowers shall, upon completion of remedial action by
Borrowers or Guarantors, as the case may be, cause to be prepared by a
reputable environmental consultant reasonably acceptable to Agent a report
describing the Environmental Violation and the actions taken by such Borrower
or Guarantor, as the case may be (or their respective agents), in response to
such Environmental Violation, and a statement by the consultant that the
Environmental Violation has been remedied in full compliance with applicable
Environmental Law. At Agent=s request, copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial investigations
shall be promptly furnished, or caused to be furnished, by each Borrower and
Guarantor to Lender.
(c) Promptly, but in any event within ten (10) Business Days from the
date any Borrower or Guarantor has actual knowledge thereof, such Borrower or
Guarantor shall provide to Agent written notice of any pending or threatened
claim, action or proceeding involving any Environmental Law or any Release on
or in connection with any Real Property to the extent the claim, action or
proceeding will or might reasonably result in a cost to any Borrower or
Guarantor of more than $50,000. All such notices shall describe in reasonable
detail the nature of the claim, action or proceeding and such Borrower's or
Guarantor=s proposed response thereto. In addition, Borrowers and Guarantors
shall provide to Lender, within ten (10) Business Days of receipt, copies of
all material written communications with any Governmental Authority relating to
any Environmental Violation in connection with any Real Property. Borrowers
and Guarantors shall also promptly provide such detailed reports of any such
material environmental claims as may reasonably be requested by Agent.
(d) Each Borrower and Guarantor shall indemnify
and hold harmless Agent and each Lender, and their respective directors,
officers, employees, agents, invitees, representatives, successors and assigns,
from and against any and all losses, claims, damages, liabilities, costs, and
expenses (including reasonable attorneys' fees and legal expenses) directly or
indirectly arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
by any Borrower or Guarantor or presence of a Hazardous Material on any Real
Property of any Borrower or Guarantor, including the costs of any required or
necessary repair, cleanup or other remedial work with respect to any property
of a Borrower or Guarantor and the preparation and implementation of any
closure, remedial or other required plans, provided, however, that none of the
Borrowers or Guarantors shall have any obligation under this Section 9.3 with
respect to any and all losses, claims, damages, liabilities, costs or expenses
to the extent resulting from the gross negligence or willful misconduct of
Agent or any Lender, as determined pursuant to a final non-appealable order of
a court of competent jurisdiction, or with respect to any Hazardous Material
either not present, or present in compliance with applicable Environmental
Laws, on the date of payment of the Obligations. The indemnification in this
Section 9.3 shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and
shall cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to such
Borrower, Guarantor or Subsidiary, as the case may be, and with respect to
which adequate reserves have been set aside on its books. Each Borrower and
Guarantor shall be liable for any tax or penalties imposed on Agent or any
Lender as a result of the financing arrangements provided for herein and each
Borrower and Guarantor agrees to indemnify and hold Agent harmless with respect
to the foregoing, and to repay to Agent, for the benefit of Lenders, on demand
the amount thereof, and until paid by such Borrower or Guarantor such amount
shall be added and deemed part of the Loans, provided, that, nothing contained
herein shall be construed to require Borrowers or Guarantors to pay any income
or franchise taxes attributable to the income of Lenders from any amounts
charged or paid hereunder to Lenders. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement.
9.5 Insurance. Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and
all other insurance of the kinds and in the amounts customarily insured against
or carried by corporations of established reputation engaged in the same or
similar businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Each Borrower
and Guarantor shall furnish certificates, policies or endorsements to Agent as
Agent shall reasonably require as proof of such insurance, and, if any Borrower
or Guarantor fails to do so, Agent is authorized, but not required, to obtain
such insurance at the expense of Borrowers. All policies with respect to
Collateral shall provide for at least thirty (30) days prior written notice to
Agent of any cancellation or reduction of coverage and that Agent may act as
attorney for
any Borrower or Guarantor in obtaining such insurance at the expense of
Borrowers, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. Each
Borrower and Guarantor shall cause Agent to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies with respect to Collateral and each Borrower and Guarantor
shall obtain non-contributory lender=s loss payable endorsements to all
insurance policies in form and substance satisfactory to Agent. Such lender's
loss payable endorsements shall specify that the proceeds of such insurance
shall be payable to Agent as its interests may appear and further specify that
Agent and Lenders shall be paid regardless of any act or omission by any
Borrower, Guarantor or any of its or their Affiliates; provided, that, prior to
the occurrence of a Cash Dominion Event such proceeds may be paid to Borrowers.
At its option, Agent may apply any insurance proceeds received by Agent at any
time to the cost of repairs or replacement of Collateral and/or to payment of
the Obligations, whether or not then due, in the order and manner set forth in
Section 6.4 of this Agreement.
9.6 Financial Statements and Other Information.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary
to, keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and
the business of such Borrower, Guarantor and its Subsidiaries in accordance
with GAAP. Borrowers and Guarantors shall promptly furnish to Agent and
Lenders all such financial and other information as Agent shall reasonably
request relating to the Collateral and the assets, business and operations of
Borrowers and Guarantors, and Borrower shall notify the auditors and
accountants of Borrowers and Guarantors that Agent is authorized to obtain such
information directly from them. Without limiting the foregoing, Borrowers and
Guarantors shall furnish or cause to be furnished to Agent (and Agent shall
provide to Lenders), the following: (i) within twenty (20) days after the end
of each fiscal month, a compliance certificate substantially in the form of
Exhibit C hereto, along with a
schedule in form reasonably satisfactory to Agent of the calculations used in
determining, as of the end of such month, (A) whether Borrowers were in
compliance with the covenant set forth in Section 9.17 of this Agreement for
such month and (B) a calculation of the Exempted Debt Limit and Exempted Debt
Availability; and (ii) within forty-five (45) days after the end of each of the
first three fiscal quarters, unaudited consolidated financial statements, and
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders' equity) in form consistent with those statements delivered to
Agent prior to the date hereof, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Pep Boys and its
Subsidiaries as of the end of and through such fiscal quarter, certified to be
correct by the chief financial officer or Vice President-Finance of each of
Borrowers, subject
to normal year-end adjustments, and accompanied by the certificate described in
Section 9.6 (e) hereof, and a compliance certificate substantially in the form
of Exhibit C hereto, along with a schedule in form reasonably satisfactory to
Agent of the calculations used in determining, as of the end of such quarter,
(A) whether Borrowers were in compliance with the covenant set forth in Section
9.18 of this Agreement for such month and the calculations used in determining
the Fixed Charge Coverage Ratio for purposes of determining the Interest Rate
as of the last day of the immediately preceding fiscal quarter and (B) a
calculation of the Exempted Debt Limit and Exempted Debt Availability, and
(iii) within ninety (90) days after the end of each fiscal year, audited
consolidated financial statements and unaudited consolidating financial
statements of Pep Boys and its Subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and the results of the
operations of Pep Boys and its Subsidiaries as of the end of and for such
fiscal year, together with the unqualified (in any material respect) opinion of
independent certified public accountants with respect to the audited
consolidated financial statements, which accountants shall be an independent
accounting firm selected by Borrowers and reasonably acceptable to Agent, that
such audited consolidated financial statements have been prepared in accordance
with GAAP, and present fairly the results of operations and financial condition
of Pep Boys and its Subsidiaries as of the end of and for the fiscal year then
ended.
(b) Borrowers, shall furnish to Agent upon its request, internally
prepared monthly balance sheets, and profit and loss statements.
(c) Borrowers and Guarantors shall promptly notify Agent in
writing of the details of (i) any loss or damage that involves Collateral
having a value in excess of $1,000,000 or which would result in any Material
Adverse Effect, (ii) any action, suit or proceeding relating to Collateral
having a value in excess of $1,000,000, (iii) any Material Contract of a
Borrower or Guarantor being terminated or amended or any new Material Contract
entered into (in which event such Borrower or Guarantor shall provide Lender
with a copy of such Material Contract), (iv) any order, judgment or decree in
excess of $5,000,000 shall have been entered against a Borrower or Guarantor or
any of its properties or assets, (v) any notification of a material violation
of laws or regulations received by a Borrower or Guarantor, (vi) any ERISA
Event, and (vii) the occurrence of any Event of Default or act, condition or
event which, with notice or the passage of time or giving of notice or both,
would constitute an Event of Default.
(d) Borrowers and Guarantors shall promptly after the sending or
filing thereof furnish or cause to be furnished to Agent (which Agent shall
furnish to Lenders) copies of all reports which any Borrower or Guarantor
sends to its stockholders generally and copies of all reports and registration
statements which any Borrower or Guarantor files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(e) Without limiting the rights of Agent under any other provision of
this Agreement, as soon as available, but in any event not later than forty-
five (45) days after the end of each fiscal quarter or more frequently as Agent
may request, but no more frequently than monthly, Borrowers and Guarantors
shall deliver to Agent, in form and reasonably substance satisfactory to Agent,
in each case certified by the chief financial officer or
Vice-President-Finance of Pep Boys as true and correct: (i) a statement
confirming the payment of rent and other amounts due to owners and lessors of
real property used by Borrowers and Guarantors in the immediately preceding
fiscal quarter, subject to year-end or periodic adjustments or setting forth
the amount of such rent or other amounts which have been deferred and remain
payable, (ii) the addresses of all third party or new retail store locations of
Borrowers and Guarantors opened or closed since the date of the most recent
certificate delivered to Agent containing the information required under this
subsection (ii), or if no such certificate has been delivered, then since the
date hereof (and as to store locations closed, such information with respect to
the sale of any assets at such store location as Agent may from time to time
reasonably request), and (iii) a report of any new deposit account, investment
accounts, securities accounts or other accounts established or used by
Borrowers and Guarantors with any bank or other financial institution,
including the Borrower or Guarantor in whose name the account is maintained,
the account number, the name and address of the financial institution at which
such account is maintained, the purpose of such account and, if any, the amounT
held in such account on or about the date of such report.
(f) Borrowers and Guarantors shall furnish or cause
to be furnished to Agent (which Agent shall distribute to Lenders) such
budgets, forecasts, projections and other information respecting the Collateral
and the business of Borrowers and Guarantors, as Agent may, from time to time,
reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrowers and Guarantors to any court or other Governmental Authority or to any
Lender or Participant or prospective Lender or Participant or any Affiliate of
any Lender or Participant. Each Borrower and Guarantor hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Agent, at
Borrowers' expense, copies of the financial statements of any Borrower and
Guarantor and any reports or management letters prepared by such accountants or
auditors on behalf of any Borrower or Guarantor and to disclose to Agent and
Lenders such information as they may have regarding
the business of any Borrower and Guarantor. Any documents, schedules, invoices
or other papers delivered to Agent or any Lender may be destroyed or otherwise
disposed of by Agent or such Lender one (1) year after the same are delivered
to Agent or such Lender, except as otherwise designated by Administrative
Borrower to Agent or such Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower
and Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly,
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, except,
that, any Borrower or Guarantor may merge with and into or consolidate with any
other Borrower or Guarantor, provided, that, each of the following conditions
is satisfied as determined by Agent: (i) Agent shall have received not less
than five (5) days' prior written notice of the consummation of any merger or
consolidation of such Borrower or Guarantor to so merge or consolidate and such
information with respect thereto as Agent may reasonably request, (ii) as of
the effective date of the merger or consolidation and after giving effect
thereto, no Event of Default or Default, shall exist or have occurred, (iii)
Agent shall have received, true, correct and complete copies of all agreements,
documents and instruments relating to such merger, including, but not limited
to, the certificate or certificates of merger as filed with each appropriate
Secretary of State, (iv)
the surviving entity shall, immediately before and immediately after giving
effect to such transaction or series of transactions have a net worth
(including, without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions) equal to or greater than the net worth of such Borrower or
Guarantor involved in such merger immediately prior to such transaction or
series of transactions, (v) the surviving entity shall expressly confirm,
ratify and assume the Obligations and the Financing Agreements to which it is
a party in writing, in form and substance reasonably satisfactory to Agent,
and execute and deliver such other agreements, documents and instruments as
Agent may request in connection therewith, (vi) the surviving entity of a
merger between a Borrower and Guarantor shall be a Borrower, and (vii) each
Borrower and Guarantor shall ratify and confirm that its guarantees of the
Obligations (and in the case of Borrowers, its joint and several liability,
the guarantees of the Obligations of the other Borrowers) shall apply to the
Obligations as assumed by such surviving entity; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of
any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person except, for,
(i) sales of Inventory and rendition of services in the
ordinary course of business,
(ii) the sale or other disposition of Equipment and Real
Property so long as (A) as of the date of such sale and after giving effect
thereto, no Event of Default, or Default shall exist or have occurred, and
(B) in connection with any such sale permitted in accordance with Section 9.20
hereof, subject to the satisfaction of all of the condition set forth in
clause (A) above, and the conditions set forth in such Section,
(iii) the issuance and sale by Pep Boys of its Capital
Stock after the date hereof; provided, that, (A) Pep Boys shall not be required
to pay any cash dividends or repurchase or redeem its Capital Stock or make any
other payments in respect thereof, except to the extent such dividends, or
repurchases or redemptions are otherwise permitted under Section 9.11 hereof,
(B) the terms of such Capital Stock, and the terms and conditions of the
purchase and sale thereof, shall not include any terms that include any
limitation on the right of Borrowers to request or receive Loans or Letter of
Credit Accommodations or the right of Borrowers to amend or modify any of the
terms and conditions of this Agreement or any of the other Financing Agreements
or otherwise in any way relate to or affect the arrangements of Borrowers with
Agent and Lenders or are more restrictive or burdensome to Borrowers than the
terms of any Capital Stock of Pep Boys in effect on the date hereof, (C) so
long as any Cash Dominion Event has occurred and is continuing, any proceeds
payable to Pep Boys in connection with the issuance and sale of its Capital
Stock shall be paid to Agent for application to the Obligations, and (D) as of
the date of such issuance and sale and after giving effect thereto, no Event of
Default or Default shall exist or have occurred and be continuing;
(iv) in addition to the issuance of Capital Stock permitted
in Section 9.7(b)(iii) above, the issuance of Capital Stock of any Borrower or
Guarantor consisting of common stock pursuant to a stock option plan or 401(k)
plan of such Borrower or Guarantor for the benefit of its employees, directors
and consultants, provided, that, in no event shall such Borrower or Guarantor
be required to issue, or shall such Borrower or Guarantor issue, Capital Stock
pursuant to such stock option plan or 401(k) plan which would result in a
Change of Control or other Event of Default; and
(iv) the termination of any Hedge Agreements;
(c) wind up, liquidate or dissolve except that any Subsidiary of a
Borrower or Guarantor (other than a Borrower) may wind up, liquidate and
dissolve, provided, that, each of the following conditions is satisfied, (i)
the winding up, liquidation and dissolution of such Subsidiary shall not
violate any law or any order or decree of any court or other Governmental
Authority in any material respect and shall not conflict with or result in the
breach of, or constitute a default under, any material indenture, mortgage,
deed of trust, or other agreement or instrument to which any Borrower,
Guarantor or such Subsidiary is a party or may be bound, (ii) such winding up,
liquidation or dissolution shall be done in accordance with the requirements
of all applicable laws and regulations, (iii) effective upon such winding up,
liquidation or dissolution, all of the assets and properties of such
Subsidiary shall be duly and validly transferred and assigned to a Borrower,
Guarantor (or in the case of a Subsidiary which is
not a Borrower or Guarantor, to another Subsidiary which is not a Borrower or
Guarantor) free and clear of any liens, restrictions or encumbrances other than
the security interests and liens of Agent or other security interests, liens,
restrictions or encumbrances expressly permitted hereunder (and Agent shall
have received such evidence thereof as Agent may require), (iv) Agent shall
have received copies of all documents and agreements of such Subsidiary to be
filed with any Governmental Authority or otherwise required to effectuate such
winding up, liquidation or dissolution, (v) no Borrower or Guarantor shall
assume any Indebtedness, obligations or liabilities as a result of such winding
up, liquidation or dissolution, or otherwise become liable in respect of any
obligations or liabilities of the Person which is winding up, liquidating or
dissolving, unless such Indebtedness is otherwise expressly permitted
hereunder or such obligations or liabilities are not prohibited under this
Agreement or any of the other Financing Agreements, (vi) Agent shall have
received not less than ten (10) Business Days= prior written notice of the
intention of such Subsidiary to wind up, liquidate or dissolve, (vii) Agent
shall have received copies of such deeds, assignments or other agreements as
Agent may reasonably request to evidence and confirm the transfer of such
assets from the Subsidiary which is liquidating to a Borrower, and (viii) as
of the date of such winding up, liquidation or dissolution and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing; or
(d) agree to do any of the foregoing (unless such agreement has
been consented to in writing by Agent or includes as a condition to the
effectiveness of such agreement that Agent's consent thereto be obtained).
