Exhibit 10.16

 

Published CUSIP Number:

 

 

 

$320,000,000

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

among

 

THE PEP BOYS - MANNY, MOE & JACK
as Borrower,

 

and

 

CERTAIN DOMESTIC SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTIES HERETO,
as Guarantors,

 

THE LENDERS PARTIES HERETO,

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent

 

Dated as of October 27, 2006

 

WACHOVIA CAPITAL MARKETS, LLC,
as Sole Lead Arranger and Sole Book Runner

 

 

 

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Prepared by:

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS

1

Section 1.1

Defined Terms

1

Section 1.2

Other Definitional Provisions

27

Section 1.3

Accounting Terms

28

Section 1.4

Resolution of Drafting Ambiguities

28

Section 1.5

Time References

28

 

 

 

ARTICLE II THE LOANS; AMOUNT AND TERMS

29

Section 2.1

Term Loan

29

Section 2.2

[Reserved]

30

Section 2.3

Fee

31

Section 2.4

Prepayments

31

Section 2.5

Default Rate and Payment Dates

32

Section 2.6

Conversion Options

33

Section 2.7

Computation of Interest and Fees; Usury

33

Section 2.8

Pro Rata Treatment and Payments

35

Section 2.9

Non-Receipt of Funds by the Administrative Agent

36

Section 2.10

Inability to Determine Interest Rate

37

Section 2.11

Illegality

38

Section 2.12

Requirements of Law

38

Section 2.13

Indemnity

40

Section 2.14

Taxes

40

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES

42

Section 3.1

Financial Condition

42

Section 3.2

No Change

43

Section 3.3

Corporate Existence; Compliance with Law

43

Section 3.4

Corporate Power; Authorization; Enforceable Obligations

44

Section 3.5

No Legal Bar; No Default

44

Section 3.6

No Material Litigation

44

Section 3.7

Investment Company Act; Etc

44

Section 3.8

Margin Regulations

45

Section 3.9

ERISA

45

Section 3.10

Environmental Matters

45

Section 3.11

Use of Proceeds

46

Section 3.12

Subsidiaries

46

Section 3.13

Ownership

47

Section 3.14

Indebtedness

47

Section 3.15

Taxes

47

Section 3.16

Intellectual Property Rights

47

Section 3.17

Solvency

47

Section 3.18

Investments

48

Section 3.19

Location of Collateral

48

Section 3.20

No Burdensome Restrictions

48

 

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Section 3.21

Brokers’ Fees

48

Section 3.22

Labor Matters

48

Section 3.23

Accuracy and Completeness of Information

49

Section 3.24

Material Contracts

49

Section 3.25

Insurance

49

Section 3.26

Security Documents

49

Section 3.27

Classification of Senior Indebtedness

49

Section 3.28

Anti-Terrorism Laws

50

Section 3.29

Compliance with OFAC Rules and Regulations

50

Section 3.30

Compliance with FCPA

50

Section 3.31

Mortgaged Properties

50

 

 

 

ARTICLE IV CONDITIONS PRECEDENT

53

Section 4.1

Conditions to Closing Date

53

 

 

ARTICLE V AFFIRMATIVE COVENANTS

58

Section 5.1

Financial Statements

58

Section 5.2

Certificates; Other Information

59

Section 5.3

Payment of Taxes and Other Obligations

60

Section 5.4

Conduct of Business and Maintenance of Existence

60

Section 5.5

Maintenance of Property; Insurance

60

Section 5.6

Inspection of Property; Books and Records; Discussions

63

Section 5.7

Notices

64

Section 5.8

Environmental Laws

65

Section 5.9

Financial Covenant

66

Section 5.10

Additional Guarantors

66

Section 5.11

Compliance with Law

66

Section 5.12

Pledged Collateral; Substitutions; Releases

67

Section 5.13

[Reserved]

68

Section 5.14

Casualty and Condemnation

68

Section 5.15

Further Assurances; Real Property Documents

72

 

 

ARTICLE VI NEGATIVE COVENANTS

73

Section 6.1

Indebtedness

73

Section 6.2

Liens

74

Section 6.3

Nature of Business

74

Section 6.4

Consolidation, Merger, Sale or Purchase of Assets, etc.

74

Section 6.5

Advances, Investments and Loans

77

Section 6.6

Transactions with Affiliates

80

Section 6.7

Reciprocal Easement Agreements

81

Section 6.8

Corporate Changes; Material Contracts

81

Section 6.9

Limitation on Restricted Actions

81

Section 6.10

Restricted Payments

82

Section 6.11

Amendment of Subordinated Debt

84

Section 6.12

Sale Leasebacks

84

Section 6.13

No Joint Assessment

85

 

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ARTICLE VII EVENTS OF DEFAULT

85

Section 7.1

Events of Default

85

Section 7.2

Property-Specific Cure

88

Section 7.3

Acceleration; Remedies

88

 

 

ARTICLE VIII THE ADMINISTRATIVE AGENT

89

Section 8.1

Appointment

89

Section 8.2

Delegation of Duties

89

Section 8.3

Exculpatory Provisions

90

Section 8.4

Reliance by Administrative Agent

90

Section 8.5

Notice of Default

91

Section 8.6

Non-Reliance on Administrative Agent and Other Lenders

91

Section 8.7

Indemnification

91

Section 8.8

Administrative Agent in Its Individual Capacity

92

Section 8.9

Successor Administrative Agent

92

Section 8.10

Nature of Duties

93

Section 8.11

Releases

93

 

 

ARTICLE IX MISCELLANEOUS

93

Section 9.1

Amendments, Waivers and Release of Collateral

93

Section 9.2

Notices

95

Section 9.3

No Waiver; Cumulative Remedies

97

Section 9.4

Survival of Representations and Warranties

97

Section 9.5

Payment of Expenses and Taxes

97

Section 9.6

Successors and Assigns; Participations; Purchasing Lenders

98

Section 9.7

Adjustments; Set-off

102

Section 9.8

Table of Contents and Section Headings

103

Section 9.9

Counterparts

103

Section 9.10

Effectiveness

103

Section 9.11

Severability

103

Section 9.12

Integration

103

Section 9.13

Governing Law

103

Section 9.14

Consent to Jurisdiction and Service of Process

104

Section 9.15

Confidentiality

104

Section 9.16

Acknowledgments

105

Section 9.17

Waivers of Jury Trial; Waiver of Consequential Damages

105

Section 9.18

Patriot Act Notice

106

 

 

ARTICLE X GUARANTY

106

Section 10.1

The Guaranty

106

Section 10.2

Bankruptcy

106

Section 10.3

Nature of Liability

107

Section 10.4

Independent Obligation

107

Section 10.5

Authorization

107

Section 10.6

Reliance

108

Section 10.7

Waiver

108

Section 10.8

Limitation on Enforcement

109

 

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Section 10.9

Confirmation of Payment

109

 

iv

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Schedules

 

Schedule 1.1(a)

 

Account Designation Letter

Schedule 1.1(b)

 

Liens

Schedule 1.1(c)

 

Allocated Payoff Amount

Schedule 2.1(d)

 

Form of Term Note

Schedule 2.6

 

Form of Notice of Conversion/Extension

Schedule 3.3

 

Jurisdictions of Organization and Qualification

Schedule 3.5

 

Violations; Defaults

Schedule 3.12

 

Subsidiaries

Schedule 3.19(a)

 

Location of Real Property

Schedule 3.19(b)

 

Chief Executive Offices

Schedule 3.22

 

Labor Matters

Schedule 3.24

 

Material Contracts

Schedule 3.25

 

Insurance

Schedule 3.27

 

Classification of Senior Indebtedness

Schedule 3.31(b)

 

Leases

Schedule 3.31(e)

 

Partial Takings

Schedule 4.1(b)

 

Form of Secretary’s Certificate

Schedule 4.1(g)

 

Form of Solvency Certificate

Schedule 5.2(a)(i)

 

Form of Officer’s Compliance Certificate

Schedule 5.2(a)(ii)

 

Form of Collateral Value Report

Schedule 5.5(c)

 

O&M Plans

Schedule 5.10

 

Form of Joinder Agreement

Schedule 5.15

 

Post-Closing Surveys

Schedule 6.1(b)

 

Indebtedness

Schedule 6.5

 

Existing Loans, Advances and Guarantees

Schedule 6.9

 

Existing Encumbrances and Restrictions

Schedule 9.6

 

Form of Assignment and Assumption

 

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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 27, 2006, among THE
PEP BOYS -MANNY, MOE & JACK, a Pennsylvania corporation (the “Borrower”), each
of those Domestic Subsidiaries of the Borrower identified as a “Guarantor” on
the signature pages hereto and such other Domestic Subsidiaries of the Borrower
as may from time to time become a party hereto (collectively the “Guarantors”
and individually a “Guarantor”), the several banks and other financial
institutions from time to time parties to this Credit Agreement (collectively
the “Lenders” and individually a “Lender”), and WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, as administrative agent for the
Lenders hereunder (in such capacity, the “Administrative Agent” or the “Agent”).

 

W I T N E S S E T H :

 

WHEREAS, the Borrower, the Guarantors, the lenders party thereto and the
Administrative Agent are parties to that certain Credit Agreement dated as of
January 27, 2006 (as amended, supplemented or otherwise modified from time to
time prior to the date hereof, the “Existing Credit Agreement”);

 

WHEREAS, the Borrower desires to amend the Existing Credit Agreement as set
froth herein and to restate the Existing Credit Agreement in its entirety to
read as follows;

 

WHEREAS, the Borrower has requested that the Lenders make a term loan to the
Borrower in the amount of up to $320,000,000, as more particularly described
herein; and

 

WHEREAS, the Lenders have agreed to make such term loan to the Borrower on the
terms and conditions contained herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, such parties hereby
agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                   Defined Terms.

 

As used in this Credit Agreement, terms defined in the preamble to this Credit
Agreement have the meanings therein indicated, and the following terms have the
following meanings:

 

“2002 Senior Note Indenture” shall mean the Indenture, dated as of May 21, 2002,
by and among the Borrower and certain of its Subsidiaries, and Wachovia Bank,
National Association, as Trustee, with respect to the Borrower’s 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.

 

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“2004 Senior Subordinated Note Indenture” shall mean the Indenture, by and
between the Borrower and Wachovia Bank, National Association, as Trustee,
executed and delivered by the parties thereto on the 2004 Senior Subordinated
Note Issuance Date, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, pursuant to
which the Borrower shall have issued promissory notes in the maximum aggregate
principal amount equal to the 2004 Senior Subordinated Note Issuance Amount
(such promissory notes being referred to as the “2004 Senior Subordinated
Notes”).

 

“2004 Senior Subordinated Note Issuance Amount” shall mean the aggregate
principal amount of the notes of the Borrower issued pursuant to the 2004 Senior
Subordinated Note Indenture on the 2004 Senior Subordinated Note Issuance Date,
provided, that, such amount shall not exceed $200,000,000.

 

“2004 Senior Subordinated Note Issuance Date” shall mean December 14, 2004.

 

“2005 Appraisals” shall mean the FIRREA compliant appraisal of the fee simple
interest in each Mortgaged Property, dated February 2005 and performed by
Cushman & Wakefield, Inc.

 

“2006 Appraisals” shall have the meaning set forth in Section 4.1(d).

 

“ABL Consolidated EBITDA” shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the ABL 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 ABL Consolidated Net Income of such
Person), all in accordance with GAAP, plus (c) ABL Interest Expense for such
period (to the extent deducted in the computation of ABL Consolidated Net Income
of such Person), plus (d) the Provision for Taxes for such period (to the extent
deducted in the computation of ABL Consolidated Net Income of such Person).

 

“ABL 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 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; 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

 

2

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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, 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.

 

“ABL Interest Expense” shall mean, for any period, as to any Person, all of the
following as determined in accordance with GAAP:  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
(a) amortization of discount and amortization of deferred financing fees paid in
cash in connection with the transactions contemplated hereby and (b) any other
interest expense not payable in cash.

 

“ABR Default Rate” shall have the meaning set forth in Section 2.5.

 

“Account Designation Letter” shall mean the Account Designation Letter dated as
of the Closing Date from the Borrower to the Administrative Agent in
substantially the form attached hereto as Schedule 1.1(a).

 

“Additional Credit Party” shall mean each Person that becomes a Guarantor by
execution of a Joinder Agreement in accordance with Section 5.10.

 

“Administrative Agent” or “Agent” shall have the meaning set forth in the first
paragraph of this Credit Agreement and any successors in such capacity.

 

“Administrative Details Form” shall mean, with respect to any Lender, a document
containing such Lender’s contact information for purposes of notices provided
under this Credit Agreement and account details for purposes of payments made to
such Lender under this Credit Agreement.

 

“Affiliate” shall mean as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, a Person shall be deemed to be
“controlled by” a Person if such Person possesses, directly or indirectly, power
either (a) to vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (b) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.

 

“Agreement” or “Credit Agreement” shall mean this Credit Agreement, as amended,
restated, amended and restated, modified or supplemented from time to time in
accordance with its terms.

 

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“Allocated Payoff Amount” shall mean, with respect to each Mortgaged Property,
the allocated payoff amount set forth with respect to such Mortgaged Property on
Schedule 1.1(c) or, with respect to any Property that becomes a Mortgaged
Property after the Closing Date, the allocated payoff amount as determined by
the Administrative Agent and provided to the Borrower.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: 
“Prime Rate” shall mean, at any time, the rate of interest per annum publicly
announced or otherwise identified from time to time by Wachovia at its principal
office in Charlotte, North Carolina as its prime rate. The parties hereto
acknowledge that the rate announced publicly by Wachovia as its Prime Rate is an
index or base rate and shall not necessarily be its lowest or best rate charged
to its customers or other banks; and “Federal Funds Effective Rate” shall mean,
for any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published on the next
succeeding Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms above, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective on the opening of business on the date of such change.

 

“Alternate Base Rate Loan” shall mean that portion of the Term Loan that bears
interest at an interest rate based on the Alternate Base Rate.

 

“Applicable Percentage” shall mean (a) for Term Loans that are Alternate Base
Rate Loans, 1.75% and (b) for Term Loans that are LIBOR Rate Loans, 2.75%;
provided, however, after the financial statements referred to in
Section 5.1(a) for the fiscal year ending January 28, 2007 shall have been
delivered to the Administrative Agent pursuant to the terms thereof and the
Borrower shall have achieved the Senior Leverage Ratio Target as of the fiscal
year ending January 28, 2007 or any subsequent fiscal quarter, the Applicable
Percentage shall be changed on a permanent basis to 1.50% for Term Loans that
are Alternate Base Rate Loans and 2.50% for Term Loans that are LIBOR Rate
Loans.

 

“Approved Fund” means any Fund that is administered, managed or underwritten by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.

 

“Arranger” shall mean Wachovia Capital Markets, LLC, together with its
successors and assigns.

 

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“Asset Disposition” shall mean the disposition of any or all of the assets
constituting Collateral of any Credit Party or any Subsidiary whether by sale,
transfer or otherwise. The term “Asset Disposition” shall not include the sale
or transfer of assets permitted by Subsections 6.4(b)(i) through (v).

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 9.6), and accepted by the Administrative Agent, in
substantially the form of Schedule 9.6 or any other form approved by the
Administrative Agent.

 

“Bankruptcy Code” shall mean the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.

 

“Bankruptcy Event” shall mean any of the events described in Section 7.1(f).

 

“Borrower” shall have the meaning set forth in the first paragraph of this
Credit Agreement.

 

“Business” shall have the meaning set forth in Section 3.10.

 

“Business Day” shall mean a day other than a Saturday, Sunday or other day on
which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close; provided, however, that when used in
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate Loan, the term “Business Day” shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the London
interbank market.

 

“Capital Lease” shall mean any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.

 

“Capital Lease Obligations” shall mean the capitalized lease obligations
relating to a Capital Lease determined in accordance with GAAP.

 

“Capital Stock” shall mean (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

 

“Cash Equivalents” shall mean (a) securities 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) having maturities of not more
than twelve months from the date of acquisition (“Government

 

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Obligations”), (b) Dollar denominated time deposits, certificates of deposit,
Eurodollar time deposits and Eurodollar certificates of deposit of (i) any
domestic commercial bank of recognized standing having capital and surplus in
excess of $250,000,000 or (ii) any bank whose short-term commercial paper rating
from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least
P-1 or the equivalent thereof (any such bank being an “Approved Bank”), in each
case with maturities of not more than 364 days from the date of acquisition,
(c) commercial paper and variable or fixed rate notes issued by any Approved
Bank (or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by any domestic corporation rated A-1 (or the equivalent thereof) or
better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and
maturing within six months of the date of acquisition, (d) repurchase agreements
with a bank or trust company (including a Lender) or a recognized securities
dealer having capital and surplus in excess of $500,000,000 for direct
obligations issued by or fully guaranteed by the United States of America,
(e) obligations of any State of the United States or any political subdivision
thereof for the payment of the principal and redemption price of and interest on
which there shall have been irrevocably deposited Government Obligations
maturing as to principal and interest at times and in amounts sufficient to
provide such payment, and (f) auction preferred stock rated in the highest
short-term credit rating category by S&P or Moody’s.

 

“Casualty” shall have the meaning set forth in Section 5.14.

 

“Change of Control” shall mean at any time the occurrence of any of the
following events: (a) any “person” or “group” (as such terms are used in
Section 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person shall be deemed to have “beneficial ownership” of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 50%
or more of the then outstanding Voting Stock of the Borrower; or (b) the
replacement of a majority of the Board of Directors of the Borrower over a
two-year period from the directors who constituted the Board of Directors at the
beginning of such period, and such replacement shall not have been approved by a
vote of at least a majority of the Board of Directors of the Borrower then still
in office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.

 

“Closing Date” shall mean the date of this Credit Agreement.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

 

“Collateral” shall mean a collective reference to the Mortgaged Properties and
any other collateral which is identified in, and at any time will be covered by
the Security Documents and any other property or assets of a Credit Party that
may from time to time secure the Credit Party Obligations.

 

“Collateral Value” means, as of any date of determination with respect to any
Properties then constituting Collateral, the fee simple fair market value, based
on the 2005 Appraisals, the 2006 Appraisals or such later appraisals as required
by this Agreement, as applicable, of such

 

6

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Properties as set forth in and calculated in accordance with the Collateral
Value Report most recently delivered to the Administrative Agent.

 

“Collateral Value Report” means, a report demonstrating the fee simple fair
market value of the Collateral as more specifically set forth on Schedule
5.2(a)(ii).

 

“Commonly Controlled Entity” shall mean an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group that includes the Borrower and that
is treated as a single employer under Section 414 of the Code.

 

“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result, in lieu or in anticipation, of the exercise of the
right of condemnation or eminent domain, of all or any part of any Mortgaged
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting such Mortgaged Property or
any part thereof.

 

“Consolidated” shall mean, when used with reference to financial statements or
financial statement items of the Credit Parties and their Subsidiaries or any
other Person, such statements or items on a consolidated basis in accordance
with the consolidation principles of GAAP.

 

“Consolidated Cash Flow Available for Fixed Charges” for any period means the
Consolidated Net Income for such period increased by the sum of (to the extent
deducted in determining Consolidated Net Income):

 

(1)                                        Consolidated Interest Expense for
such period; plus

 

(2)                                        the Consolidated amount of interest
capitalized by the Credit Parties and their Subsidiaries during such period;
plus

 

(3)                                        Consolidated Income Tax Expense for
such period; plus

 

(4)                                        the Consolidated depreciation and
amortization expense included in the income statement of the Credit Parties and
their Subsidiaries for such period; plus

 

(5)                                        other non-cash expenses (excluding
any such non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) included in the income statement of the
Credit Parties and their Subsidiaries for such period; minus

 

(6)                                        non-cash items increasing
Consolidated Net Income for such period, other than items that were accrued in
the ordinary course of business;

 

provided, however, that there shall be excluded therefrom the Consolidated Cash
Flow Available for Fixed Charges (if positive) of the Insurance Subsidiary
(calculated

 

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separately for such Subsidiary in the same manner as provided above for the
Credit Parties) that is subject to a restriction which prevents the payment of
dividends or the making of distributions to the Borrower or a Guarantor to the
extent of such restriction.

 

“Consolidated Cash Flow Coverage Ratio” as of any date of determination means
the ratio of:

 

(1)                                        Consolidated Cash Flow Available for
Fixed Charges for the period of the most recently completed four consecutive
fiscal quarters for which quarterly or annual financial statements are available
to

 

(2)                                        Consolidated Fixed Charges for such
period;

 

provided, however, that Consolidated Fixed Charges shall be adjusted to give
effect on a pro forma basis to any Indebtedness that has been incurred by any
Credit Party or any Subsidiary thereof since the end of such period that remains
outstanding and to any Indebtedness that is proposed to be Incurred by any
Credit Party or any Subsidiary thereof as if in each case such Indebtedness had
been Incurred on the first day of such period and as if any Indebtedness that is
or will no longer be outstanding as the result of the incurrence of any such
Indebtedness had not been outstanding as of the first day of such period;
provided, however, that in making such computation, the Consolidated Interest
Expense attributable to interest on any proposed Indebtedness bearing a floating
interest rate shall be computed on a pro forma basis as if the rate in effect on
the date of computation had been the applicable rate for the entire period; and
provided further that, in the event any Credit Party or any Subsidiary thereof
has made Asset Dispositions or acquisitions of assets not in the ordinary course
of business (including acquisitions of other Persons by merger, consolidation or
purchase of Capital Stock) during or after such period, such computation shall
be made on a pro forma basis as if the Asset Dispositions or acquisitions had
taken place on the first day of such period.

 

“Consolidated EBITDA” shall mean, as of any date of determination for the four
quarter period ending on such date, (a) Consolidated Net Income for such period
plus (b) the sum of the following to the extent deducted in calculating
Consolidated Net Income: (i) Consolidated Interest Expense for such period,
(ii) tax expense (including, without limitation, any federal, state, local and
foreign income and similar taxes) of the Credit Parties and their Subsidiaries
for such period, (iii) depreciation and amortization expense of the Credit
Parties and their Subsidiaries for such period, and (iv) other non-cash charges
(excluding reserves for future cash charges) of the Credit Parties and their
Subsidiaries for such period, minus (c) non-cash charges previously added back
to Consolidated Net Income in determining Consolidated EBITDA to the extent such
non-cash charges have become cash charges during such period minus (d) any other
non-recurring cash or non-cash gains during such period.

 

“Consolidated Fixed Charges” for any period means the sum of:

 

(1)                                        Consolidated Interest Expense and

 

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(2)                                        the Consolidated amount of interest
capitalized by the Credit Parties and their Subsidiaries during such period.

 

“Consolidated Income Tax Expense” for any period means the Consolidated
Provision for Taxes of the Credit Parties and their Subsidiaries for such period
calculated.

 

“Consolidated Interest Expense” means for any period the Consolidated interest
expense included in a Consolidated income statement (without deduction of
interest income) of the Credit Parties and their Subsidiaries for such period
calculated, including without limitation or duplication (or, to the extent not
so included, with the addition of):

 

(1)                                        the amortization of Indebtedness
discounts;

 

(2)        any payments or fees with respect to letters of credit, bankers’
acceptances or similar facilities;

 

(3)        net fees with respect to interest rate swap or similar agreements or
foreign currency hedge, exchange or similar agreements;

 

(4)        Preferred Stock dividends of the Credit Parties and their
Subsidiaries (other than with respect to Redeemable Stock) declared and paid or
payable;

 

(5)        accrued Redeemable Stock dividends of the Credit Parties and their
Subsidiaries, whether or not declared or paid;

 

(6)         interest on Indebtedness guaranteed by the Credit Parties and their
Subsidiaries; and

 

(7)                                        the portion of rental expense deemed
to be representative of the interest factor attributable to Capital Lease
Obligations.

 

“Consolidated Net Income” for any period means the Consolidated net income (or
loss) of the Credit Parties and their Subsidiaries for such period; provided
that there shall be excluded therefrom:

 

(1)                                        the net income (or loss) of any
Person acquired by the Borrower or a Guarantor in a pooling-of-interests
transaction for any period prior to the date of such transaction;

 

(2)                                        the net income (or loss) of any
Person that is not a Guarantor except to the extent of the amount of dividends
or other distributions actually paid to the Borrower or a Guarantor by such
Person during such period;

 

(3)                                        gains or losses on Asset Dispositions
by the Credit Parties and their Subsidiaries;

 

(4)                                        all extraordinary gains and
extraordinary losses;

 

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(5)                                        gains or losses from the early
retirement or extinguishment of Indebtedness;

 

(6)                                        the cumulative effect of changes in
accounting principles;

 

(7)                                        non-cash gains or losses resulting
from fluctuations in currency exchange rates; and

 

(8)                                        the tax effect of any of the items
described in clauses (1) through (6) above;

 

provided, further, that there shall further be excluded therefrom the net income
(but not net loss) of the Insurance Subsidiary if it is subject to a restriction
which prevents the payment of dividends or the making of distributions to the
Borrower or a Guarantor to the extent of such restriction.

 

“Contractual Obligation” shall mean, as to any Person, any provision of any
security issued by such Person or of any contract, agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.

 

“Convertible Senior Notes” shall mean the Borrower’s 4.25% Convertible Senior
Notes due June 1, 2007, issued pursuant to the 2002 Senior Note Indenture.

 

“Copyright Licenses” shall mean any agreement, whether written or oral,
providing for the grant by or to a Person of any right under any Copyright.

 

“Copyrights” shall mean all copyrights of the Credit Parties and their
Subsidiaries in all works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Copyright Office or in any similar
office or agency of the United States, any state thereof or any other country or
any political subdivision thereof, or otherwise.

 

“Credit Documents” shall mean this Credit Agreement, each of the Term Notes, any
Joinder Agreement, and the Security Documents and all other agreements,
documents, certificates and instruments delivered to the Administrative Agent or
any Lender by any Credit Party in connection therewith (other than any
agreement, document, certificate or instrument related to a Hedging Agreement).

 

“Credit Party” shall mean any of the Borrower or the Guarantors.

 

“Credit Party Obligations” shall mean, without duplication, (a) all of the
obligations, Indebtedness and liabilities of the Credit Parties to the Lenders
and the Administrative Agent, whenever arising, under this Credit Agreement, the
Term Notes or any of the other Credit Documents, including principal, interest,
fees, reimbursements and indemnification obligations and other amounts
(including, but not limited to, any interest accruing after the occurrence of a
filing of a petition of bankruptcy under the Bankruptcy Code with respect to any
Credit Party, regardless of whether such interest is an allowed claim under the
Bankruptcy Code) and (b) all

 

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liabilities and obligations, whenever arising, owing from any Credit Party or
any of their Subsidiaries to any Hedging Agreement Provider arising under any
Secured Hedging Agreement.

 

“Debt Rating” means, as of any date of determination, the rating as determined
by either S&P or Moody’s, as applicable, of the Borrower’s non-credit enhanced,
senior secured long term debt evidenced by the Credit Documents.

 

“Default” shall mean any of the events specified in Section 7.1, whether or not
any requirement for the giving of notice or the lapse of time, or both, or any
other condition, has been satisfied.

 

“Dollars” and “$” shall mean dollars in lawful currency of the United States of
America.

 

“Domestic Lending Office” shall mean, initially, the office of each Lender
designated as such Lender’s Domestic Lending Office shown in such Lender’s
Administrative Details Form; and thereafter, such other office of such Lender as
such Lender may from time to time specify to the Administrative Agent and the
Borrower as the office of such Lender at which Alternate Base Rate Loan of such
Lender are to be made.

 

“Domestic Subsidiary” shall mean any Subsidiary that is organized and existing
under the laws of the United States or any state or commonwealth thereof or
under the laws of the District of Columbia.

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, (ii) unless an Event of Default has occurred
and is continuing, the Borrower (each such approval not to be unreasonably
withheld or delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.

 

“Engagement Letter” shall mean the letter agreement dated September 1, 2006,
addressed to the Borrower from Wachovia and the Arranger, as amended, modified
or otherwise supplemented.

 

“Environmental Laws” shall mean any and all applicable foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other Requirement
of Law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time be in effect during the term of this Credit Agreement.

 

“Environmental Permits” shall mean any and all permits, licenses, approvals,
registrations, notifications, exemptions and other authorizations under or
pursuant to any Environmental Law.

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

“Eurodollar Reserve Percentage” shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

 

“Event of Default” shall mean any of the events specified in Section 7.1;
provided, however, that any requirement for the giving of notice or the lapse of
time, or both, or any other condition, has been satisfied.

 

“Excess Availability” shall mean, as of any date of determination, the amount
the Borrower is entitled to borrow on such date under the Revolving Credit
Agreement in accordance with the terms thereof or the amount of cash on the
balance sheet of the Borrower.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) taxes imposed on or measured by its overall net
income (however denominated), and franchise taxes imposed on it (in lieu of net
income taxes), by the jurisdiction (or any political subdivision thereof) under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender, any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office) or is
attributable to such Foreign Lender’s failure or inability to comply with
Section 2.14, except to the extent that such Foreign Lender (or its assignor, if
any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.14.

 

“Existing Credit Agreement” shall have the meaning set forth in the preamble
hereto.

 

“Federal Funds Effective Rate” shall have the meaning set forth in the
definition of “Alternate Base Rate”.

 

“FIRREA” shall mean the Financial Institutions Reform, Recovery & Enforcement
Act of 1989, as amended from time to time.

 

“Fixtures” shall have the meaning set forth in the granting clause of the
related Mortgage Instrument with respect to each Mortgaged Property.

 

“Flexi-Trust” shall mean the Trust established pursuant to the Flexi-Trust
Agreement.

 

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“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.

 

“Flood Hazard Property” an area designated by the Federal Emergency Management
Agency as having special flood or mud slide hazards.

 

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States of America, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.

 

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

 

“Funded Debt” shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations (including, without limitation, earnout
obligations) of such Person incurred, issued or assumed as the deferred purchase
price of property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and not more than 90 days overdue)
which would appear as liabilities on a balance sheet of such Person, (e) the
principal portion of all obligations of such Person under Capital Leases,
(f) the maximum amount of all letters of credit issued or bankers’ acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (g) all preferred Capital
Stock issued by such Person and which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption or other acceleration, (h) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product, (i) all
obligations of such Person under Hedging Agreements, excluding any portion
thereof which would be accounted for as interest expense under GAAP, (j) all
Indebtedness of others of the type described in clauses (a) through (i) hereof
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (k) all Guaranty
Obligations of such Person with respect to Indebtedness of another Person of the
type described in clauses (a) through (i) hereof, and (l) all Indebtedness of
the type described in clauses (a) through (i) hereof of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer.

 

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“GAAP” shall mean generally accepted accounting principles in effect in the
United States of America applied on a consistent basis; subject, however, in the
case of determination of compliance with the financial covenant set out in
Section 5.9, to the provisions of Section 1.3.

 

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

 

“Guarantor” shall have the meaning set forth in the first paragraph of this
Credit Agreement.

 

“Guaranty” shall mean the guaranty of the Guarantors set forth in Article X.

 

“Guaranty Obligations” shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (a) to purchase any such Indebtedness or
any property constituting security therefor, (b) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (c) to lease or
purchase property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.

 

“Hedging Agreement Provider” shall mean any Person that enters into a Secured
Hedging Agreement with a Credit Party or any of its Subsidiaries that is
permitted by Section 6.1(d)(i) to the extent such Person is a Lender, an
Affiliate of a Lender or any other Person that was a Lender (or an Affiliate of
a Lender) at the time it entered into the Secured Hedging Agreement but has
ceased to be a Lender (or whose Affiliate has ceased to be a Lender) under the
Credit Agreement.

 

“Hedging Agreements” shall mean, with respect to any Person, any agreement
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreement or similar arrangement between such Person
and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate hedging agreements.

 

“Improvements” shall have the meaning set forth in the granting clause of the
related Mortgage Instrument with respect to each Mortgaged Property.

 

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“Indebtedness” shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations (including, without limitation, earnout
obligations) of such Person incurred, issued or assumed as the deferred purchase
price of property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and not more than 90 days overdue)
which would appear as liabilities on a balance sheet of such Person, (e) all
obligations of such Person under take-or-pay or similar arrangements or under
commodities agreements, (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production
from, property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Guaranty Obligations of such Person
with respect to Indebtedness of another Person, (h) the principal portion of all
Capital Lease Obligations of such Person, (i) all obligations of such Person
under Hedging Agreements, excluding any portion thereof which would be accounted
for as interest expense under GAAP, (j) the maximum amount of all letters of
credit issued or bankers’ acceptances facilities created for the account of such
Person and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock issued by such Person and which
by the terms thereof could be (at the request of the holders thereof or
otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration, (l) the Indebtedness of any partnership or unincorporated joint
venture in which such Person is a general partner or a joint venturer and
(m) obligations of such Person under non-compete agreements. Any funds borrowed
by the Borrower 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.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Insolvency” shall mean, with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.

 

“Insurance Subsidiary” shall mean Colchester Insurance Company, a Vermont
insurance corporation, and its successors and assigns.

 

“Intellectual Property” shall mean the Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks and Trademark Licenses of the Credit Parties and
their Subsidiaries, all goodwill associated therewith and all rights to sue for
infringement thereof.

 

“Interest Payment Date” shall mean (a) as to any Alternate Base Rate Loan, the
last day of each March, June, September and December and on the Maturity Date,
(b) as to any LIBOR Rate Loan having an Interest Period of three months or less,
the last day of such Interest Period, (c) as to any LIBOR Rate Loan having an
Interest Period longer than three months, (i) each three

 

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(3) month anniversary following the first day of such Interest Period and
(ii) the last day of such Interest Period and (d) as to any Term Loan which is
the subject of a mandatory prepayment required pursuant to Section 2.4(b), the
date on which such mandatory prepayment is due.

