Exhibit 10.3
July 31, 1998
The Pep Boys - Manny, Moe & Jack
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Gentlemen:
Effective as of November 13, 1995, State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity, but solely as
Trustee under Declaration of Trust dated November 13, 1995 ("Lessor"), and The
Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation ("Guarantor"), entered
into that certain Lease Guarantee pursuant to which Guarantor guaranteed
certain obligations of Guarantor, The Pep Boys Manny, Moe & Jack of California,
a California corporation, and Pep Boys - Manny, Moe & Jack of Delaware, Inc., a
Delaware corporation (collectively, "Lessee"), under that certain Master Lease
(as amended, supplemented or otherwise modified from time to time, the "Lease")
dated effective as of November 13, 1995, between Lessor and Lessee, with
respect to certain property more particularly described therein. Such Xxxxx
Xxxxxxxxx, as heretofore modified by a certain amendment letter dated as of
January 31, 1998, is herein referred to as the "Guarantee". All terms used
herein and not otherwise defined shall have the meanings ascribed thereto in
the Lease.
1. The modifications set out below with respect to Section 8(e) of the
Guarantee (relating to the required NOP/Interest Charges Ratio) have been
agreed to between Lessor and Guarantor, with the consent of Citicorp Leasing,
Inc., a Delaware corporation, as Agent for Noteholders ("Agent"), and shall be
effective as of the second fiscal quarter of fiscal year 1998. Accordingly,
Section 8(e) of the Guarantee shall read as follows:
"(e) NOP/Interest Charges Ratio. At any time permit the NOP/
Interest Charges Ratio to be less than 2.25 to 1.0; provided, however,
that for purposes of computing the NOP/Interest Charges Ratio for the
respective fiscal quarters ending August 1, 1998, and October 31,
1998, only, the NOP/Interest Charges Ratio shall be measured not on a
four (4) consecutive fiscal quarter basis as provided for in the
definition of the term NOP/Interest Charges Ratio, but rather on the
basis of the period elapsed in fiscal year 1998 (e.g., the ratio for
the second quarter of 1998 shall compare Net Operating Profit for the
first two quarters of fiscal year 1998 to Interest Expense for the
same period, and the ratio for the third quarter shall compare Net
Operating Profit for the first three quarters of fiscal year 1998 to
Interest Expense for the same period)."
For periods prior to the second fiscal quarter of 1998, the NOP/Interest
Charges Ratio shall be determined based on the provisions of the Guarantee (as
heretofore amended) without regard to the foregoing restatement of Section 8(e).
In consideration of the modification set out above with respect to Section
8(e) of the Guarantee, simultaneously herewith Guarantor shall pay to Agent, on
behalf of itself as a Purchaser and Instrument Holder and the other Purchasers
and Instrument Holders, a fee in the amount of 5.0 basis points (.05%) times
the aggregate outstanding balance of the Instruments held by each such
Instrument Holder.
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2. The Guarantee currently provides for written notice by Lessor or
Agent to Guarantor, and opportunity to cure, in the event of certain defaults
under the Guarantee. Xxxxxx and Guarantor hereby agree, with the consent of
Agent, to modify such requirements and certain other provisions of the
Guarantee as follows:
(a) Clause (iv) of Section 7(d) of the Guarantee is hereby amended
in its entirety to be and read as follows:
"(iv) promptly after Guarantor learns or has reason to
believe that an Event of Default (or an event or circumstances
which with notice and/or the passage of time could mature into
an Event of Default) has occurred under the Lease, this
Guarantee, and/or the Environmental Indemnity Agreement of even
date herewith executed by Guarantor, a notice of such Event of
Default (or other event or circumstance, as applicable)
describing the same in reasonable detail and, together with
such notice or as soon thereafter as possible, as description
of the action that Guarantor has taken and proposes to take
with respect thereto;..."
(b) Subsection (iv) of Section 14(a) of the Guarantee is hereby
deleted in its entirety, and in lieu thereof there is hereby inserted new
subsections (iv) and (v), to be and read as follows (with the subsequent
subsections of Section 14[a] being re-lettered accordingly):
"(iv) If there shall be a default in the performance of
any of its obligations under any of Sections 7(a), 7(b),
7(d)(iv), or 8(b) through 8(e), of this Guarantee.
"(v) If there shall be a defualt in the performance of
any of its other obligations or observance of any term,
condition or covenant contained in this Guarantee other than
defaults described in other subsections of this Section 14(a)
and such default shall continue unremedied for a period of
thirty (30) days after written notice thereof has been given
to Guarantor by the Lessor or Agent."
3. Except as specifically amended hereby, the Guarantee (as previously
amended) shall remain unchanged and in full force and effect, and Guarantor and
Lessor ratify and confirm the terms thereof, as amended hereby.
Very truly yours,
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, but
solely as Trustee under Declaration
of Trust, Lessor
By:_________________________________
AGREED TO AND ACCEPTED:
THE PEP BOYS - XXXXX, XXX & XXXX, Guarantor
By:__________________________
Name:________________________
Title:_______________________
APPROVED:
CITICORP LEASING, INC., Agent
By:__________________________
Name:________________________
Title:_______________________
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