9.8 Encumbrances. (a) Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on any of its assets or properties, including the Collateral,
except:
(i) the security interests and liens of Agent for itself and the
benefit of Lenders and the security interests and liens of Agent for the
benefit of the Affiliate of Agent or other Person that is party to a Hedge
Agreement to the extent provided for herein and subject to the terms hereof;
(ii) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower, or Guarantor or Subsidiary, as the case
may be and with respect to which adequate reserves have been set aside on its
books;
(iii) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of such Borrower's or
Guarantor's business to the extent: (A) such liens secure indebtedness which
is not overdue or (B) such liens secure indebtedness relating to claims or
liabilities which are fully insured (other than the payment by such Borrower
of the deductible with respect to such claim, which deductible/self insurance
retention shall not exceed $250,000) and being defended at the sole cost and
expense and at the sole risk of the insurer or which are being contested in
good faith by appropriate proceedings diligently pursued and available to
such Borrower or Guarantor, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(iv) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of such Borrower, Guarantor or such Subsidiary as presently conducted
thereon or materially impair the value of the Real Property which may be
subject thereto;
(v) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property, in each case, acquired
after the date hereof so long as such security interests and mortgages do not
apply to any property of a Borrower or Guarantor other than the Equipment or
Real Property so acquired, and the Indebtedness secured thereby does not exceed
the cost of the Equipment or Real Property so acquired, as the case may be;
(vi) setoff or credit balances of any Borrower with Credit Card
Issuers, but not liens on or rights of setoff against any other property or
assets of such Borrower pursuant to the Credit Card Agreements (as in effect on
the date hereof) to secure the obligations of such Borrower to the Credit Card
Issuers as a result of fees and chargebacks;
(vii) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
benefits consistent with the current practices of such Borrower or Guarantor as
of the date hereof;
(viii) pledges and deposits of cash by any Borrower or Guarantor
after the date hereof to secure the performance of tenders, bids, leases,
trade contracts (other than for the repayment of Indebtedness), statutory
obligations and other similar obligations in each case in the ordinary course
of business consistent with the current practices of such Borrower or
Guarantor as of the date hereof; provided, that, in connection with any
performance bonds issued by a surety or other person, the issuer of such bond
shall not have any rights in or to, or other interest in, any of the
Collateral;
(ix) liens arising from (A) operating leases and the precautionary
UCC financing statement filings in respect thereof and (B) equipment or other
materials which are not owned by any Borrower or Guarantor located on the
premises of such Borrower or Guarantor (but not in connection with, or as part
of, the financing thereof) from time to time in the ordinary course of business
and consistent with current practices of such Borrower or Guarantor and the
precautionary UCC financing statement filings in respect thereof;
(x) judgments and other similar liens arising in connection with
court proceedings that do not constitute an Event of Default, provided, that,
(A) such liens are being contested in good faith and by appropriate proceedings
diligently pursued, (B) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, and (C) a stay of
enforcement of any such liens is in effect;
(xi) liens and security interests on assets of Borrowers and
Guarantors to secure Indebtedness of Borrowers and Guarantors permitted under
Section 9.9(k) hereof, provided, that, such assets do not constitute
Collateral;
(xii) liens and security interests to secure Indebtedness permitted
under Section 9.9(p);
(xiii) pledges and deposits of cash by any Borrower or Guarantor to
secure payment of the Existing Letter of Credit referred to in Section 9.9(n)
hereof; and
(xiv) liens and security interests on assets of Borrowers and
Guarantors in connection with Synthetic Lease Facility Agreements, provided,
that, liens on the Collateral shall only be permitted so long as Lenders
(or their Affiliates, as provided in Section 14.7(a) hereof) are the sole
holders of the Tranche A Notes (as such term is defined in the Synthetic
Lease Facility Agreements);
(xv) liens and security interests on equipment, real property,
fixtures or goods (but excluding Inventory) of Pep Boys, pursuant to, and
as more particularly described in, the Equipment Term Loan Documents;
(xvi) liens and security interests on Accounts, Inventory and certain
other personal property of the Borrowers and Guarantors pursuant to, and as
more particularly described in, the PNC Credit Card Documents, and subject to
the terms of the Intercreditor Agreement between PNC Bank, National Association
and Agent; and
(xvii) the security interests and liens set forth on Schedule 8.4 to
the Information Certificate.
(b) Notwithstanding anything to the contrary set forth in Sections
9.8(a)(i) through (xvii) above, such liens shall only be permitted (i) to the
extent that such liens are permitted pursuant to Section 1004(a) of the 1998
Senior Note Indenture (as in effect on the date hereof), or if such 1998 Senior
Note Indenture is not in effect, then the equivalent provision in any other Pep
Boys Indenture, then in effect or (ii) to the extent such liens are not
permitted under Section 1004(a) of the 1998 Senior Note Indenture, then only
if the Indebtedness that such liens secure is (A) Exempted Debt, and (B) after
giving effect to the incurrence of such Indebtedness and the lien securing such
Indebtedness, the aggregate amount of outstanding Exempted Debt secured by such
liens does not exceed the Exempted Debt Limit.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) to the
extent incurred or secured by liens (including Capital Leases) permitted under
Section 9.8(a)(v) hereof;
(c) unsecured Indebtedness of a Borrower to any other Borrower
arising after the date hereof pursuant to loans by such Borrower to such other
Borrower to the extent permitted under Section 9.10(c) hereof,
(d) unsecured Indebtedness of a Borrower to any Guarantor arising
after the date hereof pursuant to loans by such Guarantor to such Borrower to
the extent permitted under Section 9.10(f) hereof;
(e) unsecured Indebtedness of a Guarantor or a Subsidiary of any
Guarantor (other than a Borrower) to any Borrower arising after the date hereof
pursuant to loans by such Borrower to such Guarantor to the extent permitted
under Section 9.10(e) hereof,
(f) Indebtedness of any Subsidiary of Pep Boys, other than
Borrowers and Guarantors, provided, that, (i) as to any such Indebtedness,
Borrowers and Guarantors shall not be directly or indirectly liable (by virtue
of such Borrower or Guarantor being the primary obligor on, guarantor of, or
otherwise liable in any respect of such Indebtedness), (ii) the occurrence of
a default with respect thereto shall not result in, or permit any holder of any
Indebtedness of any Borrower or Guarantor to declare a default on Indebtedness
of any Borrower or Guarantor or cause the payment thereof to be accelerated or
payable prior to its stated maturity, and (iii) the aggregate amount of all of
such Indebtedness shall not exceed $15,000,000 at any time outstanding;
(g) Indebtedness of Borrowers, Guarantors or any of their respective
Subsidiaries under swap agreements, cap agreements, collar agreements, exchange
agreements, futures or forward hedging contracts or similar contractual
arrangements intended to protect a Person against fluctuations in interest
rates, currency exchange rates or the price of raw materials and other chemical
products used or produced in the business of any Borrower (other than a Hedge
Agreement as described in Section 9.9(r) hereof); provided, that, such
arrangements are with banks or other financial institutions that have combined
capital and surplus and undivided profits of not less than $250,000,000 and are
not for speculative purposes and such Indebtedness shall be unsecured;
(h) Indebtedness of Borrowers evidenced by or arising under the Pep
Boys Senior Indentures (as in effect on September 22, 2000, except with respect
to the 2002 Senior Note Indenture, as in effect on May 21, 2002), provided,
that:
(i) the aggregate principal amount of such Indebtedness shall
not exceed $501,215,000, less the aggregate amount of all repayments,
repurchases or redemptions thereof from and after such date, whether optional
or mandatory, plus interest thereon at the applicable rates provided in the
Pep Boys Senior Indentures in effect on the date hereof;
(ii) Intentionally Deleted;
(iii) as of the date hereof, the principal amount of such
outstanding Indebtedness under the 1995 Senior Note Indenture is $100,000,000;
(iv) as of the date hereof, the principal amount of such
outstanding Indebtedness under the 1997 Senior Note Indenture is $51,215,000;
(v) as of the date hereof, the principal amount of such
outstanding Indebtedness under the 1998 Senior Note Indenture is $200,000,000;
(vi) as of the date hereof, the principal amount of such
outstanding Indebtedness under the 2002 Senior Note Indenture is $150,000,000;
(vii) as of the date hereof, and after giving effect to the
Synthetic Lease Facility Agreements, no default or event of default, or act,
condition or event which with notice or passage of time or both would
constitute an event of default exists or has occurred and is continuing under
any of the Pep Boys Senior Indentures;
(viii) such Indebtedness is and shall remain unsecured;
(ix) Borrowers shall not, directly or indirectly, make, or be
required to make, any payments in respect of such Indebtedness, except, that,
Borrowers may make regularly scheduled payments of principal, interest and
fees, on an unaccelerated basis, in respect of such Indebtedness in accordance
with the terms of the Pep Boys Senior Indentures as in effect on September 22,
2000, except in the case of the 2002 Senior Note Indenture which shall be as in
effect on May 21, 2002, and payments as otherwise permitted pursuant to Section
9.9(h)(x)(B);
(x) Borrowers shall not, directly or indirectly, (A)
amend, modify, alter or change any of the material terms of such Indebtedness
or any of the Pep Boys Senior Indentures as in effect on September 22, 2000,
except in the case of the 2002 Senior Note Indenture as in effect on May 21,
2002, except, that, Borrowers may, after prior written notice to Agent, amend,
modify,alter or change the terms thereof so as to extend the maturity thereof
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness other than pursuant to payments thereof, or to
reduce the interest rate or any fees in connection therewith, or to make the
provisions thereof less restrictive or burdensome than the terms or conditions
of the Pep Boys Senior Indentures as in effect on the date hereof, or (B) make
optional prepayments of principal or redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose except that Borrowers may make optional
prepayments of principal or redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, provided, that, each of the following conditions is
satisfied as determined by Agent: (1) as of the date of such payment and after
giving effect thereto, Excess Availability for each of the immediately
preceding thirty (30) consecutive days shall have been not less than
$25,000,000, and as of the date of such payment and after giving effect
thereto, the Excess Availability shall be not less than $25,000,000 and (2) as
of the date of such payment and after giving effect thereto, no Default or
Event of Default shall exist or be continuing, and, except that Pep Boys may
redeem or retire such Indebtedness with proceeds of Refinancing Indebtedness
with respect thereto as permitted in Section 9.9(l) hereof, and
(xi) Borrowers shall furnish to Agent all notices or demands
in connection with such Indebtedness either received by any Borrower or
Guarantor or on its behalf promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its behalf concurrently with the sending thereof,
as the case may be.