 

“Interest Period” shall mean, with respect to any LIBOR Rate Loan,

 

(a)                                  initially, the period commencing on the
Closing Date or conversion date, as the case may be, with respect to such LIBOR
Rate Loan and ending one, two, three or six months thereafter, subject to
availability to all Lenders, as selected by the Borrower in the Notice of
Conversion given with respect thereto; and

 

(b)                                 thereafter, each period commencing on the
last day of the immediately preceding Interest Period applicable to such LIBOR
Rate Loan and ending one, two, three or six months thereafter, subject to
availability to all Lenders, as selected by the Borrower by irrevocable notice
to the Administrative Agent not less than three Business Days prior to the last
day of the then current Interest Period with respect thereto; provided that the
foregoing provisions are subject to the following:

 

(i)                                     if any Interest Period pertaining to a
LIBOR Rate Loan would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end on the immediately
preceding Business Day;

 

(ii)                                  any Interest Period pertaining to a LIBOR
Rate Loan that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of the relevant
calendar month;

 

(iii)                               if the Borrower shall fail to give notice as
provided above, the Borrower shall be deemed to have selected an Alternate Base
Rate Loan to replace the affected LIBOR Rate Loan;

 

(iv)                              no Interest Period shall extend beyond the
Maturity Date and, further, no Interest Period shall extend beyond any principal
amortization payment date with respect to the Term Loan unless the portion of
the Term Loan consisting of Alternate Base Rate Loans together with the portion
of the Term Loan consisting of LIBOR Rate Loans with Interest Periods expiring
prior to or concurrently with the date such principal amortization payment date
is due, is at least equal to the amount of such principal amortization payment
due on such date; and

 

(v)                                 no more than three (3) LIBOR Rate Loans may
be in effect at any time. For purposes hereof, LIBOR Rate Loans with different
Interest Periods shall be considered as separate LIBOR Rate Loans, even if they
shall begin on the same date, although borrowings, extensions and conversions
may, in accordance

 

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with the provisions hereof, be combined at the end of existing Interest Periods
to constitute a new LIBOR Rate Loan with a single Interest Period.

 

“Investment” shall mean (a) the acquisition (whether for cash, property,
services, assumption of Indebtedness, securities or otherwise) of shares of
Capital Stock, other ownership interests or other securities of any Person or
bonds, notes, debentures or all or substantially all of the assets of any Person
or (b) any deposit with, or advance, loan or other extension of credit to, any
Person (other than deposits made in the ordinary course of business) or (c) any
other capital contribution to or investment in any Person, including, without
limitation, any Guaranty Obligation (including any support for a letter of
credit issued on behalf of such Person) incurred for the benefit of such Person.

 

“Joinder Agreement” shall mean a Joinder Agreement in substantially the form of
Schedule 5.10, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10.

 

“Lender” shall have the meaning set forth in the first paragraph of this Credit
Agreement.

 

“Lender Commitment Letter” shall mean, with respect to any Lender, the letter
(or other correspondence) to such Lender from the Administrative Agent notifying
such Lender of its Term Loan Commitment Percentage.

 

“LIBOR” shall mean, for any LIBOR Rate Loan for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term “LIBOR” shall mean, for any LIBOR Rate Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%). If, for any reason, neither of such rates is available,
then “LIBOR” shall mean the rate per annum at which, as determined by the
Administrative Agent, Dollars in an amount comparable to the Term Loans then
requested are being offered to leading banks at approximately 11:00 A.M. London
time, two (2) Business Days prior to the commencement of the applicable Interest
Period for settlement in immediately available funds by leading banks in the
London interbank market for a period equal to the Interest Period selected.

 

“LIBOR Lending Office” shall mean, initially, the office of each Lender
designated as such Lender’s LIBOR Lending Office in such Lender’s Administrative
Details Form; and thereafter, such other office of such Lender as such Lender
may from time to time specify to the Administrative Agent and the Borrower as
the office of such Lender at which the LIBOR Rate Loan of such Lender are to be
made.

 

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“LIBOR Rate” shall mean a rate per annum (rounded upwards, if necessary, to the
next higher 1/100th of 1%) determined by the Administrative Agent pursuant to
the following formula:

 

 

LIBOR Rate =

LIBOR

 

 

 

1.00 - Eurodollar Reserve Percentage

 

 

“LIBOR Rate Loan” shall mean that portion of the Term Loan the rate of interest
applicable to which is based on the LIBOR Rate.

 

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).

 

“Maintenance Reversion Date” shall mean the date that Excess Availability has
been greater than $75,000,000 for thirty (30) consecutive days.

 

“Mass Appraisal” shall mean an appraisal wherein the value conclusion for each
Mortgaged Property is determined by adjusting the values from the 2005
Appraisals and the 2006 Appraisals for changes in market conditions as
determined by extrapolating the values based on the full narrative appraised
values on a representative sample of Mortgaged Properties.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, property, assets or financial condition of the Borrower or
of the Credit Parties and their Subsidiaries taken as a whole, (b) the ability
of the Borrower or any Guarantor to perform its obligations, when such
obligations are required to be performed, under this Credit Agreement, any of
the Term Notes or any other Credit Document, (c) the validity or enforceability
of this Credit Agreement, any of the Term Notes or any of the other Credit
Documents or the rights or remedies of the Administrative Agent or the Lenders
hereunder or thereunder or (d) the economic value, useful life, utility,
condition, operational capacity or functional capacity of the Mortgaged
Properties taken as a whole.

 

“Material Contract” shall mean (a) any contract or other agreement listed on
Schedule 3.24, (b) any contract or other agreement, written or oral, of the
Credit Parties or any of their Subsidiaries involving monetary liability of or
to any such Person in an amount in excess of $20,000,000 per annum, (c) any
contract or other agreement, written or oral, of the Credit Parties or any of
their Subsidiaries representing at least $20,000,000 of the total Consolidated
revenues of the Credit Parties and their Subsidiaries for any fiscal year or
(d) any other contract, agreement, permit or license, written or oral, of the
Credit Parties or any of their Subsidiaries as to which the breach,
nonperformance, cancellation of failure to renew by any party thereto,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

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“Materials of Environmental Concern” shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
perchlorate, polychlorinated biphenyls and urea-formaldehyde insulation.

 

“Maturity Date” shall mean the date that is seven (7) years following the
Closing Date.

 

“Minimum EBITDA Maintenance Event” shall mean the period commencing the end of
any month during which Excess Availability is at anytime less than $50,000,000
and ending on a Maintenance Reversion Date.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Mortgage Instrument” shall mean any mortgage, deed of trust, or deed to secure
debt or any amendment to mortgage, deed of trust or deed to secure debt executed
by a Credit Party in favor of the Administrative Agent pursuant to the terms of
Section 4.1(d)(iii) or 5.12, as the same may be amended, modified, restated,
amended and restated or supplemented from time to time.

 

“Mortgage Title Insurance Policy” shall mean, with respect to any Mortgage
Instrument, an ALTA mortgagee title insurance policy issued by a title insurance
company (the “Title Insurance Company”) selected by the Administrative Agent in
an amount satisfactory to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent.

 

“Mortgaged Property” shall mean any owned real property of a Credit Party with
respect to which such Credit Party executes a Mortgage Instrument in favor of
the Administrative Agent.

 

“Mortgaged Property MAE” shall mean a material adverse effect on (a) the
business, operations, property, assets or financial condition of the Borrower or
of the Credit Parties and their Subsidiaries taken as a whole, (b) the ability
of the Borrower or any Guarantor to perform its obligations, when such
obligations are required to be performed, under this Credit Agreement, any of
the Term Notes or any other Credit Document, (c) the validity or enforceability
of this Credit Agreement, any of the Term Notes or any of the other Credit
Documents or the rights or remedies of the Administrative Agent or the Lenders
hereunder or thereunder or (d) the economic value, useful life, utility,
condition, operational capacity or functional capacity of any Mortgaged
Property.

 

“Multiemployer Plan” shall mean a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

 

“Net Cash Proceeds” shall mean the aggregate cash proceeds received by any
Credit Party or any Subsidiary in respect of any Asset Disposition or Recovery
Event, net of (a) direct costs (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) associated therewith,
(b) amounts held in escrow to be applied as part of the purchase price of any
Asset Disposition and (c) taxes paid or payable as a result thereof, it being
understood that “Net Cash Proceeds” shall include, without limitation, any cash
received upon

 

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the sale or other disposition of any non-cash consideration received by any
Credit Party or any Subsidiary in any Asset Disposition or Recovery Event and
any cash released from escrow as part of the purchase price in connection with
any Asset Disposition.

 

“Notice of Conversion/Extension” shall mean the written notice of conversion of
a LIBOR Rate Loan to an Alternate Base Rate Loan or an Alternate Base Rate Loan
to a LIBOR Rate Loan, or extension of a LIBOR Rate Loan, in each case
substantially in the form of Schedule 2.6.

 

“O&M Plans” shall mean each of the Operations and Maintenance Program Reports
listed on Schedule 5.5(c).

 

“Obligations” shall mean, collectively, the Term Loans and all other obligations
of the Credit Parties to the Administrative Agent and the Lenders under the
Credit Documents.

 

“OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

 

“Operating Lease” shall mean, as applied to any Person, any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) which is not a Capital Lease
other than any such lease in which that Person is the lessor.

 

“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Credit Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Credit Document.

 

“Participant” has the meaning assigned to such term in clause (d) of
Section 9.6.

 

“Patent Licenses” shall mean all agreements, whether written or oral, providing
for the grant by or to a Person of any right to manufacture, use or sell any
invention covered by a Patent.

 

“Patents” shall mean all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions thereof,
and all applications for letters patent of the United States or any other
country, now existing or hereafter arising, and all provisionals, divisions,
continuations and continuations-in-part and substitutes thereof.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.

 

“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): (i) the 2004 Senior Subordinated Note
Indenture and (ii) all agreements, documents and instruments executed and/or
delivered in connection with the foregoing.

 

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“Permitted Liens” shall mean:

 

(a)                                  Liens created by or otherwise existing
under or in connection with this Credit Agreement or the other Credit Documents
in favor of the Lenders;

 

(b)                                 Liens in favor of a Hedging Agreement
Provider in connection with any Secured Hedging Agreement, but only if such
Hedging Agreement Provider and the Administrative Agent, on behalf of the
Lenders, shall share pari passu in the collateral subject to such Liens;

 

(c)                                  Liens for taxes, assessments, charges or
other governmental levies not yet delinquent, if any, related thereto has not
expired or which are being contested in good faith by appropriate proceedings;
provided that (i) adequate reserves with respect thereto are maintained on the
books of the Borrower or its Subsidiaries, as the case may be, in conformity
with GAAP (or, in the case of Subsidiaries with significant operations outside
of the United States of America, generally accepted accounting principles in
effect from time to time in their respective jurisdictions of incorporation) and
(ii) to the extent such Lien affects a Mortgaged Property, no forfeiture or
other enforcement action shall have been commenced with respect to such
Mortgaged Property;

 

(d)                                 carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or which are
being contested in good faith by appropriate proceedings; provided that a
reserve or other appropriate provision shall have been made therefore and the
aggregate amount of such Liens is less than $100,000;

 

(e)                                  pledges or deposits in connection with
workers’ compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements in an aggregate amount not to exceed
$500,000;

 

(f)                                    deposits to secure the performance of
bids, trade contracts, (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;

 

(g)                                 Liens on assets and properties (other than
Mortgaged Properties) securing Indebtedness permitted pursuant to
Section 6.1(b), (d)(ii), (e) and (f);

 

(h)                                 any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses; provided that such extension, renewal
or replacement Lien shall be limited to all or a part of the property which
secured the Lien so extended, renewed or replaced (plus improvements on such
property);

 

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(i)            Liens existing on the Closing Date and set forth on Schedule
1.1(b) provided that no such Lien shall at any time be extended to cover
Collateral;

 

(j)            easements, encroachments, rights-of-way, zoning restrictions,
minor defects or irregularities in title and other similar encumbrances not
interfering in any material respect with the value or use of the property to
which such Lien is attached; and

 

(k)           Liens arising from precautionary UCC financing statements.

 

“Person” shall mean an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

 

“Plan” shall mean, as of any date of determination, any employee benefit plan
which is covered by Title IV of ERISA and in respect of which any Credit Party
or a Commonly Controlled Entity is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

 

“Prime Rate” shall have the meaning set forth in the definition of Alternate
Base Rate.

 

“Pro Forma Basis” shall mean, with respect to any transaction, that such
transaction shall be deemed to have occurred as of the first day of the
twelve-month period ending as of the most recent quarter end preceding the date
of such transaction for which financial information applicable to the
transaction is available.

 

“Properties” shall have the meaning set forth in Section 3.10(a).

 

“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.

 

“REA” shall mean any construction, operation and reciprocal easement agreement,
common area maintenance agreement or similar agreement (including any separate
agreement or other agreement between a Credit Party and one or more other
parties to a REA with respect to such REA) affecting any Mortgaged Property or
portion thereof.

 

“Reappraisal Date” shall have the meaning set forth in Section 5.12(d).

 

“Recovery Event” shall mean the receipt by the Credit Parties or any of their
Subsidiaries of any cash insurance proceeds or condemnation or expropriation
award payable by reason of theft, loss, physical destruction or damage, taking
or similar event with respect to any of their assets constituting Collateral.

 

“Redeemable Stock” of any Person means any Capital Stock of such Person that by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable)

 

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or otherwise (including upon the occurrence of an event) matures or is required
to be redeemed (pursuant to any sinking fund obligation or otherwise) or is
convertible into or exchangeable for Indebtedness or is redeemable at the option
of the holder thereof, in whole or in part, at any time prior to the Maturity
Date.

 

“Register” shall have the meaning set forth in Section 9.6(c).

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.

 

“Remaining Authority” means, at any time of determination, an amount equal to
$40,000,000 less the amount expended by or on behalf of the Borrower to purchase
shares of its Common Stock from the Closing Date through such time of
determination.

 

“Reorganization” shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.

 

“Reportable Event” shall mean any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty-day notice period is
waived under PBGC Reg. §4043.

 

“Required Lenders” shall mean, as of any date of determination, Lenders holding
at least a majority of the outstanding principal amount of the Term Loan.

 

“Requirement of Law” shall mean, as to any Person, the articles or certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

 

“Responsible Officer” shall mean, as to (a) the Borrower, the Chief Executive
Officer, the Chief Accounting Officer, the Chief Financial Officer and the
President and (b) as to any other Credit Party, any duly authorized officer
thereof.

 

“Restoration” shall have the meaning set forth in Section 5.14(h).

 

“Restricted Payment” shall mean (a) any dividend or other distribution, direct
or indirect, on account of any shares of any class of Capital Stock of any
Credit Party or any of its Subsidiaries, now or hereafter outstanding, (b) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of any Credit Party or any of its Subsidiaries, now or hereafter
outstanding, (c) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
Capital Stock of any Credit Party or any of its Subsidiaries, now or hereafter
outstanding, (d) any payment with respect to

 

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any earnout obligation and (e) any payment or prepayment of principal of,
premium, if any, or interest on, redemption, purchase, retirement, defeasance,
sinking fund or similar payment with respect to, any Subordinated Debt of any
Credit Party or any of its Subsidiaries.

 

“Revolving Credit Agreement” shall mean that certain Amended and Restated Loan
and Security Agreement, dated as of August 1, 2003 by and among Congress
Financial Corporation, The CIT Group/Business Credit, Inc. and General Electric
Capital Corporation as Co-Documentation Agents, the revolving lenders, the
Borrowers (as defined therein) and the Guarantors (as defined therein), as
amended by Amendment No. 1 to Amended and Restated Loan and Security Agreement
dated as of October 24, 2003, Amendment No. 2 to Amended and Restated Loan and
Security Agreement dated as of October 15, 2004, Amendment No. 3 to Amended and
Restated Loan and Security Agreement dated as of December 2, 2004, Amendment
No. 4 to Amended and Restated Loan and Security Agreement dated as of
November 16, 2005, and Amendment No. 5 to Amended and Restated Loan and Security
Agreement dated as of January 27, 2006 (as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced in
accordance with the terms hereof) and the agreements, documents and instruments
at any time executed and/or delivered in connection therewith or related
thereto.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw
Hill Companies, Inc.

 

“Sanctioned Country” shall mean a country subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time.

 

“Sanctioned Person” shall mean (a) a Person named on the list of “Specially
Designated Nationals and Blocked Persons” maintained by OFAC available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise
published from time to time, or (b) (i) an agency of the government of a
Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or
(iii) a Person resident in a Sanctioned Country, to the extent subject to a
sanctions program administered by OFAC.

 

“Secured Hedging Agreement” shall mean any Hedging Agreement between a Credit
Party and a Hedging Agreement Provider relating to obligations, Indebtedness and
liabilities of such Credit Party arising under this Credit Agreement, the Term
Notes or any of the other Credit Documents, as such Hedging Agreement may be
amended, restated, amended and restated, modified, supplemented or extended from
time to time.

 

“Secured Parties” shall mean the Administrative Agent, the Lenders and the
Hedging Agreement Providers.

 

“Security Documents” shall mean the Mortgage Instruments and all other
agreements, documents and instruments (a) relating to, arising out of, or in any
way connected with any of the foregoing documents, (b) granting to the
Administrative Agent, Liens or security interests to

 

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secure, inter alia, the Credit Party Obligations or (c) perfecting such Liens or
security interests, in each case whether now or hereafter executed and/or filed
and as the same may be amended from time to time in accordance with the terms
hereof.

 

“Senior Funded Debt” shall mean (a) all Funded Debt of the Credit Parties and
their Subsidiaries to the extent any portion thereof is included as debt on the
financial statements of the Borrower delivered to the Administrative Agent
pursuant to Section 5.1 hereof other than Funded Debt that is, by its terms,
subordinated in right of payment to the prior payment in full of the Credit
Party Obligations; provided that, the Convertible Senior Notes shall not be
included in the definition of Senior Funded Debt to the extent that the Borrower
has irrevocably funded to the applicable trustee the amount required to satisfy
in full the Convertible Senior Notes, (b) all off-balance sheet Funded Debt of
the Credit Parties and their Subsidiaries to the extent reserves are in place
with respect to borrowing availability under the Revolving Credit Agreement or
such availability is otherwise blocked as a result of the existence thereof,
with respect to such Funded Debt and (c) all letters of credit funded under the
Revolving Credit Agreement or otherwise.

 

“Senior Leverage Ratio” shall mean, as of the end of a fiscal quarter of the
Borrower, for the Credit Parties and their Subsidiaries on a consolidated basis
for the four consecutive quarters ending on such date, the ratio of (a) Senior
Funded Debt of the Credit Parties and their Subsidiaries on a consolidated basis
on the last day of such period to (b) Consolidated EBITDA for such four fiscal
quarter period.

 

“Senior Leverage Ratio Target” shall mean a Senior Leverage Ratio of less than
5.00 to 1.00, as evidenced by the certificate of a Responsible Officer delivered
pursuant to Section 5.2(a) hereof, which certificate shall include calculations
in reasonable detail demonstrating that such target has been obtained as of the
last day of the quarter then ended; provided that if such certificate proves to
be inaccurate, the Applicable Percentage shall retroactively revert to the
percentage set forth in clause (a) of the definition of Applicable Percentage
until such time as a corrected certificate of a Responsible Officer
demonstrating that such target has been obtained is provided.

 

“Share Repurchase Plan” shall mean the Borrower’s share repurchase plan as
approved by its Board of Directors and described in the Borrower’s public
announcement on September 9, 2004, pursuant to which the Borrower is authorized
to expend $100,000,000 to purchase shares of its Common Stock.

 

“Single Employer Plan” shall mean any Plan that is not a Multiemployer Plan.

 

“Subordinated Debt” shall mean any Indebtedness incurred by any Credit Party
which by its terms is specifically subordinated in right of payment to the prior
payment of the Credit Party Obligations and contains subordination and other
terms reasonably acceptable to the Administrative Agent.

 

“Subsidiary” shall mean, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by

 

25

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reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Credit Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.

 

“Synthetic Leases” shall mean any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

 

“Term Loan” shall have the meaning set forth in Section 2.1(a).

 

“Term Loan Commitment” shall mean, with respect to each Lender, the commitment
of such Lender to make its portion of the Term Loan in a principal amount equal
to such Lender’s Term Loan Commitment Percentage of the Term Loan Committed
Amount.

 

“Term Loan Commitment Percentage” shall mean, for any Lender, the percentage
identified as its Term Loan Commitment Percentage in its Lender Commitment
Letter.

 

“Term Loan Committed Amount” shall have the meaning set forth in Section 2.1(a).

 

“Term Note” or “Term Notes” shall mean the promissory notes of the Borrower (if
any) in favor of any of the Lenders evidencing the portion of the Term Loan
provided by any such Lender pursuant to Section 2.1(a), individually or
collectively, as appropriate, as such promissory notes may be amended, modified,
restated, amended and restated, supplemented, extended, renewed or replaced from
time to time.

 

“Total Leverage Ratio” shall mean, as of the end of each fiscal quarter of the
Borrower, for the Credit Parties and their Subsidiaries on a consolidated basis
for the four consecutive quarters ending on such date, the ratio of (a) Funded
Debt of the Credit Parties and their Subsidiaries on a consolidated basis on the
last day of such period to (b) Consolidated EBITDA for such four fiscal quarter
period.

 

“Trademark License” shall mean any agreement, whether written or oral, providing
for the grant by or to a Person of any right to use any Trademark.

 

“Trademarks” shall mean (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, service marks,
elements of package or trade dress of goods or services, logos and other source
or business identifiers, together with the goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States

 

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Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof, and (b) all renewals thereof.

 

“Tranche” shall mean the collective reference to LIBOR Rate Loan whose Interest
Periods begin and end on the same day.

 

“Transactions” shall mean the closing of this Agreement and the other Credit
Documents (including, without limitation, the initial borrowings under the
Credit Documents and the payment of fees and expenses in connection with all of
the foregoing).

 

“Transfer Effective Date” shall have the meaning set forth in each Assignment
and Assumption.

 

“Type” shall mean, as to any Term Loan, its nature as an Alternate Base Rate
Loan or LIBOR Rate Loan, as the case may be.

 

“UCC” shall mean the Uniform Commercial Code from time to time in effect in any
applicable jurisdiction.

 

“Voting Stock” shall mean, with respect to any Person, Capital Stock issued by
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
may be or have been suspended by the happening of such a contingency.

 

“Wachovia” shall mean Wachovia Bank, National Association, a national banking
association, together with its successors and/or assigns.

 

“Works” shall mean all works which are subject to copyright protection pursuant
to Title 17 of the United States Code.

 

Section 1.2            Other Definitional Provisions.

 

(a)           Unless otherwise specified therein, all terms defined in this
Credit Agreement shall have the defined meanings when used in the Term Notes or
other Credit Documents or any certificate or other document made or delivered
pursuant hereto.

 

(b)           The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Credit Agreement shall refer to this Credit Agreement
as a whole and not to any particular provision of this Credit Agreement, and
Section, subsection, Schedule and Exhibit references are to this Credit
Agreement unless otherwise specified.

 

(c)           The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

 

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Section 1.3            Accounting Terms.

 

Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
Consolidated financial statements of the Borrower delivered to the Lenders;
provided that, if the Borrower shall notify the Administrative Agent that it
wishes amend the definitions of ABL Consolidated EBITDA, ABL Interest Expense,
ABL Consolidated Net Income, Consolidated EBITDA, Consolidated Interest Expense,
Consolidated Net Income, Funded Debt or any provision in Section 5.9 to
eliminate the effect of any change in GAAP on the operation of any such
definition or such Section (or if the Administrative Agent notifies the Borrower
that the Required Lenders wish to amend any such definition or such Section for
such purpose), then the Borrower’s compliance with such provisions shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such
definition or provision is amended in a manner satisfactory to the Borrower and
the Required Lenders.

 

The Borrower shall deliver to the Administrative Agent and each Lender at the
same time as the delivery of any annual or quarterly financial statements given
in accordance with the provisions of Section 5.1, (a) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (b) a reasonable estimate of the effect on the financial statements on
account of such changes in application.

 

Section 1.4            Resolution of Drafting Ambiguities.

 

Each Credit Party acknowledges and agrees that it was represented by counsel in
connection with the execution and delivery of this Credit Agreement and the
other Credit Documents to which it is a party, that it and its counsel reviewed
and participated in the preparation and negotiation hereof and thereof and that
any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation hereof or
thereof.

 

Section 1.5            Time References.

 

Unless otherwise specified, all references herein to times of day shall be
references to Eastern time (daylight or standard, as applicable).

 

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ARTICLE II

 

THE LOANS; AMOUNT AND TERMS

 

Section 2.1            Term Loan.

 

(a)           Term Loan. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each Lender
severally agrees to make available to the Borrower (through the Administrative
Agent) on the Closing Date such Lender’s Term Loan Commitment Percentage of a
term loan in Dollars (the “Term Loan”) in the aggregate principal amount of
THREE HUNDRED TWENTY MILLION DOLLARS ($320,000,000) (the “Term Loan Committed
Amount”) for the purposes hereinafter set forth. Upon receipt by the
Administrative Agent of the proceeds of the Term Loan, such proceeds will then
be made available to the Borrower by the Administrative Agent by crediting the
account of the Borrower on the books of the office of the Administrative Agent
specified in Section 9.2, or at such other office as the Administrative Agent
may designate in writing, with the aggregate of such proceeds made available to
the Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent (or by crediting such other account(s) as directed by the
Borrower). The Term Loan may consist of Alternate Base Rate Loans or LIBOR Rate
Loans, or a combination thereof, as the Borrower may request; provided, however,
that the Term Loan made on the Closing Date or any of the three (3) Business
Days following the Closing Date may only consist of Alternate Base Rate Loans.
LIBOR Rate Loans shall be made by each Lender at its LIBOR Lending Office and
Alternate Base Rate Loans at its Domestic Lending Office. Amounts repaid or
prepaid on the Term Loan may not be reborrowed.

 

(b)           Repayment of Term Loan. The principal amount of the Term Loan
shall be repaid in twenty-eight (28) consecutive quarterly installments as
follows, unless accelerated sooner pursuant to Section 7.2:

 

Principal Amortization Payment
Dates

 

Term Loan Principal Amortization
Payment

 

March 31, 2007

 

$

800,000

 

June 30, 2007

 

$

800,000

 

September 30, 2007

 

$

800,000

 

December 31, 2007

 

$

800,000

 

March 31, 2008

 

$

800,000

 

June 30, 2008

 

$

800,000

 

September 30, 2008

 

$

800,000

 

December 31, 2008

 

$

800,000

 

March 31, 2009

 

$

800,000

 

June 30, 2009

 

$

800,000

 

September 30, 2009

 

$

800,000

 

December 31, 2009

 

$

800,000

 

March 31, 2010

 

$

800,000

 

June 30, 2010

 

$

800,000

 

September 30, 2010

 

$

800,000

 

December 31, 2010

 

$

800,000

 

March 31, 2011

 

$

800,000

 

June 30, 2011

 

$

800,000

 

September 30, 2011

 

$

800,000

 

December 31, 2011

 

$

800,000

 

March 31, 2012

 

$

800,000

 

June 30, 2012

 

$

800,000

 

September 30, 2012

 

$

800,000

 

December 31, 2012

 

$

800,000

 

March 31, 2013

 

$

800,000

 

June 30, 2013

 

$

800,000

 

September 30, 2013

 

$

800,000

 

Maturity Date

 

$ 298,400,000 or the remaining outstanding
principal amount of the
Term Loan

 

 

29

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(c)           Interest on the Term Loan. Subject to the provisions of
Section 2.5, the Term Loan shall bear interest as follows:

 

(i)            Alternate Base Rate Loan. During such periods as the Term Loan
shall be comprised of Alternate Base Rate Loans, each such Alternate Base Rate
Loan shall bear interest at a per annum rate equal to the sum of the Alternate
Base Rate plus the Applicable Percentage; and

 

(ii)           LIBOR Rate Loan. During such periods as the Term Loan shall be
comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at
a per annum rate equal to the sum of the LIBOR Rate plus the Applicable
Percentage.

 

Interest on the Term Loan shall be payable in arrears on each Interest Payment
Date.

 

(d)           Term Loan Notes, Covenant to Pay. Each Lender’s Term Loan
Commitment shall be evidenced, upon such Lender’s request, by a duly executed
promissory note of the Borrower to such Lender in substantially the form of
Schedule 2.1(d). The Borrower covenants and agrees to pay the Term Loans in
accordance with the terms of this Credit Agreement and the Term Note or Term
Notes.

 

Section 2.2            [Reserved].

 

30

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Section 2.3            Fee.

 

The Borrower agrees to pay to the Administrative Agent the annual administrative
fee as described in the Engagement Letter.

 

Section 2.4            Prepayments.

 

(a)           Optional Prepayments. The Borrower shall have the right to prepay
the Term Loan in whole or in part from time to time; provided, however, that
(i) each partial prepayment of the Term Loan shall be in a minimum principal
amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof (or
the remaining outstanding principal amount) and (ii) upon the prepayment of any
such amount, Collateral having a fee simple fair market value based on the 2005
Appraisals and the 2006 Appraisals (or such later appraisals as may be required
by the Administrative Agent to the extent the Borrower encumbers, enters into a
sale-leaseback arrangement or otherwise disposes of properties not constituting
Collateral with a fair market value in excess of $125,000,000), as applicable,
as selected by the Borrower and approved by the Administrative Agent, shall be
released on a dollar-for-dollar basis; provided that no Mortgaged Property shall
be required to be partially released in order to comply with the foregoing
dollar-for-dollar reduction. The Borrower shall give three Business Days’
irrevocable notice in the case of LIBOR Rate Loans and one Business Day
irrevocable notice in the case of Alternate Base Rate Loans, to the
Administrative Agent (which shall notify the Lenders thereof as soon as
practicable) by 11:00 A.M. on the date notice is given. Amounts prepaid under
this Section shall be (i) applied ratably to the remaining principal
installments thereof and (ii) applied first to Alternate Base Rate Loans and
then to LIBOR Rate Loans in direct order of Interest Period maturities. All
prepayments under this Section shall be subject to Section 2.13, but otherwise
without premium or penalty. Interest on the principal amount prepaid shall be
payable on the next occurring Interest Payment Date that would have occurred had
such loan not been prepaid or, at the request of the Administrative Agent,
interest on the principal amount prepaid shall be payable on any date that a
prepayment is made hereunder through the date of prepayment. Amounts prepaid on
the Term Loan may not be reborrowed.

 

(b)           Mandatory Prepayments.

 

(i)            Asset Dispositions. Promptly following any Asset Disposition (or
related series of Asset Dispositions), the Borrower shall prepay the Term Loan
in an aggregate amount equal to the greater of (A) one hundred percent (100%) of
the Net Cash Proceeds derived from such Asset Disposition (or related series of
Asset Dispositions) and (B) 100% of the Allocated Payoff Amount (such prepayment
to be applied as set forth in clause (iii) below);

 

(ii)           Recovery Event. Immediately upon receipt by any Credit Party or
any of its Subsidiaries of proceeds from any Recovery Event, the Borrower shall
prepay the Term Loan in an aggregate amount equal to one hundred percent (100%)
of the Net Cash Proceeds of such Recovery Event (such prepayment to be

 

31

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applied as set forth in clause (iii) below); provided, however, that, so long as
no Default or Event of Default has occurred and is continuing and the Recovery
Event (or the event giving rise to the Recovery Event) is addressed under
Section 5.14, then the applicable provisions of Section 5.14 shall govern and
shall dictate the rights and obligations of the Borrower.

 

(iii)          Application of Mandatory Prepayments. All amounts required to be
paid pursuant to this Section shall be (i) applied ratably to the remaining
principal installments thereof and (ii) applied first to Alternate Base Rate
Loans and then to LIBOR Rate Loans in direct order of Interest Period
maturities.

 

(c)           Hedging Obligations Unaffected. Any repayment or prepayment made
pursuant to this Section shall not affect the Borrower’s obligation to continue
to make payments under any Secured Hedging Agreement, which shall remain in full
force and effect notwithstanding such repayment or prepayment, subject to the
terms of such Secured Hedging Agreement.

 

Section 2.5            Default Rate and Payment Dates.

 

(a)           If all or a portion of the principal amount of the Term Loan which
is a LIBOR Rate Loan shall not be paid when due or continued as a LIBOR Rate
Loan in accordance with the provisions of Section 2.6 (whether at the stated
maturity, by acceleration or otherwise), such overdue principal amount of such
Term Loan shall be converted to an Alternate Base Rate Loan at the end of the
Interest Period applicable thereto.

 

(b)           (i) If all or a portion of the principal amount of any LIBOR Rate
Loan shall not be paid when due, such overdue amount shall bear interest at a
rate per annum which is equal to the rate that would otherwise be applicable
thereto plus 2%, until the end of the Interest Period applicable thereto, and
thereafter at a rate per annum which is equal to the Alternate Base Rate plus
the sum of the Applicable Percentage then in effect for Alternate Base Rate Loan
and 2% (the “ABR Default Rate”) or (ii) if any interest payable on the principal
amount of any Term Loan or any fee or other amount, including the principal
amount of any Alternate Base Rate Loan, payable hereunder shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum which is equal to the ABR Default
Rate, in each case from the date of such non-payment until such amount is paid
in full (after as well as before judgment). Upon the occurrence, and during the
continuance, of any other Event of Default hereunder, at the option of the
Required Lenders, the principal of and, to the extent permitted by law, interest
on the Term Loan and any other amounts owing hereunder or under the other Credit
Documents shall bear interest, payable on demand, at a per annum rate which is
(A) in the case of principal, the rate that would otherwise be applicable
thereto plus 2% or (B) in the case of interest, fees or other amounts, the ABR
Default Rate (after as well as before judgment).