(i) Indebtedness of Pep Boys evidenced by or arising under the Pep
Boys Subordinated Indentures (as in effect on the date hereof), provided, that:
(i) the aggregate principal amount of such Indebtedness
shall not exceed $271,000,000, less the aggregate amount of all repayments,
repurchases or redemptions thereof, whether optional or mandatory, plus
interest thereon at the applicable rates provided in the Pep Boys
Subordinated Indentures in effect on the date hereof,
(ii) as of the date hereof, the principal amount of such
outstanding Indebtedness under the 1998 Subordinated Indenture is $-0-,
(iii) as of the date hereof, the principal amount of such
outstanding Indebtedness under the 1997 Subordinated Indenture is $-0-,
(iv) at maturity, the principal amount of such outstanding
Indebtedness under the XXXXX Indenture will be $-0-,
(v) as of the date hereof, no default or event of default,
or act, condition or event which with notice or passage of time or both would
constitute an event of default exists or has occurred and is continuing under
any of the Pep Boys Subordinated Indentures;
(vi) such Indebtedness is and shall remain unsecured;
(vii) such Indebtedness is, in all respects, subject to, and
subordinate in right of payment to, the right of Agent and Lenders to receive
the prior indefeasible payment and satisfaction in full of all of the
Obligations;
(viii) the Obligations shall at all times constitute "Senior
Indebtedness" as such term is defined in each Pep Boys Subordinated Indenture
and shall be entitled to all of the rights and benefits of Senior Indebtedness
under the terms of such Pep Boys Subordinated Indentures;
(ix) Pep Boys shall not, directly or indirectly, make, or be
required to make, any payments in respect of such Indebtedness, except, that,
Pep Boys may make regularly scheduled payments of interest, on an unaccelerated
basis, in respect of such Indebtedness in accordance with the terms of the Pep
Boys Subordinated Indentures as in effect on the date hereof and payments
otherwise permitted pursuant to Section 9.9(i)(x)(B);
(x) Borrowers shall not, directly or indirectly, (A)
amend, modify, alter or change any of the material terms of such Indebtedness
or any of the Pep Boys Subordinated Indentures as in effect on the date
hereof, except, that, Borrowers may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness other than pursuant to payments
thereof, or to reduce the interest rate or any fees in connection therewith,
or to make the provisions thereof less restrictive or burdensome than the terms
or conditions of the Pep Boys Subordinated Indentures as in effect on the date
hereof, or (B) make optional prepayments of principal or redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, except, that, Borrowers
may make optional prepayments of principal or redeem, retire, defease, purchase
or otherwise acquire such Indebtedness, provided, that, as to any such payment
each of the following conditions is satisfied as determined by Agent: (1) as of
the date of such payment and after giving effect thereto, Excess Availability
for each of the immediately preceding thirty (30) consecutive days shall have
been not less than $25,000,000, and as of the date of such payment and after
giving effect thereto, the Excess Availability shall be not less than
$25,000,000 and (2) as of the date of such payment and after giving effect
thereto, no Default or Event of Default shall exist or be continuing, and,
except that Pep Boys may redeem or retire such Indebtedness with proceeds of
Refinancing Indebtedness with respect thereto as permitted in this Section
9.9(l) hereof, and
(xi) Borrowers shall furnish to Agent all notices or demands
in connection with such Indebtedness either received by any Borrower or
Guarantor or on its behalf promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its behalf concurrently with the sending thereof,
as the case may be;
(j) the Indebtedness of Borrowers, Guarantors and their Subsidiaries set
forth on Schedule 9.9 to the Information Certificate; provided, that, (i)
except as otherwise provided in clauses (ii) and (iv) below, the Borrower,
Guarantor or Subsidiary obligated on such Indebtedness may only make regularly
scheduled or other mandatory payments of principal and interest in respect of
such Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date hereof,
(ii) such Borrower, Guarantor or Subsidiary obligated on such Indebtedness may
make optional prepayments in respect of such Indebtedness, provided, that, each
of the following conditions is satisfied as determined by Agent: (A) as of the
date of such payment and after giving effect thereto, Excess Availability for
each of the immediately preceding thirty (30) consecutive days shall have been
not less than $25,000,000, and as of the date of such payment and after giving
effect
thereto, Excess Availability shall be not less than $25,000,000, and (B) as of
the date of such payment and after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing, (iii) such Borrower,
Guarantor or Subsidiary shall not amend, modify, alter or change the terms of
such Indebtedness or any agreement, document or instrument related thereto as
in effect on the date hereof except, that, such Borrower, Guarantor or
Subsidiary, as the case may be, may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith,
or to make the provisions thereof less restrictive or burdensome than the
terms or conditions of such Indebtedness as in effect on the date hereof,
(iv) such Borrower, Guarantor or Subsidiary shall not, directly or indirectly,
redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or
set aside or otherwise deposit or invest any sums for such purpose (except as
expressly required pursuant to the terms thereof, or with proceeds of any
Refinancing Indebtedness permitted hereunder), and (v) Borrowers and Guarantors
shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by a Borrower, Guarantor, or Subsidiary or on its
behalf, promptly after the receipt thereof, or sent by a Borrower, Guarantor,
Subsidiary or on its behalf, concurrently with the sending thereof, as the case
may be;
(k) Indebtedness of any Borrower or Guarantor for borrowed money (other than
Indebtedness permitted under Sections 9.9(a) through (j) and (l) through (s)
hereof), arising after the date hereof owing to any person (other than to a
Borrower, Guaranty or Subsidiary) in an aggregate amount not to exceed
$50,000,000 at any time outstanding for all Borrowers and Guarantors; provided,
that, as to each and all of such indebtedness: (i) Agent shall have received
not less than ten (10) Business Days prior written notice of the intention to
incur such indebtedness, which notice shall set forth in reasonable detail
satisfactory to Agent, the person to whom such indebtedness will be owed and
the anticipated interest rate, schedule of repayments and maturity date with
respect thereto and such other information with respect thereto as Agent may
request, (ii) Agent shall have received true, correct and complete copies of
all agreements, documents and instruments evidencing or otherwise related to
such indebtedness, as duly
authorized, executed and delivered by the parties thereto, (iii) such
indebtedness shall be incurred by such Borrower at commercially reasonable
rates and terms in a bona fide arms' length transaction, (iv) if any of such
indebtedness is to be secured by any assets of such Borrower, then (A) the
security interests and liens on the assets of Borrower in favor of such person
to secure such indebtedness shall not be on any of the Collateral, and (B)
Agent shall have received, in form and substance satisfactory to Agent, if
required by Agent, in good faith, a Collateral Access Agreement executed by
such Person in favor of Agent, (v) such indebtedness shall not at any time
include terms and conditions which in any manner adversely affect Agent or
any rights of Agent as determined in good faith by Agent and confirmed by
Agent to Borrower in writing, (vi) as of the date of incurring such
indebtedness and after giving effect thereto, no Event of Default shall exist
or have occurred, (vii) Borrower may only make
regularly scheduled payments of principal and interest in respect of such
indebtedness, (viii) Borrower shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of the agreements with respect to such
indebtedness, except, that, Borrower may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof or defer the timing of any payments in respect thereof, or to forgive
or cancel a portion of such indebtedness (other than pursuant to payments
thereof), or to release any liens or security interests in any assets of
Borrower which secure such indebtedness (if any), or to reduce the rate or any
fees in connection therewith, or to make any covenants contained therein less
restrictive or burdensome as to Borrower or otherwise more favorable to
Borrower (as determined in good faith by Agent), or (B) redeem, retire,
defease, purchase or otherwise acquire such indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (ix) Borrower shall
furnish to Agent all notices or demands in connection with such indebtedness
either received by Borrower or on its behalf promptly after the receipt
thereof, or sent by Borrower on its behalf, concurrently with the sending
thereof, as the case may be;
(l) Indebtedness issued in exchange for, or the proceeds of which are used
to extend, refinance, replace or substitute for, Indebtedness permitted under
Section 9.9(b), Section 9.9(h), Section 9.9(i), Section 9.9(f), Section 9.9(j)
or Section 9.9(k) hereof (the "Refinancing Indebtedness"); provided, that, as
to any such Refinancing Indebtedness, each of the following conditions is
satisfied: (i) Agent shall have received not less than ten (10) Business Days'
prior written notice of the intention to incur such Indebtedness, which notice
shall set forth in reasonable detail satisfactory to Agent, the anticipated
amount of such Indebtedness, the schedule of repayments and maturity date with
respect thereto and such other information with respect thereto as Agent may
request, (ii) promptly upon Agent's request, Agent shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, as duly authorized,
executed and delivered
by the parties thereto, (iii) such Indebtedness incurred by any Borrower
or Guarantor shall be at rates and with fees or other charges no higher or
greater than the prevailing market rates of interest, charges and fees at the
time of incurrence of such Refinancing Indebtedness, (iv) the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity and a final
maturity equal to or greater than the Weighted Average Life to Maturity and the
final maturity, respectively, of the Indebtedness being extended, refinanced,
replaced, or substituted for, (v) as of the date of incurring such Indebtedness
and after giving effect thereto, no Event of Default shall exist or have
occurred and be continuing, (vi) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of and interest on the
Indebtedness so extended, refinanced, replaced or substituted for (plus the
amount of reasonable refinancing fees and expenses incurred in connection
therewith), (vii) the Refinancing
Indebtedness shall be subject to the same restrictions set forth in this
Agreement as the Indebtedness so refinanced, (vii) the Refinancing
Indebtedness may be secured by assets other than Collateral, and Agent shall
have received, if required by Agent in form and substance satisfactory to Agent
a Collateral Access Agreement executed by such Person in favor of Agent, (viii)
the Refinancing Indebtedness shall not at any time include any terms that
include any limitation on the right of Borrowers to request or receive Loans or
Letter of Credit Accommodations or the right of Borrowers or Guarantors to
amend, modify, supplement, replace, renew or extend any of the terms or
conditions of this Agreement, any of the other Financing Agreements, the
Synthetic Lease Facility Agreements or otherwise in any way adversely affect
the arrangements of Borrowers and Guarantors with Agent and Lenders and such
Refinancing Indebtedness shall not at any time include terms and conditions
which in any manner adversely affect
Agent or any rights of Agent and Lenders as determined by Agent in good faith,
(ix) Borrowers and Guarantors shall not, directly or indirectly, (A) amend,
modify, alter or change in any material respect the terms of the agreements
with respect to such Indebtedness, except, that, Borrowers and Guarantors may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or to make the provisions
thereof less restrictive or burdensome as to Borrowers or Guarantors, or (B)
redeem, retire, defease, purchase or otherwise acquired such Indebtedness, or
set aside or otherwise deposit or invest any sums for such purpose, except as
expressly required pursuant to the terms thereof or pursuant to regularly
scheduled payments permitted herein or with the proceeds of any other
Refinancing Indebtedness permitted hereunder, and (x) Borrowers and Guarantors
shall furnish to Agent all notices or demands in connection with such
Indebtedness received by any Borrower or Guarantor or on its behalf promptly
after the receipt thereof, or sent by any Borrower or Guarantor, concurrently
with the sending thereof, as the case may be;
(m) Indebtedness to the extent incurred or secured by pledges and deposits of
cash permitted under Section 9.8(a)(viii) hereof;
(n) Intentionally deleted;
(o) Indebtedness of Pep Boys owing to Colchester evidenced by a Demand
Promissory Note, dated March 2, 1995, provided, that:
(i) as of July 5, 2005, the principal amount of such outstanding
Indebtedness is $78,345,863.12;
(ii) such Indebtedness is and shall remain unsecured;
(iii) Borrowers or Guarantors shall not, directly or indirectly, make,
or be required to make, any payments in respect of such Indebtedness, except,
that, Borrowers may make (A) payments of principal in an amount equal to (1)
the amounts of insurance claims that Colchester is then required to pay on
behalf of the insurance policies issued by it for which it does not have funds,
and (2) the amount of any insurance premiums then due and payable by Pep Boys
to Colchester, and (B) regularly scheduled payments of interest, on an
unaccelerated basis, in respect of such Indebtedness;
(iv) Borrowers shall not, directly or indirectly, (A) amend, modify,
alter or change any of the material terms of such Indebtedness, except, that,
Borrowers may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness other than pursuant to payments thereof, or to reduce the
interest rate in connection therewith, and
(v) Borrowers shall furnish to Agent all notices or demands in
connection with such Indebtedness either received by any Borrower or Guarantor
or on its behalf promptly after the receipt thereof, or sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;
(p) Indebtedness of any Borrower for borrowed money (other than Indebtedness
permitted under Sections 9.9(b) and (l) hereof) arising after September 22,
2000 owing to any person, arising in connection with the financing of assets
(other than Collateral) of such Borrower purchased by such Borrower for cash no
more than 360 days prior to the date of the incurrence of such Indebtedness;
provided, that, as to each and all of such indebtedness: (i) Agent shall have
received not less than ten (10) Business Days prior written notice of the
intention to incur such indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent, the person to whom such
indebtedness will be owed, the anticipated amount of such indebtedness,
interest rate, schedule of repayments and maturity date with respect thereto
and such other information with respect thereto as Agent may request, (ii)
Agent shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or
otherwise related to such indebtedness, as duly authorized, executed and
delivered by the parties thereto, (iii) such indebtedness shall be incurred by
such Borrower at commercially reasonable rates and terms in a bona fide arms'
length transaction, (iv) (A) security interests and mortgages do not apply to
Collateral or to any other property of such Borrower other than the property
so acquired, and the Indebtedness secured thereby does not exceed the cost of
the asset, as the case may be, and (B) Agent shall have received, in form and
substance satisfactory to Agent, if required by Agent, in good faith, a
Collateral Access Agreement executed by such Person in favor of Agent, (v) such
indebtedness shall not at any time include terms and conditions which in any
manner adversely affect Agent or any rights of Agent as determined in good
faith by Agent and confirmed by Agent to Borrower in writing, (vi) as of the
date of incurring such indebtedness and after giving effect thereto, no Event
of Default shall exist
or have occurred, (vii) Borrower may only make regularly scheduled payments of
principal and interest in respect of such indebtedness, (viii) Borrower shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
the agreements with respect to such indebtedness, except, that, Borrower may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any
payments in respect thereof, or to forgive or cancel a portion of such
indebtedness (other than pursuant to payments thereof), or to release any liens
or security interests in any assets of Borrower which secure such indebtedness
(if any), or to reduce the rate or any fees in connection therewith, or (B)
redeem, retire, defease, purchase or otherwise acquire such indebtedness, or
set aside or otherwise deposit or invest any sums for such purpose, and (ix)
Borrower shall furnish to Agent all notices or demands in connection with such
indebtedness either received by Borrower or on its behalf promptly after the
receipt thereof, or sent by Borrower on its behalf, concurrently with the
sending thereof, as the case may be.
(q) Indebtedness of Pep Boys evidenced by or arising under the Equipment Term
Loan Documents (as in effect on June 29, 2001), provided, that:
(i) the principal amount of such Indebtedness shall not exceed
$90,000,000, less the aggregate amount of all repayments, repurchases or
redemptions thereof, whether optional or mandatory, plus interest thereon at
the rate provided in the Equipment Term Loan Documents as in effect on
June 29, 2001,
(ii) Pep Boys shall not, directly or indirectly, make, or be required
to make, any payments in respect of such Indebtedness, except, that, Pep Boys
may make regularly scheduled payments of principal and interest, in respect
of such Indebtedness in accordance with the terms of the Equipment Term Loan
Documents as in effect on June 29, 2001 and payments otherwise permitted
pursuant to Section 9.9(q)(iii)(B) hereof;
(iii) Borrowers shall not, directly or indirectly, (A)
amend, modify, alter or change any of the material terms of such Indebtedness
or any of the Equipment Term Loan Documents as in effect on June 29, 2001,
except, that, Borrowers may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof as permitted in Section 2.7(b) of
the Intercreditor Agreement, dated June 29, 2001, by and between Agent and GMAC
Business Credit, LLC, as such agreement is in effect on the date hereof, or (B)
make optional prepayments of principal or redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, except, that, Borrowers may only make
optional prepayments of principal or redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, provided, that, as to any such payment
each of the following conditions is satisfied as determined by Agent: (1) as of
the date of such payment and after giving effect thereto, Excess Availability
for each of the immediately preceding thirty (30) consecutive days shall have
been not less than $25,000,000, and as of the date of such payment and after
giving effect thereto, the Excess Availability shall be not less than
$25,000,000 and (2) as of the date of such payment and after giving effect
thereto, no Default or Event of Default shall exist or be continuing, and,
except that Pep Boys may redeem or retire such Indebtedness with proceeds of
Refinancing Indebtedness with respect thereto as permitted in Section 9.9(l)
hereof,
(r) Indebtedness of any Borrower or Guarantor entered into in the ordinary
course of business pursuant to a Hedge Agreement; provided, that, (i) such
arrangements are either with an Affiliate of Agent or other financial
institutions reasonably acceptable to Agent, (ii) such arrangements are not for
speculative purposes, and (iii) such Indebtedness shall be unsecured, except as
to obligations under such Hedge Agreements, to the extent of the security
interest of Agent in the Collateral as provided herein; and
(s) Indebtedness of Pep Boys evidenced by or arising under the PNC Credit Card
Documents (as in effect on December 13, 2001), provided, that:
(i) the principal amount of such Indebtedness shall not exceed $2,500,000 at
any time, plus interest thereon and fees with respect thereto at the rates
provided in PNC Credit Card Documents (as in effect on December 13, 2001),
(ii) Pep Boys shall not, directly or indirectly, make, or be required to make,
any payments in respect of such Indebtedness, except, that, Pep Boys may make
regularly scheduled payments of principal and interest, in respect of such
Indebtedness in accordance with the terms of the PNC Credit Card Documents
(as in effect on December 13, 2001) and payments otherwise permitted pursuant
to Section 9.9(s)(iii)(B) hereof;
(iii) Borrowers shall not, directly or indirectly, (A) amend, modify, alter or
change any of the material terms of such Indebtedness or any of the PNC Credit
Card Documents (as in effect on December 13, 2001), except, that, Borrowers
may, after prior written notice to Agent, amend, modify, alter or change the
terms thereof as permitted in accordance with Section 3.1(b) of the
Intercreditor Agreement, dated December 31, 2001, by and between Agent and PNC
Bank, National Association, as such agreement is in effect on the date hereof
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness other than pursuant to payments thereof, or to
reduce the interest rate or any fees in connection therewith, or to make the
provisions thereof less restrictive or burdensome than the terms or conditions
of the PNC Credit Card Documents (as in effect on December 13, 2001), or (B)
make optional prepayments of principal or redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, except, that, Borrowers may make optional
prepayments of principal or redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, provided, that, as to any such payment each of the
following conditions is satisfied as determined by Agent: (1) as of the date of
such payment and after giving effect thereto, Excess Availability for each of
the immediately preceding thirty (30) consecutive days shall have been not less
than $25,000,000, and as of the date of such payment and after giving effect
thereto, the Excess Availability shall be not less than $25,000,000 and (2) as
of the date of such payment and after giving effect thereto, no Default or
Event of Default shall exist or be continuing, and, except that Pep Boys may
redeem or retire such Indebtedness with proceeds of Refinancing Indebtedness
with respect thereto as permitted in Section 9.9(l) hereof.
9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the Capital Stock or
Indebtedness or all or a substantial part of the assets or property of any
person, or guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly), the Indebtedness, performance, obligations or
dividends of any other Person or form or acquire any Subsidiaries, or agree to
do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, as to
any of the foregoing, unless waived in writing by Agent, each Borrower,
Guarantor or Subsidiary, as the case may be, shall take such actions as are
deemed necessary by Agent to perfect the security interest of Agent in such
investments, except that, each Borrower, Guarantor or Subsidiary, as the case
may be, may make investments of the cash proceeds of any sale of its property
(to the extent such disposition is permitted herein) other than Collateral,
without taking actions to perfect the security interests of Agent in such
investments;
(c) loans by a Borrower to any other Borrower after the date
hereof, provided, that, as to any such loan, (i) each month Borrowers shall
provide to Agent a report in form and substance reasonably satisfactory to
Agent of the outstanding amount of such loans as of the last day of the
immediately preceding month and indicating any loans made and payments received
during the immediately preceding month, (ii) the Indebtedness arising pursuant
to any such loan shall not be evidenced by a promissory note or other
instrument, unless the single original of such note or other instrument is
delivered to Agent to hold as part of the Collateral, with such endorsement
and/or assignment by the payee of such note or other instrument as Agent may
require, (iii) as of the date of any such loan and after giving effect thereto,
the Borrower making such loan shall be Solvent; and (iv) as of the date of any
such loan and after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing;
(d) any guaranties by any Borrower or Guarantor or other assumptions
or endorsements of Indebtedness constituting permitted Indebtedness under
Section 9.9 hereof;
(e) loans by a Guarantor (or a Subsidiary of a Guarantor or
a Borrower other than a Borrower) to a Borrower after the date hereof,
provided, that, as to any such loan (i) the Indebtedness arising pursuant to
such loan shall be subject to, and subordinate in right of payment to, the
right of Agent to receive the prior final payment and satisfaction in full of
all of the Obligations on terms and conditions acceptable to Agent, (ii) Agent
shall have received, in form and substance satisfactory to Agent, a
subordination agreement providing for the terms of the subordination in right
of payment of such Indebtedness of such Borrower to the prior final payment and
satisfaction in full of all of the Obligations, duly authorized, executed and
delivered by such Guarantor or Subsidiary (as the case may be) and such
Borrower, (iii) such Borrower shall not, directly or indirectly make, or be
required to make, any payments in respect of such Indebtedness, (iv) each
month Borrowers shall provide to Agent a report in form and substance
satisfactory to Agent of the outstanding amount of such loans as of the last
day of the immediately preceding month and indicating any loans made and
payments received during the immediately preceding month, and (v) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is delivered to Agent to hold as part of the Collateral, with
such endorsement and/or assignment by the payee of such note or other
instrument as Agent may require;
(f) loans by a Borrower to a Guarantor; provided, that, as to any
such loan, (i) each month Borrowers shall provide to Agent a report in form and
substance satisfactory to Agent of the outstanding amount of such loans as of
the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (ii) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is delivered to Agent to hold as part of the Collateral, with
such endorsement and/or assignment by the payee of such note or other
instrument as Agent may require, and (iii) as of the date of the making of such
loan and after giving effect thereto, the Borrower making such loan shall be
Solvent;
(g) the formation or acquisition by a Borrower or Guarantor after
the date hereof of one or more Subsidiaries incorporated or organized under the
laws of any State of the United States of America; provided, that: (i) such
Borrower or Guarantor (as the case may be) shall cause any such Subsidiary to
execute and deliver to Agent, in form and substance satisfactory to Agent, (A)
an absolute and unconditional guarantee of payment of the Obligations, (B) a
security agreement granting to Agent for itself and the ratable benefit of
Lenders a first security interest and lien (except as otherwise consented to in
writing by Agent) upon property of any such Subsidiary constituting the same
items or types of property set forth in Section 5 hereof, (C) related UCC
financing statements, and (D) such other agreements, documents and instruments
as Agent may require, including, but not limited to, supplements and amendments
hereto and other loan agreements or instruments evidencing Indebtedness of such
new Subsidiaries to
Agent, (ii) the Subsidiary formed or acquired shall be engaged in a business
related, ancillary or complimentary to the businesses of Borrowers as conducted
on the date hereof, (iii) in the case of loans and advances, the original of
any promissory note or other instrument evidencing the Indebtedness arising
pursuant to such loans and advances shall be delivered, or caused to be
delivered, to Agent, at Agent's option, together with an appropriate
endorsement and with full recourse to the payee thereof, and (iv) Agent shall
have received (A) not less than ten (10) Business Days= prior written notice of
the formation or acquisition of any such Subsidiary and such information with
respect thereto as Agent may request, and (B) true, correct and complete copies
of all agreements, documents and instruments relating thereto and (v) as of
the date of any such loan, advance, capital contribution or other investment or
payment, no Default or Event of Default shall exist or have occurred and be
continuing;
(h) the existing equity investments of Borrowers, Guarantors and
their Subsidiaries as of the date hereof in their respective Subsidiaries,
provided, that, Borrowers and Guarantors shall have no further obligations or
liabilities to make any capital contributions or other additional investments
or other payments to or in or for the benefit of any of such Subsidiaries;
(i) stock or obligations issued to any Borrower, Guarantor or any
of their respective Subsidiaries by any Person (or the representative of such
Person) in respect of Indebtedness of such Person owing to any Borrower or
Subsidiary in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided, that, prior to an Event of Default, if the amount or
value thereof is greater than $100,000, or the amount or value of all of such
stock and instruments in the aggregate is greater than $250,000, and after an
Event of Default, regardless of the amount or value thereof, the original of
any such stock or instrument evidencing such obligations to a Borrower,
Guarantor or any Subsidiary shall be promptly delivered to Agent, upon Agent's
request, together with such stock power, assignment or endorsement by such
Borrower or as Agent may request;
(j) obligations of account debtors to any Borrower, Guarantor or
Subsidiaries arising from Accounts which are past due provided, that, such
Borrower, Guarantor or Subsidiary, as the case may be, uses its best efforts to
evidence such obligations, to the extent such obligations exceed $100,000, with
a promissory note made by such account debtor payable to such Borrower or
Subsidiary, as the case may be; provided, that, prior to an Event of Default,
if the amount of such note is greater than $100,000, or the amount of all of
such notes in the aggregate is greater than $250,000, and after an Event of
Default, regardless of the amount thereof, promptly upon the receipt of the
original of any such promissory note by a Borrower to a Borrower, Guarantor or
any Subsidiary such promissory note shall be endorsed to the order of Agent by
such Borrower to a Borrower, Guarantor or any Subsidiary and promptly delivered
to Agent as so endorsed;
(k) loans or advances by any Borrower, Guarantor or any of their
respective Subsidiaries to any of its employees, after the date hereof, not to
exceed the principal amount of $1,000,000 in the aggregate at any time
outstanding in the ordinary course of such Borrower's, Guarantor's or
Subsidiary's business for reasonable and necessary work-related travel and
other ordinary business expenses to be incurred by such employees in
connection with their employment with such Borrower, Guarantor or Subsidiary,
as the case may be;
(l) any investments of any Borrower, Guarantor or any of their
respective Subsidiaries in (i) Hedge Agreements permitted under Section 9.9(r)
hereof and (ii) swap agreements, cap agreements, collar agreements, exchange
agreements futures or forward hedging contracts or similar contractual
arrangements intended to protect a Person against fluctuations in interest
rates, currency exchange rates or the price of raw materials and other chemical
products used or produced in the business of any Borrower; provided, that, with
respect to the arrangements described in clause (ii) hereof, such arrangements
are with banks or other financial institutions that have combined capital and
surplus and undivided profits of not less than $250,000,000 and are not for
speculative purposes and are unsecured;
(m) loans by any Subsidiary of Pep Boys (other than a Borrower or
Guarantor) to any other Subsidiary of Pep Boys (other than a Borrower or
Guarantor);
(n) the existing loans, advances and guarantees set forth on
Schedule 9.10 to the Information Certificate, provided, that, as to such loans,
advances and guarantees, (i) Borrowers, Guarantors, or their respective
Subsidiaries, as the case may be, shall not, directly or indirectly, (A)
amend, modify, alter or change in any material respect the terms of such loans,
advances or guarantees or any agreement, document or instrument related
thereto, except, that, such Borrower, Guarantor or Subsidiary, as the case may
be, after prior written notice to Agent, amend, modify, alter or change the
terms thereof so as to extend the maturity thereof or defer the timing of any
payments in respect thereof, or to forgive or cancel a portion of such
indebtedness (other than pursuant to payments thereof), or to release any
liens or security interests in any assets of Borrower which secure such
indebtedness (if any), or to reduce the rate or any fees in connection
therewith, or to make any covenants contained therein less restrictive or
burdensome as to Borrower or otherwise more favorable to Borrower, Guarantor
or Subsidiary, as the case may be, (as determined in good faith by Agent), or
(B) as to such guarantees, redeem, retire, defease, purchase or otherwise
acquire such guarantee or set aside or otherwise deposit or invest any sums
for such purpose (except as expressly required pursuant to the terms thereof or
pursuant to regularly scheduled payments permitted herein) and (ii) Borrowers
and Guarantors shall furnish to Agent all notices or demands in connection with
such loans, advances or guarantees either received by a Borrower, Guarantor or
Subsidiary on its behalf, promptly after the receipt thereof, or sent by a
Borrower, Guarantor or Subsidiary on its behalf, concurrently with the sending
thereof, as the case may be;
(o) investments (including, without limitation, any loan, advance,
capital contribution or other investment or payment) in joint ventures or other
Persons (each a "Business Enterprise") by Pep Boys for the purpose of
development, creation and operation of an internet business; provided, that:
(i) each such Business Enterprise is entered into with a Person who is not an
Affiliate, (ii) the Business Enterprise shall be engaged in a business related,
ancillary or complimentary to the businesses of Borrowers as conducted on the
date hereof, (iii) Agent shall have received (A) (1) in the event the initial
investment (whether characterized by loans, capital contributions, letters of
credit or otherwise) in the Business Enterprise is not in excess of $5,000,000,
not more than two (2) Business Days= written notice after the date of such
investment, and such other information with respect thereto as Agent may
reasonably request, or (2) in the event such initial investment is to be equal
to or greater than
$5,000,000, not less than ten (10) Business Days prior written notice of such
investment in such Business Enterprise, and such other information with
respect thereto as Agent may reasonably request and (B) true, correct and
complete copies of all agreements, documents and instruments relating thereto,
(iv) in the case of loans and advances, the original of any promissory note
or other instrument evidencing the Indebtedness arising pursuant to such loans
and advances shall be delivered, or caused to be delivered, to Agent, at
Agent's option, together with an appropriate endorsement and with full recourse
to the payee thereof, (v) so long as a Cash Dominion Event is continuing, in no
event shall the total amount of investments made by Pep Boys in all such
Business Enterprises be in excess of $15,000,000 in each fiscal year, (vi) the
total amount of all such investments in such Business Enterprises shall not
exceed $50,000,000 in the aggregate at any time, and (vii) Agent shall receive
a monthly report in form and substance satisfactory to Agent of the amount of
such investment and such other information with respect thereto as Agent may
reasonably request and (viii) as of the date of any such loan, advance, capital
contribution or other investment or payment, no Default or Event of Default
shall exist or have occurred and be continuing;
(p) the existing loans by Pep Boys to the Flexi-Trust, pursuant to the
terms and conditions of the Flexi-Trust Agreement in effect on the date hereof;
(q) repurchases and redemptions of Capital Stock permitted pursuant to
Section 9.11(c);
(r) the loans and advances set forth on Schedule 9.10 to the
Information Certificate; provided, that, as to such loans and advances,
Borrowers and Guarantors shall not, directly or indirectly, amend, modify,
alter or change the terms of such loans and advances or any agreement,
document or instrument related thereto and Borrowers and Guarantors shall
furnish to Agent all notices or demands in connection with such loans and
advances either received by any Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf, concurrently with the sending thereof, as the case may be; and
(s) Indebtedness of The Pep Boys Xxxxx Xxx & Xxxx of California and Pep
Boys-Manny, Moe & Xxxx of Delaware, Inc. under the Guaranty, dated as of June
29, 2001, as in effect on such date, in favor of the Equipment Term Loan Agent,
guaranteeing the obligations of Pep Boys, provided, that, all of the conditions
set forth in Sections 9.10(n)(i) and (ii) are satisfied with respect thereto.
9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, declare or pay any
dividends on account of any shares of class of any Capital Stock of such
Borrower, Guarantor or Subsidiary now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except that:
(a) any Subsidiary of a Borrower may pay dividends to such Borrower
or another Subsidiary and any Subsidiary of a Borrower (other than a Borrower)
may redeem or repurchase any of its Capital Stock by making payments to a
Borrower;
(b) any Borrower or Guarantor may pay dividends or may redeem or
repurchase any of its Capital Stock for consideration consisting of common
stock;
(c) any Borrower or Guarantor may pay dividends or may redeem or
repurchase any of its Capital Stock, provided, that, as to any payment of such
dividend or for such redemption or repurchase each of the following conditions
is satisfied:
(i) such payment shall be made with funds legally available
therefor,
(ii) such dividend or redemption or repurchase shall not
violate any law or regulation or the terms of any indenture, agreement or
undertaking to which a Borrower or Guarantor is a party or by which a Borrower
or Guarantor or its properties are bound,
(iii) as of the date of the payment of such dividend or
redemption or repurchase and after giving effect thereto, no Default or Event
of Default shall exist or have occurred; and
(iv) in the case of redemptions and repurchases, as of the
day of the redemption or repurchase and after giving effect thereto, the Excess
Availability, as of the date of any such payment and after giving effect
thereto, shall be not less than $25,000,000.