 

32

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(c)           Interest on the Term Loan shall be payable in arrears on each
Interest Payment Date; provided that interest accruing pursuant to paragraph
(b) of this Section shall be payable from time to time on demand.

 

Section 2.6            Conversion Options.

 

(a)           The Borrower may elect from time to time to convert an Alternate
Base Rate Loan to a LIBOR Rate Loan by delivering a Notice of
Conversion/Extension to the Administrative Agent at least three Business Days
prior to the proposed date of conversion. In addition, the Borrower may elect
from time to time to convert all or any portion of a LIBOR Rate Loan to an
Alternate Base Rate Loan by giving the Administrative Agent irrevocable written
notice thereof by 11:00 A.M. one Business Day prior to the proposed date of
conversion. If the date upon which an Alternate Base Rate Loan is to be
converted to a LIBOR Rate Loan is not a Business Day, then such conversion shall
be made on the next succeeding Business Day and during the period from such last
day of an Interest Period to such succeeding Business Day such Term Loan shall
bear interest as if it were an Alternate Base Rate Loan. A LIBOR Rate Loan may
only be converted to Alternate Base Rate Loan on the last day of the applicable
Interest Period. If the date upon which a LIBOR Rate Loan is to be converted to
an Alternate Base Rate Loan is not a Business Day, then such conversion shall be
made on the next succeeding Business Day and during the period from such last
day of an Interest Period to such succeeding Business Day such Term Loan shall
bear interest as if it were an Alternate Base Rate Loan. All or any part of
outstanding Alternate Base Rate Loan or LIBOR Rate Loans may be converted as
provided herein; provided that (i) no Term Loan may be converted into a LIBOR
Rate Loan when any Default or Event of Default has occurred and is continuing
and (ii) partial conversions shall be in an aggregate principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof.

 

(b)           Any LIBOR Rate Loan may be continued as such upon the expiration
of an Interest Period with respect thereto by compliance by the Borrower with
the notice provisions contained in Section 2.6(a); provided, that no LIBOR Rate
Loan may be continued as such when any Default or Event of Default has occurred
and is continuing, in which case such LIBOR Rate Loan shall be automatically
converted to an Alternate Base Rate Loans at the end of the applicable Interest
Period with respect thereto. If the Borrower shall fail to give timely notice of
an election to continue a LIBOR Rate Loan, or the continuation of LIBOR Rate
Loans is not permitted hereunder, such LIBOR Rate Loan shall be automatically
converted to Alternate Base Rate Loans at the end of the applicable Interest
Period with respect thereto.

 

Section 2.7            Computation of Interest and Fees; Usury.

 

(a)           Interest payable hereunder with respect to any Alternate Base Rate
Loan shall be calculated on the basis of a year of 365 days (or 366 days, as
applicable) for the actual days elapsed. All other fees, interest and all other
amounts payable hereunder shall be calculated on the basis of a 360 day year for
the actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Lenders of

 

33

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each determination of a LIBOR Rate on the Business Day of the determination
thereof Any change in the interest rate on a Term Loan resulting from a change
in the Alternate Base Rate shall become effective as of the opening of business
on the day on which such change in the Alternate Base Rate shall become
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the Lenders of the effective date and the amount of each such
change.

 

(b)           Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Credit Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the computations used by the Administrative Agent
in determining any interest rate.

 

(c)           It is the intent of the Lenders and the Credit Parties to conform
to and contract in strict compliance with applicable usury law from time to time
in effect. All agreements between the Lenders and the Credit Parties are hereby
limited by the provisions of this subsection which shall override and control
all such agreements, whether now existing or hereafter arising and whether
written or oral. In no way, nor in any event or contingency (including but not
limited to prepayment or acceleration of the maturity of any Credit Party
Obligation), shall the interest taken, reserved, contracted for, charged, or
received under this Credit Agreement, under the Term Notes or otherwise, exceed
the maximum nonusurious amount permissible under applicable law. If, from any
possible construction of any of the Credit Documents or any other document,
interest would otherwise be payable in excess of the maximum nonusurious amount,
any such construction shall be subject to the provisions of this paragraph and
such interest shall be automatically reduced to the maximum nonusurious amount
permitted under applicable law, without the necessity of execution of any
amendment or new document. If any Lender shall ever receive anything of value
which is characterized as interest on the Term Loan under applicable law and
which would, apart from this provision, be in excess of the maximum nonusurious
amount, an amount equal to the amount which would have been excessive interest
shall, without penalty, be applied to the reduction of the principal amount
owing on the Term Loan and not to the payment of interest, or refunded to the
Borrower or the other payor thereof if and to the extent such amount which would
have been excessive exceeds such unpaid principal amount of the Term Loan. The
right to demand payment of the Term Loan or any other Indebtedness evidenced by
any of the Credit Documents does not include the right to receive any interest
which has not otherwise accrued on the date of such demand, and the Lenders do
not intend to charge or receive any unearned interest in the event of such
demand. All interest paid or agreed to be paid to the Lenders with respect to
the Term Loan shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term (including any
renewal or extension) of the Term Loan so that the amount of interest on account
of such Indebtedness does not exceed the maximum nonusurious amount permitted by
applicable law.

 

34

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Section 2.8            Pro Rata Treatment and Payments.

 

(a)           Allocation of Payments Prior to Exercise of Remedies. Unless
otherwise required by the terms of this Credit Agreement, each payment under
this Credit Agreement or any Term Note shall be applied, first, to any fees then
due and owing by the Borrower pursuant to Section 2.3, second, to interest then
due and owing hereunder and under the Term Notes of the Borrower and, third, to
principal then due and owing hereunder and under the Term Notes of the Borrower.
Each payment on account of any fee pursuant to Section 2.3 shall be made pro
rata in accordance with the respective amounts due and owing. Each payment
(other than prepayments) by the Borrower on account of principal of and interest
on the Term Loan shall be applied to such Term Loan on a pro rata basis in
accordance with the terms of this Section 2.8(a). Each optional prepayment on
account of principal of the Term Loan shall be applied in accordance with
Section 2.4(a). Each mandatory prepayment on account of principal of the Term
Loan shall be applied in accordance with Section 2.4(b). All payments (including
prepayments) to be made by the Borrower on account of principal, interest and
fees shall be made without defense, set-off or counterclaim (except as provided
in Section 2.14) and shall be made to the Administrative Agent for the account
of the Lenders at the Administrative Agent’s office specified on Section 9.2 in
Dollars and in immediately available funds not later than 1:00 P.M. on the date
when due. The Administrative Agent shall distribute such payments to the Lenders
entitled thereto promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the LIBOR Rate Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a LIBOR Rate Loan becomes due and payable on a day other than a
Business Day, such payment date shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.

 

(b)           Allocation of Payments After Exercise of Remedies. Notwithstanding
any other provisions of this Credit Agreement to the contrary, after the
exercise of remedies (other than the invocation of default interest pursuant to
Section 2.5(b)) by the Administrative Agent or the Lenders pursuant to
Section 7.2 (or after the Term Loan Commitments shall automatically terminate
and the Term Loan (with accrued interest thereon) and all other amounts under
the Credit Documents shall automatically become due and payable in accordance
with the terms of such Section), all amounts collected or received by the
Administrative Agent or any Lender on account of the Credit Party Obligations or
any other amounts outstanding under any of the Credit Documents or in respect of
the Collateral shall be paid over or delivered as follows (irrespective of
whether the following costs, expenses, fees, interest, premiums, scheduled
periodic payments or Credit Party Obligations are allowed, permitted or
recognized as a claim in any proceeding resulting from the occurrence of a
Bankruptcy Event):

 

35

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FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation reasonable attorneys’ fees) of the Administrative
Agent in connection with enforcing the rights of the Lenders under the Credit
Documents and any protective advances made by the Administrative Agent with
respect to the Collateral under or pursuant to the terms of the Security
Documents;

 

SECOND, to the payment of any fees owed to the Administrative Agent;

 

THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys’ fees) of each of the
Lenders in connection with enforcing its rights under the Credit Documents or
otherwise with respect to the Credit Party Obligations owing to such Lender;

 

FOURTH, to the payment of all of the Credit Party Obligations consisting of
accrued fees and interest, and including, with respect to any Secured Hedging
Agreement, any fees, premiums and scheduled periodic payments due under such
Secured Hedging Agreement and any interest accrued thereon;

 

FIFTH, to the payment of the outstanding principal amount of the Credit Party
Obligations, and including with respect to any Secured Hedging Agreement, any
breakage, termination or other payments due under such Secured Hedging Agreement
and any interest accrued thereon;

 

SIXTH, to all other Credit Party Obligations and other obligations which shall
have become due and payable under the Credit Documents or otherwise and not
repaid pursuant to clauses “FIRST” through “FIFTH” above; and

 

SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.

 

In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category and (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Term Loan
held by such Lender bears to the aggregate then outstanding Term Loan) of
amounts available to be applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH”
and “SIXTH” above. Notwithstanding the foregoing terms of this Section, only
Collateral proceeds and payments under the Guaranty (as opposed to ordinary
course principal, interest and fee payments hereunder) shall be applied to
obligations under any Secured Hedging Agreement.

 

Section 2.9            Non-Receipt of Funds by the Administrative Agent.

 

(a)           Unless the Administrative Agent shall have been notified in
writing by a Lender prior to the date a Term Loan is to be made by such Lender
(which notice shall be

 

36

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effective upon receipt) that such Lender does not intend to make the proceeds of
such Term Loan available to the Administrative Agent, the Administrative Agent
may assume that such Lender has made such proceeds available to the
Administrative Agent on such date, and the Administrative Agent may in reliance
upon such assumption (but shall not be required to) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent, the Administrative Agent shall be
able to recover such corresponding amount from such Lender. If such Lender does
not pay such corresponding amount forthwith upon the Administrative Agent’s
demand therefor, the Administrative Agent will promptly notify the Borrower, and
the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
from the Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent at a per
annum rate equal to (i) from the Borrower at the applicable rate for the
applicable borrowing pursuant to the Notice of Borrowing and (ii) from a Lender
at the Federal Funds Effective Rate.

 

(b)           Unless the Administrative Agent shall have been notified in
writing by the Borrower, prior to the date on which any payment is due from the
Borrower hereunder (which notice shall be effective upon receipt) that the
Borrower does not intend to make such payment, the Administrative Agent may
assume that the Borrower has made such payment when due, and the Administrative
Agent may in reliance upon such assumption (but shall not be required to) make
available to each Lender on such payment date an amount equal to the portion of
such assumed payment to which such Lender is entitled hereunder, and if the
Borrower has not in fact made such payment to the Administrative Agent, such
Lender shall, on demand, repay to the Administrative Agent the amount made
available to such Lender. If such amount is repaid to the Administrative Agent
on a date after the date such amount was made available to such Lender, such
Lender shall pay to the Administrative Agent on demand interest on such amount
in respect of each day from the date such amount was made available by the
Administrative Agent to such Lender to the date such amount is recovered by the
Administrative Agent at a per annum rate equal to the Federal Funds Effective
Rate.

 

(c)           A certificate of the Administrative Agent submitted to the
Borrower or any Lender with respect to any amount owing under this Section shall
be conclusive in the absence of manifest error.

 

Section 2.10         Inability to Determine Interest Rate.

 

Notwithstanding any other provision of this Credit Agreement, if (a) the
Administrative Agent shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR for such Interest Period, or (b) the Required Lenders shall
reasonably determine (which determination shall be conclusive and binding absent
manifest error) that the LIBOR Rate does not adequately and fairly reflect the
cost to such

 

37

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Lenders of funding LIBOR Rate Loans that the Borrower has requested be
outstanding as a LIBOR Tranche during such Interest Period, the Administrative
Agent shall forthwith give telephone notice of such determination, confirmed in
writing, to the Borrower, and the Lenders at least two Business Days prior to
the first day of such Interest Period. Unless the Borrower shall have notified
the Administrative Agent upon receipt of such telephone notice that it wishes to
rescind or modify its request regarding such LIBOR Rate Loan, any Term Loan that
were requested to be made as LIBOR Rate Loans shall be made as Alternate Base
Rate Loans and any Term Loan that were requested to be converted into or
continued as LIBOR Rate Loans shall remain as or be converted into Alternate
Base Rate Loans. Until any such notice has been withdrawn by the Administrative
Agent, no further Term Loan shall be made as, continued as, or converted into,
LIBOR Rate Loans for the Interest Periods so affected.

 

Section 2.11         Illegality.

 

Notwithstanding any other provision of this Credit Agreement, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof by the relevant Governmental Authority to any Lender shall make it
unlawful for such Lender or its LIBOR Lending Office to make or maintain LIBOR
Rate Loans as contemplated by this Credit Agreement or to obtain in the
interbank eurodollar market through its LIBOR Lending Office the funds with
which to make such Term Loan, (a) such Lender shall promptly notify the
Administrative Agent and the Borrower thereof, (b) the commitment of such Lender
hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall
forthwith be suspended until the Administrative Agent shall give notice that the
condition or situation which gave rise to the suspension shall no longer exist,
and (c) such Lender’s Term Loan then outstanding as LIBOR Rate Loans, if any,
shall be converted on the last day of the Interest Period for such Term Loan or
within such earlier period as required by law as Alternate Base Rate Loans. The
Borrower hereby agrees promptly to pay any Lender, upon its demand, any
additional amounts necessary to compensate such Lender for actual and direct
costs (but not including anticipated profits) reasonably incurred by such Lender
in making any repayment in accordance with this Section including, but not
limited to, any interest or fees payable by such Lender to lenders of funds
obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to this
Section submitted by such Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its sole discretion to be material.

 

Section 2.12         Requirements of Law.

 

(a)           If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:

 

38

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(i)            shall subject such Lender to any tax of any kind whatsoever with
respect to any LIBOR Rate Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for changes in the rate of
tax on the overall net income of such Lender);

 

(ii)           shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, deposits
or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
such Lender which is not otherwise included in the determination of the LIBOR
Rate hereunder; or

 

(iii)          shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining LIBOR Rate Loans or to reduce any amount receivable
hereunder or under any Term Note, then, in any such case, the Credit Parties
shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such additional cost or reduced amount
receivable which such Lender reasonably deems to be material as determined by
such Lender with respect to its LIBOR Rate Loans. A certificate as to any
additional amounts payable pursuant to this Section submitted by such Lender,
through the Administrative Agent, to the Borrower shall be conclusive in the
absence of manifest error. Each Lender agrees to use reasonable efforts
(including reasonable efforts to change its Domestic Lending Office or LIBOR
Lending Office, as the case may be) to avoid or to minimize any amounts which
might otherwise be payable pursuant to this paragraph of this Section; provided,
however, that such efforts shall not cause the imposition on such Lender of any
additional costs or legal or regulatory burdens deemed by such Lender to be
material.

 

(b)           If any Lender shall have reasonably determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central bank
or Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Lender’s or such corporation’s
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender’s or such
corporation’s policies with respect to capital adequacy) by an amount reasonably
deemed by such Lender to be material, then from time to time, within fifteen
(15) days after demand by such Lender, the Credit Parties shall pay to such
Lender such additional amount as shall be certified by such Lender as being
required to compensate it for such reduction. Such a certificate as to any
additional amounts payable under this Section submitted by a Lender (which
certificate shall include a description of the basis for the computation),
through the Administrative Agent, to the Borrower shall be conclusive absent
manifest error.

 

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(c)           The agreements in this Section shall survive the termination of
this Credit Agreement and payment of the Credit Party Obligations.

 

Section 2.13         Indemnity.

 

The Credit Parties hereby agree to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which such Lender may sustain or incur
as a consequence of (a) default by the Borrower in payment of the principal
amount of or interest on any Term Loan by such Lender in accordance with the
terms hereof, (b) default by the Borrower in accepting a borrowing after the
Borrower has given a notice in accordance with the terms hereof, (c) default by
the Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Term Loan, or the conversion thereof, on a day which is not the
last day of the Interest Period with respect thereto, in each case including,
but not limited to, any such loss or expense arising from interest or fees
payable by such Lender to lenders of funds obtained by it in order to maintain
its Term Loan hereunder. A certificate as to any additional amounts payable
pursuant to this Section submitted by any Lender, through the Administrative
Agent, to the Borrower (which certificate must be delivered to the
Administrative Agent within thirty days following such default, prepayment or
conversion) shall be conclusive in the absence of manifest error. The agreements
in this Section shall survive termination of this Credit Agreement and payment
of the Credit Party Obligations.

 

Section 2.14         Taxes.

 

(a)           Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Credit Document
shall be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes, provided that if the Borrower shall be
required by applicable law to deduct any Indemnified Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent or Lender, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall timely pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.

 

(b)           Payment of Other Taxes by the Borrower. Without limiting the
provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable law.

 

(c)           Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, and each Lender, within ten (10) days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Administrative Agent or such
Lender, as the case may be, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto,

 

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whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrower by a Lender
(with a copy to the Administrative Agent), or by the Administrative Agent on its
own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

(d)           Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

 

(e)           Status of Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Credit Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate of withholding. In
addition, any Lender, if requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.

 

Without limiting the generality of the foregoing, in the event that the Borrower
is resident for tax purposes in the United States of America, any Foreign Lender
shall deliver to the Borrower and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

 

(a)           duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States of America is a party,

 

(b)           duly completed copies of Internal Revenue Service Form W-8ECI,

 

(c)           in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (i) a
certificate to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in section

 

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881(c)(3)(C) of the Code and (ii) duly completed copies of Internal Revenue
Service Form W-8BEN, or

 

(d)           any other form prescribed by applicable law as a basis for
claiming exemption from or a reduction in United States Federal withholding tax
duly completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower to determine the withholding
or deduction required to be made.

 

(e)           Treatment of Certain Refunds. If the Administrative Agent, or a
Lender determines, in its sole discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section, it shall pay to the Borrower an amount equal to such refund (but only
to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of the Administrative Agent,
or such Lender, as the case may be, and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund), provided that the Borrower, upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender in the event the
Administrative Agent, such Lender is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrower or any other Person.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders to enter into this Credit Agreement and to make the Term
Loan herein provided for, the Credit Parties hereby represent and warrant to the
Administrative Agent and to each Lender that:

 

Section 3.1            Financial Condition.

 

(a)           (i) The audited Consolidated balance sheets of the Borrower and
its Subsidiaries as of January 31, 2004, January 29, 2005 and January 28, 2006
together with the related Consolidated statements of income or operations, and
Consolidated statements of shareholders’ equity and cash flows for the fiscal
years ended on such dates, (ii) the unaudited Consolidated balance sheets of the
Borrower and its Subsidiaries as of July 29, 2006, together with the related
unaudited Consolidated statements of income or operations and Consolidated cash
flows (to the extent available) for the twelve-month period ending on July 29,
2006 and (iii) an unaudited pro forma consolidated balance sheet of the Borrower
and its Subsidiaries as of July 29, 2006:

 

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(A)          were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;

 

(B)           fairly present the financial condition of the Borrower and its
Subsidiaries as of the date thereof (subject, in the case of the unaudited
financial statements, to normal year-end adjustments) and results of operations
for the period covered thereby; and

 

(C)           show all material Indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and contingent obligations
required to be included in accordance with GAAP.

 

(b)           The projections through the fiscal year ending January, 2009 of
the Borrower and its Subsidiaries delivered to the Lenders on or prior to the
Closing Date have been prepared in good faith based upon reasonable assumptions
contained therein.

 

Section 3.2            No Change.

 

Since January 28, 2006, except as disclosed in the quarterly and annual reports
filed by the Borrower with the SEC, there has been no development or event
which, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect.

 

Section 3.3            Corporate Existence; Compliance with Law.

 

Each of the Credit Parties (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
requisite power and authority and the legal right to own and operate all its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified to conduct
business and is in good standing under the laws of (i) the jurisdiction of its
organization, (ii) the jurisdiction where its chief executive office is located
and (iii) each other jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification except to
the extent that the failure to so qualify or be in good standing could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business or operations of the Credit Parties and their
Subsidiaries in such jurisdiction and (d) is in compliance with all Requirements
of Law, government permits and government licenses except to the extent that the
failure to comply therewith could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The jurisdictions in
which the Credit Parties as of the Closing Date are organized and qualified to
do business are described on Schedule 3.3.

 

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Section 3.4            Corporate Power; Authorization; Enforceable Obligations.

 

Each of the Credit Parties has full power and authority and the legal right to
make, deliver and perform the Credit Documents to which it is party and has
taken all necessary limited liability company or corporate action to authorize
the execution, delivery and performance by it of the Credit Documents to which
it is party. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution, delivery or
performance of any Credit Document by any of the Credit Parties (other than
those that have been obtained) or with the validity or enforceability of any
Credit Document against any of the Credit Parties (except such filings as are
necessary in connection with the perfection of the Liens created by such Credit
Documents). Each Credit Document to which it is a party has been duly executed
and delivered on behalf of each Credit Party. Each Credit Document to which it
is a party constitutes a legal, valid and binding obligation of each Credit
Party, enforceable against such Credit Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

Section 3.5            No Legal Bar; No Default.

 

The execution, delivery and performance of the Credit Documents, the borrowings
thereunder and the use of the proceeds of the Term Loan will not violate any
Requirement of Law or any Contractual Obligation of any Credit Party (except as
set forth on Schedule 3.5 and except those as to which waivers or consents have
been obtained), and will not result in, or require, the creation or imposition
of any Lien on any Credit Party’s properties or revenues pursuant to any
Requirement of Law or Contractual Obligation other than the Liens arising under
or contemplated in connection with the Credit Documents. No Credit Party is in
default under or with respect to any of its Material Contracts in any material
respect. No Default or Event of Default has occurred and is continuing.

 

Section 3.6            No Material Litigation.

 

No litigation, investigation, claim, criminal prosecution, civil investigative
demand, imposition of criminal or civil fines and penalties, or any other
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of the Credit Parties, threatened by or against any Credit
Party or any of its Subsidiaries or against any of its or their respective
properties or revenues (a) with respect to the Credit Documents or the Term Loan
or any of the transactions contemplated hereby, or (b) which, if adversely
determined, could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

Section 3.7            Investment Company Act;  Etc.

 

No Credit Party is an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended. No Credit Party is subject to regulation under the Federal Power
Act, the Interstate

 

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Commerce Act, or any federal or state statute or regulation limiting its ability
to incur the Credit Party Obligations.

 

Section 3.8            Margin Regulations.

 

No part of the proceeds of the Term Loan hereunder will be used directly or
indirectly for any purpose that violates, or that would be inconsistent with,
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Credit
Parties and their Subsidiaries (a) are not engaged, principally or as one of
their important activities, in the business of extending credit for the purpose
of “purchasing” or “carrying” “margin stock” within the respective meanings of
each of such terms under Regulation U and (b) taken as a group do not own
“margin stock” except as identified in the financial statements referred to in
Section 3.1 and the aggregate value of all “margin stock” owned by the Credit
Parties and their Subsidiaries taken as a group does not exceed 25% of the value
of their assets.

 

Section 3.9            ERISA.

 

Neither a Reportable Event nor an “accumulated funding deficiency” (within the
meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during
the five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. No termination of
a Single Employer Plan has occurred resulting in any liability that has remained
underfunded, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither any Credit Party nor any Commonly Controlled
Entity is currently subject to any liability for a complete or partial
withdrawal from a Multiemployer Plan.

 

Section 3.10         Environmental Matters.

 

Except for matters which, either individually or in the aggregate, could not
reasonably be expected to have a Mortgaged Property MAE:

 

(a)           The facilities, Collateral and properties owned, leased or
operated by the Credit Parties or any of their Subsidiaries (the “Properties”)
do not contain any Materials of Environmental Concern in amounts or
concentrations which (i) constitute a violation of, or (ii) could give rise to
liability under, any Environmental Law.

 

(b)           The Properties and all operations of the Credit Parties and/or
their Subsidiaries at the Properties are in compliance, and have in the last
five years been in compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law

 

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with respect to the Properties or the business operated by the Credit Parties or
any of their Subsidiaries (the “Business”).

 

(c)           Neither the Credit Parties nor their Subsidiaries have received
any written or actual notice of violation, alleged violation, non-compliance,
liability or potential liability with respect to environmental matters or
Environmental Laws regarding any of the Properties or the Business, nor do the
Credit Parties and their Subsidiaries have knowledge or reason to believe that
any such notice will be received or is being threatened.

 

(d)           Materials of Environmental Concern have not been transported,
generated, treated, stored or disposed of from, on or under the Properties in
violation of, or in a manner or to a location that could give rise to liability
under any Environmental Law.

 

(e)           No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Credit Parties and their Subsidiaries,
threatened, under any Environmental Law to which any Credit Party or any
Subsidiary is or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Properties or the Business.

 

(f)            The Credit Parties and their Subsidiaries: (i) hold all
Environmental Permits (each of which is in full force and effect) required for
any of their current operations or for any property owned, leased, or otherwise
operated by any of them; (ii) are, and within the period of all applicable
statutes of limitation have been, in compliance with all of their Environmental
Permits; and (iii) reasonably believe that:  each of their Environmental Permits
will be timely renewed and complied with, without material expense; any
additional Environmental Permits that may be required of any of them will be
timely obtained and complied with, without material expense; and compliance with
any Environmental Law that is or is expected to become applicable to any of them
will be timely attained and maintained, without material expense.

 

Section 3.11         Use of Proceeds.

 

The proceeds of the Term Loan shall be used by the Borrower solely (a) to
refinance certain existing Indebtedness of the Borrower and its Subsidiaries
(including the Convertible Senior Notes), (b) to pay any fees and expenses
associated with this Credit Agreement on the Closing Date and (c) for general
corporate purposes of the Credit Parties and their Subsidiaries.

 

Section 3.12         Subsidiaries.

 

Set forth on Schedule 3.12 is a complete and accurate list of all Subsidiaries
of the Credit Parties as of the Closing Date. The outstanding Capital Stock and
other equity interests of all such Subsidiaries is validly issued, fully paid
and non-assessable and is owned free and clear of

 

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all Liens (other than those arising under or contemplated in connection with the
Credit Documents).

 

Section 3.13         Ownership.

 

Each of the Credit Parties and its Subsidiaries has title to all of its
Mortgaged Properties free from any Lien other than Permitted Liens. Each of the
Credit Parties and its Subsidiaries has title to all of its assets other than
Mortgaged Properties subject to Permitted Liens and except for matters with
respect to such assets that, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

 

Section 3.14         Indebtedness.

 

Except as otherwise permitted under Section 6.1, the Credit Parties and their
Subsidiaries have no Indebtedness.

 

Section 3.15         Taxes.

 

Except for matters that, either individually or in the aggregate, could not
reasonably be expected to have a Mortgaged Property MAE, each of the Credit
Parties and their Subsidiaries has filed, or caused to be filed, all tax returns
(federal, state, local and foreign) required to be filed and paid (a) all
amounts of taxes shown thereon to be due (including interest and penalties) and
(b) all other taxes, fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing
by it, except for such taxes (i) that are not yet delinquent or (ii) that are
being contested in good faith and by proper proceedings, and against which
adequate reserves are being maintained in accordance with GAAP.

 

Section 3.16         Intellectual Property Rights.

 

Each of the Credit Parties and their Subsidiaries owns, or has the legal right
to use, all Intellectual Property, tradenames, technology, know-how and
processes necessary for each of them to conduct its business as currently
conducted. No claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor do the Credit Parties or
any of their Subsidiaries know of any such claim, and, to the knowledge of the
Credit Parties and their Subsidiaries, the use of such Intellectual Property by
the Credit Parties or any of their Subsidiaries does not infringe on the rights
of any Person in any material respect.

 

Section 3.17         Solvency.

 

After giving effect to the Transactions, the fair saleable value of each Credit
Party’s assets, measured on a going concern basis, exceeds all probable
liabilities, including those to be incurred pursuant to this Credit Agreement.
None of the Credit Parties (a) has unreasonably small capital in relation to the
business in which it is or proposes to be engaged or (b) has incurred, or
believes that it will incur after giving effect to the Transactions, debts
beyond its

 

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ability to pay such debts as they become due. In executing the Credit Documents
and consummating the Transactions, none of the Credit Parties intends to hinder,
delay or defraud either present or future creditors or other Persons to which
one or more of the Credit Parties is or will become indebted.

 

Section 3.18         Investments.

 

All Investments of each of the Credit Parties and their Subsidiaries are
permitted by Section 6.5.

 

Section 3.19         Location of Collateral.

 

Set forth on Schedule 3.19(a) is a list of all Mortgaged Properties of the
Credit Parties and their Subsidiaries as of the Closing Date with street
address, city and state where located. Set forth on Schedule 3.19(b) is the
chief executive office of each of the Credit Parties and their Subsidiaries as
of the Closing Date. The state of incorporation or organization of each of the
Credit Parties is as set forth on Schedule 3.3.

 

Section 3.20         No Burdensome Restrictions.

 

None of the Credit Parties and their Subsidiaries is a party to any agreement or
instrument or subject to any other obligation or any charter or corporate
restriction or any provision of any applicable law, rule or regulation which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

Section 3.21         Brokers’ Fees.

 

None of the Credit Parties and their Subsidiaries has any obligation to any
Person in respect of any finder’s, broker’s, investment banking or other similar
fee in connection with any of the transactions contemplated under the Credit
Documents other than the closing and other fees payable pursuant to this Credit
Agreement and as set forth in the Engagement Letter.

 

Section 3.22         Labor Matters.

 

There are no collective bargaining agreements or Multiemployer Plans covering
the employees of the Credit Parties or any of their Subsidiaries as of the
Closing Date, other than as set forth in Schedule 3.22 hereto, and none of the
Credit Parties and their Subsidiaries (a) has suffered any strikes, walkouts,
work stoppages or other material labor difficulty within the last five years,
other than as set forth in Schedule 3.22 hereto, or (b) has knowledge of any
potential or pending strike, walkout or work stoppage. Other than as set forth
on Schedule 3.22, no unfair labor practice complaint is pending against any
Credit Party or any of its Subsidiaries that is reasonably likely to result in a
Material Adverse Effect.

 

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Section 3.23         Accuracy and Completeness of Information.

 

All factual information heretofore, contemporaneously or hereafter furnished by
or on behalf of any Credit Party or any of its Subsidiaries to the
Administrative Agent, the Arranger or any Lender for purposes of or in
connection with this Credit Agreement or any other Credit Document, or any
transaction contemplated hereby or thereby, is or will be true and accurate in
all material respects and not incomplete by omitting to state any material fact
necessary to make such information not misleading.

 

Section 3.24         Material Contracts.

 

Schedule 3.24 sets forth a complete and accurate list of all Material Contracts
of the Credit Parties and their Subsidiaries in effect as of the Closing Date.
Each such Material Contract is, and after giving effect to the Transactions will
be, in full force and effect in accordance with the terms thereof. The Credit
Parties and their Subsidiaries have delivered to the Administrative Agent a true
and complete copy of each Material Contract.

 

Section 3.25         Insurance.

 

The insurance coverage of the Credit Parties and their Subsidiaries as of the
Closing Date is outlined as to carrier, policy number, expiration date, type and
amount on Schedule 3.25 and such insurance coverage complies with the
requirements set forth in Section 5.5(b), (d) and (e).

 

Section 3.26         Security Documents.

 

The Security Documents create valid security interests in, and Liens on, the
Collateral purported to be covered thereby. Except as set forth in the Security
Documents, such security interests and Liens are currently (or will be, upon the
recordation of the applicable Mortgage Instruments, in each case in favor of the
Administrative Agent, on behalf of the Lenders) perfected security interests and
Liens, prior to all other Liens other than Permitted Liens.

 

Section 3.27         Classification of Senior Indebtedness.

 

The Credit Party Obligations constitute “Designated Senior Indebtedness” or
“Senior Indebtedness” (or any similar classification) under and as defined in
any agreement governing any Subordinated Debt and the subordination provisions
set forth in each such agreement are legally valid and enforceable against the
parties thereto and the Administrative Agent and the Lenders are entitled to
rely on such subordination provisions. Except as set forth on Schedule 3.27, the
incurrence of the Credit Party Obligations and the granting of Liens on the
assets of the Credit Parties to secure the Credit Party Obligations is permitted
by the terms of any senior note purchase agreements to which a Credit Party or
any Subsidiary thereof is a party and will not require the granting of a Lien to
the holder of any senior note.

 

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Section 3.28         Anti-Terrorism Laws.

 

Neither any Credit Party nor any of its Subsidiaries is an “enemy” or an “ally
of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act
of the United States of America (50 U.S.C. App. §§ 1 et seq.), as amended.
Neither any Credit Party nor any of its Subsidiaries is in violation of (a) the
Trading with the Enemy Act, as amended, (b) any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto or (c) the Patriot Act (as defined in Section 9.18). None of the Credit
Parties (i) is a blocked person described in Section 1 of the Anti-Terrorism
Order or (ii) to the best of its knowledge, engages in any dealings or
transactions, or is otherwise associated, with any such blocked person.

 

Section 3.29         Compliance with OFAC Rules and Regulations.

 

None of the Credit Parties or their Subsidiaries or, to the actual knowledge of
any Credit Party, their respective Affiliates (a) is a Sanctioned Person,
(b) has more than 15% of its assets in Sanctioned Countries, or (c) derives more
than 15% of its operating income from investments in, or transactions with
Sanctioned Persons or Sanctioned Countries. No part of the proceeds of the Term
Loan will be used directly or indirectly to fund any operations in, finance any
investments or activities in or make any payments to, a Sanctioned Person or a
Sanctioned Country.

 

Section 3.30         Compliance with FCPA.