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not,
and shall not permit any Subsidiary to, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any officer, employee, shareholder, director, agent
or any other Affiliate, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's, Guarantor's or Subsidiary's
business (as the case may be) and upon fair and reasonable terms no less
favorable to such Borrower, Guarantor or Subsidiary than it would obtain in a
comparable arm's length transaction with a person that is not an Affiliate,
except, that (i) in the case of such transactions between Borrowers, then upon
fair and reasonable terms consistent with the current practices of such
Borrowers, as of the date hereof, (ii) in the case of sales of property by
Borrowers or Guarantors to the Business Enterprises referred to in Section
9.10(o) upon fair and reasonable terms no more favorable than such Business
Enterprises would obtain in a comparable arm's length transaction with a Person
that is not an Affiliate, (iii) Pep Boys may sell its Capital Stock to the
Flexi-Trust in accordance with the Flexi-Trust Agreement; or
(b) make any payments of management, consulting or other fees for
management or similar services, or of any Indebtedness owing to any officer,
employee, shareholder, director or any other Affiliate of any Borrower or
Guarantor except (i) compensation to officers, employees and directors for
services rendered to such Borrower, Guarantor or Subsidiary, as the case may
be, in the ordinary course of business, (ii) payments by a Borrower to any
other Borrower in respect of Indebtedness arising pursuant to loans made by
such Borrower to the extent such Indebtedness is permitted under Section 9.9
hereof, and (iii) payments by a Borrower (other than Pep Boys) or Guarantor to
Pep Boys for actual and necessary reasonable out-of-pocket legal and
accounting, insurance, marketing, payroll and similar types of services paid
for by Pep Boys on behalf of the other Borrowers or Guarantors and their
Subsidiaries in the ordinary course of their respective businesses or as the
same may be directly attributable to such
Borrowers or other Guarantor.
9.13 Compliance with ERISA. Each Borrower and Guarantor shall, and shall
cause each of its ERISA Affiliates, to: (a) maintain each Plan in compliance
with the applicable provisions of ERISA, the Code and other Federal and State
law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; (c) not terminate any of such Plans so as to incur
any liability to the Pension Benefit Guaranty Corporation; (d) not allow or
suffer to exist any prohibited transaction involving any of such Plans or any
trust created thereunder which would subject such Borrower, Guarantor or such
ERISA Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA; (e) make all
required contributions to any Plan which it is obligated to pay under Section
302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow
or suffer to exist any accumulated funding deficiency, whether or not waived,
with respect to any such Plan; or (g) not allow or suffer to exist any
occurrence of a reportable event or any other event or condition which presents
a material risk of termination by the Pension Benefit Guaranty Corporation of
any such Plan that is a single employer plan, which termination could result in
any liability to the Pension Benefit Guaranty Corporation except as to (a)
through (g) above, where the failure to comply would not have a reasonable
likelihood of having a Material Adverse Effect.
9.14 End of Fiscal Years; Fiscal Quarters. Pep Boys shall, for financial
reporting purposes, and shall cause each of its Subsidiaries= (a) fiscal years
to end on the Saturday closest to the 31st day of January of each year, and (b)
fiscal quarters to end on the last day of the thirteenth (13th) week following
the end of the immediately preceding fiscal quarter, provided, that, the end of
the fourth fiscal quarter shall be on the last day of the fourteenth (14th)
week following the end of the third fiscal quarter whenever necessary to have
the fourth fiscal quarter end on the Saturday closest to January 31 of each
year.
9.15 Change in Business. Pep Boys and its Subsidiaries shall not engage in
any business other than the business of Pep Boys and its Subsidiaries on the
date hereof and any business reasonably related, ancillary or complimentary to
the business in which was engaged as of September 22, 2000.
9.16 Limitation of Restrictions Affecting Subsidiaries. Each Borrower and
Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
\ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends
or make other distributions or pay any Indebtedness owed to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or
advances to such Borrower or Guarantor or any Subsidiary of such Borrower or
Guarantor, (c) transfer any of its properties or assets constituting
Collateral to such Borrower or Guarantor or any Subsidiary of such Borrower
or Guarantor; or (d) create, incur, assume or suffer to exist any lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, other than encumbrances and restrictions arising under (i) applicable
law, (ii) this Agreement,(iii) liens permitted under this Agreement (iv)
customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of such Borrower or Guarantor or any Subsidiary
of such Borrower or Guarantor, (v) customary restrictions on dispositions of
real property interests found in reciprocal easement agreements of such
Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (vi) any
agreement relating to permitted Indebtedness incurred by a Subsidiary of such
Borrower or Guarantor prior to the date on which such Subsidiary was acquired
by such Borrower or such Guarantor and outstanding on such acquisition date,
and (vii) the extension or continuation of contractual obligations in existence
on the date hereof; provided, that, any such encumbrances or restrictions
contained in such extension or continuation are no less favorable to Agent and
Lenders than those encumbrances and restrictions under or pursuant to the
contractual obligations so extended or continued.
9.17 Adjusted Tangible Net Worth.
(a) Pep Boys and its Subsidiaries (inclusive of Colchester), shall, at all
times maintain, Adjusted Tangible Net Worth of not less than $450,000,000
(the "TNW Minimum Amount", as adjusted pursuant to Section 9.17(b) below).
(b) The TNW Minimum Amount set forth in Section 9.17(a) above shall be
permanently increased (dollar for dollar), by the amount, if any, by which the
Adjusted Tangible Net Worth of Pep Boys and its Subsidiaries (inclusive of
Colchester), shown on the financial statements of Pep Boys and its Subsidiaries
(to be delivered to Agent pursuant to Section 9.6 hereof) in respect of the
fiscal quarter ending August 2, 2003 exceeds $474,000,000.
9.18 Exempted Debt Limit. Borrowers shall not permit the outstanding
aggregate amount of Exempted Debt (including any amounts owing by Borrowers and
Guarantors to counterparties in respect of Hedge Agreements which are secured
by Collateral hereunder) at any time to exceed the Exempted Debt Limit, without
the prior written consent of Agent and the Required Lenders.
9.19 Credit Card Agreements. Each Borrower shall (a) observe and perform
all material terms, covenants, conditions and provisions of the Credit Card
Agreements to be observed and performed by it at the times set forth therein;
(b) not do, permit, suffer or refrain from doing anything, as a result of
which there could be a material default under or breach of any of the terms of
any of the Credit Card Agreements and (c) at all times maintain in full force
and effect the Credit Card Agreements and not terminate, cancel, surrender,
modify, amend, waive or release any of the Credit Card Agreements except where
such amendment, modification, or waiver would not have a Material Adverse
Effect, or consent to or permit to occur any of the foregoing; except, that,
(i) any such Borrower may terminate or cancel any of the Credit Card Agreements
in the ordinary course of the business of such Borrower; provided, that, such
Borrower shall give Agent not less than fifteen (15) days prior written notice
of its intention to
so terminate or cancel any of the Credit Card Agreements; (d) not enter into
any new Credit Card Agreements with any new Credit Card Issuer unless (i) Agent
shall have received not less than fifteen (15) days prior written notice of the
intention of such Borrower to enter into such agreement (together with such
other information with respect thereto as Agent may request) and (ii) such
Borrower delivers, or causes to be delivered to Agent, a Credit Card
Acknowledgment in favor of Agent; (e) give Agent immediate written notice of
any Credit Card Agreement entered into by such Borrower after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may reasonably request; and (f)
furnish to Agent, promptly upon the request of Agent, such information and
evidence as Agent may reasonably require from time to time concerning the
observance, performance and compliance by such Borrower or the other party
or parties thereto with the terms, covenants or provisions of the Credit Card
Agreements.
9.20 Sale and Leasebacks. Each Borrower and Guarantor shall not, and shall
not permit any Subsidiary to, enter into any arrangement, directly or
indirectly, with any Person whereby such Borrower, Guarantor or Subsidiary, as
the case may be, shall sell or transfer any property, real or personal, used or
useful in its business, whether now owned or hereafter acquired, and thereafter
rent or lease such property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred (except to the
extent of Capital Leases permitted under Section 9.9(b) hereof), except, that,
Borrowers may enter into such arrangements provided, that, each of the
following conditions is satisfied, as determined by Agent: (a) Agent shall have
received not less than ten (10) Business Days= prior written notice of any such
proposed transaction, which notice shall describe the transaction in detail,
(b) as of the date of any Borrower entering into such arrangement and after
giving effect to such transaction, the aggregate amount of outstanding
Exempted Debt secured by such liens shall not exceed the Exempted Debt Limit,
(c) such proposed transaction shall be in compliance with the terms and
conditions set forth in the Pep Boys Indentures, and (d) as of the date of any
such transaction and after giving effect thereto, no Event of Default or
Default shall exist or have occurred and be continuing.
9.21 Costs and Expenses. Borrowers and Guarantors shall pay to Agent on
demand all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing taxes and fees,
documentary taxes, intangibles taxes and mortgage recording taxes and fees,
if applicable); (b) costs and expenses and fees for insurance premiums,
environmental audits, title insurance premiums, surveys, assessments,
engineering reports and inspections, appraisal fees and search
fees, costs and expenses of remitting loan proceeds, collecting checks and
other items of payment, and establishing and maintaining the Blocked Accounts,
together with Agent's customary charges and fees with respect thereto; (c)
charges, fees or expenses charged by any bank or issuer in connection with the
Letter of Credit Accommodations; (d) costs and expenses of preserving and
protecting the Collateral; (e) costs and expenses paid or incurred in
connection with obtaining payment of the Obligations, enforcing the security
interests and liens of Agent, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Agent or any Lender arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (f) all out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Agent during the course of periodic field
examinations of the Collateral and such Borrower's or Guarantor's operations,
plus a per diem charge at Agent=s then standard rate for Agent's examiners in
the field and office (which rate as of the date hereof is $850 per person per
day); and (g) the fees and disbursements of counsel (including legal
assistants) to Agent in connection with any of the foregoing.
9.22 Further Assurances. At the request of Agent, made in good faith, at
any time and from time to time, Borrowers and Guarantors shall, at their
expense, duly execute and deliver, or cause to be duly executed and delivered,
such further agreements, documents and instruments, and do or cause to be done
such further acts as may be necessary or proper to evidence, perfect, maintain
and enforce the security interests and the priority thereof in the Collateral
and to otherwise effectuate the provisions or purposes of this Agreement or any
of the other Financing Agreements. Agent may at any time and from time to time
request a certificate from an officer of any Borrower or Guarantor representing
that all conditions precedent to the making of Loans and providing Letter of
Credit Accommodations contained herein are satisfied. In the event of such
request by Agent, Agent and Lenders may, at Agent=s option, cease to make any
further Loans or provide any further Letter of Credit Accommodations until
Agent has received such certificate and, in addition, Agent has determined that
such conditions are satisfied.
9.23 Equipment and Real Property Covenants. With respect to the Equipment
and Real Property: (a) each Borrower shall keep the Equipment in good order,
repair, running and marketable condition (ordinary wear and tear excepted); (b)
each Borrower shall use the Equipment and Real Property with all reasonable
care and caution and in accordance with applicable standards of any insurance
and in conformity with all applicable laws; and (c) each Borrower assumes all
responsibility and liability arising from the use of the Equipment and Real
Property.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) (1) any Borrower fails to pay when due any principal amount of
the Loans or (2) any Borrower fails to pay when due any of the Obligations
(other than payments of principal in respect of the Loans) within three (3)
days after the due date thereof or (ii) any Borrower or Obligor fails to
perform any of the covenants contained in Sections 9.3, 9.4, 9.6, 9.14, 9.15,
9.16, 9.19 or 9.23 of this Agreement and such failure shall continue for
fifteen (15) days; provided, that, such fifteen (15) day period shall not apply
in the case of: (A) any failure to observe any such covenant which is not
capable of being cured at all or within such fifteen (15) day period or which
has been the subject of a prior failure within a six (6) month period or (B) an
intentional breach by any Borrower or Obligor of any such covenant or (iii) any
Borrower or Obligor fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by any
Borrower or Guarantor to Agent in this Agreement, the other Financing
Agreements or any other written agreement, schedule, confirmatory assignment
or otherwise shall when made or deemed made be false or misleading in any
material respect;
(c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Agent or any Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or Obligor in excess of $5,000,000 in any one case or in excess of
$10,000,000 in the aggregate, exclusive in each case of any portion of such
judgment covered by insurance, and shall remain undischarged or unvacated for
a period in excess of forty-five (45) days or execution shall at any time not
be effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against any
Borrower or Obligor or any of their assets;
(e) any Borrower or Obligor, which is a partnership, limited
liability company, limited liability partnership or a corporation, dissolves or
suspends or discontinues doing business (except as otherwise expressly
permitted herein);
(f) any Borrower or Obligor becomes insolvent (however defined or
evidenced) makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Borrower or Obligor or all or any part of its properties and
such petition or application is not dismissed within forty-five (45) days after
the date of its filing or any Borrower or Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or
the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property;
(i) any default by any Borrower or Obligor under any
agreement, document or instrument relating to any Indebtedness owing to any
person other than Agent and Lenders hereunder (including without limitation,
any of the Pep Boys Indentures), or any Capitalized Lease, or any of the
Synthetic Lease Facility Agreements, which results in the right of the
holder of such obligation or indebtedness to accelerate indebtedness owing to
such holder in an amount equal to at least $5,000,000 or any default by any
Borrower or Obligor under any Material Contract, which default continues for
more than the applicable cure period, if any, with respect thereto and would
have a Material Adverse Effect or any Credit Card Issuer or Credit Card
Processor withholds payment of amounts otherwise payable to any Borrower to
fund a reserve account or otherwise hold as collateral, or shall require any
Borrower or any Guarantor to pay funds into a reserve account or for such
Credit Card Issuer or Credit Card Processor to otherwise hold as collateral, or
any Borrower or Guarantor shall provide a letter of credit, guarantee,
indemnity or similar instrument to or in favor of such Credit Card Issuer or
Credit Card Processor such that in the aggregate all of such funds in the
reserve account, other amounts held as collateral and the amount of such
letters of credit, guarantees, indemnities or similar instruments shall exceed
$2,000,000 or any Credit Card Issuer or Credit Card Processor shall debit or
deduct any amounts from any deposit account of any Borrower or Guarantor;
(j) an ERISA Event shall occur;
(k) any Change of Control;
(l) the indictment by any Governmental Authority, or as
Agent may reasonably and in good faith determine, the threatened indictment by
any Governmental Authority of a Borrower or Guarantor of which any Borrower,
Guarantor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal or civil statute, or commencement or
threatened commencement of criminal or civil proceedings by any Governmental
Authority against such Borrower or Guarantor, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
(i) (A) any of the Collateral having a value in excess of $40,000,000 if such
indictment or threatened indictment occurs prior to the occurrence of a Cash
Dominion Event, or (B) any Collateral having a value in excess of $20,000,000,
if such threatened indictment or indictment occurs upon the occurrence and
during the continuance of a Cash Dominion Event or (ii) any other property of
any Borrower or Guarantor which is necessary or material to the conduct of its
business; or
(m) there shall be a material adverse change in the business, assets
or financial condition of Borrowers taken as a whole after the date hereof.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by any Borrower or Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative,
not exclusive and enforceable, in Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction
to restrain a breach or threatened breach by any Borrower or Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the written direction of the Required Lenders shall,
at any time or times, proceed directly against any Borrower or Obligor to
collect the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion, and
upon the written direction of the Required Lenders, shall (i) accelerate the
payment of all Obligations and demand immediate payment thereof to Agent for
itself and the ratable benefit of Lenders (provided, that, upon the occurrence
of any Event of Default described in Sections 10.1(g) and 10.1(h), all
Obligations shall automatically become immediately due and payable), (ii) with
or without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and repair
of all or any portion of the Collateral, (iii) require any Borrower or Obligor,
at Borrowers= expense, to assemble and make available to Agent any part or all
of the Collateral at any place and time designated by Agent, (iv) collect,
foreclose, receive, appropriate,
setoff and realize upon any and all Collateral, (v) remove any or all of the
Collateral from any premises on or in which the same may be located for the
purpose of effecting the sale, foreclosure or other disposition thereof or for
any other purpose, (vi) sell, lease, transfer, assign, deliver or otherwise
dispose of any and all Collateral (including entering into contracts with
respect thereto, public or private sales at any exchange, broker's board, at
any office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Agent having
the right to purchase the whole or any part of the Collateral at any such
public sale, all of the foregoing being free from any right or equity of
redemption of any Borrower or Obligor, which right or equity of redemption is
hereby expressly waived and released by Borrowers and Obligors and/or (vii)
terminate this Agreement. If any of the Collateral is sold or leased by Agent
upon credit terms or for
future delivery, the Obligations shall not be reduced as a result thereof until
payment therefor is finally collected by Agent. If notice of disposition of
Collateral is required by law, ten (10) days prior notice by Agent to
Administrative Borrower designating the time and place of any public sale or
the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof and
Borrowers and Obligors waive any other notice. In the event Agent institutes
an action to recover any Collateral or seeks recovery of any Collateral by way
of prejudgment remedy, each Borrower and Obligor waives the posting of any bond
which might otherwise be required. At any time an Event of Default exists or
has occurred and is continuing, upon Agent=s request, Borrowers will either, as
Agent shall specify, furnish cash collateral to the issuer to be used to
secure and fund Agent=s reimbursement obligations to the issuer in connection
with any Letter of Credit Accommodations or furnish cash collateral to Agent
for the Letter of Credit Accommodations. Such cash collateral shall be in the
amount equal to one hundred five (105%) percent of the amount of the Letter of
Credit Accommodations plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations.
(c) At any time or times that an Event of Default exists or has
occurred and is continuing, Agent may, in its discretion, and upon the written
direction of the Required Lenders, Agent shall, enforce the rights of any
Borrower or Obligor against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables. Without
limiting the generality of the foregoing, Agent may, in its discretion, and
upon the direction of the Required Lenders, Agent shall, at such time or times
(i) notify any or all account debtors, secondary obligors or other obligors in
respect thereof that the Receivables have been assigned to Agent and that Agent
has a security interest therein and Agent may direct any or all accounts
debtors, secondary obligors and other obligors to make payment of Receivables
directly to Agent, (ii) extend the time of payment of, compromise, settle or
adjust for cash, credit, return of merchandise or otherwise, and upon any terms
or conditions, any and all
Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Agent and Lenders shall not be
liable for any failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent=s request, all
invoices and statements sent to any account debtor shall state that the
Accounts and such other obligations have been assigned to Agent and are payable
directly and only to Agent and Borrowers and Obligors shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may reasonably
require. In the event any account debtor returns Inventory when an Event of
Default exists or has occurred and is continuing, Borrowers and Guarantors
shall, upon Agent=s request, hold the returned Inventory in trust for Agent,
segregate all returned Inventory from all of its other property, dispose of
the returned Inventory solely according to Agent=s instructions, and not issue
any credits, discounts or allowances with respect thereto without Agent's prior
written consent.
(d) To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Borrower and Guarantor acknowledges and
agrees that it is not commercially unreasonable for Agent or any Lender (i) to
fail to incur expenses reasonably deemed significant by Agent or any Lender to
prepare Collateral for disposition or otherwise to complete raw material or
work in process into finished goods or other finished products for disposition,
(ii) to fail to obtain third party consents for access to Collateral to be
disposed of, or to obtain or, if not required by other law, to fail to obtain
consents of any Governmental Authority or other third party for the collection
or disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove liens or encumbrances on or
any adverse
claims against Collateral, (iv) to exercise collection remedies against account
debtors and other persons obligated on Collateral directly or through the use
of collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other persons, whether or not in the same business as any Borrower or
Guarantor, for expressions of interest in acquiring all or any portion of the
Collateral, (vii) to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing Internet sites that
provide for the auction of assets of the types included in the Collateral or
that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (ix) to dispose of assets in wholesale rather than retail
markets, (x) to disclaim
disposition warranties, (xi) to purchase insurance or credit enhancements to
insure Agent or Lenders against risks of loss, collection or disposition of
Collateral or to provide to Agent or Lenders a guaranteed return from the
collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any
Borrower or Guarantor or to impose any duties on Agent or Lenders that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section.
(e) Upon the occurrence of an Event of Default and so long as an
Event of Default is continuing, for the purpose of enabling Agent to exercise
the rights and remedies hereunder with respect to the Collateral, each Borrower
and Guarantor hereby grants to Agent, to the extent assignable, an irrevocable,
non-exclusive license without payment of royalty or other compensation to any
Borrower or Guarantor, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by any Borrower or
Guarantor, wherever the same maybe located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.
(f) Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in accordance
with Section 6.4 hereof. Borrowers and Guarantors shall remain jointly and
severally liable to Agent and Lenders for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses of
collection or enforcement, including attorneys' fees and legal expenses.
(g) Without limiting the foregoing, upon the occurrence of a Default or an
Event of Default, (i) Agent and Lenders may, at Agent=s option, and upon the
occurrence of an Event of Default at the written direction of the Required
Lenders, Agent and Lenders shall, without notice, (A) cease making Loans or
arranging for Letter of Credit Accommodations or reduce the lending formulas or
amounts of Loans and Letter of Credit Accommodations available to Borrowers
and/or (B) terminate any provision of this Agreement providing for any future
Loans or Letter of Credit Accommodations to be made by Agent and Lenders to
Borrowers and (ii) Agent may, at its option, establish such Reserves as Agent
determines, without limitation or restriction, notwithstanding anything to the
contrary contained herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York but
excluding any principles of conflicts of law or other rule of law that would
cause the application of the law of any jurisdiction other than the laws of the
State of New York.
(b) Borrowers, Guarantors, Agent and Lenders irrevocably consent
and submit to the non-exclusive jurisdiction of the Supreme Court of the
State of New York for New York County and the United States District Court
for the Southern District of New York, whichever Agent may elect, and waive
any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Agent
and Lenders shall have the right to bring any action or proceeding against any
Borrower or Guarantor or its or their property in the courts of any other
jurisdiction which Agent deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against any Borrower or
Guarantor or its or their property).
(c) Each Borrower and Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may
be made by certified mail (return receipt requested) directed to its address
set forth herein and service so made shall be deemed to be completed five (5)
days after the same shall have been so deposited in the U.S. mails, or, at
Agent's option, by service upon any Borrower or Guarantor (or Administrative
Borrower on behalf of such Borrower or Guarantor) in any other manner provided
under the rules of any such courts. Within thirty (30) days after such
service, such Borrower or Guarantor shall appear in answer to such process,
failing which such Borrower or Guarantor shall be deemed in default and
judgment may be entered by Agent against such Borrower or Guarantor for the
amount of the claim and other relief requested.
(d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER
MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to any Borrower or
Guarantor (whether in tort, contract, equity or otherwise) for losses suffered
by such Borrower or Guarantor in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Agent and such Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. In any such litigation,
Agent and Lenders shall be entitled to the benefit of the rebuttable
presumption that they acted in good faith and with the exercise of ordinary
care in the performance by them of the terms of this Agreement. Each Borrower
and Guarantor: (i) certifies that neither Agent, any Lender nor any
representative, agent or attorney acting for or on behalf of Agent or any
Lender has represented, expressly or otherwise, that Agent and Lenders would
not, in the event of litigation, seek to enforce any of the waivers provided
for in this Agreement or any of the other Financing Agreements and (ii)
acknowledges that in entering into this Agreement and the other Financing
Agreements, Agent and Lenders are relying upon, among other things, the waivers
and certifications set forth in this Section 11.1 and elsewhere herein and
therein.
11.2 Waiver of Notices. To the extent permitted by law, each Borrower and
Guarantor hereby expressly waives demand, presentment, protest and notice of
protest and notice of dishonor with respect to any and all instruments and
chattel paper, included in or evidencing any of the Obligations or the
Collateral, and any and all other demands and notices of any kind or nature
whatsoever with respect to the Obligations, the Collateral and this Agreement,
except such as are expressly provided for herein. No notice to or demand on
any Borrower or Guarantor which Agent or any Lender may elect to give shall
entitle such Borrower or Guarantor to any other or further notice or demand in
the same, similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor
any terms hereof or thereof may be amended, waived, discharged or terminated
unless such amendment, waiver, discharge or termination is in writing signed by
Agent and the Required Lenders or at Agent=s option, by Agent with the
authorization of the Required Lenders, and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof), by any Borrower; except, that, no such amendment, waiver, discharge or
termination shall:
(i) reduce the interest rate or any fees or extend the time
of payment of principal, interest or any fees or reduce the principal amount of
any Loan or Letter of Credit Accommodations, in each case without the consent
of each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the amount
thereof then in effect or provided hereunder, in each case without the consent
of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly required
hereunder or under any of the other Financing Agreements or applicable law and
except as permitted under Section 12.11(b) hereof), without the consent of
Agent and all of Lenders,
(iv) reduce any percentage specified in the definition of
Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the release, assignment or transfer by any Borrower or
Guarantor of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders,
(vi) release or reduce the Facility Reserve or the Special
Reserve, other than as specifically provided for herein, without the consent of
Agent and all Lenders,
(vii) amend, modify or waive any terms of Sections 2.1(c),
11.3, 12.8 and 12.11 hereof, without the consent of Agent and all of Lenders,
or
(viii) increase the advance rates constituting part of the
Borrowing Base, without the consent of Agent and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and
signed as provided herein. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Agent or any Lender of any
right, power and/or remedy on any one occasion shall not be construed as a bar
to or waiver of any such right, power and/or remedy which Agent or any Lender
would otherwise have on any future occasion, whether similar in kind or
otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required
are obtained, if any, then Congress shall have the right, but not the
obligation, at any time thereafter, and upon the exercise by Congress of such
right, such Non-Consenting Lender shall have the obligation, to sell, assign
and transfer to Congress or such Eligible Transferee as Congress may specify,
the Commitment of such Non-Consenting Lender and all rights and interests of
such Non-Consenting Lender pursuant thereto. Congress shall provide the
Non-Consenting Lender with prior written notice of its intent to exercise its
right under this Section, which notice
shall specify on date on which such purchase and sale shall occur. Such
purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Congress, or such Eligible Transferee
specified by Congress, shall pay to the Non-Consenting Lender the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the
Non-Consenting Lender to the effective date of the purchase (but in no event
shall the Non-Consenting Lender be deemed entitled to any early termination
fee), minus (iii) the amount of the closing fee received by the Non-Consenting
Lender pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the fraction, the numerator of which is the number of months
remaining in the then current term of the Credit Facility and the denominator
of which is the number of months in the then current term thereof. Such
purchase and sale shall be effective on the date of the payment of such amount
to the Non-Consenting Lender and the Commitment of the Non-Consenting Lender
shall terminate on such date.
(d) The consent of Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of Agent hereunder or under
any of the other Financing Agreements, in addition to the consent of the
Lenders otherwise required by this Section and the exercise by Agent of any of
its rights hereunder with respect to Reserves or Eligible Accounts or Eligible
Inventory shall not be deemed an amendment to the advance rates provided for
in this Section 11.3.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with respect
to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 Indemnification. Each Borrower and Guarantor shall, jointly and
severally, indemnify and hold Agent and each Lender, and its officers,
directors, agents, employees and counsel (each such person being an
"Indemnitee"), harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses (including reasonable attorneys= fees and
expenses) imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing
Agreements, or any undertaking or proceeding related to any of the transactions
contemplated hereby or any act, omission, event or transaction related or
attendant thereto, including amounts paid in settlement, court costs, and the
fees and expenses of counsel except that Borrowers and Guarantors shall not
have any obligation under this Section 11.5 to indemnify an Indemnitee with
respect to a matter covered hereby resulting from the gross negligence or
wilful misconduct of such Indemnitee as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction (but without
limiting the obligations of Borrowers or Guarantors as to any other
Indemnitee). To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrowers and Guarantors shall pay the maximum portion
which it is permitted to pay under applicable law to Agent and Lenders in
satisfaction of indemnified matters under this Section. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and
under the other Financing Agreements with such powers as are specifically
delegated to Agent by the terms of this Agreement and of the other Financing
Agreements, together with such other powers as are reasonably incidental
thereto. Agent (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Financing Agreements,
and shall not by reason of this Agreement or any other Financing Agreement be a
trustee or fiduciary for any Lender; (b) shall not be responsible to Lenders
for any recitals, statements, representations or warranties contained in this
Agreement or in any of the other Financing Agreements, or in any certificate or
other document referred to or provided for in, or received by any of them
under, this Agreement or any other Financing Agreement, or for the value,
validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing
Agreement or any other document referred to or provided for herein or therein
or for any failure by any Borrower or any Obligor or any other Person to
perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Agent may employ agents and attorneys?in?fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys?in?fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and
until the assignment thereof pursuant to an agreement (if and to the extent
permitted herein) in form and substance satisfactory to Agent shall have been
delivered to and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not
expressly provided for by this Agreement or any other Financing Agreement,
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or thereunder in accordance with instructions given by the
Required Lenders or all of Lenders as is required in such circumstance, and
such instructions given to Agents and any action taken or failure to act
pursuant thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a
condition precedent to the Loans and Letter of Credit Accommodations
hereunder, unless and until Agent has received written notice from a Lender
or a Borrower specifying such Event of Default or any unfulfilled condition
precedent, and stating that such notice is a "Notice of Default or Failure of
Condition". In the event that Agent receives such a Notice of Default or
Failure of Condition, Agent shall give prompt notice thereof to the Lenders.