 

Each of the Credit Parties and their Subsidiaries is in compliance with the
Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., and any foreign
counterpart thereto. None of the Credit Parties and their Subsidiaries has made
a payment, offering, or promise to pay, or authorized the payment of, money or
anything of value (a) in order to assist in obtaining or retaining business for
or with, or directing business to, any foreign official, foreign political
party, party official or candidate for foreign political office, (b) to a
foreign official, foreign political party or party official or any candidate for
foreign political office, and (c) with the intent to induce the recipient to
misuse his or her official position to direct business wrongfully to such Credit
Party or its Subsidiary or to any other Person, in violation of the Foreign
Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.

 

Section 3.31         Mortgaged Properties.

 

(a)           Compliance with Laws. Except for matters that, either individually
or in the aggregate, could not reasonably be expected to have a Mortgaged
Property MAE, each Credit Party and each Mortgaged Property and the use thereof
comply in all material respects with all applicable Requirements of Law
(including with respect to the American Disabilities Act, parking and applicable
zoning and land use laws, regulations and ordinances). Each Mortgaged Property
is used by a Credit Party or its tenant (or other occupant) exclusively for
retail use, warehouse, office use, automobile service or other lawful commercial
uses and other lawful uses appurtenant or ancillary thereto. Except for matters
that, either individually or in the aggregate, could not reasonably be expected
to have a Mortgaged Property MAE, (i) no legal proceedings are pending or, to
the

 

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knowledge of the Borrower, threatened with respect to the zoning of any
Mortgaged Property, (ii) neither the zoning nor any other right to construct,
use or operate any Mortgaged Property is in any way dependent upon or related to
any property other than such Mortgaged Property, (iii) all certifications,
permits, licenses and approvals, including certificates of completion and
occupancy permits required for the legal use, occupancy and operation of the
Mortgaged Properties (collectively, the “Licenses”) have been obtained and are
in full force and effect, (iv) the use being made of each Mortgaged Property is
in conformity with the certificate of occupancy issued for such Mortgaged
Property, if a certificate of occupancy is required, or is otherwise operating
in conformity with other required approvals and (v) is in conformity with all
other restrictions, covenants and conditions affecting such Mortgaged Property.

 

(b)           Leases. Except as set forth on Schedule 3.31(b), none of the
Mortgaged Properties is subject to any lease or sublease, including any ground
lease.

 

(c)           Utilities and Public Access; Parking. (i) Each Mortgaged Property
has adequate rights of access to public ways and is served by water, sewer,
sanitary sewer and storm drain facilities adequate to service such Mortgaged
Property for its intended uses, (ii) all public utilities necessary to the full
use and enjoyment of each Mortgaged Property as currently used and enjoyed are
located either in the public right-of-way abutting such Mortgaged Property
(which are connected so as to serve the Mortgaged Property without passing over
other property) or in recorded easements serving the Mortgaged Property and such
easements are set forth in and insured by the applicable Title Insurance Policy
and (iii) except for matters that, either individually or in the aggregate,
could not reasonably be expected to have a Mortgaged Property MAE, each
Mortgaged Property has sufficient parking (whether by right, pursuant to an REA
or pursuant to an irrevocable easement) to the extent required to comply with
all Requirements of Law.

 

(d)           Physical Condition. The Mortgaged Properties, including, without
limitation, all buildings, improvements, parking facilities, sidewalks, storm
drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in
serviceable condition, order and repair in all material respects (ordinary wear
and tear excepted). Except for matters that, either individually or in the
aggregate, could not reasonably be expected to have a Mortgaged Property MAE,
there exists no material structural, mold or other material defects or damages
in any Mortgaged Property, as a result of a casualty or otherwise, and whether
latent or otherwise. Borrower has not received notice from any insurance company
or bonding company of any defects or inadequacies in any Mortgaged Property, or
any part thereof, which would adversely affect the insurability of the same or
cause the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond.

 

(e)           Condemnation. Except for those partial takings set forth on
Schedule 3.31(e), no Condemnation or other proceeding has been commenced or, to
the

 

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Borrower’s best knowledge, is threatened or contemplated with respect to all or
any portion of the Mortgaged Properties or for the relocation of roadways
providing access to any Mortgaged Property.

 

(f)            Separate Lots; Assessments. Each Mortgaged Property is assessed
for real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of such
lot or lots, and no other land or improvements is assessed and taxed together
with such Mortgaged Property or any portion thereof. Except for matters that,
either individually or in the aggregate, could not reasonably be expected to
have a Mortgaged Property MAE, there are no pending or proposed special or other
assessments for public improvements or otherwise affecting any Mortgaged
Property, nor are there any contemplated improvements to such Mortgaged Property
that may result in such special or other assessments.

 

(g)           Boundaries. Except to the extent affirmatively insured over under
the title policies and except for matters that, either individually or in the
aggregate, could not reasonably be expected to have a Mortgaged Property MAE,
(i) none of the Improvements which were included in determining the appraised
value of the any Mortgaged Property lie outside the boundaries and building
restriction lines of such Mortgaged Property to any material extent, and (ii) no
improvements on adjoining properties encroach upon the such Mortgaged Property
and no easements or other encumbrances upon such Mortgaged Property encroach
upon any of the Improvements so as to materially affect the value or
marketability of such Mortgaged Property.

 

(h)           Reciprocal Easement Agreements. Except for matters that, either
individually or in the aggregate, could not reasonably be expected to have a
Mortgaged Property MAE, neither any Credit Party nor any Subsidiary thereof is
in default (nor has any notice been given or received with respect to any
alleged or current default) under any of the terms and conditions of a REA, and
each REA remains unmodified and in full force and effect. To the Credit Parties’
knowledge, all easements granted pursuant to any REA that were to have survived
the site preparation and completion of construction (to the extent the same has
been completed), remain in full force and effect and have not been released,
terminated, extinguished or discharged by agreement or otherwise. All material
sums due and owing by a Credit Party to other parties to any REA (or, to the
Credit Parties’ knowledge, by the other parties to each REA to a Credit Party)
pursuant to the terms of such REA (including, without limitation, all sums,
charges, fees, assessments, costs and expenses in connection with any taxes,
site preparation and construction, non-shareholder contributions, and common
area and other property management activities) have been paid, and no Lien has
attached on any Mortgaged Property (or threat thereof has been made) for failure
to pay any of the foregoing.

 

(i)            No Flood Hazard Properties. No Mortgaged Property is a Flood
Hazard Property unless flood insurance acceptable to Administrative Agent has
been provided for such Mortgaged Property.

 

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ARTICLE IV

 

CONDITIONS PRECEDENT

 

Section 4.1                                   Conditions to Closing Date.

 

This Credit Agreement shall become effective upon, and the obligation of each
Lender to make its portion of the Term Loan on the Closing Date is subject to,
the satisfaction of the following conditions precedent:

 

(a)                                  Execution of Credit Agreement and Credit
Documents. The Administrative Agent shall have received (i) counterparts of this
Credit Agreement, executed by a duly authorized officer of each party hereto,
(ii) for the account of each Lender requesting a note, a Term Loan Note,
(iii) counterparts of each Mortgage Instrument, in each case conforming to the
requirements of this Credit Agreement and executed by duly authorized officers
of the Credit Parties or other Person, as applicable, and (iv) counterparts of
any other Credit Document, executed by the duly authorized officers of the
parties thereto.

 

(b)                                 Corporate Documents. The Administrative
Agent shall have received a (i) certificate for each Credit Party, certified by
an officer of such Credit Party as of the Closing Date, certifying that the
(A) articles of incorporation, partnership agreement or other charter documents
of such Credit Party, and (B) the bylaws or other operating agreement of such
Credit Party, which were delivered to the Administrative Agent in connection
with the closing of the Existing Credit Agreement, have not been rescinded or
modified, have been in full force and effect since the closing date of the
Existing Credit Agreement and are in full force and effect as of the Closing
Date, (ii) resolutions of the board of directors or other comparable governing
body of such Credit Party approving and adopting the Credit Documents, the
transactions contemplated herein and authorizing the execution and delivery
hereof, (iii) copies of certificates of good standing, existence or its
equivalent with respect to each Credit Party certified as of a recent date by
the appropriate Governmental Authorities of the state of incorporation and each
other state in which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect and (iv) an incumbency
certificate of each Credit Party certified by a secretary or assistant secretary
(pursuant to a secretary’s certificate in substantially the form of Schedule
4.1(b) attached hereto) to be true and correct as of the Closing Date.

 

(c)                                  Legal Opinion of Counsel. The
Administrative Agent shall have received an opinion or opinions of counsel for
the Credit Parties, dated the Closing Date and addressed to the Administrative
Agent and the Lenders, in form and substance acceptable to the Administrative
Agent (which shall include, without limitation, opinions with respect to the
valid existence of each Credit Party, opinions as to perfection of the Liens
granted to the Administrative Agent pursuant to the Security Documents and
opinions as to the non-contravention of the Credit Parties’ organizational
documents and Material Contracts).

 

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(d)                                 Real Property Collateral. The Administrative
Agent shall have received, to the extent not already received in connection with
the Existing Credit Agreement, in form and substance satisfactory to the
Administrative Agent and the Lenders:

 

(i)                                     to the extent required by the
Administrative Agent, searches of Uniform Commercial Code filings in each
jurisdiction where any Collateral is located or where a filing would need to be
made in order to perfect the Lenders’ security interest in the Collateral,
copies of the financing statements on file in such jurisdictions and evidence
that no Liens exist other than Permitted Liens;

 

(ii)                                  completed UCC financing statements for
each appropriate jurisdiction as is necessary, in the Administrative Agent’s
sole discretion, to perfect the Lenders’ security interest in the Collateral;

 

(iii)                               fully executed and notarized Mortgage
Instruments encumbering the Mortgaged Properties listed on Schedule 3.19(a);

 

(iv)                              with respect to each Mortgaged Property listed
in Schedule 3.19(a), a Mortgage Title Insurance Policy assuring the
Administrative Agent that the Mortgage Instrument with respect to such Mortgaged
Property creates a valid and enforceable first priority mortgage lien on such
Mortgaged Property, free and clear of all defects and encumbrances except
Permitted Liens, which Mortgage Title Insurance Policy shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall provide
for affirmative insurance and such reinsurance as the Administrative Agent may
reasonably request, all of the foregoing in form and substance reasonably
satisfactory to the Administrative Agent;

 

(v)                                 evidence as to (A) whether any Mortgaged
Property listed in Schedule 3.19(a) is a Flood Hazard Property and (B) if any
Mortgaged Property is a Flood Hazard Property, (y) the applicable Credit Party’s
written acknowledgment of receipt of written notification from the
Administrative Agent (I) as to the fact that such Mortgaged Property is a Flood
Hazard Property and (II) as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood Insurance
Program and (z) copies of insurance policies or certificates of insurance of the
Credit Parties and their Subsidiaries evidencing flood insurance reasonably
satisfactory to the Administrative Agent and naming the Administrative Agent as
loss payee on behalf of the Lenders;

 

(vi)                              except as set forth in Section 5.15, maps or
plats of an as-built survey of the sites of the Mortgaged Properties listed in
Schedule 3.19(a) certified to the Administrative Agent and the Title Insurance
Company in a manner reasonably satisfactory to them, dated the original date the
survey was created and the day of the last revision by American National
Surveyors, which maps or plats

 

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and the surveys on which they are based shall be sufficient to delete any
standard printed survey exception contained in the applicable title policy and
be made in accordance with the Minimum Standard Detail Requirements for Land
Title Surveys jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1999, and,
without limiting the generality of the foregoing, there shall be surveyed and
shown on such maps, plats or surveys the following: (A) the locations on such
sites of all the buildings, structures and other improvements and the
established building setback lines; (B) the lines of streets abutting the sites
and width thereof; (C) all access and other easements appurtenant to the sites
necessary to use the sites; (D) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting the
site, whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (E) any encroachments on any adjoining property
by the building structures and improvements on the sites; and (F) if the site is
described as being on a filed map, a legend relating the survey to said map;

 

(vii)                           pollution and remediation legal liability
insurance covering legal expenses, remediation costs and loss of value for all
owned Mortgaged Properties listed in Schedule 3.19(a) relating to environmental
issues on, under or emanating from the Property in such reasonable amounts as
requested by the Administrative Agent;

 

(viii)                        opinions of counsel to the Credit Parties for each
jurisdiction in which the Mortgaged Properties are located; and

 

(ix)                                a Mass Appraisal by Cushman & Wakefield for
each owned Mortgaged Property not previously pledged as Collateral under the
Existing Credit Agreement, in form and substance satisfactory to the
Administrative Agent (the “2006 Appraisals”).

 

(e)                                  Liability, Casualty, Property and Business
Interruption Insurance. The Administrative Agent shall have received copies of
insurance policies or certificates of insurance evidencing liability, casualty,
property and business interruption insurance meeting the requirements set forth
herein or in the Security Documents. The Administrative Agent shall be named as
loss payee, mortgagee and/or additional insured with respect to any such
insurance providing liability coverage or coverage in respect of any Collateral,
and each provider of any such insurance shall agree, by endorsement upon the
policy or policies issued by it or by independent instruments furnished to the
Administrative Agent, that it will give thirty (30) days prior written notice
before any such policy or policies shall be altered or cancelled.

 

(f)                                    Litigation. There shall not exist (i) any
material pending or threatened litigation, injunction, order or claim (A) which
could have a material adverse effect on the business, properties, operations or
financial condition of the Borrower and its Subsidiaries (taken as a whole) or
(B) with respect to this Agreement or the other Credit

 

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Documents, or (ii) any pending or threatened bankruptcy or insolvency with
respect to the Borrower or any of its Subsidiaries, in each case that has not
been settled, dismissed, vacated, discharged or terminated prior to the Closing
Date.

 

(g)                                 Solvency Certificate. The Administrative
Agent shall have received an officer’s certificate prepared by the chief
financial officer of the Borrower as to the financial condition, solvency and
related matters of the Credit Parties and their Subsidiaries, taken as a whole,
after giving effect to the initial borrowings under the Credit Documents, in
substantially the form of Schedule 4.1(g) hereto.

 

(h)                                 Account Designation Letter. The
Administrative Agent shall have received the executed Account Designation Letter
in the form of Schedule 1.1(a) hereto.

 

(i)                                     Corporate Structure. The number of
shares of each class of Capital Stock issued and outstanding and the ownership
thereof of the Credit Parties and their Subsidiaries as of the Closing Date
shall be as described in Schedule 3.12. The Administrative Agent shall be
reasonably satisfied with the legal, tax, accounting, business, regulatory and
other matters relating to the Transactions or to the Credit Parties and their
Subsidiaries after giving effect thereto.

 

(j)                                     Consents. The Administrative Agent shall
have received evidence that all boards of directors, governmental, shareholder
and material third party consents and approvals necessary in connection with the
Transactions have been obtained and all applicable waiting periods have expired
without any action being taken by any authority that could restrain, prevent or
impose any material adverse conditions on such transactions or that could seek
or threaten any of the foregoing.

 

(k)                                  Compliance with Laws. The financings and
other Transactions contemplated hereby shall be in compliance with all
applicable laws and regulations (including all applicable securities and banking
laws, rules and regulations).

 

(l)                                     Bankruptcy. There shall be no bankruptcy
or insolvency proceedings with respect to Credit Parties or any of their
Subsidiaries.

 

(m)                               Existing Indebtedness of the Credit Parties.
All of the existing Indebtedness for borrowed money of the Borrower and its
Subsidiaries (other than Indebtedness permitted to exist pursuant to
Section 6.1) shall be repaid in full (or discharged in accordance with their
respective terms) and all security interests related thereto shall be terminated
on the Closing Date; provided that the Convertible Senior Notes shall be
terminated on or prior to the Closing Date or the Borrower shall have
irrevocably funded, on or prior to the Closing Date, to the applicable trustee
the amount required to satisfy in full the Convertible Senior Notes on terms and
conditions reasonably satisfactory to the Administrative Agent.

 

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(n)                                 Financial Statements. The Administrative
Agent and the Lenders shall have received copies of the financial statements
referred to in Section 3.1 hereof, each in form and substance satisfactory to
it.

 

(o)                                 No Material Adverse Change. Since
January 29, 2006, there has been no material adverse change in the business,
properties, operations or financial condition of the Borrower and its
Subsidiaries (taken as a whole) and there shall not have occurred any material
disruption or material adverse change in the financial, banking or capital
markets (including the loan syndication market) that has impaired or would
impair the Arranger’s ability to syndicate the facilities.

 

(p)                                 Financial Condition Certificate. The
Administrative Agent shall have received a certificate or certificates executed
by a Responsible Officer of the Borrower as of the Closing Date stating that
(i) to the knowledge of any Credit Party, there is no action, suit,
investigation, litigation or proceeding pending or ongoing in any court or
before any other Governmental Authority that purports to affect any Credit Party
or any of its Subsidiaries, or any transaction contemplated by the Credit
Documents, which action, suit, investigation, litigation or proceeding could
reasonably be expected to have a Material Adverse Effect, that has not been
settled, dismissed, vacated, discharged or terminated prior to the Closing Date,
(ii) immediately after giving effect to this Credit Agreement, the other Credit
Documents, and all the Transactions contemplated to occur on such date, (A) no
Default or Event of Default exists, (B) all representations and warranties
contained herein and in the other Credit Documents are true and correct in all
material respects, and (C) the Credit Parties are in pro forma compliance with
the initial financial covenant set forth in Section 5.9 (as evidenced through
detailed calculations of such financial covenant on a schedule to such
certificate) as of the last day of the month immediately preceding the Closing
Date and (iii) each of the conditions precedent in Sections 4.1 have been
satisfied.

 

(q)                                 Material Contracts. The Administrative Agent
shall have received true and complete copies, certified by an officer of the
Borrower as true and complete, of all Material Contracts, together with all
exhibits and schedules.

 

(r)                                    Patriot Act Certificate. The
Administrative Agent shall have received a certificate satisfactory thereto, for
benefit of itself and the Lenders, provided by the Borrower that sets forth
information required by the Patriot Act (as defined in Section 9.18) including,
without limitation, the identity of the Credit Parties, the name and address of
the Credit Parties and other information that will allow the Administrative
Agent or any Lender, as applicable, to identify the Borrower in accordance with
the Patriot Act.

 

(s)                                  Debt Ratings. The Term Loan shall have
received Debt Ratings from S&P and Moody’s.

 

(t)                                    Fees. The Administrative Agent and the
Lenders shall have received all fees, if any, owing pursuant to the Engagement
Letter and Section 2.3.

 

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(u)                                 Additional Matters. All other documents and
legal matters in connection with the transactions contemplated by this Credit
Agreement shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Credit Agreement is in effect and until no Term
Note remains outstanding and unpaid and the Credit Party Obligations and all
other amounts owing to the Administrative Agent or any Lender hereunder are paid
in full, the Credit Parties shall, and shall cause each of their Subsidiaries
(other than in the case of Sections 5.1 or 5.2 hereof), to:

 

Section 5.1                                   Financial Statements.

 

Furnish to the Administrative Agent and each of the Lenders:

 

(a)                                  Annual Financial Statements. As soon as
available and in any event no later than the earlier of (i) to the extent
applicable, the date the Borrower is required by the SEC to deliver its
Form 10-K for any fiscal year of the Borrower and (ii) ninety (90) days after
the end of each fiscal year of the Borrower, a copy of the Consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and
the related Consolidated statements of income and retained earnings and of cash
flows of the Borrower and its consolidated Subsidiaries for such year, which
shall be audited by a firm of independent certified public accountants of
nationally recognized standing reasonably acceptable to the Required Lenders,
setting forth in each case in comparative form the figures for the previous
year, reported on without a “going concern” or like qualification or exception,
or qualification indicating that the scope of the audit was inadequate to permit
such independent certified public accountants to certify such financial
statements without such qualification and without any other material
qualification or exception; provided, however, if the Administrative Agent or
any Lender requires such delivery through any means other than filing such
financial statements with the SEC, such delivery by other means shall occur not
later than five (5) days following such filing with the SEC;

 

(b)                                 Quarterly Financial Statements. As soon as
available and in any event no later than the earlier of (i) to the extent
applicable, the date the Borrower is required by the SEC to deliver its
Form 10-Q for any fiscal quarter of the Borrower and (ii) forty-five (45) days
after the end of each fiscal quarter of the Borrower, a copy of the Consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the end of
such period and related Consolidated and consolidating statements of income and
retained earnings and of cash flows for the Borrower and its Subsidiaries for
such quarterly period and for the portion of the fiscal year ending with such
period, in each case setting forth in comparative form consolidated figures for
the corresponding period or periods of the

 

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preceding fiscal year (subject to normal recurring year-end audit adjustments);
provided, however, if the Administrative Agent or any Lender requires such
delivery through any means other than filing such financial statements with the
SEC, such delivery by other means shall occur not later than five (5) days
following such filing with the SEC; and

 

(c)                                  Annual Operating Budget and Cash Flow.
Within five (5) days of approval by the Board of Directors of the Borrower, but
in any event within sixty (60) days of the Borrower’s fiscal year end, a copy of
the detailed annual operating budget or plan including cash flow projections of
the Borrower and its Subsidiaries for the next four fiscal quarter periods
prepared on a quarterly basis, in form and detail reasonably acceptable to the
Administrative Agent and the Lenders, together with a summary of the material
assumptions made in the preparation of such annual budget or plan;

 

except for projections provided in accordance with subsection (c) above, all
such financial statements to be complete and correct in all material respects
(subject, in the case of interim statements, to normal recurring year-end audit
adjustments) and to be prepared in reasonable detail and, in the case of the
annual and quarterly financial statements provided in accordance with
subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change, if any, in the application of accounting principles as
provided in Section 1.3.

 

Section 5.2                                   Certificates; Other Information.

 

Furnish to the Administrative Agent and each of the Lenders:

 

(a)                                  concurrently with the delivery of the
financial statements referred to in Sections 5.1(a) and 5.1(b) above, (i) a
certificate of a Responsible Officer substantially in the form of Schedule
5.2(a)(i) stating that, to the best of such Responsible Officer’s knowledge,
none of the Credit Parties has obtained knowledge of any Default or Event of
Default except as specified in such certificate and such certificate shall
include the calculations in reasonable detail (A) required to indicate
compliance with Section 5.9 as of the last day of such period and
(B) determining the Senior Leverage Ratio as of the last day of such period to
the extent the Senior Leverage Ratio meets the Senior Leverage Ratio Target and
(ii) a Collateral Value Report substantially in the form of Schedule 5.2(a)(ii).

 

(b)                                 concurrently with or prior to the delivery
of the financial statements referred to in Sections 5.1(a) and 5.1(b) above,
(i) an updated copy of Schedule 3.12 if the Borrower or any of its Subsidiaries
has formed or acquired a new Subsidiary since the Closing Date or since Schedule
3.12 was last updated, as applicable and (ii) an updated copy of Schedule 3.24
if any new Material Contract has been entered into since the Closing Date or
since Schedule 3.24 was last updated, as applicable, together with a copy of
each new Material Contract and (iii) an updated copy of Schedule 3.25 if the
Borrower or any of its Subsidiaries has altered or acquired any insurance
policies since the Closing Date in any material respect;

 

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(c)                                  within ninety (90) days after the end of
each fiscal year of the Borrower, a certificate containing information regarding
the amount of all Asset Dispositions and acquisitions that were made during the
prior fiscal year and amounts received in connection with any Recovery Event
during the prior fiscal year; and

 

(d)                                 promptly, such additional financial and
other information as the Administrative Agent, on behalf of any Lender, may from
time to time reasonably request.

 

Section 5.3                                   Payment of Taxes and Other
Obligations.

 

Pay, discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, subject, where applicable, to specified grace
periods, (a) its taxes (Federal, state, local and any other taxes), (b) its
other obligations and liabilities of whatever nature in accordance with industry
practice and (c) any additional costs that are imposed as a result of any
failure to so pay, discharge or otherwise satisfy such taxes, obligations and
liabilities, except when the amount to be paid, discharged or otherwise
satisfied is less than $5,000,000 or when the amount or validity of any such
taxes, obligations and liabilities is currently being contested in good faith by
appropriate proceedings and reserves, if applicable, in conformity with GAAP
with respect thereto have been provided on the books of the Credit Parties. The
Borrower and its Subsidiaries shall not suffer and shall promptly cause to be
paid and discharged any Lien or charge whatsoever which may be or become a Lien
or charge against any Mortgaged Property (other than Permitted Liens), and shall
promptly pay for all utility services provided to the Mortgaged Properties,
except to the extent failure to pay such utility services could not reasonably
be expected to have a Mortgaged Property MAE.

 

Section 5.4                                   Conduct of Business and
Maintenance of Existence.

 

(a) Continue to engage in business of the same general type as now conducted by
it on the Closing Date and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business; (b) comply in all material respects with all Material Contracts;
(c) comply with all Requirements of Law applicable to it except to the extent
that failure to comply therewith could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect and (d) not commit,
permit or suffer to exist any act or omission affording any Governmental
Authority the right of forfeiture as against any Mortgaged Property or any part
thereof or any monies paid in performance of Borrower’s obligations under any of
the Credit Documents. The Borrower shall at all times maintain, preserve and
protect all franchises and material trade names used in connection with the
operation of the Mortgaged Properties.

 

Section 5.5                                   Maintenance of Property;
Insurance.

 

(a)                                  Keep all material property useful and
necessary in its business in good working order and condition (ordinary wear and
tear and obsolescence excepted).

 

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(b)                                 Maintain with financially sound and
reputable insurance companies having a claims paying ability rating of “A-” or
better by S&P and Moody’s (or such other rating agencies acceptable to the
Administrative Agent) liability, casualty, property and business interruption
insurance (including, without limitation, insurance with respect to its
Collateral) in at least such amounts and against at least such risks as are
usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to the Administrative Agent, upon the
request of the Administrative Agent, full information as to the insurance
carried. The Administrative Agent shall be named as loss payee or mortgagee, as
its interest may appear, and/or additional insured with respect to any such
casualty, property and liability insurance, as applicable.

 

(c)                                  Cause the Mortgaged Properties to be
maintained in a good and safe condition and repair (excepting customary and
ordinary wear and tear) and in accordance with the O&M Plans. The Improvements
and the Fixtures shall not be removed, demolished or materially altered (except
for replacement of the Fixtures in the ordinary course of business) without the
prior written consent of Administrative Agent; provided that, the Credit Parties
shall have the right to improve any Mortgaged Property so long as the economic
value, useful life, utility, condition, operational capacity and functional
capacity of such Mortgaged Property is not decreased or diminished by such
improvement. If under applicable zoning provisions the use of all or any portion
of any Mortgaged Property is or shall become a nonconforming use, the Credit
Parties will not knowingly and intentionally cause or permit the nonconforming
use to be discontinued or the nonconforming Improvement to be abandoned without
the express written consent of Administrative Agent. The Credit Parties will not
commit or suffer any waste of the Mortgaged Properties or take any action that
invalidates or causes the cancellation of any insurance policy with respect to
the Mortgaged Properties, or do or permit to be done on any Mortgaged Property
anything that may in any way materially impair the value of such Mortgaged
Property or the Lien on such Mortgaged Property (except for Permitted Liens).
Subject to the rights of others under Permitted Liens, the Credit Parties will
not, without the prior written consent of Administrative Agent, permit any
drilling or exploration for or extraction, removal, or production of any
minerals from the surface or the subsurface of any Mortgaged Property,
regardless of the depth thereof or the method of mining or extraction thereof.

 

(d)                                 The Credit Parties shall obtain and
maintain, or cause to be maintained, at all times insurance for the Credit
Parties and each Mortgaged Property providing at least the following coverages:

 

(i)                                     comprehensive “all risk” insurance on
the Improvements and the Fixtures, in each case (A) in an amount equal to one
hundred percent (100%) of the “Full Replacement Cost,” which for purposes of
this Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect to the
Improvements and Fixtures waiving all co-insurance provisions; (C) providing for
no deductible or self-insured retention in excess of $500,000 for all such
insurance coverage; and (D) if

 

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any of the Improvements or the use of the Mortgaged Property shall at any time
constitute “legal nonconforming” structures or uses, providing coverage for
contingent liability from operation of building laws, demolition costs and
increased cost of construction endorsements and containing an “Ordinance or Law
Coverage” or “Enforcement” endorsement. In addition, Credit Parties shall
obtain: (x) windstorm insurance in amounts and in form and substance acceptable
to the Administration Agent; (y) if any portion of the Improvements is currently
or at any time in the future located in a “special flood hazard area” designated
by the Federal Emergency Management Agency, flood hazard insurance in an amount
equal to the maximum amount of such insurance available under the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National
Flood Insurance Reform Act of 1994, as each may be amended; and (z) earthquake
insurance in amounts and in form and substance reasonably satisfactory to
Administrative Agent in the event the Mortgaged Property is located in an area
with a high degree of seismic risk;

 

(ii)                                  commercial general liability insurance
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the Mortgaged Property, with such insurance (A) to
be in an amount reasonably acceptable to the Administrative Agent; and (B) to
cover at least the following hazards: (1) premises and operations; (2) products
and completed operations; (3) independent contractors and (4) blanket
contractual liability;

 

(iii)                               at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements, and only if the Mortgaged Property coverage form does not
otherwise apply, (A) owner’s contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the insurance
provided for in subsection (i) above written in a so-called Builder’s Risk
Completed Value form (1) on a non-reporting basis, (2) against “all risks”
insured against pursuant to subsection (i) above, (3) including permission to
occupy the Mortgaged Property, and (4) with an agreed amount endorsement waiving
co-insurance provisions;

 

(iv)                              workers’ compensation, subject to applicable
statutory limits, and employer’s liability insurance in respect of any work or
operations on or about the Mortgaged Property, or in connection with such
Mortgaged Property or its operation (if applicable); and

 

(v)                                 pollution and remediation legal liability
insurance covering legal expenses, remediation costs and loss of value for all
Mortgaged Properties relating to environmental issues on, under or emanating
from the Mortgaged Property in such reasonable amounts as requested by the
Administrative Agent; provided that (A) such insurance shall be (1) not less
than $5,000,000 per Mortgaged Property per occurrence and (2) not less than
$25,000,000 in the aggregate and (B) no deductible shall be in excess of
$250,000.

 

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(e)                                  All insurance policies provided for in
Section 5.5 shall contain clauses or endorsements to the effect that:

 

(i)                                     no act or negligence of any Credit
Party, or anyone acting for any Credit Party, or any other tenant or other
occupant, or failure to comply with the provisions of any insurance policy,
which might otherwise result in a forfeiture of the insurance or any part
thereof, shall in any way affect the validity or enforceability of the insurance
insofar as Administrative Agent is concerned;

 

(ii)                                  the insurance policies shall not be
materially changed (other than to increase the coverage provided thereby) or
canceled without at least thirty (30) days’ prior written notice to
Administrative Agent and any other party named therein as an additional insured;

 

(iii)                               the issuers thereof shall give written
notice to Administrative Agent if the insurance policies have not been renewed
thirty (30) days prior to its expiration; and

 

(iv)                              the Administrative Agent shall not be liable
for any insurance premiums thereon or subject to any assessments thereunder.

 

(f)                                    If at any time Administrative Agent is
not in receipt of written evidence that all insurance required hereunder is in
full force and effect, the Administrative Agent shall have the right, without
notice to the Credit Parties, to take such action as the Administrative Agent
deems necessary to protect its interest in any Mortgaged Property, including,
without limitation, obtaining such insurance coverage as Administrative Agent in
its sole discretion deems appropriate. All premiums incurred by Administrative
Agent in connection with such action or in obtaining such insurance and keeping
it in effect shall be paid by the Credit Parties to the Administrative Agent
upon demand and, until paid, shall be secured by the Mortgages and shall bear
interest at the default rate set forth in Section 2.5.

 

(g)                                 Comply with all of the material terms and
conditions in each REA.

 

Section 5.6                                   Inspection of Property; Books and
Records; Discussions.

 

Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its businesses and activities; and
permit, during regular business hours and upon reasonable notice by the
Administrative Agent, the Administrative Agent (at the request of any Lender or
otherwise) to visit and inspect any Mortgaged Property or any other property
where books and records are located and examine and make abstracts from any of
its books and records at any reasonable time and as often as may reasonably be
desired, and to discuss the business, operations, properties and financial and
other condition of the Borrower and

 

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its Subsidiaries with officers and employees of the Borrower and its
Subsidiaries and with its independent certified public accountants.

 

Section 5.7                                   Notices.