Agent shall (subject to Section 12.7) take such action with respect to any such
Event of Default or failure of condition precedent as shall be directed by the
Required Lenders; provided, that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to or by reason of such Event of
Default or failure of condition precedent, as it shall deem advisable in the
best interest of Lenders. Without limiting the foregoing, and notwithstanding
the existence or occurrence and continuance of an Event of Default or any other
failure to satisfy any of the conditions precedent set forth in Section 4 of
this Agreement to the contrary, Agent may, but shall have no obligation to,
continue to make Loans and issue or cause to be issued Letter of Credit
Accommodations for the ratable account and risk of Lenders from time to time if
Agent believes making such Loans or issuing or causing to be issued such Letter
of Credit Accommodations is in the best interests of Lenders, unless and until
Required Lenders specifically direct Agent otherwise.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against any Borrower
or Obligor or any of the Collateral or other property of any Borrower or
Obligor.
12.4 Congress in its Individual Capacity. With respect to its Commitment and
the Loans made and Letter of Credit Accommodations issued or caused to be
issued by it (and any successor acting as Agent), so long as Congress shall be
a Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as Agent,
and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Congress in its individual capacity as Lender hereunder.
Congress (and any successor acting as Agent) and its Affiliates may (without
having to account therefor to any Lender) lend money to, make investments in
and generally engage in any kind of business with Borrowers (and any of its
Subsidiaries or Affiliates) as if it were not acting as Agent, and Congress and
its Affiliates may accept fees and other consideration from any Borrower or
Guarantor and any of its Subsidiaries and Affiliates for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrowers hereunder and without limiting any obligations of
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out
of this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined
by a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 Non?Reliance on Agent and Other Lenders. Each Lender agrees that it has,
independently and without reliance on Agent or other Lender, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of Borrowers and Obligors and has made its own decision to enter into
this Agreement and that it will, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions
in taking or not taking action under this Agreement or any of the other
Financing Agreements. Agent shall not be required to keep itself informed as
to the performance or observance by any Borrower or Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of any Borrower or Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from any
Borrower or Obligor which is required to be provided to Lenders or deemed to be
requested by Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from any Borrower or any Lender;
provided, that, Agent shall not be liable to any Lender for any failure to do
so, except to the extent that such failure is attributable to Agent's own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Except for notices, reports and
other documents expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any
Lender with any other credit or other information concerning the affairs,
financial condition or business of any Borrower or Obligor that may come into
the possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent hereunder
and under the other Financing Agreements, Agent shall in all cases be fully
justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Loans or provide any Letter
of Credit Accommodations to any Borrower on behalf of Lenders intentionally and
with actual knowledge that such Loans or Letter of Credit Accommodations would
cause the aggregate amount of the total outstanding Loans and Letter of Credit
Accommodations to all Borrowers to exceed the Borrowing Base, without the
prior consent of all Lenders, except, that, Agent may make such additional
Loans or provide such additional Letter of Credit Accommodations on behalf of
Lenders, intentionally and with actual knowledge that such Loans or Letter of
Credit Accommodations will cause the total outstanding Loans and Letter of
Credit Accommodations to such Borrower to exceed the Borrowing Base, as Agent
may deem necessary or advisable in its discretion, provided, that: (a) the
total principal amount of the additional Loans or additional Letter of Credit
Accommodations to any Borrower which Agent may make or provide after obtaining
such actual
knowledge that the aggregate principal amount of the Loans equal or exceed the
Borrowing Base, shall not exceed the aggregate amount equal to ten (10%) of the
Borrowing Base, (b) the total principal amount of the additional Loans or
additional Letter of Credit Accommodations to any Borrower which Agent may make
or provide after obtaining such actual knowledge that the aggregate principal
amount of the Loans equal or exceed the Borrowing Base, plus the amount of
Special Agent Advances made pursuant to Section 12.11(a)(ii) hereof then
outstanding, shall not exceed the aggregate amount equal to ten (10%) of the
Maximum Credit and shall not cause the total principal amount of the Loans and
Letter of Credit Accommodations to exceed the Maximum Credit and (c) no such
additional Loan or Letter of Credit Accommodation shall be outstanding more
than sixty (60) days after the date such additional Loan or Letter of Credit
Accommodation is made or issued (as the case may be), except as the Required
Lenders may otherwise agree. Each Lender shall be obligated to pay Agent the
amount of its Pro Rata Share of any such additional Loans or Letter of Credit
Accommodations.
12.9 Concerning the Collateral and the Related Financing Agreements. Each
Lender authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 Field Audit, Examination Reports and other Information; Disclaimer by
Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
and Agent agrees to so furnish such Lender with, promptly after it becomes
available, a copy of each field audit or examination report and report with
respect to the Borrowing Base prepared or received by Agent (each field audit
or examination report and report with respect to the Borrowing Base being
referred to herein as a "Report" and collectively, "Reports"), appraisal and
financial statements;
(b) expressly agrees and acknowledges that Agent (i) does not make
any representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained
in any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers= and
Guarantors' books and records, as well as on representations of Borrowers' and
Guarantors' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 14.5 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at
any time on or after an Event of Default and for so long as the same is
continuing or upon any other failure of a condition precedent to the Loans and
Letter of Credit Accommodations hereunder, make such disbursements and advances
("Special Agent Advances") which Agent, in its sole discretion, (i) deems
necessary or desirable either to preserve or protect the Collateral or any
portion thereof or (ii) to enhance the likelihood or maximize the amount of
repayment by Borrowers and Guarantors of the Loans and other Obligations,
provided, that, the aggregate principal amount of the Special Agent Advances
pursuant to clauses (i) and (ii) hereof, plus the then outstanding principal
amount of the additional Loans and Letter of Credit Accommodations which Agent
may make or provide as set forth in Section 12.8 hereof, shall not exceed the
aggregate amount of ten (10%) percent of the Maximum Credit or (iii) to pay any
other amount chargeable to any Borrower or
Guarantor pursuant to the terms of this Agreement or any of the other Financing
Agreements consisting of (A) costs, fees and expenses and (B) payments to any
issuer of Letter of Credit Accommodations. Special Agent Advances shall be
repayable on demand and together with all interest thereon shall constitute
Obligations secured by the Collateral. Special Agent Advances shall not
constitute Loans but shall otherwise constitute Obligations hereunder.
Interest on Special Agent Advances shall be payable at the Interest Rate then
applicable to Prime Rate Loans and shall be payable on demand. Without
limitation of its obligations pursuant to Section 6.10, each Lender agrees that
it shall make available to Agent, upon Agent's demand, in immediately available
funds, the amount equal to such Lender's Pro Rata Share of each such Special
Agent Advance. If such funds are not made available to Agent by such Lender,
such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to
recover such funds, on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent=s option based on
the arithmetic mean determined by Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of the three leading brokers of Federal funds transactions in
New York City selected by Agent) and if such amounts are not paid within three
(3) days of Agent=s demand, at the highest Interest Rate provided for in
Section 3.1 hereof applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion to release any security interest in, mortgage or lien upon, any
of the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 14.1 below, or (ii) constituting property being
sold or disposed of if Administrative Borrower or any Borrower or Guarantor
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such certificate,
without further inquiry), or (iii) constituting property in which any Borrower
or Guarantor did not own an interest at the time the security interest,
mortgage or lien was granted or at any time thereafter, or (iv) having a value
in the aggregate in any twelve (12) month period of less than $5,000,000 , or
(v) if required or permitted under the terms of any of the other Financing
Agreements, including any intercreditor agreement, or (vi) approved, authorized
or ratified in writing xxxxx of Lenders. Except as provided above, Agent will
not release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of all of Lenders. Upon
request by Agent at any time, Lenders will promptly confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Section.
(c) Without any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Required
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section. Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the security interest,
mortgage or liens granted to Agent upon any Collateral to the extent set forth
above; provided, that, (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to liability or
create any obligations or entail any consequence other than the release of such
security interest, mortgage or liens without recourse or warranty and (ii)
such release shall not in any manner discharge, affect or impair the
Obligations or any security interest, mortgage or lien upon (or obligations of
any Borrower or Guarantor in respect of) the Collateral retained by such
Borrower or Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender or any other
Person to investigate, confirm or assure that the Collateral exists or is owned
by any Borrower or Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the
liens and security interests granted to Agent pursuant hereto or any of the
Financing Agreements or otherwise have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this Agreement
or in any of the other Financing Agreements, it being understood and agreed
that in respect of the Collateral, or any act, omission or event related
thereto, Agent may act in any manner it may deem appropriate, in its
discretion, given Agent's own interest in the Collateral as a Lender and that
Agent shall have no duty or liability whatsoever to any other Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and each other
Lender as agent and bailee for the purpose of perfecting the security interests
in and liens upon the Collateral of Agent in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession (or where the security
interest of a secured party with possession has priority over the security
interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days' notice
to Lenders and Administrative Borrower. If Agent resigns under this Agreement,
the Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and Pep
Boys, a successor agent from among Lenders. Upon the acceptance by the Lender
so selected of its appointment as successor agent hereunder, such successor
agent shall succeed to all of the rights, powers and duties of the retiring
Agent and the term "Agent" as used herein and in the other Financing Agreements
shall mean such successor agent and the retiring Agent's appointment, powers
and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 12 shall inure
to its benefit as to any actions taken or omitted by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is thirty (30) days after the date of a retiring Agent's
notice of resignation, the retiring Agent=s resignation shall nonetheless
thereupon become effective and Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.
12.14 Co-Agent. Agent may at any time and from time to time determine that a
Lender may, in addition, be a "Co-Agent", "Co-Documentation Agent" or similar
designation hereunder and enter into an agreement with such Lender to have it
so identified for purposes of this Agreement. Agent shall provide written
notice to Administrative Borrower of any such agreement. Any Lender that is so
designated as a Co-Agent, Co-Documentation Agent or such similar designation by
Agent shall have no right, power, obligation, liability, responsibility or duty
under this Agreement or any of the other Financing Agreements other than those
applicable to all Lenders as such. Without limiting the foregoing, the Lenders
so identified shall not have or be deemed to have any fiduciary relationship
with any Lender and no Lender shall be deemed to have relied, nor shall any
Lender rely, on a Lender so identified as a Co-Agent, Co-Documentation Agent
or such similar designation in deciding to enter into this Agreement or in
taking or not taking action hereunder.
SECTION 13. ACKNOWLEDGMENT AND RESTATEMENT
13.1 Existing Obligations. Each Borrower and Guarantor hereby acknowledges,
confirms and agrees that Borrowers are indebted to Congress for loans and
advances to Borrowers under the Existing Loan Agreement, as of the close of
business on July 31, 2003, in the aggregate principal amount of $____________
and the aggregate amount of $____________ in respect of Letter of Credit
Accommodations (as defined in the Existing Loan Agreement), together with all
interest accrued and accruing thereon (to the extent applicable), and all fees,
costs, expenses and other charges relating thereto, all of which are
unconditionally owing by Borrowers to Congress, without offset, defense or
counterclaim of any kind, nature or description whatsoever.
13.2 Acknowledgment of Security Interests.
(a) Each Borrower and Guarantor hereby acknowledges, confirms and
agrees that Congress has had, and on and after the date hereof, that Agent, for
itself and the ratable benefit of Lenders, (i) shall continue to have a
security interest in and lien upon the Collateral heretofore granted to
Congress pursuant to the Existing Financing Agreements to secure the
Obligations, and (ii) succeeds to all of the right, title and interest of
Congress in and to the Collateral including the grant of a security interest by
Borrowers to Congress, in its individual capacity, under the Existing Financing
Agreements as well as any Collateral granted to or held by Agent or any Lender
under this Agreement or under any of the other Financing Agreements.
(b) On and after the date hereof, the liens and security interests of Agent,
for itself and the ratable benefit of Lenders, in the Collateral shall be
deemed to be continuously granted and perfected from the earliest date of the
granting and perfection of such liens and security interests, whether under the
Existing Loan Agreement, this Agreement or any of the other Financing
Agreements
13.3 Existing Loan Agreement. Each Borrower and Guarantor hereby
acknowledges, confirms and agrees that: (a) the Existing Loan Agreement has
been duly executed and delivered by Borrowers and Guarantors is in full force
and effect as of July __, 2003, (b) the Guarantees, dated September 22, 2000,
have been duly executed and delivered by each Guarantor party thereto and are
in full force and effect as of July _, 2003, and (c) the agreements and
obligations of Borrowers and Guarantors contained in the Existing Loan
Agreement constitute the legal, valid and binding obligations of each such
Borrower and Guarantor enforceable against it in accordance with their
respective terms and Borrowers and Guarantors have no valid defense to the
enforcement of such obligations.
13.4 Restatement.
(a) Except as otherwise stated in Section 13.2 hereof and this
Section 13.4, as of the date hereof, the terms, conditions, agreements,
covenants, representations and warranties set forth in the Existing Loan
Agreement and each of the General Security Agreements, dated September 22,
2000, made by Carrus and PBY are hereby amended and restated in their entirety,
and as so amended and restated, replaced and superseded, by the terms,
conditions, agreements, covenants, representations and warranties set forth in
this Agreement and the other Financing Agreements, except that nothing herein
or in the other Financing Agreements shall impair or adversely affect the
continuation of the liability of each Borrower or Guarantor for the Obligations
heretofore granted, pledged and/or assigned to Agent or any Lender. The
amendment and restatement contained herein shall not, in any manner, be
construed to constitute payment of, or impair, limit, cancel or extinguish, or
constitute a novation in respect of, the Indebtedness and other obligations and
liabilities of each Borrower or Guarantor evidenced by or arising under the
Existing Loan Agreement, and the liens and security interests securing such
Indebtedness and other obligations and liabilities, which shall not in any
manner be impaired, limited, terminated, waived or released.
(b) The principal amount of the Loans and Letters of Credit
Accommodations (including the Existing Letters of Credit) outstanding as of
the date hereof under the Existing Loan Agreement shall be allocated to the
Loans and Letter of Credit Accommodations hereunder according to the Lenders'
Pro Rata Shares and in such manner and in such amounts as Agent shall
determine.
13.5 Release. Each Borrower and Guarantor, for itself and its successors and
assigns, does hereby remise, release, discharge and hold Agent and each Lender,
its officers, directors, agents and employees and their respective
predecessors, successors and assigns harmless from all claims, demands, debts,
sums of money, accounts, damages, judgments, financial obligations, actions,
causes of action, suits at law or in equity, of any kind or nature whatsoever,
whether or not now existing or known, which such Borrower, Guarantor or their
respective successors or assigns has had or may now or hereafter claim to have
against Agent or any Lender or its officers, directors, Agents and employees
and their respective predecessors, successors and assigns in any way arising
from or connected with the Existing Loan Agreement or the arrangements set
forth therein or transactions thereunder up to and including the date hereof.