 

Give notice in writing to the Administrative Agent (which shall promptly
transmit such notice to each Lender) of:

 

(a)                                  promptly, but in any event within two
(2) Business Days after any Credit Party knows or has reason to know thereof,
the occurrence of any Default or Event of Default;

 

(b)                                 promptly, any default or event of default
under any Material Contract of any Credit Party or any of their Subsidiaries
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or involve a monetary claim in excess of $5,000,000;

 

(c)                                  promptly, any litigation, or any
investigation or proceeding known to any Credit Party (i) affecting any Credit
Party or any of their Subsidiaries which, if adversely determined, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect or involve a monetary claim in excess of $5,000,000, (ii) affecting or
with respect to this Credit Agreement, any other Credit Document or any security
interest or Lien created thereunder or (iii) involving an environmental claim or
potential liability under Environmental Laws which could reasonably be expected
to have, individually or in the aggregate, a Mortgaged Property MAE;

 

(d)                                 any labor controversy that has resulted in,
or threatens to result in, a strike or other work action against any Credit
Party which could reasonably be expected to have a Material Adverse Effect;

 

(e)                                  any attachment, judgment, lien, levy or
order exceeding $5,000,000 that may be assessed against or threatened against
any Credit Party other than Permitted Liens;

 

(f)                                    as soon as possible and in any event
within thirty (30) days after any Credit Party knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC (other than a Permitted Lien) or a
Plan or any withdrawal from, or the termination, Reorganization or Insolvency
of, any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or any Credit Party, any Commonly Controlled
Entity or any Multiemployer Plan, with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;

 

(g)                                 promptly, any notice of violation of any
Requirement of Law received by a Credit Party from any Governmental Authority
(including, without limitation, any

 

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notice of violation of Environmental Laws) to the extent such violation could
result in a fine, penalty or other liability in excess of $75,000;

 

(h)                                 any (i) notice that any Governmental
Authority has revoked or is likely to revoke any Environmental Permit held by,
or has refused to issue or renew, or is likely to refuse to issue or renew, any
Environmental Permit sought by, the Borrower or any of its Subsidiaries to the
extent such revocation, non-renewal or refusal to issue could reasonably be
expected to have a Mortgaged Property MAE; (ii) listing or proposal for listing
any property owned, leased, or operated by the Borrower or any of its
Subsidiaries on, any list maintained by any Governmental Authority for possible
environmental investigation or remediation, including without limitation the
National Priorities List and the Comprehensive Environmental Response,
Compensation and Liability Information System list maintained by the U.S.
Environmental Protection Agency and any similar list maintained by any other
federal, state, local, or other authority; or (iii) development, event or
condition that, individually or in the aggregate with other developments, events
or conditions, could reasonably be expected to have a Mortgaged Property MAE;
and

 

(i)                                     promptly, any other development or event
which could reasonably be expected to have a Mortgaged Property MAE.

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Credit Parties propose to take with respect thereto.
In the case of any notice of a Default or Event of Default, the Borrower shall
specify that such notice is a Default or Event of Default notice on the face
thereof

 

Section 5.8                                   Environmental Laws.

 

(a)                                  Comply in all material respects with, and
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws;

 

(b)                                 Conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material respects
with all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws except to the extent that the same are being contested in
good faith by appropriate proceedings; and

 

(c)                                  Defend, indemnify and hold harmless the
Administrative Agent and the Lenders, and their respective employees, agents,
officers and directors, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under,

 

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any Environmental Law applicable to the operations of the Credit Parties or any
of their Subsidiaries or the Properties, or any orders, requirements or demands
of Governmental Authorities related thereto, including, without limitation,
reasonable attorney’s and consultant’s fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor. The agreements in this paragraph
shall survive repayment of the Credit Party Obligations and all other amounts
payable hereunder and termination of the Term Loan Commitments and the Credit
Documents.

 

Section 5.9                                   Financial Covenant.

 

Comply with the following financial covenant:

 

Minimum EBITDA. (a) As of the end of any month during which a Minimum EBITDA
Maintenance Event has occurred and is continuing or (b) upon the occurrence of
the fourth Minimum EBITDA Maintenance Event during the term of this Agreement
and until the end of the term of this Agreement, the Borrower and its
Subsidiaries (inclusive of the Insurance Subsidiary) shall have ABL Consolidated
EBITDA for the twelve (12) consecutive months then ended of at least
$170,000,000.

 

Section 5.10                            Additional Guarantors.

 

The Credit Parties will cause each of their Domestic Subsidiaries (other than
the Insurance Subsidiary to the extent such Subsidiary is engaged in the
insurance business and is regulated by the relevant Governmental Authority),
whether newly formed, after acquired or otherwise existing to promptly (and in
any event within thirty (30) days after such Domestic Subsidiary is formed or
acquired (or such longer period of time as agreed to by the Administrative Agent
in its reasonable discretion)) become a Guarantor hereunder by way of execution
of a Joinder Agreement. In connection therewith, the Credit Parties shall give
notice to the Administrative Agent not less than ten (10) days prior to creating
a Domestic Subsidiary (or such shorter period of time as agreed to by the
Administrative Agent in its reasonable discretion), or acquiring the Capital
Stock of any other Person. In connection with the foregoing, the Credit Parties
shall deliver to the Administrative Agent, with respect to each new Guarantor to
the extent applicable, substantially the same documentation required pursuant to
Sections 4.1 (b)-(e), (t) and 5.12 and such other documents or agreements as the
Administrative Agent may reasonably request.

 

Section 5.11                            Compliance with Law.

 

Comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and its
Property if noncompliance with any such law, rule, regulation, order or
restriction could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

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Section 5.12                            Pledged Collateral; Substitutions;
Releases.

 

(a)                                  Collateral Value Test. From the Closing
Date until the Maturity Date, cause Properties with a Collateral Value (as of
the most recent appraisals) of at least 2.0 times the principal amount of the
then outstanding Term Loan to be, at all times, subject to a valid, first
priority perfected Lien, in favor of the Administrative Agent on behalf of the
Lenders, granted by the Credit Parties; provided that (i) the Mortgaged
Properties shall at all times consist of Properties with a Collateral Value (as
of the most recent appraisals) of at least $150,000,000 and (ii) Mortgaged
Properties that are vacant or otherwise non-operational or that are being
altered, renovated or refurbished at any one time (excluding minor alterations
and upkeep) (A) shall not represent more than 15% of the total number of
Mortgaged Properties at any time and (B) together with the Mortgaged Properties
subject to a lease or sublease (other than those set forth on Schedule 3.31(b))
in accordance with the terms of Section 6.4(d), shall not represent more than
25% of the total number of Mortgaged Properties at any time. If at any time
there exists a deficiency in the amount of the Collateral required to be
delivered pursuant to this Section, the Borrowers shall within forty-five (45)
days, deliver additional Properties as Collateral to secure the Credit Party
Obligations in an aggregate amount sufficient to eliminate such deficiency. The
Borrower and its Subsidiaries will deliver the Collateral and such other
documentation as the Administrative Agent may reasonably request in connection
with the foregoing, including, without limitation, certified resolutions and
other organizational and authorizing documents of the Borrower and any
applicable Subsidiaries, favorable opinions of counsel to the Borrower and such
Subsidiaries (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documentation referred to above and the
perfection of the Administrative Agent’s Liens thereunder), and other items of
the types required to be delivered by the Administrative Agent all in form,
content and scope reasonably satisfactory to the Administrative Agent.

 

(b)                                 Substitution or Release of Collateral.
Notwithstanding the foregoing, so long as no Default or Event of Default exists
or would otherwise result therefrom, the Borrower shall be permitted from time
to time to (i) substitute additional Properties reasonably satisfactory to the
Administrative Agent (collectively, the “Substituted Properties”) as Collateral
for Properties previously pledged as Collateral; provided, that, the Collateral
Value of all Substituted Properties shall not exceed fifteen percent (15%) of
the Collateral Value of all Mortgaged Properties, in each case as determined at
the time of any such substitution by the 2005 Appraisals, the 2006 Appraisals or
such later appraisals as may be required by the Administrative Agent, as
applicable, and/or (ii) request that certain Collateral be released so long as,
prior to any release of Collateral, the Borrower shall deliver to the
Administrative Agent an updated Collateral Value Report demonstrating, to the
satisfaction of the Administrative Agent, that after giving effect to such
release (and any new Collateral pledged in substitution therefor) the Collateral
Value shall be greater than or equal to 2.0 times the principal amount of the
then outstanding Term Loan. In connection with the delivery of additional
Collateral, the Credit Parties shall comply with the requirements set forth in
Subsection (a) hereof. To the extent the Borrower requests the release of
certain Collateral in accordance with the

 

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terms hereof, then the Administrative Agent shall promptly release Collateral,
at the expense of the Borrower.

 

(c)                                  New Appraisals. Have each Mortgaged
Property be subject to a Mass Appraisal by a nationally recognized appraisal
firm no less frequently than every 20 months after the later of (i) January 27,
2006 and (ii) the date of the last Mass Appraisal or new market value appraisal
of such Mortgaged Property (the “Reappraisal Date”). The Mass Appraisal shall
conform with FIRREA guidelines and shall have the form of a “mass appraisal” as
set forth in the USPAP guidelines.  The Mass Appraisal shall contain both a
“fair market value” and a “dark value” for each of the Mortgaged Properties. 
The “fair market value” shall be determined based on both (i) then current sales
of similarly sized properties in similar markets and (ii) then current market
rental rates for comparable properties, capped at then prevailing cap rates for
similar credits.  The “dark value” shall be determined by adjusting the fair
market value down for (A) rent loss during the re-leasing period,
(B) anticipated tenant improvements, (C) leasing commissions at market rates and
(D) holding costs during the re-leasing period.  The representative sample shall
include both the highest and lowest performing Mortgaged Properties and shall
have similar geographic concentrations to that of the larger Mortgaged Property
pool. In addition to the foregoing requirements of this Section 5.12(e), to the
extent (i) the Borrower encumbers, enters into sale leaseback arrangements with
respect to or otherwise disposes of Properties not constituting Collateral with
a fair market value in excess of $125,000,000 and (ii) a period of at least one
year has elapsed since the date of the last Mass Appraisal, then the Borrower
must provide new market value appraisals for the Mortgaged Properties then
constituting Collateral; provided that to the extent the Borrower is not
required to deliver new market value appraisals at the time the Borrower
encumbers, enters into sale leaseback arrangements with respect to or otherwise
disposes of Properties not constituting Collateral with a fair market value in
excess of $125,000,000, then the Borrower shall deliver new market value
appraisals upon the next Reappraisal Date.

 

Section 5.13                            [Reserved].

 

Section 5.14                            Casualty and Condemnation.

 

(a)                                  If the Borrower has knowledge of a Casualty
or a Condemnation of a Mortgaged Property or any interest therein, the Borrower,
within fifteen (15) days of obtaining such knowledge, shall give notice thereof
to the Administrative Agent generally describing the nature and extent of such
Casualty or Condemnation.

 

(b)                                 To the extent a Casualty or Condemnation
occurs at such time that (i) a Default has occurred and is continuing, any
condemnation proceeds, award, compensation or insurance proceeds received by the
Borrower shall be paid to the Administrative Agent (or if otherwise paid to the
Administrative Agent shall be retained by the Administrative Agent) as security
for the Credit Party Obligations and shall not be available under this
Section 5.13 to the Borrower until the Default has been cured and all Credit
Party Obligations are made fully current and (ii) an Event of Default has
occurred

 

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and is continuing, any condemnation proceeds, award, compensation or insurance
proceeds shall be paid to the Administrative Agent (or if otherwise paid to the
Administrative Agent shall be retained by the Administrative Agent) as security
for the Credit Party Obligations and shall be subject to application pursuant to
the remedies available to the Administrative Agent and the Lenders under this
Agreement and at law.

 

(c)                                  If no Default or Event of Default has
occurred and is continuing and any Mortgaged Property suffers a Casualty
affecting greater than fifty percent (50%) of the appraised value for such
Mortgaged Property pursuant to the 2005 Appraisals, the 2006 Appraisals, or such
later appraisals as may be required by the Administrative Agent, as applicable,
the Borrower at its option shall either:

 

(i)                                     replace such Mortgaged Property in
accordance with Section 5.12 with a Substituted Property having the same,
superior or greater remaining economic value, useful life, utility, condition,
operational capacity and functional capacity to that which existed for such
Mortgaged Property then being replaced immediately prior to such Casualty
(assuming all maintenance and repair standards have been satisfied); or

 

(ii)                                  prepay the Term Loan in an aggregate
amount equal to one hundred percent (100%) of the Allocated Payoff Amount with
respect to such Mortgaged Property.

 

Upon satisfaction of all obligations in connection with subsection (i) or (ii),
as applicable, then the Administrative Agent shall cause the applicable
Mortgaged Property to be released from the Collateral and the Net Cash Proceeds
associated with such Mortgaged Property shall be returned to the Borrower.

 

(d)                                 If no Default or Event of Default has
occurred and is continuing and any Mortgaged Property suffers a Casualty
affecting less than or equal to fifty percent (50%) of the appraised value for
such Mortgaged Property pursuant to the 2005 Appraisals, the 2006 Appraisals, or
such later appraisals as may be required by the Administrative Agent, as
applicable, the Borrower at its option shall either:

 

(i)                                     replace such Mortgaged Property in
accordance with Section 5.12 with a Substituted Property having the same,
superior or greater remaining economic value, useful life, utility, condition,
operational capacity and functional capacity to that which existed for such
Mortgaged Property then being replaced immediately prior to such Casualty
(assuming all maintenance and repair standards have been satisfied);

 

(ii)                                  prepay the Term Loan in an aggregate
amount equal to one hundred percent (100%) of the Allocated Payoff Amount with
respect to such Mortgaged Property; or

 

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(iii)                               perform a Restoration in accordance with
Section 5.14(h); provided that no more than five (5) Mortgaged Properties may be
in the process of Restoration as a result of a Casualty at any one time.

 

To the extent the Borrower elects either of the options described in the
foregoing subsections (i) or (ii) and the Administrative Agent confirms
satisfaction of all obligations in connection with subsection (i) or (ii), as
applicable, then the Administrative Agent shall cause the applicable Mortgaged
Property to be released from the Collateral and the Net Cash Proceeds associated
with such Mortgaged Property shall be returned to the Borrower.

 

(e)                                  If no Default or Event of Default has
occurred and is continuing and any Mortgaged Property suffers a Condemnation
which materially impairs the economic value, useful life, utility, condition,
operational capacity or functional capacity of such Mortgaged Property from that
which existed immediately prior to such Condemnation (assuming all maintenance
and repair standards have been satisfied), the Borrower at its option shall
either:

 

(i)                                     replace such Mortgaged Property in
accordance with Section 5.12 with a Substituted Property having the same,
superior or greater remaining economic value, useful life, utility, condition,
operational capacity and functional capacity to that which existed for such
Mortgaged Property then being replaced immediately prior to such Condemnation
(assuming all maintenance and repair standards have been satisfied); or

 

(ii)                                  prepay the Term Loan in an aggregate
amount equal to one hundred percent (100%) of the Allocated Payoff Amount
allocable to such Mortgaged Property.

 

Upon satisfaction of all obligations in connection with subsection (i) or
(ii) above, as applicable, then the Administrative Agent shall cause the
applicable Mortgaged Property to be released from the Collateral and the Net
Cash Proceeds associated with such Mortgaged Property shall be returned to the
Borrower.

 

(f)                                    If no Default or Event of Default has
occurred and is continuing and any Mortgaged Property suffers a Condemnation
which does not materially impair the economic value, useful life, utility,
condition, operational capacity or functional capacity of such Mortgaged
Property from that which existed immediately prior to such Condemnation
(assuming all maintenance and repair standards have been satisfied), the
Borrower shall cause the Net Cash Proceeds in excess of $250,000 to be paid to
the Administrative Agent for application to the prepayment in part of the Term
Loan in accordance with Section 2.4(b)(iii).

 

(g)                                 The Borrower may appear in any proceeding or
action to negotiate, prosecute, adjust or appeal any claim for any award,
compensation or insurance payment on account of any such Casualty or
Condemnation and shall pay all expenses thereof. At

 

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the Borrower’s reasonable request, and at the Borrower’s sole cost and expense,
the Administrative Agent shall participate in any such proceeding, action,
negotiation, prosecution or adjustment. The Administrative Agent and the
Borrower agree that this Agreement shall control the rights of the
Administrative Agent and the Borrower in and to any such award, compensation or
insurance payment.

 

(h)                                 In the event of a Casualty under
Section 5.14(d), to the extent the Borrower does not elect to either (i) prepay
one-hundred percent (100%) of the Allocated Payoff Amount allocable to such
Mortgaged Property or (ii) replace the Mortgaged Property with a Substituted
Property pursuant to Sections 5.12 and 5.14(d), the Borrower shall, within one
hundred and eighty (180) days of such Casualty or as soon thereafter as shall be
reasonably practicable, commence such repair or replacement within such period,
and thereafter diligently prosecute such repair or replacement of the Mortgaged
Property to the same or greater economic value, remaining useful life, utility,
condition, operation and function as existed immediately prior to such Casualty
(“Restoration”).

 

(i)                                     Any award, compensation or proceeds in
respect of any Casualty (collectively, as used in this Section 5.14(h),
“proceeds”) in excess of $500,000 shall be turned over to the Administrative
Agent (or at the Administrative Agent’s election, to a trustee or escrow agent
who shall be selected by the Administrative Agent and whose fees shall be paid
by the Borrower); provided that the Borrower shall be entitled to keep any such
award, compensation or proceeds to the extent the Borrower delivers evidence
reasonably satisfactory to the Administrative Agent that such amounts were
previously applied to the Restoration of the affected Mortgaged Property. At the
Borrower’s reasonable request, the Administrative Agent will deposit any
proceeds held by it for Restoration into an interest-bearing account which is
backed directly or indirectly by the full faith and credit of the United States
government over which the Administrative Agent has sole possession, authority
and control, and otherwise on terms and conditions reasonably satisfactory to
the Administrative Agent.

 

(ii)                                  Any such proceeds held by the
Administrative Agent for Restoration of any Mortgaged Property shall be made
available to the Borrower upon its request (but no more frequently than once a
month) as the Restoration progresses.

 

(iii)                               Prior to the disbursement of Restoration
proceeds, the Borrower shall have delivered to the Administrative Agent the
following:

 

(A)                              evidence reasonably satisfactory to the
Administrative Agent of the estimated cost of Restoration;

 

(B)                                evidence reasonably satisfactory to the
Administrative Agent of additional funds from the Borrower in excess of the
proceeds sufficient to complete and fully pay for the entire unpaid cost of the
Restoration, free and clear of all Liens or claims of Lien; and

 

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(C)                                such architect’s certificates, waivers of
lien, contractor’s sworn statements, plats of survey and such other evidence of
cost, payment and performance as the Administrative Agent may reasonably require
and approve;

 

provided, no payment made prior to the final completion of Restoration shall
exceed ninety percent (90%) of the value of the work performed from time to
time, as such value shall be determined by the Administrative Agent in its
reasonable judgment.

 

Any surplus which may remain out of the proceeds held by the Administrative
Agent after payment of all costs of the Restoration shall be paid to, and
retained by the Borrower.

 

(i)                                     In no event shall a Casualty or
Condemnation affect the Borrower’s obligation to pay the Credit Party
Obligations in accordance with the terms of this Agreement.

 

Section 5.15                            Further Assurances; Real Property
Documents.

 

(a)                                  Further Assurances. Upon the reasonable
request of the Administrative Agent, promptly perform or cause to be performed
any and all acts and execute or cause to be executed any and all documents for
filing under the provisions of the Uniform Commercial Code or any other
Requirement of Law which are necessary or advisable to maintain in favor of the
Administrative Agent, for the benefit of the Secured Parties, Liens on the
Collateral that are duly perfected in accordance with the requirements of, or
the obligations of the Credit Parties under, the Credit Documents and all
applicable Requirements of Law. Upon the exercise by the Administrative Agent or
any Lender of any power, right, privilege or remedy pursuant to this Agreement
or the other Credit Documents which requires any consent, approval, recording,
qualification or authorization of any Governmental Authority, the Borrower or
any Credit Party will execute and deliver, or will cause the execution and
delivery of, all applications, certifications, instruments and other documents
and papers that the Administrative Agent or such Lender may be required to
obtain from the Borrower or any of its Subsidiaries for such governmental
consent, approval, recording, qualification or authorization.

 

(b)                                 Real Property Documents. Within 180 days of
the Closing Date (or such extended period of time as agreed to by the
Administrative Agent), the Administrative Agent shall have received maps or
plats of as-built surveys of the sites of the Mortgaged Properties listed in
Schedule 5.15, which surveys shall comply with the requirements set forth in
Section 4.1(d)(vi); provided that if an Event of Default occurs as a result of
the failure of the Credit Parties to delivery a survey for one or more Mortgaged
Properties pursuant to this Section, such Event of Default may be subject to
cure in accordance with the terms of Section 7.2.

 

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ARTICLE VI

 

NEGATIVE COVENANTS

 

The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Credit Agreement is in effect and until no Term
Note remains outstanding and unpaid and the Credit Party Obligations and all
other amounts owing to the Administrative Agent or any Lender hereunder are paid
in full, that:

 

Section 6.1            Indebtedness.

 

The Credit Parties will not, nor will they permit any Subsidiary to, contract,
create, incur, assume or permit to exist any Indebtedness and Synthetic Leases,
except:

 

(a)           Indebtedness arising or existing under this Credit Agreement and
the other Credit Documents;

 

(b)           Indebtedness and Synthetic Leases of the Credit Parties and their
Subsidiaries existing as of the Closing Date as referenced in the financial
statements referenced in Section 3.1 (and set out more specifically in Schedule
6.1(b)) hereto and renewals, refinancings or extensions thereof in a principal
amount not in excess of that outstanding (or committed lines) as of the date of
such renewal, refinancing or extension; provided that with respect to
Subordinated Debt permitted by this Section 6.1(b), the Borrower (A) may
refinance such Indebtedness with similar issuances of Subordinated Debt having a
maturity that is after the Maturity Date and on terms and conditions
satisfactory to the Administrative Agent and (B) may not refinance such
Indebtedness with issuances of senior Indebtedness until such time as the
Borrower shall have achieved a Total Leverage Ratio of less than 3.50 to 1.0 on
a Pro Forma Basis after giving effect to any such issuance;

 

(c)           Unsecured intercompany Indebtedness among the Credit Parties;
provided that any such Indebtedness shall be fully subordinated to the Credit
Party Obligations hereunder on terms reasonably satisfactory to the
Administrative Agent;

 

(d)           Indebtedness and obligations owing under (i) Secured Hedging
Agreements 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 the Borrower; provided, that, with
respect to the arrangements described in clause (ii) hereof, such arrangements
are (A) with banks or other financial institutions that have combined capital
and surplus and undivided profits of not less than $250,000,000, (B) are not for
speculative purposes and (C) are unsecured or secured by assets or property
other than Collateral;

 

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(e)           Guaranty Obligations in respect of Indebtedness and Synthetic
Leases of a Credit Party to the extent such Indebtedness and Synthetic Leases
are permitted to exist or be incurred pursuant to this Section 6.1;

 

(f)            other secured Indebtedness and Synthetic Leases of the Credit
Parties and their Subsidiaries which does not exceed $250,000,000 in the
aggregate at any time outstanding; provided that such Indebtedness shall not be
secured by any Mortgaged Property; and

 

(g)           other unsecured Indebtedness of the Credit Parties and their
Subsidiaries which does not exceed $150,000,000 in the aggregate at any time
outstanding.

 

Section 6.2            Liens.

 

The Credit Parties will not, nor will they permit any Subsidiary to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
Property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, except for Permitted
Liens.

 

Section 6.3            Nature of Business.

 

The Credit Parties and their Subsidiaries shall not engage in any business other
than the business of the Credit Parties and their Subsidiaries on the date
hereof and any business reasonably related, ancillary or complimentary thereto.

 

Section 6.4            Consolidation, Merger, Sale or Purchase of Assets, etc.

 

The Credit Parties will not, nor will they 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
Credit Party may merge with and into or consolidate with any other Credit Party;
provided, that, each of the following conditions is satisfied as determined by
the Administrative Agent: (i) the Administrative Agent shall have received not
less than five (5) days’ prior written notice of the consummation of any merger
or consolidation of such Credit Party to so merge or consolidate and such
information with respect thereto as the Administrative 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 and be continuing, (iii) the Administrative 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 expressly confirm, ratify and assume the Credit
Party Obligations and the Credit Documents to which it is a party in writing, in
form and substance reasonably satisfactory to the Administrative Agent, and
execute and deliver such other agreements, documents and instruments as the
Administrative Agent may request in connection therewith, (v) the surviving
entity of a merger between the

 

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Borrower and a Guarantor shall be the Borrower, and (vi) each Credit Party shall
ratify and confirm that its guarantee of the Credit Party Obligations shall
apply to the Credit Party Obligations as assumed by such surviving entity; or

 

(b)           sell, assign, transfer, abandon or otherwise dispose of any
Capital Stock, Indebtedness or 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 so long as, as of the
date of such sale and after giving effect thereto, no Event of Default or
Default shall exist or have occurred;

 

(iii)          the issuance and sale by the Borrower of its Capital Stock after
the date hereof; provided, that, (A) the Borrower 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 6.10 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
the Borrower to request or receive Loans or Letters of Credit or the right of
the Borrower to amend or modify any of the terms and conditions of this Credit
Agreement or any of the other Credit Documents or otherwise in any way relate to
or affect the arrangements of the Borrower with the Administrative Agent and
Lenders or are more restrictive or burdensome to the Borrower than the terms of
any Capital Stock of the Borrower in effect on the date hereof and (C) 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 6.4(b)(ii) above, the issuance of Capital Stock of any Credit Party
consisting of common stock pursuant to a stock option plan or 401(k) plan of
such Credit Party for the benefit of its employees, directors and consultants;
provided, that, in no event shall such Credit Party be required to issue, or
shall such Credit Party 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;

 

(v)           the termination of any Hedging Agreement;

 

(vi)          the Credit Parties and their Subsidiaries may encumber (to the
extent permitted by Section 6.2), sell, enter into sale-leaseback agreements (to
the extent permitted by Section 6.12) or otherwise dispose of Properties, in
each case for fair market value, which are not Collateral (a) with a fee simple
fair market value of $125,000,000 in the aggregate or less and (b) subject to
Section 5.12,

 

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with a fee simple fair market value of greater than $125,000,000 in the
aggregate; and

 

(vii)         the Borrower may sell the Collateral for fair market value so long
as the Borrower complies with the provisions of Sections 2.4(b)(i) and 5.12.

 

(c)           wind up, liquidate or dissolve except that any Subsidiary of the
Borrower or a Guarantor 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 Requirement of Law 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 the Borrower, such Guarantor or such
Subsidiary is a party or may be bound, (ii) such winding up, liquidation or
dissolution shall be done in accordance with all Requirements of Law,
(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 the Borrower, a Guarantor or in the case of a Subsidiary which
is not a Borrower or Guarantor, to the Borrower, a Guarantor or 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 the
Administrative Agent or other Permitted Liens or restrictions or encumbrances
expressly permitted hereunder (and the Administrative Agent shall have received
such evidence thereof as the Administrative Agent may require), (iv) the
Administrative 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
Credit Party 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 Credit Agreement or any of the other Credit Documents,
(vi) the Administrative 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) the Administrative Agent shall have
received copies of such deeds, assignments or other agreements as the
Administrative Agent may reasonably request to evidence and confirm the transfer
of such assets from the Subsidiary which is liquidating to the transferee, 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)           lease or sublease Mortgaged Properties that (i) represent more
than 15% of the total number of Mortgaged Properties (other than those set forth
on Schedule 3.31(b)) at any time and (ii) together with the Mortgaged Properties
that are vacant or otherwise non-operational or that are being altered,
renovated or refurbished at any one time (excluding minor alterations and
upkeep) in accordance with the terms of Section 5.12(a), represent more than 25%
of the total number of Mortgaged Properties at any time; provided that the
Credit Parties shall promptly (but in any event within five (5) Business Days
after the execution and delivery of such lease or sublease) notify the
Administrative

 

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Agent of any lease or sublease of a Mortgaged Property and any such lease or
sublease (A) shall be on market terms and at market rents, (B) shall in no way
diminish the fair market value or useful life of such Mortgaged Property,
(C) shall not release any Credit Party from its obligations under the Mortgaged
Instrument with respect to such Mortgaged Property, (D) shall be expressly
subject and subordinate to the Mortgaged Instrument with respect to such
Mortgaged Property and (E) shall be subject to a subordination, non-disturbance
and attornment agreement to the extent requested by the Borrower or the
Administrative Agent and consented to by the Administrative Agent (such consent
not to be unreasonably withheld), which agreement shall be in form and substance
reasonably satisfactory to the Borrower and the Administrative Agent; or

 

(e)           agree to do any of the foregoing (unless such agreement has been
consented to in writing by the Administrative Agent or includes as a condition
to the effectiveness of such agreement that the Administrative Agent’s consent
thereto be obtained).

 

Section 6.5            Advances, Investments and Loans.

 

The Credit Parties will not, nor will they 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;

 

(c)           loans by the Borrower to any other Credit Party after the date
hereof; provided, that, as to any such loan, (i) each month the Borrower shall
provide to the Administrative Agent a report in form and substance reasonably
satisfactory to the Administrative 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) as of
the date of any such loan and after giving effect thereto, the Borrower shall be
Solvent; and (iii) 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 Credit Party or other assumptions or
endorsements of Indebtedness constituting permitted Indebtedness under
Section 6.1 hereof;

 

(e)           loans by a Guarantor or a Subsidiary of the Borrower that is not a
Guarantor (the “intercompany lender”) to the Borrower or a Guarantor (the

 

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“intercompany 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 the Administrative Agent and
the Lenders to receive the prior final payment and satisfaction in full of all
of the Credit Party Obligations on terms and conditions acceptable to the
Administrative Agent, (ii) the Administrative Agent shall have received, in form
and substance satisfactory to the Administrative Agent, a subordination
agreement providing for the terms of the subordination in right of payment of
such Indebtedness of the intercompany borrower to the prior final payment and
satisfaction in full of all of the Credit Party Obligations, duly authorized,
executed and delivered by the intercompany lender and the intercompany borrower,
(iii) the intercompany borrower shall not directly or indirectly make, or be
required to make, any payments in respect of such Indebtedness, and (iv) each
month the Borrower shall provide to the Administrative Agent a report in form
and substance satisfactory to the Administrative 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;

 

(f)            loans by any Subsidiary of a Credit Party (other than a
Guarantor) to any other Subsidiary of a Credit Party (other than the Borrower or
Guarantor);

 

(g)           the formation or acquisition by a Credit Party 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 Credit Party
shall cause any such Subsidiary to execute and deliver to the Administrative
Agent, in form and substance satisfactory to the Administrative Agent, (A) a
Joinder Agreement in accordance with the terms of Section 5.10, (B) a mortgage
instrument granting to Agent for itself and the ratable benefit of Lenders a
first security interest and Lien upon the Property of any such Subsidiary to the
extent required pursuant to the terms of Section 5.12(a) and (C) such other
agreements, documents and instruments as the Administrative 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
the Administrative Agent, (ii) the Subsidiary formed or acquired shall be
engaged in a business related, ancillary or complimentary to the businesses of
the Borrower as conducted on the date hereof, (iii) the Administrative 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 the Administrative Agent may request, and
(B) true, correct and complete copies of all agreements, documents and
instruments relating thereto, (iv) prior to and after giving effect to any
acquisition, there shall be not less than $50,000,000 of Excess Availability
under the Revolving Credit Agreement or cash on the balance sheet and (v) as of
the date of any such formation or acquisition, no Default or Event of Default
shall exist or have occurred and be continuing;

 

(h)           the existing equity investments of the Borrower and its
Subsidiaries as of the date hereof in their respective Subsidiaries; provided,
that, the Credit Parties shall have no further obligations or liabilities to
make any capital contributions or other

 

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additional investments or other payments to or in or for the benefit of any of
such Subsidiaries;

 

(i)            stock or obligations issued to the Borrower or any of its
Subsidiaries by any Person (or the representative of such Person) in respect of
Indebtedness of such Person owing to the 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;

 

(j)            obligations of account debtors to the Borrower or its
Subsidiaries arising from accounts which are past due;

 

(k)           loans or advances after the date hereof by the Credit Parties or
any of their respective Subsidiaries to any of their employees not to exceed the
principal amount of $1,000,000 in the aggregate at any time outstanding, in the
ordinary course of such Credit Party’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 Credit
Party or Subsidiary, as the case may be;

 

(l)            any investments of any Credit Party or any of their respective
Subsidiaries in Hedging Agreements permitted under Section 6.1(d) hereof;

 

(m)          the existing loans, advances and guarantees set forth on Schedule
6.5; provided, that, as to such loans, advances and guarantees, (i) the Credit
Parties 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 Credit Party or
Subsidiary, as the case may be, after prior written notice to the Administrative
Agent, may 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 the Credit Parties 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 the Credit Parties or otherwise
more favorable to the Credit Parties or their Subsidiaries, as the case may be,
(as determined in good faith by the Administrative 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) the Borrower and
Guarantors shall furnish to the Administrative Agent all notices or demands in
connection with such loans, advances or guarantees either received by the
Borrower, Guarantor or Subsidiary on its behalf, promptly after the receipt
thereof, or sent by the Borrower, Guarantor or Subsidiary on its behalf,
concurrently with the sending thereof, as the case may be;

 

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(n)           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 the Borrower 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 Borrower as conducted on the
date hereof, (iii) the Administrative 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 the Administrative 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 the
Administrative Agent may reasonably request, (iv) true, correct and complete
copies of all agreements, documents and instruments relating thereto, (v) the
total amount of all such investments in such Business Enterprises shall not
exceed $50,000,000 in the aggregate at any time, (vi) the Administrative Agent
shall receive a monthly report in form and substance satisfactory to the
Administrative Agent of the amount of such investment and such other information
with respect thereto as the Administrative Agent may reasonably request and
(vii) 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;

 

(o)           the existing loans by the Borrower to the Flexi-Trust, pursuant to
the terms and conditions of the Flexi-Trust Agreement in effect on the date
hereof; and

 

(p)           repurchases and redemptions of Capital Stock permitted pursuant to
Section 6.10.

 

Section 6.6            Transactions with Affiliates.

 

Each Credit Party 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 Credit Parties, then upon fair and
reasonable terms consistent with the current practices of such Credit Parties as
of the date hereof, (ii) in the case of sales of property by Credit Parties to
the Business Enterprises referred to in Section 6.5(n), upon fair and reasonable
terms no more favorable than such Business Enterprises would obtain in a
comparable arm’s length

 

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transaction with a Person that is not an Affiliate and (iii) the Borrower 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 Credit Party
except (i) compensation to officers, employees and directors for services
rendered to such a Credit Party or Subsidiary, as the case may be, in the
ordinary course of business, (ii) payments by a Credit Party to any other Credit
Party in respect of Indebtedness arising pursuant to loans made by a Credit
Party to the extent such Indebtedness is permitted under Section 6.1 hereof, and
(iii) payments by the Guarantors to the Borrower for actual and necessary
reasonable out-of-pocket legal and accounting, insurance, marketing, payroll and
similar types of services paid for by the Borrower on behalf of the other Credit
Parties and their Subsidiaries in the ordinary course of their respective
businesses or as the same may be directly attributable to the Borrower or other
Credit Party.