SECTION 14. TERM OF AGREEMENT; MISCELLANEOUS
14.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date five (5) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Agent may, at its option (or
shall at the direction of any Lender in writing received by Agent at least
sixty (60) days prior to the Renewal Date or the anniversary of any Renewal
Date, as the case may be), terminate this Agreement and the other Financing
Agreements, or Administrative Borrower or any Borrower may terminate this
Agreement and the other Financing Agreements, in each case, effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; provided, that,
this Agreement and all other Financing Agreements and Synthetic Lease Facility
Agreements must be
terminated simultaneously. In addition, Borrowers may terminate this Agreement
at any time upon ten (10) days prior written notice to Agent (which notice
shall be irrevocable) and Agent may, at its option, and shall at the direction
of Required Lenders, terminate this Agreement at any time on or after an Event
of Default. Upon the Renewal Date or any other effective date of termination
of the Financing Agreements, Borrowers shall pay to Agent all outstanding and
unpaid Obligations and shall furnish cash collateral to Agent (or at Agent's
option, a letter of credit issued for the account of Borrowers and at
Borrowers' expense, in form and substance satisfactory to Agent in good faith,
by an issuer reasonably acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent and Lenders from loss, cost, damage or expense, including
reasonable attorneys' fees and legal expenses, in connection with any
contingent Obligations, including issued
and outstanding Letter of Credit Accommodations (in such amounts as set forth
in the immediately succeeding sentence) and checks or other payments
provisionally credited to the Obligations and/or as to which Agent or any
Lender has not yet received final payment and any continuing obligations of
Agent or any Lender pursuant to any Deposit Account Control Agreement, and for
any of the Obligations arising under or in connection with any Hedge Agreement
in such amounts as the other party to such Hedge Agreement may require (unless
such Obligations arising under or in connection with any Hedge Agreement are
paid in full in cash and terminated in a manner satisfactory to such other
party). The amount of such cash collateral (or letter of credit, as Agent may
determine) as to any Letter of Credit Accommodations shall be in the amount
equal to one hundred five (105%) percent of the amount of the Letter of Credit
Accommodations plus the amount of any fees and expenses payable in connection
therewith through the end of the latest expiration date of such Letter of
Credit Accommodations. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Administrative Borrower for such purpose.
Interest shall be due until and including the next Business Day, if the amounts
so paid by Borrowers to the Agent Payment Account or other bank account
designated by Agent are received in such bank account later than 12:00 noon,
New York City time, except, that, if Administrative Borrower notifies Agent
that a payment shall be received after 12:00 noon and such payment is received
by Lender prior to 2:00 p.m. of the same day, interest shall not accrue through
the next Business Day.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge any Borrower or Guarantor of its respective duties,
obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid (or for which Agent has received cash collateral as provided in Section
14.1(a) above, as to contingent Obligations), and Agent's continuing security
interest in the Collateral and the rights and remedies of Agent and Lenders
hereunder, under the other Financing Agreements and applicable law, shall
remain in effect until all such Obligations have been fully and finally
discharged and paid. Accordingly, each Borrower and Guarantor waives any
rights it may have under the UCC to demand the filing of termination statements
with respect to the Collateral and Agent shall not be required to send such
termination statements to Borrowers or Guarantors, or to file them with any
filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations paid and satisfied in full in
immediately available funds.
(c) If for any reason this Agreement is terminated prior to the
Renewal Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Agent's and each Lender=s lost profits as a result
thereof, Borrowers agree to pay to Agent for itself and the ratable benefit
of Lenders, upon the effective date of such termination, an early termination
fee in the amount equal to
Amount Period
(i) 1.5% of Maximum Credit From the date hereof to and
including the first anniversary
of the date hereof
(ii) 1% of Maximum Credit From and after the first
anniversary of the date hereof to
and including the second
anniversary of the date hereof
(iii) .75% of Maximum Credit From and after the second
anniversary of the date hereof to
and including the third
anniversary of the date hereof
(iv) .5% of Maximum Credit From and after the third
anniversary of the date hereof to
and including the fourth
anniversary of the date hereof
(v) .25% of Maximum Credit From and after the fourth
anniversary of the date hereof to
but not including the fifth
anniversary of the date hereof or
if the term of this Agreement is
extended, at any time prior to
fifteen (15) days prior to the
end of the then current term.
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers and Guarantors agree that it is reasonable under the circumstances
currently existing. In addition, Agent and Lenders shall be entitled to such
early termination fee upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h) hereof, even if Agent and Lenders do not exercise
the right to terminate this Agreement, but elect, at their option, to provide
financing to any Borrower or permit the use of cash collateral under the United
States Bankruptcy Code. The early termination fee provided for in this Section
14.1 shall be deemed included in the Obligations.
(d) Notwithstanding anything to the contrary contained in Section
14.1(c), in the event of termination of this Agreement by Borrowers prior to
the end of the then current term or renewal term of this Agreement and the full
and final repayment of all of the Obligations and the receipt by Agent of cash
collateral all as provided in Section 14.1(a) above, Borrowers shall not be
required to pay to Agent an early termination fee if such payments are made to
Agent with the initial proceeds of a financing transaction provided or
underwritten by Wachovia Bank, National Association to Borrowers.
(e) Notwithstanding anything to the contrary set forth in
Section 14. 1(c), in the event of the termination of the Synthetic Lease
Facility Agreements prior to the Renewal Date, without the termination of the
Financing Agreements, Borrowers shall not be required to pay to Agent an early
termination fee with respect to the Financing Agreements.
14.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8
or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to any Borrower, Guarantor, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3 or is
cured in a manner satisfactory to Agent, if such Event of Default is capable
of being cured as determined by Agent.
(g) All references to the term "good faith" used herein or the term
"reasonable" or "reasonably" when applicable to Agent or any Lender shall be
based upon the manner in which comparably situated asset-based lenders
similarly situated, with similar rights and providing a credit facility of the
type and with the Collateral and information then available to it set forth
herein, would act in such circumstances.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be
computed unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the financial statements of Pep Boys most recently
received by Agent prior to the date hereof.
(i) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including", the words
"to" and "until" each mean "to but excluding" and the word "through" means "to
and including".
(j) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing
Agreement, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or
regulation.
(k) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Agent and the
other parties, and are the products of all parties. Accordingly, this
Agreement and the other Financing Agreements shall not be construed against
Agent or Lenders merely because of Agent's or any Lender=s involvement in their
preparation.
14.3 Notices. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests
and demands upon the parties are to be given to the following addresses (or to
such other address as any party may designate by notice in accordance with this
Section):
If to any Borrower
or Guarantor: The Pep Boys - Manny, Moe & Xxxx
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Vice-President-Chief
Accounting Officer
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to:
The Pep Boys - Manny, Moe & Xxxx
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Vice-President-General
Counsel
Telephone No.: 000-000-0000
Telecopy No.: 000-000-00000
If to Agent: Congress Financial Corporation, as
Agent
0000 Xxxxxx xx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Portfolio Manager
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
14.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
14.5 Confidentiality.
(a) Agent and each Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by any Borrower or Guarantor pursuant to this
Agreement, provided, that, nothing contained herein shall limit the disclosure
of any such information: (i) to the extent required by statute, rule,
regulation, subpoena or court order, (ii) to bank examiners and other
regulators, auditors and/or accountants, in connection with any litigation to
which Agent or such Lender is a party, (iii) to any Lender or Participant (or
prospective Lender or Participant) or to any Affiliate of any Lender so long as
such Lender or Participant (or prospective Lender or Participant) or Affiliate
shall have first agreed in writing to treat such information as confidential in
accordance with this Section 14.5, (iv) to counsel for Agent or any Lender or
Participant (or prospective Lender or
Participant), or (v) by Agent or any Lender (or prospective Lender or
Participant) to any and all Persons, without limitation of any kind, of any
information with respect to the U.S. federal income tax treatment and U.S.
federal income tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to Agent or any Lender (or prospective Lender or Participant) relating
to such tax treatment and tax structure.
(b) In no event shall this Section 14.5 or any other provision of
this Agreement, any of the other Financing Agreements or applicable law be
deemed: (i) to apply to or restrict disclosure of information that has been or
is made public by any Borrower, Guarantor or any third party without breach of
this Section 14.5 or otherwise becomes generally available to the public other
than as a result of a disclosure in violation hereof, (ii) to apply to or
restrict disclosure of information that was or becomes available to Agent or
any Lender (or any Affiliate of any Lender) on a non-confidential basis from a
person other than a Borrower or Guarantor, (iii) to require Agent or any Lender
to return any materials furnished by a Borrower or Guarantor to Agent or a
Lender or prevent Agent or a Lender from responding to routine informational
requests in accordance with the Code of Ethics for the Exchange of Credit
Information promulgated by The Xxxxxx Xxxxxx Associates or other applicable
industry standards relating to the exchange of credit information. The
obligations of Agent and Lenders under this Section 14.5 shall supersede and
replace the obligations of Agent and Lenders under any confidentiality letter
signed prior to the date hereof.
14.6 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Borrowers, Guarantors and
their respective successors and assigns, except that Borrowers and Guarantors
may not assign their respective rights under this Agreement, the other
Financing Agreements and any other document referred to herein or therein
without the prior written consent of Agent and Lenders. Any such purported
assignment without such express prior written consent shall be void. No Lender
may assign its rights and obligations under this Agreement, except as provided
in Section 14.7 below. The terms and provisions of this Agreement and the other
Financing Agreements are for the purpose of defining the relative rights and
obligations of Borrowers, Guarantors, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of
the other Financing Agreements.
14.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of Agent (the
prior written consent of Agent shall not be required in the event of an
assignment to a Person that is an Eligible Transferee under Section 1.45(a) or
(b) hereof) and prior written notice to Administrative Borrower, assign all or,
if less than all, a portion equal to at least $10,000,000 in the aggregate for
the assigning Lender, of such rights and obligations under this Agreement to
one or more Eligible Transferees (but not including for this purpose any
assignments in the form of a participation), each of which assignees shall
become a party to this Agreement as a Lender by execution of an Assignment and
Acceptance; provided, that, (i) such transfer or assignment will not be
effective until recorded by Agent on the Register, (ii) Agent shall have
received for its sole account payment of a processing fee from the assigning
Lender or the assignee in the amount of $3,500 (the payment of the processing
fee shall not be required in the event of an assignment to a Person that is an
Eligible Transferee under Section 1.45(a) or (b) hereof), (iii) so long as no
Event of Default has occurred and is continuing, such transfer or assignment
shall require the prior written consent of Administrative Borrower (the prior
written consent of Administrative Borrower shall not be required in the event
of an assignment to a Person that is an Eligible Transferee under Section
1.45(a) or (b) hereof), which shall not be unreasonably withheld or delayed and
shall be deemed granted if not objected to within three (3) Business Days and
(iv) no assignment shall be made or participation sold to any Direct Competitor
of any Borrower except after the occurrence of an Event of Default. No Lender
shall make an assignment of its rights and obligations under this Agreement
without making a contemporaneous assignment to the same assignee of an
equivalent percentage of such Lender's (or in the case of Congress, its
affiliate, Wachovia Capital Investments, Inc.) rights and obligations in
respect of the Tranche A Loans (as such term is defined in the Synthetic Lease
Facility Agreements) under the Synthetic Lease Facility Agreements.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and shall modify the Register to
give effect to each Assignment and Acceptance. The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
any Borrowers, Obligors, Agent and Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Administrative
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and the
assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the
other Financing Agreements or the execution, legality, enforceability,
genuineness, sufficiency or value of this Agreement or any of the other
Financing Agreements furnished pursuant hereto, (ii) the assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, Obligor or any of their Subsidiaries or
the performance or observance by any Borrower or Obligor of any of the
Obligations; (iii) such assignee confirms that it has received a copy of this
Agreement and the other Financing
Agreements, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such assignee will, independently and without
reliance upon the assigning Lender, Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably
incidental thereto, and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement and the other Financing Agreements are required to be performed by it
as a Lender. Agent and Lenders may furnish any information concerning any
Borrower or Obligor in the possession of Agent or any Lender from time to time
to assignees and Participants.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation,
all or a portion of its Commitments and the Loans owing to it and its
participation in the Letter of Credit Accommodations, without the consent of
Agent or the other Lenders); provided, that, (i) such Lender's obligations
under this Agreement (including, without limitation, its Commitment hereunder)
and the other Financing Agreements shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, and Borrowers, Guarantors, the other Lenders and Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other
Financing Agreements, and (iii) the Participant shall not have any rights under
this Agreement or any of the other Financing Agreements (the Participant's
rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by any Borrower or Obligor hereunder
shall be determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
(g) Borrowers and Guarantors shall assist Agent or any Lender
permitted to sell assignments or participations under this Section 14.7 in
whatever manner reasonably necessary in order to enable or effect any such
assignment or participation, including (but not limited to) the execution and
delivery of any and all agreements, notes and other documents and instruments
as shall be requested and the delivery of informational materials, appraisals
or other documents for, and the participation of relevant management in
meetings and conference calls with, potential Lenders or Participants
(provided, that, Borrowers shall not be required to incur more than $100,000 of
expenses, in the aggregate, during the term of this Agreement in connection
therewith, unless otherwise agreed to by Agent and Administrative Borrower).
Borrowers shall certify the correctness, completeness and accuracy, in all
material respects, of all descriptions of Borrowers and Guarantors and their
affairs provided or prepared by any Borrower or Guarantor that are contained in
any selling materials and all other information provided by it and included in
such materials.
14.8 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
14.9 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall
be an original, but all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of this Agreement or any of
the other Financing Agreements by telefacsimile shall have the same force and
effect as the delivery of an original executed counterpart of this Agreement or
any of such other Financing Agreements. Any party delivering an executed
counterpart of any such agreement by telefacsimile shall also deliver an
original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.
IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused these
presents to be duly executed as of the day and year first above written.
AGENT BORROWERS
/s/CONGRESS FINANCIAL CORPORATION,
as agent /s/ THE PEP BOYS - MANNY, MOE & XXXX
/s/ THE PEP BOYS XXXXX XXX &
XXXX OF CALIFORNIA
/s/ PEP BOYS - MANNY, MOE & XXXX OF
DELAWARE, INC.
/s/ PEP BOYS - MANNY, MOE & XXXX OF
PUERTO RICO, INC.
GUARANTORS
/s/ PBY CORPORATION
/s/ CARRUS SUPPLY CORPORATION
LENDERS
/s/ CONGRESS FINANCIAL CORPORATION
/s/ XXXXX FARGO FOOTHILL, LLC
/s/ WHITEHALL BUSINESS CREDIT CORP.
/s/ THE CIT GROUP/BUSINESS CREDIT, INC.
/s/ GENERAL ELECTRIC CAPITAL CORPORATION
/s/ RZB FINANCE, LLC
/s/ GMAC COMMERCIAL FINANCE LLC
/s/ LASALLE BUSINESS CREDIT LLC
/s/ PNC BANK, NATIONAL ASSOCIATION
/s/ UPS CAPITAL CORPORATION
/s/ SIEMENS FINANCIAL SERVICES, INC.
/s/ ORIX FINANCIAL SERVICES, INC.