 

Section 6.7            Reciprocal Easement Agreements.

 

Without the Administrative Agent’s prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed, no Credit Party will, nor
will it permit any of its Subsidiaries to, enter into, terminate, amend or
modify any REA (a) to the extent such termination, amendment or modification
will result in a loss of parking or could reasonably be expected to violate any
Requirement of Law applicable to any Mortgaged Property or (b) to the extent
such REA, or the termination, amendment or modification of such REA, will not
have a Mortgaged Property MAE. To the extent the Administrative Agent’s consent
is not required pursuant to the previous sentence, the Borrower may negotiate or
enter into modifications or REA’s and at the Borrower’s sole cost and expense,
the Administrative Agent shall execute a joinder to such documents to
subordinate the Lien of the Mortgage Instrument to the REA.

 

Section 6.8            Corporate Changes; Material Contracts.

 

No Credit Party will, nor will it permit any of its Subsidiaries to, (a) change
its fiscal year, (b) amend, modify or change its articles of incorporation,
certificate of designation (or corporate charter or other similar organizational
document), operating agreement or bylaws (or other similar document) in any
respect adverse to the interests of the Lenders without the prior written
consent of the Required Lenders, (c) change its state of incorporation,
organization or formation or have more than one state of incorporation,
organization or formation or (d) materially change its accounting method (except
in accordance with GAAP) in any manner materially adverse to the interests of
the Lenders without the prior written consent of the Required Lenders.

 

Section 6.9            Limitation on Restricted Actions.

 

Each Credit Party shall not, directly or indirectly, create or otherwise cause
or suffer to exist any encumbrance or restriction which prohibits or limits the
ability of such Credit Party or any Subsidiary of such Credit Party to (a) pay
dividends or make other distributions or pay any

 

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Indebtedness owed to a Credit Party or any Subsidiary of such Credit Party;
(b) make loans or advances to a Credit Party or any Subsidiary of such Credit
Party; (c) transfer any of its Properties constituting Collateral to a Credit
Party (other than restrictions related to transactions being at arm’s length);
or (d) create, incur, assume or suffer to exist any Lien upon any of the
Mortgaged Properties, whether now owned or hereafter acquired, other than
encumbrances and restrictions arising under (i) applicable law, (ii) this Credit
Agreement, (iii) Permitted Liens, (iv) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of such
Credit Party or any Subsidiary of such Credit Party, (v) customary restrictions
on dispositions of real property interests found in any REA of such Credit Party
or any Subsidiary of such Credit Party, (vi) any agreement relating to permitted
Indebtedness incurred by a Subsidiary of such Credit Party prior to the date on
which such Subsidiary was acquired by such Credit Party and outstanding on such
acquisition date; provided, that, such Indebtedness shall not be incurred in
contemplation of such acquisition, and (vii) contractual obligations in
existence on the Closing Date and set forth on Schedule 6.9 and any extension or
continuation of such contractual obligations; provided, that, any encumbrance or
restriction contained in any such contractual obligation that is extended or
continued shall be no less favorable to the Administrative Agent and the Lenders
than those encumbrances and restrictions contained in such contractual
obligation prior to such extension or continuation.

 

Section 6.10         Restricted Payments.

 

Each Credit Party shall not, and shall not permit any Subsidiary to, directly or
indirectly, make any Restricted Payment unless each of the following conditions
have been satisfied:

 

(a)           such Restricted Payment shall be made with funds legally available
therefor;

 

(b)           such Restricted Payment shall not violate any Requirement of Law
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;

 

(c)           after giving pro forma effect to such Restricted Payment as if
such Restricted Payment had been made at the beginning of the
four-fiscal-quarter period ending as of the last day of the most recent fiscal
quarter for which quarterly or annual financial statements are available,
(A) the Borrower could incur at least $1.00 of additional Indebtedness under
this Agreement as of such fiscal quarter end and (B) the Consolidated Cash Flow
Coverage Ratio of the Borrower as of such fiscal quarter end shall be greater
than 2.0 to 1.0;

 

(d)           as of the date of such Restricted Payment and after giving effect
thereto, no Default or Event of Default shall exist or have occurred;

 

(e)           Excess Availability, as of the date of any such Restricted Payment
and after giving effect thereto, shall be not less than $37,500,000;

 

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(f)            upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments from the Closing Date does not exceed the sum of:

 

(i) 50% of cumulative Consolidated Net Income (or, in the case Consolidated Net
Income shall be negative, less 100% of such deficit) of the Borrower from
January 29, 2006 through the last day of the most recent fiscal quarter ending
prior to such Restricted Payment for which quarterly or annual financial
statements are available (taken as a single accounting period); plus

 

(ii) 100% of (1) the aggregate net cash proceeds received by the Borrower after
the Closing Date from contributions of capital or the issuance and sale (other
than to a Subsidiary of the Borrower) of Capital Stock (other than Redeemable
Stock) of the Borrower, options, warrants or other rights to acquire Capital
Stock (other than Redeemable Stock) of the Borrower and (2) the principal amount
of Indebtedness of the Borrower that is converted into or exchanged for Capital
Stock (other than Redeemable Stock and other than by or from a Subsidiary of the
Borrower) of the Borrower after the Closing Date, provided that any such net
proceeds received by the Borrower from an employee stock ownership plan financed
by loans from the Borrower or a Subsidiary of the Borrower shall be included
only to the extent such loans have been repaid with cash on or prior to the date
of determination; plus

 

(iii) an amount equal to the net reduction in Investments by the Credit Parties,
subsequent to the Closing Date, in any Guarantor, upon the disposition,
liquidation or repayment (including by way of dividends) thereof in cash or from
the redesignation of the Insurance Subsidiary as a Guarantor, but only to the
extent such amounts are not included in Consolidated Net Income and not to
exceed in the case of any one Person the amount of Investments previously made
by the Credit Parties in such Person.

 

Notwithstanding the foregoing, so long as no Default or Event of Default has
occurred and is continuing, or would result from such Restricted Payment:

 

(A)          any Subsidiary of a Credit Party may pay dividends to a Credit
Party and any Subsidiary of a Credit Party that is not a Credit Party may redeem
or repurchase any of its Capital Stock by making payments to a Credit Party;

 

(B)           any Credit Party may pay dividends or may redeem or repurchase any
of its Capital Stock for consideration consisting of common stock;

 

(C)           the Borrower may purchase, redeem, acquire or retire any shares of
Capital Stock of the Borrower solely in exchange for, by conversion into or out
of the net proceeds of the substantially concurrent sale (other than from or to
a Subsidiary of the Borrower or from or to an employee stock ownership plan
financed by loans from the Borrower or a Subsidiary of the Borrower) of shares
of Capital Stock (other than Redeemable Stock) of the Borrower;

 

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(D)                               the Borrower may acquire shares of its Capital
Stock in connection with the exercise of employee or director stock options or
stock appreciation rights by way of cashless exercise;

 

(E)                                 the Borrower may acquire shares of its
Capital Stock pursuant to equity repurchases from present or former directors or
employees in an amount of up to $2,000,000 per year;

 

(F)                                 the Borrower may declare and pay regular
quarterly cash dividends in respect of the Borrower’s Common Stock in an amount
not to exceed $0.0675 per share (such amount to be adjusted from time to time to
account for any stock splits, stock dividends or similar occurrences); provided
that the aggregate amount of such cash dividends will be included as Restricted
Payments for purposes of determining the amount of Restricted Payments that may
be made pursuant to clause (f) above;

 

(G)                                the Borrower may purchase shares of its
common stock in accordance with the Share Repurchase Plan, in an amount not to
exceed the Borrower’s Remaining Authority as of the Closing Date;

 

(H)                               the Borrower may make other Restricted
Payments from and after the Closing Date in an aggregate amount not to exceed
$25,000,000; and

 

(I)                                    any Credit Party may make payments or
prepayments of Subordinated Debt, subject to the subordination terms governing
such Subordinated Debt.

 

Section 6.11                            Amendment of Subordinated Debt.

 

The Credit Parties will not, nor will it permit any Subsidiary to, without the
prior written consent of the Required Lenders, amend, modify, waive or extend or
permit the amendment, modification, waiver or extension of any term of any
document governing or relating to any Subordinated Debt in a manner that is
adverse to the interests of the Lenders.

 

Section 6.12                            Sale Leasebacks.

 

Each Credit Party shall not, and shall not permit any Subsidiary to, enter into
any arrangement, directly or indirectly, with any Person whereby such Credit
Party 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, that, the Borrower may enter into such arrangements with
Properties (other than a Mortgaged Property) so long as each of the following
conditions is satisfied, as determined by the Administrative Agent: (a) the
Administrative 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) such proposed transaction shall be in
compliance with the terms and conditions set forth in the Pep Boys Subordinated
Indentures, (c)

 

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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, (d) such
transaction is for fair market value and (e) the Borrower shall deliver to the
Administrative Agent an updated pro forma Collateral Value Report demonstrating,
to the satisfaction of the Administrative Agent, that after giving pro forma
effect to such sale leaseback transaction, the Collateral Value shall be greater
than or equal to 2.0 times the principal amount of the then outstanding Term
Loan; provided that to the extent the Borrower encumbers or otherwise disposes
of Properties not constituting Collateral in connection with a sale leaseback
transaction with a fair market value in excess of $125,000,000, the Borrower
must comply with the appraisal requirements of Section 5.12(d).

 

Section 6.13                            No Joint Assessment.

 

The Borrower shall not, and shall not permit any Subsidiary to, suffer, permit
or initiate the joint assessment of any Mortgaged Property with (a) any other
real property constituting a tax lot separate from such Mortgaged Property, or
(b) any portion of such Mortgaged Property which may be deemed to constitute
personal property, or any other procedure whereby the Lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such Mortgaged Property.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

Section 7.1                                   Events of Default.

 

An Event of Default shall exist upon the occurrence of any of the following
specified events (each an “Event of Default”):

 

(a)                                  Payment. (i) The Borrower shall fail to pay
any principal on any Term Loan when due in accordance with the terms hereof,
(ii) the Borrower shall fail to pay any interest on any Term Loan or any fee or
other amount payable hereunder when due in accordance with the terms hereof and
such failure shall continue unremedied for three (3) days; or (iii) or any
Guarantor shall fail to pay on the Guaranty in respect of any of the foregoing
or in respect of any other Guaranty Obligations hereunder (after giving effect
to the grace period in clause (ii)); or

 

(b)                                 Misrepresentation. Any representation or
warranty made or deemed made herein, in the Security Documents or in any of the
other Credit Documents or which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Credit Agreement shall prove to have been incorrect, false or misleading in
any material respect on or as of the date made or deemed made; or

 

(c)                                  Covenant Default. (i) Any Credit Party
shall fail to perform, comply with or observe any term, covenant or agreement
applicable to it contained in Sections 5.1,

 

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5.2, 5.4, 5.7, 5.9, 5.11, or Article VI hereof, or (ii) any Credit Party shall
fail to comply with any other covenant contained in this Credit Agreement or the
other Credit Documents or any other agreement, document or instrument among any
Credit Party, the Administrative Agent and the Lenders or executed by any Credit
Party in favor of the Administrative Agent or the Lenders (other than as
described in Sections 7.1(a) or 7.1 (c)(i) above), and such breach or failure to
comply is not cured within thirty (30) days of its occurrence; or

 

(d)                                 Debt Cross-Default. (i) any Credit Party
shall default in any payment of principal of or interest on any Indebtedness
(other than the Term Loan and the Guaranty) or any payment on any Synthetic
Lease, in each case in a principal amount outstanding of at least $5,000,000 for
the Borrower and any of its Subsidiaries in the aggregate, beyond any applicable
grace period (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness was created; (ii) any Credit Party shall
default in the observance or performance of any other agreement or condition
relating to any Indebtedness (other than the Term Loan, and the Guaranty) or any
Synthetic Lease in a principal amount outstanding of at least $5,000,000 in the
aggregate for the Credit Parties and their Subsidiaries or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or Synthetic Lease or beneficiary or beneficiaries of such
Indebtedness or Synthetic Lease (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness or Synthetic Lease to become due prior to its
stated maturity; or (iii) any Credit Party shall breach or default any Secured
Hedging Agreement; or

 

(e)                                  Other Cross-Defaults. The Credit Parties or
any of their Subsidiaries shall default in (i) the payment when due under any
Material Contract (not included in subsection (d) above) or (ii) in the
performance or observance, of any obligation or condition of any Material
Contract (not included in subsection (d) above) and such failure to perform or
observe such other obligation or condition involves an aggregate liability of
$5,000,000 or more and continues unremedied for a period of thirty (30) days
after notice of the occurrence of such default unless, but only as long as, the
existence of any such default is being contested by the Credit Parties in good
faith by appropriate proceedings and adequate reserves in respect thereof have
been established on the books of the Credit Parties to the extent required by
GAAP; or

 

(f)                                    Bankruptcy Default. (i) A Credit Party or
any of its Subsidiaries shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or a Credit Party or any of its Subsidiaries
shall make a general assignment for the benefit of its

 

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creditors; or (ii) there shall be commenced against a Credit Party or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against a
Credit Party or any of its Subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of their assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof, or (iv) a Credit Party or any of its Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) a
Credit Party or any of its Subsidiaries shall generally not, or shall be unable
to, or shall admit in writing their inability to, pay its debts as they become
due; or

 

(g)                                 Judgment Default. One or more judgments or
decrees shall be entered against a Credit Party or any of its Subsidiaries
involving in the aggregate a liability (to the extent not covered by insurance)
of $5,000,000 or more and all such judgments or decrees shall not have been paid
and satisfied, vacated, discharged, stayed or bonded pending appeal within 10
Business Days from the entry thereof or any injunction, temporary restraining
order or similar decree shall be issued against a Credit Party or any of its
Subsidiaries that, individually or in the aggregate, could result in a Mortgaged
Property MAE; or

 

(h)                                 ERISA Default. (i) Any Person shall engage
in any “prohibited transaction” (as defined in Section 406 of ERISA or
Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding
deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan or any Lien in favor of the PBGC or a Plan (other
than a Permitted Lien) shall arise on the assets of the Credit Parties or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) a
Credit Party, any of its Subsidiaries or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, any Multiemployer Plan or (vi) any other similar event or
condition shall occur or exist with respect to a Plan; or

 

(i)                                     Change of Control. There shall occur a
Change of Control; or

 

(j)                                     Invalidity of Guaranty. At any time
after the execution and delivery thereof, the Guaranty, for any reason other
than the satisfaction in full of all Credit Party Obligations, shall cease to be
in full force and effect (other than in accordance with its

 

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terms) or shall be declared to be null and void, or any Credit Party shall
contest the validity or enforceability of the Guaranty or any Credit Document in
writing or deny in writing that it has any further liability, including with
respect to future advances by the Lenders, under any Credit Document to which it
is a party; or

 

(k)                                  Invalidity of Credit Documents. Any other
Credit Document shall fail to be in full force and effect or to give the
Administrative Agent and/or the Lenders the security interests, liens, rights,
powers and privileges purported to be created thereby (except as such documents
may be terminated or no longer in force and effect in accordance with the terms
thereof, other than those indemnities and provisions which by their terms shall
survive) or any Lien shall fail to be a first priority, perfected Lien on a
material portion of the Collateral; or

 

(l)                                     Hedging Agreement. Any termination
payment in excess of $5,000,000 shall be due by a Credit Party under any Hedging
Agreement and such amount is not paid within the later to occur of five
(5) Business Days after the due date thereof or the expiration of grace periods,
if any, in such Hedging Agreement; or

 

(m)                               Subordinated Debt. (i) Any default (which is
not waived or cured within the applicable period of grace) or event of default
shall occur under any Subordinated Debt in a principal amount of $5,000,000 or
(ii) the subordination provisions contained in any Subordinated Debt in a
principal amount of $5,000,000 or with respect to which any Subordinated Debt in
a principal amount of $5,000,000 is subject shall cease to be in full force and
effect or to give the Lenders the rights, powers and privileges purported to be
created thereby; or

 

(n)                                 Uninsured Loss. To the extent the Borrower
has less than $75,000,000 of Excess Availability, any uninsured damage to or
loss, theft or destruction of any assets of the Credit Parties or any of their
Subsidiaries shall occur that is in excess of $10,000,000.

 

Section 7.2                                   Property-Specific Cure.

 

To the extent that any of the foregoing Events of Default have been caused by an
individual Mortgaged Property, any Credit Party may, within forty-five (45) days
of such Event of Default, (a) cause such defaulting Mortgaged Property to be
substituted pursuant to Section 5.12(b) or (b) make a principal payment to the
Term Loan in an amount equal to the Allocated Payoff Amount with respect to such
Mortgaged Property.

 

Section 7.3                                   Acceleration; Remedies.

 

Upon the occurrence and during the continuance of an Event of Default, then, and
in any such event, (a) if such event is an Event of Default specified in
Section 7.1(f) above, automatically the Term Loan Commitments shall immediately
terminate and the Term Loan (with accrued interest thereon), and all other
amounts under the Credit Documents shall immediately become due and payable, and
(b) if such event is any other Event of Default, any or all of the following
actions may be taken: (i) with the written consent of the Required Lenders,

 

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the Administrative Agent may, or upon the written request of the Required
Lenders, the Administrative Agent shall, declare the Term Loan Commitments to be
terminated forthwith, whereupon the Term Loan Commitments shall immediately
terminate; (ii) the Administrative Agent may, or upon the written request of the
Required Lenders, the Administrative Agent shall, declare the Term Loan (with
accrued interest thereon) and all other amounts owing under this Credit
Agreement and the Term Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable; and/or (iii) with the written consent
of the Required Lenders, the Administrative Agent may, or upon the written
request of the Required Lenders, the Administrative Agent shall, exercise such
other rights and remedies (including, without limitation, the foreclosure and/or
liquidation of the Collateral) as provided under the Credit Documents and under
applicable law.

 

ARTICLE VIII

 

THE ADMINISTRATIVE AGENT

 

Section 8.1                                   Appointment.

 

Each Lender hereby irrevocably designates and appoints Wachovia as the
Administrative Agent of such Lender under this Credit Agreement, and each such
Lender irrevocably authorizes Wachovia, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this Credit
Agreement and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Credit Agreement,
together with such other powers as are reasonably incidental thereto. Each
Lender acknowledges that the Credit Parties may rely on each action taken by the
Administrative Agent on behalf of the Lenders hereunder. Notwithstanding any
provision to the contrary elsewhere in this Credit Agreement, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Credit Agreement or otherwise exist against the Administrative
Agent.

 

Section 8.2                                   Delegation of Duties.

 

The Administrative Agent may execute any of its duties under this Credit
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care. Without
limiting the foregoing, the Administrative Agent may appoint one of its
affiliates as its agent to perform the functions of the Administrative Agent
hereunder relating to the advancing of funds to the Borrower and distribution of
funds to the Lenders and to perform such other related functions of the
Administrative Agent hereunder as are reasonably incidental to such functions.

 

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Section 8.3                                   Exculpatory Provisions.

 

Neither the Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact, Subsidiaries or affiliates shall be (a) liable for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Credit Agreement (except for its or such Person’s own
gross negligence or willful misconduct) or (b) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by any Credit Party or any officer thereof contained in this Credit Agreement or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Credit Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any of the Credit Documents or for any failure
of any Credit Party to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance by any Credit Party
of any of the agreements contained in, or conditions of, this Credit Agreement,
or to inspect the properties, books or records of any Credit Party.

 

Section 8.4                             Reliance by Administrative Agent.

 

(a)                                  The Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it in good faith to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Credit Parties), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent may deem and treat the payee
of any Term Note as the owner thereof for all purposes unless an executed
Assignment and Assumption has been filed with the Administrative Agent pursuant
to Section 9.6 with respect to the Term Loan evidenced by such Term Note. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Credit Agreement unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under any of the Credit Documents in
accordance with a request of the Required Lenders or all of the Lenders, as may
be required under this Credit Agreement, and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Term Notes.

 

(b)                                 For purposes of determining compliance with
the conditions specified in Section 4.1, each Lender that has signed this Credit
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender.

 

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Section 8.5                                   Notice of Default.

 

The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Credit Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders except to the extent that
this Credit Agreement expressly requires that such action be taken, or not
taken, only with the consent or upon the authorization of the Required Lenders,
or all of the Lenders, as the case may be.

 

Section 8.6                                   Non-Reliance on Administrative
Agent and Other Lenders.

 

Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representation or warranty to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
any Credit Party, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower or any other Credit Party and
made its own decision to make its Term Loan hereunder and enter into this Credit
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Administrative 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 credit analysis, appraisals and decisions in taking or not taking
action under this Credit Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Borrower and the other Credit
Parties. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower or any other Credit Party which may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.

 

Section 8.7                                   Indemnification.

 

The Lenders agree to indemnify the Administrative Agent and its Affiliates and
their respective officers, directors, agents and employees (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to their respective Term Loan Commitment
Percentages in effect on the date on which indemnification is

 

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sought under this Section, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Credit
Party Obligations) be imposed on, incurred by or asserted against any such
indemnitee in any way relating to or arising out of any Credit Document or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such
indemnitee under or in connection with any of the foregoing; provided, however,
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting from such indemnitee’s
gross negligence or willful misconduct, as determined by a court of competent
jurisdiction. The agreements in this Section shall survive the termination of
this Credit Agreement and payment of the Term Notes and all other amounts
payable hereunder.

 

Section 8.8                                   Administrative Agent in Its
Individual Capacity.

 

The Administrative Agent and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower as though
the Administrative Agent were not the Administrative Agent hereunder. With
respect to its Term Loan made or renewed by it and any Term Note issued to it,
the Administrative Agent shall have the same rights and powers under this Credit
Agreement as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms “Lender” and “Lenders” shall include the
Administrative Agent in its individual capacity.

 

Section 8.9                                   Successor Administrative Agent.

 

The Administrative Agent may resign as Administrative Agent upon 30 days’ prior
notice to the Borrower and the Lenders and the Required Lenders may replace the
Administrative Agent at any time. If the Administrative Agent shall resign as
Administrative Agent or be replaced under this Credit Agreement and the Term
Notes or if the Administrative Agent enters or becomes subject to receivership,
then the Required Lenders shall appoint from among the Lenders a successor agent
for the Lenders, which successor agent shall be approved by the Borrower with
such approval not to be unreasonably withheld (provided, however, if an Event of
Default shall exist at such time, no approval of the Borrower shall be required
hereunder), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Credit Agreement or any holders of the Term Notes. After any retiring or
replaced Administrative Agent’s resignation or replacement as Administrative
Agent, the provisions of this Section shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Credit Agreement.

 

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Section 8.10                            Nature of Duties.

 

Except as otherwise expressly stated herein, any agent (other than the
Administrative Agent) or co-lead arranger listed from time to time on the cover
page of this Credit Agreement shall have no obligations, responsibilities or
duties under this Credit Agreement or under any other Credit Document other than
obligations, responsibilities and duties applicable to all Lenders in their
capacity as Lenders; provided, however, that such agents and co-lead arrangers
shall be entitled to the same rights, protections, exculpations and
indemnifications granted to the Administrative Agent under this Article VIII in
their capacity as an agent or co-lead arranger.

 

Section 8.11                            Releases.

 

The Administrative Agent is authorized to release (a) Mortgaged Properties in
accordance with the terms of Section 5.12 and (b) any Guarantor and any Lien on
any Collateral that is sold as permitted by the Credit Agreement or as otherwise
permitted by the Lenders or Required Lenders, as applicable.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1                                   Amendments, Waivers and Release of
Collateral.

 

Neither this Credit Agreement nor any of the other Credit Documents, nor any
terms hereof or thereof may be amended, supplemented, waived or modified (by
amendment, waiver, consent or otherwise) except in accordance with the
provisions of this Section nor may Collateral be released except as specifically
provided herein or in the Security Documents or in accordance with the
provisions of this Section. The Required Lenders may or, with the written
consent of the Required Lenders, the Administrative Agent may, from time to
time, (a) enter into with the Borrower written amendments, supplements or
modifications hereto and to the other Credit Documents for the purpose of adding
any provisions to this Credit Agreement or the other Credit Documents or
changing in any manner the rights of the Lenders or of the Borrower hereunder or
thereunder or (b) waive or consent to the departure from, on such terms and
conditions as the Required Lenders may specify in such instrument, any of the
requirements of this Credit Agreement or the other Credit Documents or any
Default or Event of Default and its consequences; provided, however, that no
such amendment, supplement, modification, release, waiver or consent shall:

 

(a)                                  reduce the amount or extend the scheduled
date of maturity of any Term Loan or Term Note or any installment thereon, or
reduce the stated rate of any interest or fee payable hereunder (except in
connection with a waiver of interest at the increased post-default rate set
forth in Section 2.5 which shall be determined by a vote of the Required
Lenders) or extend the scheduled date of any payment thereof or increase the
amount or extend the expiration date of any Lender’s Term Loan Commitment, in
each case without the written consent of each Lender directly affected thereby;
provided that, it is understood and agreed that (A) no waiver, reduction or
deferral of a mandatory prepayment required pursuant to Section 2.4(b), nor any
amendment of Section 2.4(b) or

 

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the definitions of Asset Disposition, or Recovery Event, shall constitute a
reduction of the amount of, or an extension of the scheduled date of, the
scheduled date of maturity of, or any installment of, any Term Loan or Term Note
and (B) any reduction in the stated rate of interest on the Term Loan shall only
require the written consent of each Lender holding a portion of the outstanding
Term Loan; or

 

(b)                                 amend, modify or waive any provision of this
Section or reduce the percentage specified in the definition of Required
Lenders, without the written consent of all the Lenders; or

 

(c)                                  amend, modify or waive any provision of
Article VIII without the written consent of the then Administrative Agent; or

 

(d)                                 release the Borrower or all or substantially
all of the Guarantors from obligations under the Guaranty, without the written
consent of all of the Lenders and Hedging Agreement Providers; or

 

(e)                                  release all or substantially all of the
Collateral without the written consent of all of the Lenders and Hedging
Agreement Providers; or

 

(f)                                    subordinate the Term Loan to any other
Indebtedness without the written consent of all of the Lenders; or

 

(g)                                 subordinate the liens of the Administrative
Agent in the Collateral to any other liens on the Collateral (other than
Permitted Liens) without the written consent of all of the Lenders; or

 

(h)                                 permit the Borrower to assign or transfer
any of its rights or obligations under this Credit Agreement or other Credit
Documents without the written consent of all of the Lenders; or

 

(i)                                     amend, modify or waive any provision of
the Credit Documents requiring consent, approval or request of the Required
Lenders or all Lenders without the written consent of the Required Lenders or
all the Lenders as appropriate; or

 

(j)                                     amend, modify or waive the order in
which Credit Party Obligations are paid in Section 2.8(b) without the written
consent of each Lender and each Hedging Agreement Provider directly affected
thereby; or

 

(k)                                  amend the definitions of “Hedging
Agreement,” “Secured Hedging Agreement,” or “Hedging Agreement Provider” without
the consent of any Hedging Agreement Provider that would be adversely affected
thereby.

 

Any such waiver, any such amendment, supplement or modification and any such
release shall apply equally to each of the Lenders and shall be binding upon the
Borrower, the other Credit Parties, the Lenders, the Administrative Agent and
all future holders of the Term Notes. In

 

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the case of any waiver, the Borrower, the other Credit Parties, the Lenders and
the Administrative Agent shall be restored to their former position and rights
hereunder and under the outstanding Term Loan and Term Notes and other Credit
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.

 

Notwithstanding any of the foregoing to the contrary, the consent of the
Borrower and the other Credit Parties shall not be required for any amendment,
modification or waiver of the provisions of Article VIII (other than the
provisions of Section 8.9).

 

Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (a) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the Term
Loan, and each Lender acknowledges that the provisions of Section 1126(c) of the
Bankruptcy Code supersedes the unanimous consent provisions set forth herein and
(b) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.

 

Section 9.2                                   Notices.

 

(a)                                  Except as otherwise provided in Article II,
all notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy or other electronic
communications as provided below), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made (i) when delivered by
hand, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out herein, (iii) the Business Day following the day on which the
same has been delivered prepaid (or pursuant to an invoice arrangement) to a
reputable national overnight air courier service, or (iv) the third Business Day
following the day on which the same is sent by certified or registered mail,
postage prepaid, in each case, addressed as follows in the case of the Borrower,
the other Credit Parties and the Administrative Agent, and, in the case of each
of the Lenders, as set forth in such Lender’s Administrative Details Form, or to
such other address as may be hereafter notified by the respective parties hereto
and any future holders of the Term Notes:

 

 

The Borrower

The Pep Boys — Manny, Moe & Jack

 

 

and the other

3111 W. Allegheny Avenue

 

 

Credit Parties:

Philadelphia, Pennsylvania 19132

 

 

 

Attention: Mr. Harry Yanowitz, Chief Financial Officer

 

 

 

Telecopier:

(215) 430-4640

 

 

 

Telephone:

(215) 430-9000

 

 

 

 

 

 

 

with a copy to:

 

 

 

 

 

 

 

The Pep Boys — Manny, Moe & Jack

 

 

 

3111 W. Allegheny Avenue

 

 

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Philadelphia, Pennsylvania 19132

 

 

 

Attention: General Counsel

 

 

 

Telecopier:                                     (215) 430-4640

 

 

 

Telephone:                                    (215) 430-9000

 

 

 

 

 

 

The Administrative

 

 

 

Agent:

Wachovia Bank, National Association, as Administrative Agent

 

 

Charlotte Plaza

 

 

 

201 South College Street, CP8

 

 

 

Charlotte, North Carolina 28288-0680

 

 

 

Attention:

Syndication Agency Services

 

 

Telecopier:

(704) 383-3612

 

 

 

Telephone:

(704) 383-4131

 

 

 

 

 

 

 

with a copy to:

 

 

 

 

 

 

 

Wachovia Bank, National Association,

 

 

 

One South Broad Street, PA 4843

 

 

 

Philadelphia, PA 19107

 

 

 

Attention:

Tony Braxton

 

 

 

Telecopier:

(267) 321-6700

 

 

 

Telephone:

(267) 321-6606

 

 

provided, that notices given by the Borrower pursuant to Section 2.6 hereof
shall be effective only upon receipt thereof by the Administrative Agent.

 

(b)                                 Notices and other communications to the
Lenders or the Administrative Agent hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices to any Lender pursuant to Article II if
such Lender, as applicable, has notified the Administrative Agent that it is
incapable of receiving notices under such Section by electronic communication.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (a) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (b) notices or communications
posted to an Internet or intranet website shall be deemed

 

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received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (a) of notification that such notice or
communication is available and identifying the website address therefor.

 

Section 9.3                                   No Waiver; Cumulative Remedies.

 

No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

Section 9.4                                   Survival of Representations and
Warranties.

 

All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Credit Agreement and the Term
Notes and the making of the Term Loan; provided that all such representations
and warranties shall terminate on the date upon which the Term Loan Commitments
have been terminated and all amounts owing hereunder and under any Term Notes
have been paid in full.

 

Section 9.5                                   Payment of Expenses and Taxes.

 

The Credit Parties agree (a) to pay or reimburse the Administrative Agent and
the Arranger for all their reasonable out-of-pocket costs and expenses incurred
in connection with the development, preparation, negotiation, printing and
execution of, and any amendment, supplement or modification to, this Credit
Agreement and the other Credit Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, together with the reasonable fees
and disbursements of counsel to the Administrative Agent and the Arranger,
(b) to pay or reimburse each Lender and the Administrative Agent for all its
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Credit Agreement and the other Credit Documents,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent and to the Lenders (including reasonable allocated
costs of in-house legal counsel), (c) on demand, to pay, indemnify, and hold
each Lender, the Administrative Agent and the Arranger harmless from, any and
all recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, the Credit Documents and any
such other documents, (d) to pay, indemnify, and hold each Lender, the
Administrative Agent, the Arranger and their Affiliates and their respective
officers, directors, employees, partners, members, counsel, agents,
representatives, advisors and affiliates (collectively called the “Indemnitees”)
harmless from and against, any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments,

 

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suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of the Credit Documents and any such other documents and the use, or proposed
use, of proceeds of the Term Loan and (e) to pay any civil penalty or fine
assessed by the U.S. Department of the Treasury’s Office of Foreign Assets
Control against, and all reasonable costs and expenses (including counsel fees
and disbursements) incurred in connection with defense thereof by the
Administrative Agent or any Lender as a result of the funding of Term Loan, the
acceptance of payments or of Collateral due under the Credit Documents (all of
the foregoing, collectively, the “Indemnified Liabilities”); provided, however,
that the Borrower shall not have any obligation hereunder to an Indemnitee with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of such Indemnitee, as determined by a court of competent
jurisdiction pursuant to a final non-appealable judgment. The agreements in this
Section shall survive repayment of the Term Loan, Term Notes and all other
amounts hereunder.

 

Section 9.6                             Successors and Assigns; Participations;
Purchasing Lenders.

 

(a)                                  Successors and Assigns Generally. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby,
except that neither the Borrower nor any other Credit Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Administrative Agent and each Lender and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an assignee in accordance with the provisions of paragraph (b) of this
Section, (ii) by way of participation in accordance with the provisions of
paragraph (d) of this Section or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of paragraph (f) of this
Section (and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in paragraph (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)                                 Assignments by Lenders. Any Lender may at
any time assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Term Loan
Commitment and the Term Loan at the time owing to it); provided that any such
assignment shall be subject to the following conditions:

 

(i)                                     Minimum Amounts.

 

(A)                              in the case of an assignment of the entire
remaining amount of the assigning Lender’s Term Loan Commitment and the Term
Loan at the time owing to it or in the case of an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned;
and

 

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(B)                                in any case not described in paragraph
(b)(i)(A) of this Section, the aggregate amount of the Term Loan Commitment
(which for this purpose includes the Term Loan outstanding thereunder) or, if
the Term Loan Commitment is not then in effect, the principal outstanding
balance of the Term Loan of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date) shall not be
less than $1,000,000, unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise consents
(each such consent not to be unreasonably withheld or delayed); provided that
related Approved Funds shall be aggregated for purposes of determining
compliance with such minimum assignment amounts.

 

(ii)                                  Proportionate Amounts. Each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement with respect to
the Term Loan or the Term Loan Commitment assigned, except that this clause
(ii) shall not prohibit any Lender from assigning all or a portion of its rights
and obligations among separate Tranches on a non-pro rata basis.

 

(iii)                               Required Consents. No consent shall be
required for any assignment except to the extent required by paragraph
(b)(i)(B) of this Section and, in addition:

 

(A)                              the consent of the Borrower (such consent not
to be unreasonably withheld or delayed) shall be required unless (x) an Event of
Default has occurred and is continuing at the time of such assignment or
(y) such assignment is to a Lender, an Affiliate of a Lender or an Approved
Fund; and

 

(B)                                the consent of the Administrative Agent (such
consent not to be unreasonably withheld or delayed) shall be required for
assignments in respect of a Term Loan Commitment to a Person who is not a
Lender, an Affiliate of a Lender or an Approved Fund.

 

(iv)                              Assignment and Assumption. The parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500, and
the assignee, if it is not a Lender, shall deliver to the Administrative Agent
an Administrative Details Form.

 

(v)                                 No Assignment to Borrower. No such
assignment shall be made to the Borrower or any of the Borrower’s Subsidiaries.

 

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(vi)                              No Assignment to Natural Persons. No such
assignment shall be made to a natural person.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to paragraph (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 2.13 and 9.5 with respect to facts and circumstances
occurring prior to the effective date of such assignment. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this paragraph shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (d) of this Section.

 

(c)                                  Register. The Administrative Agent, acting
solely for this purpose as an agent of the Borrower, shall maintain at one of
its offices in Charlotte, North Carolina a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Term Loan Commitment of, and principal amounts
of the Term Loan owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

(d)                                 Participations. Any Lender may at any time,
without the consent of, or notice to, the Borrower or the Administrative Agent,
sell participations to any Person (other than a natural person or the Borrower
or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in
all or a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Term Loan Commitment and/or the Term Loan
owing to it); provided that (i) such Lender’s obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent and the Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this

 

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Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that affects such Participant. No Lender shall
transfer or grant any participation under which the Participant shall have
rights to approve any amendment to or waiver of this Credit Agreement or any
other Credit Document except to the extent such amendment or waiver would
(i) extend the scheduled maturity of any Term Loan or Term Note or any
installment thereon in which such Participant is participating, or reduce the
stated rate or extend the time of payment of interest or fees thereon (except in
connection with a waiver of interest at the increased post-default rate set
forth in Section 2.5 which shall be determined by a vote of the Required
Lenders) or reduce the principal amount thereof, or increase the amount of the
Participant’s participation over the amount thereof then in effect; provided
that, it is understood and agreed that (A) no waiver, reduction or deferral of a
mandatory prepayment required pursuant to Section 2.4(b), nor any amendment of
Section 2.4(b) or the definitions of Asset Disposition or Recovery Event, shall
constitute a reduction of the amount of, or an extension of the scheduled date
of maturity of, or an extension of any installment of, any Term Loan or Term
Note, (B) a waiver of any Default or Event of Default shall not constitute a
change in the terms of such participation, and (C) an increase in the Term Loan
Commitment or Term Loan shall be permitted without consent of any participant if
the Participant’s participation is not increased as a result thereof,
(ii) release all or substantially all of the Guarantors from their obligations
under the Guaranty, (iii) release the Borrower or all or substantially all of
the Collateral, or (iv) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Credit Agreement. Subject to
paragraph (e) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.12 and 2.13 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.7 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.8 as though
it were a Lender.

 

(e)                                  Limitations upon Participant Rights. A
Participant shall not be entitled to receive any greater payment under Sections
2.12 and 2.14 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 2.14 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 2.14 as though it were a
Lender.

 

(f)                                    Certain Pledges. Any Lender may at any
time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including any pledge
or assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

 

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Section 9.7                                   Adjustments; Set-off.

 

(a)                                  Each Lender agrees that if any Lender (a
“benefited Lender”) shall at any time receive any payment of all or part of its
Term Loan, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to a Bankruptcy
Event or otherwise) in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender’s Term Loan, or interest thereon, such benefited Lender shall purchase
for cash from the other Lenders a participating interest in such portion of each
such other Lender’s Term Loan, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such benefited Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion of
another Lender’s Term Loan may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as fully as
if such Lender were the direct holder of such portion.

 

(b)                                 In addition to any rights and remedies of
the Lenders provided by law (including, without limitation, other rights of
set-off), each Lender shall have the right, without prior notice to the Borrower
or the applicable Credit Party, any such notice being expressly waived by the
Credit Parties to the extent permitted by applicable law, upon the occurrence of
any Event of Default, to setoff and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, Indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held by or owing to such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower or any other Credit Party, or any part
thereof in such amounts as such Lender may elect, against and on account of the
Term Loan and other Credit Party Obligations of the Borrower and the other
Credit Parties to the Administrative Agent and the Lenders and claims of every
nature and description of the Administrative Agent and the Lenders against the
Borrower and the other Credit Parties, in any currency, whether arising
hereunder, under any other Credit Document or any Secured Hedging Agreement
pursuant to the terms of this Credit Agreement, as such Lender may elect,
whether or not the Administrative Agent or the Lenders have made any demand for
payment and although such obligations, liabilities and claims may be contingent
or unmatured. The aforesaid right of set-off may be exercised by such Lender
against the Borrower, any other Credit Party or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver or execution, judgment or attachment creditor of the Borrower or any
other Credit Party, or against anyone else claiming through or against the
Borrower, any other Credit Party or any such trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Lender prior to the occurrence of
any Event of Default. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.

 

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Section 9.8            Table of Contents and Section Headings.

 

The table of contents and the Section and subsection headings herein are
intended for convenience only and shall be ignored in construing this Credit
Agreement.

 

Section 9.9            Counterparts.

 

This Credit Agreement may be executed by one or more of the parties to this
Credit Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Credit Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent. Delivery
of an executed counterpart of a signature page of this Agreement by telecopy
shall be effective as delivery of a manually executed counterpart of this
Agreement.

 

Section 9.10         Effectiveness.

 

This Credit Agreement shall become effective on the date on which all of the
parties have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent pursuant to
Section 9.2 or, in the case of the Lenders, shall have given to the
Administrative Agent written, telecopied or telex notice (actually received) at
such office that the same has been signed and mailed to it.

 

Section 9.11         Severability.

 

Any provision of this Credit Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

Section 9.12         Integration.

 

This Credit Agreement and the other Credit Documents represent the agreement of
the Borrower, the other Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent, the
Borrower, the other Credit Parties, or any Lender relative to the subject matter
hereof not expressly set forth or referred to herein or therein.

 

Section 9.13         Governing Law.

 

This Credit Agreement and, unless otherwise specified therein, each other Credit
Document and the rights and obligations of the parties under this Credit
Agreement and such other Credit Document shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York (including
Sections 5-1401 and 5-1402 of The New York General Obligations Law).

 

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Section 9.14         Consent to Jurisdiction and Service of Process.

 

All judicial proceedings brought against the Borrower and/or any other Credit
Party with respect to this Credit Agreement, any Term Note or any of the other
Credit Documents may be brought in any state or federal court of competent
jurisdiction in the State of New York, and, by execution and delivery of this
Credit Agreement, the Borrower and each of the other Credit Parties accepts, for
itself and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Credit
Agreement from which no appeal has been taken or is available. The Borrower and
each of the other Credit Parties irrevocably agree that all service of process
in any such proceedings in any such court may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to it at its address set forth in Section 9.2 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto, such service being hereby acknowledged by the Borrower and the
other Credit Parties to be effective and binding service in every respect. The
Borrower, the other Credit Parties, the Administrative Agent and the Lenders
irrevocably waive any objection, including, without limitation, any objection to
the laying of venue or based on the grounds of forum non conveniens which it may
now or hereafter have to the bringing of any such action or proceeding in any
such jurisdiction. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of any Lender to bring
proceedings against the Borrower or the other Credit Parties in the court of any
other jurisdiction.

 

Section 9.15         Confidentiality.

 

Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective
partners, directors, officers, employees, agents, advisors and other
representatives (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Credit
Document or any action or proceeding relating to this Agreement or any other
Credit Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (iii) to an investor or prospective investor in an Approved Fund
that also agrees that Information shall be used solely for the purpose of
evaluating an investment in such Approved Fund, (iv) to a trustee, collateral
manager, servicer, backup servicer, noteholder or secured party in an Approved
Fund in connection with the administration, servicing and reporting on the
assets serving as collateral for an Approved Fund,

 

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or (v) to a nationally recognized rating agency that requires access to
information regarding the Credit Parties, the Term Loan and Credit Documents in
connection with ratings issued with respect to an Approved Fund, (g) with the
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent, any Lender, or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Borrower.

 

For purposes of this Section, “Information” means all information received from
the Borrower or any of its Subsidiaries relating to the Borrower or any of its
Subsidiaries or any of their respective businesses, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower or any of its
Subsidiaries, provided that, in the case of information received from the
Borrower or any of its Subsidiaries after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Section 9.16         Acknowledgments.

 

The Borrower and the other Credit Parties each hereby acknowledges that:

 

(a)           it has been advised by counsel in the negotiation, execution and
delivery of each Credit Document;

 

(b)           neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any other Credit Party arising out
of or in connection with this Credit Agreement and the relationship between the
Administrative Agent and the Lenders, on one hand, and the Borrower and the
other Credit Parties, on the other hand, in connection herewith is solely that
of debtor and creditor; and

 

(c)           no joint venture exists among the Lenders or among the Borrower or
the other Credit Parties and the Lenders.

 

Section 9.17         Waivers of Jury Trial; Waiver of Consequential Damages.

 

THE BORROWER, THE OTHER CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
Each of the Borrower, the other Credit Parties, the Administrative Agent and the
Lenders agree not to assert any claim against any other party to this Credit
Agreement or any their respective directors, officers, employees, attorneys,
Affiliates or agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to any of
the transactions contemplated herein.

 

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Section 9.18         Patriot Act Notice.

 

Each Lender and the Administrative Agent (for itself and not on behalf of any
other party) hereby notifies the Borrower that, pursuant to the requirements of
the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26,
2001 (the “Patriot Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Patriot Act.

 

ARTICLE X

 

GUARANTY

 

Section 10.1         The Guaranty.

 

In order to induce the Lenders to enter into this Credit Agreement and any
Hedging Agreement Provider to enter into any Secured Hedging Agreement and to
extend credit hereunder and thereunder and in recognition of the direct benefits
to be received by the Guarantors from the Term Loan hereunder and any Secured
Hedging Agreement, each of the Guarantors hereby agrees with the Administrative
Agent, the Lenders and the Hedging Agreement Providers as follows: each
Guarantor hereby unconditionally and irrevocably jointly and severally
guarantees as primary obligor and not merely as surety the full and prompt
payment when due, whether upon maturity, by acceleration or otherwise, of any
and all Credit Party Obligations. If any or all of the Indebtedness becomes due
and payable hereunder or under any Secured Hedging Agreement, each Guarantor
unconditionally promises to pay such Indebtedness to the Administrative Agent,
the Lenders, the Hedging Agreement Providers, or their respective order, or
demand, together with any and all reasonable expenses which may be incurred by
the Administrative Agent or the Lenders in collecting any of the Credit Party
Obligations. The Guaranty set forth in this Article X is a guaranty of timely
payment and not of collection.

 

Notwithstanding any provision to the contrary contained herein or in any other
of the Credit Documents, to the extent the obligations of a Guarantor shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).

 

Section 10.2         Bankruptcy.

 

Additionally, each of the Guarantors unconditionally and irrevocably guarantees
jointly and severally the payment of any and all Credit Party Obligations of the
Borrower to the Lenders and any Hedging Agreement Provider whether or not due or
payable by the Borrower upon the occurrence of any of the events specified in
Section 7.1(f), and unconditionally promises to pay

 

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such Credit Party Obligations to the Administrative Agent for the account of the
Lenders and to any such Hedging Agreement Provider, or order, on demand, in
lawful money of the United States. Each of the Guarantors further agrees that to
the extent that the Borrower or a Guarantor shall make a payment or a transfer
of an interest in any property to the Administrative Agent, any Lender or any
Hedging Agreement Provider, which payment or transfer or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, or
otherwise is avoided, and/or required to be repaid to the Borrower or a
Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such avoidance or repayment, the
obligation or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if said payment had not been made.

 

Section 10.3         Nature of Liability.

 

The liability of each Guarantor hereunder is exclusive and independent of any
security for or other guaranty of the Credit Party Obligations of the Borrower
whether executed by any such Guarantor, any other guarantor or by any other
party, and no Guarantor’s liability hereunder shall be affected or impaired by
(a) any direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the Credit Party
Obligations of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Administrative Agent, the Lenders or any Hedging Agreement Provider on the
Credit Party Obligations which the Administrative Agent, such Lenders or such
Hedging Agreement Provider repay the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each of the Guarantors waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.

 

Section 10.4         Independent Obligation.

 

The obligations of each Guarantor hereunder are independent of the obligations
of any other Guarantor or the Borrower, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other Guarantor or the Borrower and whether or not any other
Guarantor or the Borrower is joined in any such action or actions.

 

Section 10.5         Authorization.

 

Each of the Guarantors authorizes the Administrative Agent, each Lender and each
Hedging Agreement Provider without notice or demand (except as shall be required
by applicable statute and cannot be waived), and without affecting or impairing
its liability hereunder, from time to time to (a) renew, compromise, extend,
increase, accelerate or otherwise change the time for payment of, or otherwise
change the terms of the Credit Party Obligations or any part thereof in
accordance with this Credit Agreement and any Secured Hedging Agreement, as
applicable, including any increase or decrease of the rate of interest thereon,
(b) take and hold

 

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security from any Guarantor or any other party for the payment of this Guaranty
or the Credit Party Obligations and exchange, enforce waive and release any such
security, (c) apply such security and direct the order or manner of sale thereof
as the Administrative Agent and the Lenders in their discretion may determine
and (d) release or substitute any one or more endorsers, Guarantors, the
Borrower or other obligors.

 

Section 10.6         Reliance.

 

It is not necessary for the Administrative Agent, the Lenders or any Hedging
Agreement Provider to inquire into the capacity or powers of the Borrower or the
officers, directors, members, partners or agents acting or purporting to act on
its behalf, and any Credit Party Obligations made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.

 

Section 10.7         Waiver.

 

(a)           Each of the Guarantors waives any right (except as shall be
required by applicable statute and cannot be waived) to require the
Administrative Agent, any Lender or any Hedging Agreement Provider to
(i) proceed against the Borrower, any other guarantor or any other party,
(ii) proceed against or exhaust any security held from the Borrower, any other
guarantor or any other party, or (iii) pursue any other remedy in the
Administrative Agent’s, any Lender’s or any Hedging Agreement Provider’s power
whatsoever. Each of the Guarantors waives any defense based on or arising out of
any defense of the Borrower, any other guarantor or any other party other than
payment in full of the Credit Party Obligations (other than contingent indemnity
obligations), including without limitation any defense based on or arising out
of the disability of the Borrower, any other guarantor or any other party, or
the unenforceability of the Credit Party Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Credit Party Obligations. The Administrative
Agent may, at its election, foreclose on any security held by the Administrative
Agent by one or more judicial or nonjudicial sales (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative Agent or any Lender may have against the Borrower or any other
party, or any security, without affecting or impairing in any way the liability
of any Guarantor hereunder except to the extent the Credit Party Obligations
have been paid in full and the Term Loan Commitments have been terminated. Each
of the Guarantors waives any defense arising out of any such election by the
Administrative Agent or any of the Lenders, even though such election operates
to impair or extinguish any right of reimbursement or subrogation or other right
or remedy of the Guarantors against the Borrower or any other party or any
security.

 

(b)           Each of the Guarantors waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notice of protest, notices of dishonor, notices of acceptance of
this Guaranty, and notices of the existence, creation or incurring of new or
additional Credit Party Obligations. Each Guarantor assumes all responsibility
for being and keeping itself

 

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informed of the Borrower’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Credit Party
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that neither the Administrative Agent
nor any Lender shall have any duty to advise such Guarantor of information known
to it regarding such circumstances or risks.

 

(c)           Each of the Guarantors hereby agrees it will not exercise any
rights of subrogation which it may at any time otherwise have as a result of
this Guaranty (whether contractual, under Section 509 of the U.S. Bankruptcy
Code, or otherwise) to the claims of the Lenders or any Hedging Agreement
Provider against the Borrower or any other guarantor of the Credit Party
Obligations of the Borrower owing to the Lenders or such Hedging Agreement
Provider (collectively, the “Other Parties”) and all contractual, statutory or
common law rights of reimbursement, contribution or indemnity from any Other
Party which it may at any time otherwise have as a result of this Guaranty until
such time as the Credit Party Obligations shall have been paid in full and the
Term Loan Commitments have been terminated. Each of the Guarantors hereby
further agrees not to exercise any right to enforce any other remedy which the
Administrative Agent, the Lenders or any Hedging Agreement Provider now have or
may hereafter have against any Other Party, any endorser or any other guarantor
of all or any part of the Credit Party Obligations of the Borrower and any
benefit of, and any right to participate in, any security or collateral given to
or for the benefit of the Lenders and/or the Hedging Agreement Providers to
secure payment of the Credit Party Obligations of the Borrower until such time
as the Credit Party Obligations (other than contingent indemnity obligations)
shall have been paid in full and the Term Loan Commitments have been terminated.

 

Section 10.8         Limitation on Enforcement.

 

The Lenders and the Hedging Agreement Providers agree that this Guaranty may be
enforced only by the action of the Administrative Agent acting upon the
instructions of the Required Lenders or such Hedging Agreement Provider (only
with respect to obligations under the applicable Secured Hedging Agreement) and
that no Lender or Hedging Agreement Provider shall have any right individually
to seek to enforce or to enforce this Guaranty, it being understood and agreed
that such rights and remedies may be exercised by the Administrative Agent for
the benefit of the Lenders under the terms of this Credit Agreement and for the
benefit of any Hedging Agreement Provider under any Secured Hedging Agreement.
The Lenders and the Hedging Agreement Providers further agree that this Guaranty
may not be enforced against any director, officer, employee or stockholder of
the Guarantors.

 

Section 10.9         Confirmation of Payment.

 

The Administrative Agent and the Lenders will, upon request after payment of the
Credit Party Obligations which are the subject of this Guaranty and termination
of the Term Loan Commitments relating thereto, confirm to the Borrower, the
Guarantors or any other Person that such Indebtedness and obligations have been
paid and the Term Loan Commitments relating thereto terminated, subject to the
provisions of Section 10.2.

 

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[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Credit Agreement to be duly executed and delivered by its proper and duly
authorized officers as of the day and year first above written.

 

BORROWER:

 

/s/ THE PEP BOYS - MANNY, MOE & JACK,

 

 

a Pennsylvania corporation

 

 

 

 

 

 

GUARANTORS:

 

/s/ THE PEP BOYS - MANNY, MOE & JACK OF CALIFORNIA,

 

 

a California corporation

 

 

 

 

 

/s/ PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC.,

 

 

a Delaware corporation

 

 

 

 

 

/s/ PEP BOYS - MANNY, MOE & JACK OF PUERTO RICO, INC.,

 

 

a Delaware corporation

 

 

 

 

 

/s/ CARRUS SUPPLY CORPORATION,

 

 

a Delaware corporation

 

 

 

 

 

/S/ PBY CORPORATION,

 

 

 

 

 

 

ADMINISTRATIVE AGENT

 

/s/ WACHOVIA BANK, NATIONAL ASSOCIATION,

AND LENDERS:

 

as Administrative Agent and as a Lender

 

 

 

 

 

/s/ Lenders

 

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Schedule l.l(a)

 

[FORM OF)

ACCOUNT DESIGNATION LETTER

 

[Date)

 

Wachovia Bank, National Association,

as Administrative Agent

20 I South College Street

NC0680/CP8

Charlotte, North Carolina 28288-0680

Attn: Syndication Agency Services

 

Ladies and Gentlemen:

 

This Account Designation Letter is delivered to you by The Pep Boys- Manny,
Moe & Jack, a Pennsylvania corporation (the “Borrower”), under the Amended and
Restated Credit Agreement, dated as of October (    ), 2006 (as amended,
restated, amended and restated or otherwise modified, the “Credit Agreement”),
by and among the Borrower, the Domestic Subsidiaries of the Borrower from time
to time party thereto, the Lenders from time to time party thereto, and Wachovia
Bank, National Association, as administrative agent for the Lenders (the
“Administrative Agent”).  Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Credit Agreement.

 

The Administrative Agent is hereby authorized to disburse all Loan proceeds into
the following account, unless the Borrower shall designate, in writing to the
Administrative Agent, one or more other accounts:

 

 

 

 

 

ABA Routing Number I          

 

Account #I         

 

Notwithstanding the foregoing, on the Closing Date, funds borrowed under the
Credit Agreement shall be sent to the institutions and/or persons designated on
payment instructions to be delivered separately.

 

{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}

 

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fN WITNESS WHEREOF,  the undersigned has executed this Account Designation
Letter as of the day and year first above written.

 

 

THE PEP BOYS -MANNY, MOE & JACK,

 

a Pennsylvania corporation

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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Schedule l.1(b)- Liens

 

1.     Mortgage in favor of Gayle & Ida Cook on Borrower’s real property and
improvements located at 1120 West Patrick Street, Frederick, MD

 

2.     The following Synthetic Leases:

·      Lombard Equipment Lease

·      WDC Synthetic Lease Facility

 

3.     Amended and Restated Loan and Security Agreement, dated as of August 1,
2003 by and among Congress Financial Corporation, The ClT Group/Business
Credit, Inc. and General Electric Capital Corporation as Co-Documentation
Agents, the revolving lenders, the Borrowers (as defined therein) and the
Guarantors (as defined therein), as amended.

 

4.     Encumbrances included in any title policy to any Mortgaged Property.

 

5.     Mechanic’s Lien filed on property located at 1 020 E. Hunting Park
Avenue, Philadelphia, PA, as Term No. 9909M0004, dated September 20, 1999 for
$6,494.52.

 

6.     Mechanic’s Lien or Claim of Lien by Affidavit dated February 26, 2003,
filed March 4, 2003, executed by Thomas J. Bertrand, on property located at 2336
Boca Chica Blvd., Brownsville, TX, claiming a lien in the amount of $550.00.

 

7.     Writ of Fieri Facias on property located at 8702 Abercom Street,
Savannah, GA, with parties Benjamin Holmes, Jr. vs. The Pep Boys - Manny, Moe &
Jack, in the principal amount of$1,647.20 (interest, penalty and court costs not
included), dated November 16, 1999, and recorded November 16, 1999.

 

8.     Writ of Fieri Facias on property located at 8702 Abercorn Street,
Savannah, GA, with parties Michael Harris vs. The Pep Boys- Manny, Moe & Jack,
in the principal amount of$1,200 (interest, penalty and court costs not
included), dated February 8, 2002, and recorded February 25, 2002.

 

9.     Writ of Fieri Facias on property located at 8702 Abercorn Street,
Savannah, GA, with parties Tammy Brinson vs. The Pep Boys - Manny, Moe & Jack,
in the principal amount of$667.47 (interest, penalty and court costs not
included), dated April 22, 2003.

 

10.   Writ of Fieri Facias on property located at 8702 Abcrcorn Street,
Savannah, GA, with parties Curtis McKenzie vs. The Pep Boys- Manny, ‘Moe & Jack,
in the principal amount of $231.43 (interest, penalty and court costs not
included), dated August 11, 2003, and recorded August 22, 2003.

 

--------------------------------------------------------------------------------

 

11.   Writ of Fieri Facias on property located at 8702 Abercorn Street,
Savannah, GA, with parties Raymond Roberts, Jr. vs. The Pep Boys- Manny, Moe &
Jack, in the principal amount of $1,696.08 (interest, penalty and court costs
not included), dated January 27, 2004, and recorded February 3, 2004.

 

12.   Writ of Fieri Facias on property located at 8702 Abercorn Street,
Savannah, GA, with parties Beatrice Oliver vs. The Pep Boys- Manny, Moe & Jack,
in the principal amotmt of$661.61 (interest, penalty and court costs not
included), dated April 23, 2004, and recorded April 23, 2004.

 

13.   Certificate of Judgment on property located at 1321 Morse Road, Columbus,
OH, in favor of Ohio State Department of Taxation in the Amotmt of$1,459.41,
plus interest and costs, filed March 5, 1996.

 

14.   Retailers’ occupation tax lien on property located at 7030 S. Cicero A
venue, Bedford Park, IL, in favor of the State of Illinois Department of Revenue
against Pep Boys recorded August 14,2001 as document number 0010746289.

 

15.   Revenue lien in favor of the State of Illinois Department of Revenue on
property located at 900 Broadview Village Square, Broadview, IL, recorded
August 8, 2001 as Document Number 0010746289.

 

16.   Labor or Materialman’s Affidavit, filed March 5, 2003 as #1174008, on
property located at 1313 N. Texas Blvd., Weslaco, TX, in the amount of $550 by
TNT Striping.

 

17.   Affidavit claiming a lien on property located at 609 S. 1Oth St., McAllen,
TX, executed by TnT Striping, against pep Boys, in the amount of$550, file
#1174007.

 

18.   Affidavit for Mechanic’s lien on property located at 3616 S. Broadway,
Tyler, TX, dated March 6, 2003, executed by Frank Parrish, Jr.

 

19.   Affidavit for Mechanic’s lien on property located at 3616 S. Broadway,
Tyler, TX, dated March 6, 2003, executed by Willis Jarrel, Jr.

 

20.   First-tier Subcontractor’s Affidavit for claim for Mechanic’s Lien on
property located at 3616 S. Broadway, Tyler, TX, dated March 10, 2003, executed
by William Jones.

 

21.   UCC-1 Financing Statement filed June 29,2001, on property located at 609
S. lOth Street, McAllen, TX, recorded as File No. 983975, in favor ofGMAC
Business Credit, LLC, against The Pep Boys Manny, Moe & Jack of California.

 

--------------------------------------------------------------------------------

 

22.   UCC-1 Financing Statement filed June 29, 2001, on property located at 609
S. 1Oth Street, McAllen, TX, recorded as File No. 983976, in favor of GMAC
Business Credit, LLC, against The Pep Boys Manny, Moe & Jack of Delaware.

 

23.   UCC Fixture Financing Statement on property located at J 924 Skibo Road,
Fayetteville, NC, in favor of GMAC Business Credit, LLC, recorded as UCC File
No. 01-2041.

 

24.   VCC-2 Financing Statement on property located at 1 1 160 Alpharetta
Highway, Roswell, GA, in favor of GMAC Business Credit, LLC, filed June 29, 200
l as VCC Financing Statement File No. 461991.

 

25.   VCC Fixture Financing Statement on property located at 1490 US Highway 70
W, Garner, NC, in favor ofGMAC Business Credit, dated June 29, 2001, recorded as
UCC File No. 01-4436.

 

26.   Financing Statement of Pep Boys- Manny, Moe & Jack of Delaware, Inc. on
property located 775 West Route 70, Marlton, NJ, in tavor of GMAC Business
Credit, Inc., No. #3530853, filed June 29, 2001.

 

27.   Financing Statement of Pep Boys- Manny, Moe & Jack of Delaware, Inc., on
property located at 1608 Highway 35, Ocean, NJ, in favor ofGMAC Business Credit,
LLC, #2001094750, tiled June 29,2001.

 

28.   Financing Statement of Pep Boys- Manny, Moe & Jack of Delaware, Inc., on
propeny located at 5241 Route 42, Turnersville, NJ, in favor ofGMAC Business
Credit, LLC, filed as #48149 on June 29, 2001.

 

29.   Lien in favor of GMAC Business Credit, LLC, on Borrower’s property located
at 4949 Jonestown Road, Harrisburg, PA, recorded June 29, 2001.

 

30.   Lien in favor of GMAC Business Credit, LLC, on Borrower’s property located
at 1748 Street Road, Cornwell Heights, PA, filed June, 26,2001, No. 57228.

 

31.   Financing Statement of Pep Boys Manny Moe & Jack of California on property
located at I 135 East Colorado Blvd., Pasadena, CA, in favor of GMAC Business
Credit, LLC, filed for record July 2, 2001 as Instmment No. 01·1 142280.

 

32.   UCC-1 Financing Statement filed July ll, 200 I, granted by The Pep Boys
Manny, Moe & Jack of California, on property located at 8917 research Boulevard,
Austin, TX, in favor of GMAC Business Credit, LLC.

 

33.   Security Interest in favor ofGMAC Business Credit LLC in certain described
chattels on land located at 2501 S. Cicero Ave., Cicero, TL, as disclosed by
Financing Statement executed by the Pep Boys Manny Moe & Jack of California,
Debtor, and filed June 28, 2001 as document no. 00105.

 

--------------------------------------------------------------------------------

 

34.   Financing Statement of Pep Boys Manny Moe & Jack of Delaware on property
located at 775 W. Route 70, Marlton, NJ, in favor of GMAC Business Credit, LLC,
filed for record July 9, 2001 as #3533895.

 

35.   Financing Statement of Pep Boys Manny Moe & Jack of Delaware on property
located at 5241 Route 42, Turnersville, NJ, in favor ofGMAC Business Credit,
LLC, filed for record July 29, 2001 as #48151.

 

36.   UCC-1 Financing Statement on property located at 5445 Fairmount Parkway,
Pasadena Texas, filed for record on May 16,2001, given by Pep Boys-Manny, Moe &
Jack of Delaware, Inc., in favor of Heller Financial Leasing, Inc.

 

37.   UCC Financing Statement recorded May 16,2001, tiled May 16,2001, on
property located at 3616 S. Broadway, Tyler, TX, by Pep Boys-Manny, Moe & Jack
of Delaware, Inc, in favor of Heller Financial Leasing, Inc.

 

38.   UCC Financing Statement on property located at 1313 N. Texas Blvd.,
Weslaco, TX, in favor of Heller Financial Leasing, Inc. by Pep Boys- Manny,
Moe & Jack of California, filed May 16,2001, as File No. 970487.

 

39.   Security Interest of Heller Financial Leasing, Inc., secured party, in
certain described chattels on the land, located at 21610 Cicero Avenue,
Matteson, IL, as disclosed by financing statement naming The Pep Boys Manny Moe
Jack of California as debtor and recorded May I 6, 2001.

 

40.   Judgment on property located at 41 01-19 Market St., Philadelphia, PA, in
favor of Hicks against Manny, Moe and Jack; Pep Boys; Pep Boys Company, Inc.;
Pep Boys, Inc.; Pep Boys, Manny, Moe & Jack in the amount of$5,000,000, dated
June 30, 2004 as #021203509.

 

41.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of Fradelos against Pep Boys Automotive Supercenters and Pep Boys- Manny,
Moe & Jack of Delaware in the amount of $10,214.00, dated November 9, 2005 as
#050302280.

 

42.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of Bubis, et al. against Pep Boys, Manny, Moe & Jack in the amount of
$20,000.00, dated April 12, 2005 as #040303784.

 

43.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of Brantley against Pep Boys- Manny, Moe & Jack in the amount
of$33,255.06, dated August 30,2006 as #051001559.

 

--------------------------------------------------------------------------------

 

44.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of Goslee against The Pep Boys- Manny. Moe & Jack in the amount of
$11,000.00, dated August 30,2006 as #051004787.

 

45.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of Rose Marie Garcia against Pep Boys Corp. in the amount of$283.00, dated
July 21, 2006 as #SC0606065722.

 

46.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of Raynae Fields against Pep Boys in the amount of $471.30, dated
August 14, 2002 as #0207121344.

 

47.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of City of Philadelphia against Pep Boys in the amount of$348.00, dated
December 3, 2004 as #C£04103335165.

 

48.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of Allstate Insurance Company (Jennifer Juisto) against Pep Boys in the
amount of $1,438.84, dated November 18,2003 as #SC0310212178.

 

49.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of City ofPhiladelphia against Pep Boys in the amount of$348.00, dated
May 19, 2006 as #CE060330472.

 

50.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of City of Philadelphia against Pep Boys in the amount of $1 ,545.50,
dated October 11,2002 as #C£0208335635.

 

51.   Judgment on property located at 410 l-19 Market St., Philadelphia, PA, in
favor of GEICO against Pep Boys in the amount of$7,998.67, dated Fcbntary 20,
2003 as #SC02112Il913.

 

52.   Judgment on property located at 41 0119 Market St., Philadelphia, PA, in
favor of Nellie Norman against Pep Boys #280 in the amount of$4,849.74, dated
February 2, 2004 as #SC0312126109.

 

53.   Judgment on property located at 4101-19 Market St., Philadelphia, PA, in
favor of Allstate Barabas Jones against Pep Boys, a Corp., in the amount of
$6,158.57, dated December 21, 2005 as #SC051 0288655.

 

54.   Judgment on property located at 4 J 01-19 Market St., Philadelphia, PA, in
favor of Ebboni Ames against Pep Boys Automotive Corp. in the amount of $464.33,
dated July 8, 2002 as #SC0206040277.

 

--------------------------------------------------------------------------------

 

55.

Judgment on property located at 4101-19 Market St., Philadelphia, PA, in favor
of Li Ling against Pep Boys Inc. Corp. Headquarters in the amount of $2,519.00,
dated April 30, 2003 as #SC03040203891.

 

 

56.

Judgment on property located at 4101-19 Market St., Philadelphia, PA, in favor
of Victor J. Cabrera against Pep Boys Inc. in the amount of $1 ,022.34, dated
March 20, 2006 as #SC0602025289.

 

 

57.

Judgment on property located at 4320 High Point Rd., Greensboro, NC, in favor of
Hussien Nafe against Pep Boys (Store #36) in the amount of $2039.00, dated
June 3, 1996, recorded in Book 379, Page 175, Guilford County Real Property
Records.

 

 

58.

Judgment on property located at 4320 High Point Rd., Greensboro, NC, in favor of
Alexis P. Collier against Pep Boys (Store #36) in the amount of $245.00, dated
July 22, 1999, recorded in Book 407, Page 314, Guilford County Real Property
Records.

 

 

59.

Judgment on property located at 4320 High Point Rd., Greensboro, NC, in favor of
James Alan Kibler against Pep Boys (Store #36) in the amount of $1840.00, dated
June 21, 1999, recorded in Book 407, Page 83, Guilford County Real Property
Records.

 

 

60.

Writ of Fieri Facias on property located at 2207 E. Main St., Snellville, GA,
with parties Beneficial Georgia, Inc. vs. The Pep Boys Manny, Moe & Jack, Inc.
in the amount of$10,214.00, dated February 6, 2006 and recorded April 25, 2006
in Book 1924, Page 263.

 

 

61.

Writ ofFieri Facias on property located at 2207 E. Main St., Snellville, GA,
with parties Patricia B. Tonini vs. Pep Boys, Inc. in the amount of$2,656.00,
dated January 2, 2001 and recorded January 3, 2001 in Book 1154, Page 214.

 

 

62.

Judgment on property located at 9101- I 5 Ridge Ave., Philadelphia, PA, in favor
of Hicks against Manny, Moe and Jack; Pep Boys; Pep Boys Company, Inc.; Pep
Boys, Inc.; Pep Boys, Manny, Moe & Jack in the amount of$5,000,000, dated
June 30,2004 as #021203509.

 

 

63.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of Fradelos against Pep Boys Automotive Supercenters and Pep Boys - Manny, Moe &
Jack of Delaware in the amount of$10,214.00, dated November 9, 2005 as
#050302280.

 

 

64.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
ofBubis, et al. against Pep Boys, Manny, Moe & Jack in the amount of $20,000.00,
dated April 12,2005 as #040303784.

 

--------------------------------------------------------------------------------

 

65.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of Brantley against Pep Boys- Manny, Moe & Jack in the amount of$33,255.06,
dated August 30,2006 as #051001559.

 

 

66.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of Goslee against The Pep Boys - Matmy, Moe & Jack in the amount of $11,000.00,
dated August 30,2006 as #051004787.

 

 

67.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of Rose Marie Garcia against Pep Boys Corp. in the amount of $283.00, dated
July 21,2006 as #SC0606065722.

 

 

68.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
ofRaynae Fields against Pep Boys in the amount of$471.30, dated August 14, 2002
as #0207121344.

 

 

69.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of City of Philadelphia against Pep Boys in the atnount of$348.00, dated
December 3, 2004 as #CE04103335165.

 

 

70.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of Allstate Insurance Company (Jennifer Juisto) against Pep Boys in the amount
of$1,438.84, dated November 18,2003 as #SC0310212178.

 

 

71.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of City of Philadelphia against Pep Boys in the amount of $348.00, dated May 19,
2006 as #CE060330472.

 

 

72.

Judgment on property located at 9101-!5 Ridge Ave., Philadelphia, PA, in favor
of City of Philadelphia against Pep Boys in the amount of $1 ,545.50, dated
October 11, 2002 as #CE0208335635.

 

 

73.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
ofGEICO against Pep Boys in the amount of $7,998.67, dated Febmary 20, 2003 as
#SC0211211913.

 

 

74.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
ofNellie Norman against Pep Boys #280 in the amount of$4,849.74, dated
February 9, 2004 as #SC03!21261 09.

 

 

75.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of Allstate Barabas Jones against Pep Boys, a Corp., in the amount of $6,1
58.57, dated December 2!, 2005 as #SC051 0288655.

 

--------------------------------------------------------------------------------

 

76.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
ofEbboni Ames against Pep Boys Automotive Corp. in the amount of$464.33, dated
July 8, 2002 as #SC0206040277.

 

 

77.

Judgment on property located at 9101-15 Ridge Avc., Philadelphia, PA, in favor
of Li Ling against Pep Boys Inc. Corp. Headquarters in the amount of $2,519.00,
dated April 30, 2003 as #SC03040203891.

 

 

78.

Judgment on property located at 9101-15 Ridge Ave., Philadelphia, PA, in favor
of Victor J. Cabrera against Pep Boys Inc. in the amount of $1,022.34, dated
March 20, 2006 as #SC0602025289.

 

 

79.

Judgment on property located at 2455 Decker Blvd., Columbia, SC, in favor of
Neshia A. McCall against Pep Boys in the amount of$55.00, dated September 12,
2000 as #004660870.

 

 

80.

Judgment on property located at 8825 S. Jewella Ave., Shreveport, LA, in favor
of Superior National Insurance Group and against the Pep Boys- Manny, Moe &
Jack, Inc. in the amount of $14,152.18, plus penalties and interest, dated March
24,2000, recorded in Book 2964, Page 73.

 

 

81.

Judgment on property located at 1509 Easton Rd., Willow Grove, PA, in favor of
Jee Sung Kim against Pep Boys, Inc. and Worldwide Automotive in the amount
of$2,045.93, dated June 28,2002 as #2002-12060.

 

 

82.

Judgment on property located at 2380 S. Hamilton Rd., Columbus, OH, in favor of
Ohio State Department of Taxation against Pep Boys in the amount of $1 ,459.41,
dated March 5, 1996, recorded in Book 96JG, Page 2772, Franklin County Real
Property Records.

 

 

83.

Abstract of Judgment on property located at 10501 Gateway West 11, El Paso, TX,
in favor of Devant Stewart and Deanna Stewart against The Pep Boys Manny Moe and
Jack in the amount of$1 ,384.00, plus costs, interest and attorney’s fees, dated
May 15, 1997, in Volume 3202, Page 1724, Real Property Records of El Paso
County.

 

 

84.

Abstract of Judgment on property located at 10501 Gateway West II, El Paso, TX,
in favor ofRonald S. Vievra against Pep Boys in the amount of$571.73, plus
costs, interest and attorney’s fees, dated June 17,2003, in Volume 4581, Page
1798, Real Property Records ofEl Paso County.

 

 

85.

Abstract of Judgment on property located at 5616 Walzem Rd., San Antonio, TX, in
favor of Gracie Thompson against Pep Boys #746 in the amount of $686.00, plus
interest and costs, filed June 20,2002, in Volume 9438, Page 791, Real Property
Records of Bexar County.

 

--------------------------------------------------------------------------------

 

86.

Abstract ofJudgment on property located at 4010 W. Camp Wisdom Rd., Dallas, TX,
in favor of Sandra L. MeWhorter against Pep Boys #717 in the amount of $336.34,
tiled March 22,2004, in Volume 2004056, Page 1560, Real Property Records of
Dallas County.

 

 

87.

Abstract of Judgment on property located at 40l0 W. Camp Wisdom Rd., Dallas, TX,
in favor of Jay Wesley Kralik against Pep Boys Manny Moe & Jack, eta!. in the
amount of$2,399.14, filed June 7, 2005, in Volume 2005111, Page 5302, Real
Property Records of Dallas County.

 

 

88.

Abstract of Judgment on property located at 2317 N. Galloway Blvd., Mesquite,
TX, in favor of Sandra L. McWhorter against Pep Boys #717 in the amount of
$336.34, filed March 22, 2004, in Volume 2004056, Page 1560, Real Property
Records of Dallas County.

 

 

89.

Abstract of Judgment on property located at 2317 N. Galloway Blvd., Mesquite,
TX, in favor of Jay Wesley Kralik against Pep Boys Manny Moe & Jack, eta!. in
the amount of$2,399.14, filed June 7, 2005, in Volume 2005111, Page 5302, Real
Property Records of Dallas County.

 

 

90.

Abstract of Judgment on property located at 1455 W. Trinity Mi11s Rd.,
Carrollton, TX, in favor of Sandra L. McWhorter against Pep Boys #717 in the
amount of$336.34, filed March 22,2004, in Volume 2004056, Page 1560, Real
Property Records of Dallas County.

 

 

91.

Abstract of Judgment on property located at 1455 W. Trinity Mills Rd.,
Carrollton, TX, in favor of Jay Wesley Kralik against Pep Boys Manny Moe & Jack,
et al. in the amount of $2,399.14, filed June 7, 2005, in Volume 2005 I 11,
Page 5302, Real Property Records of Dallas County.

 

 

92.

Abstract of Judgment on property located at 1212 N. Collins St., Arlington, TX,
in favor of Alfred J. Doldorf against Pep Boys in the amount of $244.00, filed
on August 2, 2002, in Volume 15863, Page 628, Real Property Records of Tarrant
County, as corrected in Volume 17086, Page 232, Real Property Records of Tarrant
County.

 

 

93.

Abstract of Judgment on property located at 1710 Buckner Blvd. S., Oallas, TX,
in favor of Sandra L. Me Whorter against Pep Boys #717 in the amount of $336.34,
filed March 22,2004, in Volume 2004056, Page 1560, Real Property Records of
Dallas County.

 

 

94.

Abstract of Judgment on property located at 1710 Buckner Blvd. S., Dallas, TX,
in favor of Jay Wesley Kralik against Pep Boys Manny Moe & Jack, et al. in the
amount of$2,399.14, filed June 7, 2005, in Volume 2005111, Page 5302, Real
Property Records of Dallas County.

 

--------------------------------------------------------------------------------

 

95.

Abstract of Judgment on property located at 6200 San Pedro Ave., San Antonio,
TX, in favor of Gracie Thompson against Pep Boys #746 in the amount of $686.00,
plus interest and costs, filed June 20,2002, in Volume 9438, Page 791, Real
Property Records of Bexar County.

 

 

96..

Abstract of Judgment on property located at 8103 Marbach Rd., San Antonio, TX,
in favor of Gracie Thompson against Pep Boys #746 in the amount of $686.00, plus
interest and costs, tiled June 20,2002, in Volume 9438, Page 791, Real Property
Records of Bexar County.

 

 

97.

Abstract of Judgment on property located at 101 W. Seminary Dr., Fort Worth, TX,
in favor of Alfred J. Doldorf against Pep Boys in the an1ount of $244.00, filed
on August 2, 2002, in Volume 15863, Page 628, Real Property Records of Tarrant
County, as corrected in Volume 17086, Page 232, Real Property Records of Tarrant
County.

 

 

98.

Abstract of Judgment on property located at 101 W. Seminary Dr., Fort Worth, TX,
in favor ofTan1 Tran Nguyen against Pep Boys in the an1ount of$400.00, tiled on
November 28, 1995, in Volume 12178, Page 2400, Real Property Records of Tarrant
County.

 

 

99.

Abstract of Judgment on property located at 424 E. State Highway 303, Grand
Prairie, TX, in favor of Sandra L. MeWhorter against Pep Boys #717 in the amount
of$336.34, filed March 22,2004, in Volume 2004056, Page 1560, Abstract of
Judgment Records of Dallas County.

 

 

100.

Abstract of Judgment on property located at 424 E. State Highway 303, Grand
Prairie, TX, in favor of Mrs. Pat Washington against Pep Boys in the amount
of$310.94, filed August 1, 1995, in Volume 95148, Page 2508, Abstract of
Judgment Records of Dallas County.

 

 

101.

Abstract of Judgment on property located at 424 E. State Highway 303, Grand
Prairie, TX, in favor ofClebum W. Wrisner against Pep Boys #765 The Pep Boys
Manny Moe & Jack in the an10unt of $2,677.08, tiled May 30, 1996, in Volume
96107, Page 5514, Abstract of.Tudgment Records of Dallas County.

 

 

I 02.

Affidavit Claiming Mechanic’s Lien on property located at 2473 S. Danville St.,
Abilene, TX, in the amount of $1 ,350.00, dated February 26, 2003, executed by
Thomas J. Bertrand, d/b/a TNT Striping, filed on March 10, 2003, in Volume 2794,
Page 315, Official Records of Taylor County.

 

The Lenders are fully insured tor all liens listed in iiems 5 - 102 above.

 

--------------------------------------------------------------------------------

 

Schedule Ll(c)- Allocated Payoff Amount

 

See attached.

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

 

 

 

 

land Area

 

 

 

Appraised

 

 

 

Store#

 

Store Name

 

Address

 

City

 

Sttlfe

 

Bldg SF

 

(Acrest

 

Oate Opened

 

Value

 

Allocated Loan

 

2

 

MONTGOMERYVILLE

 

901 N WALES RO

 

NWALES

 

PA

 

20,615

 

3.39

 

Sep-82

 

$

4,441,203

 

$

2.220,602

 

10

 

SCRANTON

 

1113US-6

 

SCRANTON

 

PA

 

22,211

 

5.61

 

Oct-87

 

$

3,000,000

 

$

1,500,000

 

32

 

41ST STREET

 

4101-19 MARKET ST

 

PHILADELPHIA

 

PA

 

17,083

 

0.98

 

Aug-69

 

$

1,961,453

 

$

980,727

 

34

 

OXFORD VALLEY

 

101 LINCOLN HWY

 

FAIRLESS HILLS

 

PA

 

17,441

 

2.25

 

Nov-73

 

$

3,024,203

 

$

1,512,102

 

36

 

GREENSBORO

 

4320 HIGH POINT RD

 

GREENSBORO

 

NC

 

20,374

 

4.13

 

Feb-90

 

$

2,300,000

 

$

1,150,000

 

50

 

TOMS RIVER

 

301 RTE 37 E

 

TOMS RIVER

 

NJ

 

17,690

 

2.85

 

Nov-86

 

$

3,405,703

 

$

1,702,852

 

54

 

HOI/JELL

 

4204 RTE 9 S

 

HOWELL

 

NJ

 

17,690

 

3.71

 

Oct-86

 

$

3,700,000

 

$

1,850,000

 

61

 

STRATFORD/NJ

 

10 N WHITEHORSE PIKE

 

STRATFORD

 

NJ

 

18,429

 

1.53

 

Aug-71

 

$

2,697,203

 

$

1,348,602

 

74

 

RANDALLSTOWN

 

8635 LIBERTY RD

 

RANDALLSTOWN

 

MD

 

13,227

 

1.38

 

Dec-73

 

$

1,879,703

 

$

939,852

 

75

 

ROUTE 40

 

6515 BALTIMORE NATIONAL P

 

BALTIMORE

 

MD

 

19,950

 

3.01

 

Jan-86

 

$

2,860,703

 

$

1,430,352

 

79

 

TOWSON

 

1739-41 E JOPPA RD

 

BALTIMORE

 

MD

 

8,160

 

0.79

 

May-65

 

$

1,400,000

 

$

700,000

 

85

 

DENBIGH

 

13200 WARW1CK BLVD

 

NEWPORT NEWS

 

VA

 

20,615

 

3.98

 

Dec-85

 

$

2,650,000

 

$

1,325,000

 

90

 

WOODBRIDGE

 

1641 VV!GGLESWORTH WAY

 

WOODBRIDGE

 

VA

 

20,374

 

2.58

 

Oct-87

 

$

4,500,000

 

$

2,250,000

 

91

 

PEtERSBURG

 

3120 S CRATER RD

 

PETERSBURG

 

VA

 

22.211

 

3.31

 

Oct-88

 

$

2,899,766

 

$

1,449.883

 

98

 

ROCK HILL

 

2514 N CHERRY RD

 

ROCKHILL

 

SC

 

22,211

 

2.20

 

Jul-89

 

$

3,170,000

 

$

1,585,000

 

100

 

VIRGINIA BEACH

 

1116 LYNNHAVEN P’tWIIY

 

VIRGINIA BCH

 

VA

 

20,374

 

1.88

 

May-89

 

$

3,335,766

 

$

1,667,883

 

102

 

NINE MII.E ROAD

 

4507 NINE MILE RD

 

RICHMOND

 

VA

 

20,615

 

3.89

 

Apr-88

 

$

2,790,766

 

$

1,395,383

 

103

 

NORCROSS

 

5620 JIMMY CARTER BLVD

 

NORCROSS

 

GA

 

20,615

 

2.42

 

Feb-88

 

$

3,383,521

 

$

1,691.761

 

108

 

SNELLVILLE

 

2207 E MAIN ST

 

SNELLVILLE

 

GA

 

22.211

 

1.81

 

Oct-88

 

$

3,274,521

 

$

1,637,261

 

116

 

DOUGLASVILLE

 

3150 HIGHWAY 5

 

DOUGLASVILLE

 

GA

 

22,211

 

1.59

 

Nov-88

 

$

3,165,521

 

$

1.582.761

 

117

 

GRETNA

 

1100 BEHRMAN HWY

 

GRETNA

 

LA

 

22,211

 

2.35

 

Mar-91

 

$

2,451,000

 

$

1,225,500

 

134

 

BROAD RIVER ROAD

 

1804 BROAD RIVER RD

 

COLUMBIA

 

SC

 

22,211

 

4.19

 

Nov-90

 

$

2,893,021

 

$

1.446,511

 

141

 

BOSSIER CITY

 

2941 E TEXAS AVE

 

BOSSIER CITY

 

tA

 

21,771

 

4.26

 

Jan-94

 

$

2,675,021

 

$

1,337,511

 

144

 

ANDORRA

 

9101-15 RIDGE AVE

 

PHILADELPHIA

 

PA

 

22,211

 

2.73

 

Oec-92

 

$

4,086,953

 

$

2.043.477

 

146

 

OLD HICKORY

 

15001 OLD HICKORY BLVD

 

NASHVILLE

 

TN

 

22.211

 

2.23

 

Mar-91

 

$

2,575,000

 

$

1,287,500

 

147

 

SUDELL

 

1421 GAUSE BIVD

 

SLIDELL

 

LA

 

22,211

 

2.37

 

Mar-91

 

$

3,000,000

 

$

1,500,000

 

151

 

KINGSTON

 

106 MARKET PLACE BLVD

 

KNOXVILLE

 

TN

 

22.211

 

2.30

 

Oct-91

 

$

3,165,521

 

$

1,582,761

 

152

 

DECKER

 

2455 DECKER BLVD

 

COLUMBIA

 

SC

 

22,211

 

2.49

 

Oec-91

 

$

2,893,021

 

$

1,446.511

 

164

 

SHREVEPORT

 

8825 S JEWELLA AVE

 

SHREVEPORT

 

LA

 

20,374

 

2.83

 

Jan-92

 

$

1,803,021

 

$

901,511

 

175

 

WIILOW GROVE

 

1509 EASTON RD

 

WILLOW GROVE

 

PA

 

22.211

 

3.73

 

Jan-94

 

$

4,495,703

 

$

2,247,852

 

184

 

GREENVILLE

 

2418LAURENS RD

 

GREENVILLE

 

SC

 

22,211

 

2.79

 

Jan-93

 

$

3,002,021

 

$

1,501,011

 

185

 

AIRPORT HIGHWAYfAL

 

831 MONTUMAR DR

 

MOBILE

 

Al

 

22,211

 

2_79

 

Dec-92

 

$

2,348,021

 

$

1,174,011

 

186

 

HAMPTON

 

2224 W MERCURY BLVD

 

HAMPTON

 

VA

 

22,211

 

3.25

 

Jan-93

 

$

3,662,766

 

$

1,831.383

 

212

 

LAFAYETTE/LA

 

5639 JOHNSTON ST

 

LAFAYETTE

 

LA

 

22,211

 

2.00

 

Nov-93

 

$

2,811,271

 

$

1,405,636

 

214

 

CLARKSVILLE

 

1317 TRIANGLE DR

 

CLARKSVILLE

 

IN

 

22,211

 

2.31

 

Oec-93

 

$

2,424,703

 

$

1,212.352

 

 

--------------------------------------------------------------------------------

 

236

 

HAMILTON ROAD

 

2830 S HAMILTON RO

 

COLUMBUS

 

OH

 

22,354

 

2.46

 

Apr-94

 

$

2,150,000

 

$

1,075,000

 

259

 

FLORENCE MALL

 

832 HEIGHTS BLVD

 

FLORENCE

 

KY

 

22,211

 

3.45

 

Oct-94

 

$

2,784,021

 

$

1,392,011

 

277

 

WATERBURY

 

699 WOLCOTT ST

 

WATERBURY

 

CT

 

18,196

 

089

 

Oct-97

 

$

2,751,703

 

$

1.375,852

 

337

 

WASHINGTON

 

7201 E WASHINGTON ST

 

INDfANA,POUS

 

IN

 

31.368

 

4.24

 

Jul-95

 

$

2,600,000

 

$

1,300,000

 

372

 

CRANBERRY

 

20229 RT 19

 

CRANBERRY

 

PA

 

18,196

 

2.00

 

Apr-97

 

$

2,969,703

 

$

1.484,852

 

375

 

MISHAWAKA

 

3415 GRAPE RD

 

MISHAWAKA

 

IN

 

21,723

 

2.24

 

Feb-97

 

$

1,879,703

 

$

939,852

 

383

 

DULUTI1

 

4055 PLEASANT HILL RD

 

DULUTH

 

GA

 

18,196

 

2.50

 

Dec-96

 

$

3,150,000

 

$

1,575,000

 

426

 

STERLING HEIGHTS

 

39755 VANDYKE AVE

 

STERLING HGTS

 

MI

 

22,073

 

2.24

 

Apr-97

 

$

4,277,703

 

$

2,138,852

 

504

 

COON RAPIDS

 

3325 124TH AV N.W.

 

COON RAPIDS

 

MN

 

21.875

 

2.43

 

Jul-99

 

$

3,514,703

 

$

1,757,352

 

551

 

SALISBURY

 

1628 N SALISBURY BIVD

 

SALISBURY

 

MD

 

18,196

 

2.24

 

Nov-97

 

$

2,588,203

 

$

1,294,102

 

608

 

SAN BERNARDINO

 

147SEST

 

SAN BERNARDINO

 

CA

 

22,908

 

1.13

 

Apr-79

 

$

1,770,703

 

$

885,352

 

611

 

LA MIRADA

 

14207 ROSECRANS AVE

 

LA MIRADA

 

CA

 

<9,122

 

2.09

 

Feb-80

 

$

3,078,703

 

$

1,539,352

 

624

 

FRESNO

 

716 BROADWAY

 

FRESNO

 

CA

 

17,321

 

0.98

 

Jul-48

 

$

1,400,000

 

$

700,000

 

626

 

ORACLE

 

3783 N ORACLE RD

 

TUCSON

 

1>-Z

 

22,960

 

1.77

 

Jul-86

 

$

3,2.69,453

 

$

1,634,727

 

630

 

INGLEWOOD

 

200 E SPRUCE AVE

 

INGLEWOOD

 

CA

 

17,920

 

0.93

 

Mar-70

 

$

2,293,903

 

$

1,146,952

 

645

 

TUCSON

 

1300 S 6TH AVE

 

TUCSON

 

A:Z.

 

22,390

 

2.02

 

Apr-84

 

$

2,751,703

 

$

1,375,852

 

647

 

67TH STREET

 

6714 EL CAJON BLVD

 

SAN DIEGO

 

CA

 

15,200

 

0.80

 

Jun-82

 

$

2,684,503

 

$

1.332,252

 

661

 

SPEEDWAY

 

4491 E SPEEDWAY BLVD

 

TUCSON

 

A:Z.

 

22,750

 

2.37

 

Mar-82

 

$

3,350,000

 

$

1,675,000

 

674

 

YVMA

 

155 E 32NDST

 

YUMA

 

AZ

 

24,430

 

3.63

 

Feb-84

 

$

2,915,203

 

$

1,<157,602

 

684

 

SCOTISDALE

 

2524 N SCOTTSDALE RD

 

SCOTTSDALE

 

AZ

 

19,110

 

1.55

 

Apr-84

 

$

2,479,2.03

 

$

1,239,602

 

688

 

SAHARA

 

637 E SAHARA AVE

 

LAS VEGAS

 

NV

 

20,736

 

1.72

 

Jun-88

 

$

2,900,000

 

$

1,450,000

 

689

 

S!ERRA VISTA

 

1255 E FRY BLVD

 

SIERRA VISTA

 

1>-Z

 

11,842

 

0.94

 

Mar-85

 

$

1,291,103

 

$

645,552

 

697

 

WEST CENTRAL

 

4523 CENTRAL AVE N W

 

ALBUQUERQUE

 

NM

 

17,523

 

1.51

 

Jun-85

 

$

2,100,000

 

$

1,050,000

 

698

 

YARBROUGH

 

10501 GATEWAY WEST 11

 

ELPASO

 

TX

 

20,400

 

1.77

 

Jun-85

 

$

1,552,703

 

$

776,352

 

713

 

WALZEM

 

5616WALZEM

 

SAN ANTONIO

 

TX

 

22,362

 

3.14

 

Apr-88

 

$

1,743,453

 

$

871,727

 

716

 

CAMP WISDOM

 

4010 W CAMP WISDOM RD

 

DALLAS

 

TX

 

21,521

 

1.33

 

Nov-86

 

$

2,097,703

 

$

1,048,852

 

717

 

MESQUITE

 

2317 N GALLOWAY BLVD

 

MESQUITE

 

TX

 

20,843

 

1.39

 

Nov-86

 

$

1,879,703

 

$

939,852

 

721

 

CARROLLTON

 

1455 WTRIN_ITY MIILS RD

 

CARROLLTON

 

TX

 

20,984

 

1.42

 

Fet>-87

 

$

2,206,703

 

$

1,103,352

 

725

 

ARLINGTON

 

1212 N COLLINS ST

 

ARLINGTON

 

TX

 

21,193

 

1.75

 

Aug-87

 

$

2,533,703

 

$

1,266,852

 

725

 

BUCKNER

 

1710 BUCKNER BLVD S

 

DALLAS

 

TX

 

21,193

 

1.19

 

Jan-91

 

$

1,661,703

 

$

e30,852

 

730

 

MONTCLAIR

 

51SO ARROW H’NY

 

MONTCLAIR

 

CA

 

20,400

 

2.16

 

Oec-87

 

$

2,260,000

 

$

1.130,000

 

734

 

SAN PEDRO

 

6200 SAN PEDRO AVE

 

SAN ANTONIO

 

TX

 

22,362

 

1.86

 

Feb-88

 

$

2,315,703

 

$

1,157,852

 

737

 

MARBACH

 

8103 MARBACH RD

 

SAN ANTONIO

 

TX

 

22.362

 

1,99

 

Feb-88

 

$

1,750,000

 

$

875,000

 

743

 

NILESICA

 

4014 E NILES ST

 

BAKERSFIELD

 

CA

 

20.528

 

1.35

 

Apr-88

 

$

1,716,203

 

$

858,102

 

751

 

SEMfNARY

 

101 W SEMINARY

 

FORT WORTH

 

TX

 

22,229

 

1.77

 

Jan-89

 

$

1,661,703

 

$

830.852

 

754

 

SOUTH WALKER

 

7600 S WALKER ST

 

OKLAHOMA CITY

 

OK

 

22,362

 

1.02

 

Feb-89

 

$

2,424,703

 

$

1,212,352

 

756

 

NORTHWEST HIGHWAY

 

7401 NW EXPRESSWAY

 

OKLAHOMA CITY

 

OK

 

22,491

 

2.21

 

Feb-89

 

$

2,860,703

 

$

1,430,352

 

 

--------------------------------------------------------------------------------

 

758

 

GRAND PRAIRIE

 

424 ESTATE HWY 303

 

GRAND PRAIRIE

 

TX

 

22,700

 

1.82

 

Sep-88

 

$

4,315,703

 

$

1.157,852

 

760

 

HARLINGEN

 

2321 W EXPRESSWAY 83

 

HARLINGEN

 

TX

 

22,491

 

1.62

 

Mar-89

 

$

1,552,703

 

$

776,352

 

764

 

QUAIL SPRINGS

 

2317 W MEMORIAL RD

 

OKLAHOMA CITY

 

OK

 

22,491

 

1.71

 

Mar-89

 

$

2,800,000

 

$

1,400,000

 

769

 

KOL8

 

7227 E 22ND ST

 

TUCSON

 

AZ

 

22,200

 

1.66

 

Juo-89

 

$

3,187,703

 

$

1,593,852

 

779

 

63RD & BELL

 

6311 W BELL RD

 

GLENDALE

 

AZ

 

22,298

 

1.95

 

Juf-90

 

$

3,187,703

 

$

1,593,852

 

781

 

DENTON

 

1605 DALLAS OR

 

DENTON

 

TX

 

20,374

 

1.73

 

Jan-92

 

$

2,275,000

 

$

1,137,500

 

788

 

ABILENE

 

2473 S DANVILLE ST

 

ASILENE

 

TX

 

22,200

 

!.95

 

Jun-90

 

$

2,206,703

 

$

1,103,352

 

791

 

MEMORIAL

 

6714 S MEMORIAL DR

 

TULSA

 

OK

 

20,374

 

1.91

 

Jan-91

 

$

2,533,703

 

$

1,266,852

 

818

 

NAPERVILLE

 

2936 W OGDEN AVE

 

NAPERVILLE

 

IL

 

20.374

 

2.51

 

Jun-94

 

$

4,168,703

 

$

2,0!14,352

 

824

 

KELLOGG EAST

 

9045 E KELLOGG

 

WICHITA

 

KS

 

22,211

 

2.85

 

Jan-94

 

$

3,024,203

 

$

1,512.102

 

856

 

ELSTON

 

2604 N ELSTON AVE

 

CHICAGO

 

IL

 

21,536

 

1.83

 

Aog-95

 

$

6,850,000

 

$

2,925,000

 

923

 

S.PONCE

 

CARR#2 KM 26 2

 

PONCE BYPASS

 

PR

 

19,300

 

1.83

 

Oct-97

 

$

3,732,703

 

$

1,866,352

 

924

 

GUAYAMA

 

CARR#54KM 0 90ESVIO DEL S

 

GUAYAMA

 

PR

 

19,300

 

0.60

 

Jan-98

 

$

3,732,703

 

$

1,866,352

 

926

 

ALTAMlRA

 

RT 17 PINERO RD 20

 

GUAYNABO

 

PR

 

19,300

 

1.00

 

Sep-97

 

$

3,841,703

 

$

1,920,852

 

928

 

SANTURCE

 

AVE MARGINAL BALDORIOTY O

 

SANTURCE

 

PR

 

8,465

 

0.57

 

Nov-97

 

$

1,879,703

 

$

939,852

 

 

 

 

 

 

 

87 Properties

 

Total

 

1,790,639

 

192.97

 

 

 

$

240,010,913

 

$

120.005,457

 

 

--------------------------------------------------------------------------------

 

[g23582kn41i001.jpg]

 

--------------------------------------------------------------------------------

 

[g23582kn43i001.jpg]

 

--------------------------------------------------------------------------------

 

[g23582kn45i001.jpg]

 

--------------------------------------------------------------------------------

 

[g23582kn47i001.jpg]

 

--------------------------------------------------------------------------------

 

Schedule 2.l(d)

 

(FORM OFl

TERM LOAN NOTE

 

[Date]

 

FOR VALUE RECEIVED, the undersigned, THE PEP BOYS — MANNY, MOE & JACK, a
Pennsylvania corporation (the “Borrower”), hereby unconditionally promises to
pay, on the Maturity Date (as defined in the Credit Agreement referred to
below), to the order of            (the “Lender’’) at the office of Wachovia
Bank, National Association, located at 201 South College Street, NC0680/CP8,
Charlotte, North Carolina 28288-0680, in lawful money of the United States of
America and in immediately available funds, the aggregate unpaid principal
amount of the Term Loan made by the Lender to the undersigned pursuant to
Section 2.1 of the Credit Agreement referred to below. The undersigned further
agrees to pay interest in like money at such office on the unpaid principal
amount hereof and, to the extent permitted by law, accrued interest in respect
hereof from time to time from the date hereof until payment in full of the
principal ammmt hereof and accrued interest hereon, at the rates and on the
dates set forth in the Credit Agreement.

 

The holder of this Term Note is authorized to endorse the date and amount of
each payment of principal and interest with respect to the Term Loan evidenced
by this Term Note and the portion thereof that constitutes a LIBOR Rate Loan or
an Alternate Base Rate Loan on Schedule 1 annexed hereto and made a part hereof,
or on a continuation thereof which shall be attached hereto and made a part
hereof, which endorsement shall constitute prima facie evidence of the accuracy
of the infonnation endorsed (absent etTOr); provided, however, that the failure
to make any such endorsement shall not affect the obligations of the undersigned
under this Term Note.

 

This Note is one of the Term Notes referred to in the Amended and Restated
Credit Agreement, dated as of October (_j, 2006 (as amended, restated, amended
and restated or otherwise modified, the “Credit Agreement”), by and among the
Borrower, the Domestic Subsidiaries of the Borrower from time to time party
thereto, the Lenders from time to time party thereto, and Wachovia Bank,
National Association, as administrative agent for the Lenders (the
“Administrative Agent”), and the holder is entitled to the benefits thereof.
Capitalized terrns used but not otherwise defined herein shall have the meanings
provided in the Credit Agreement.

 

[This Term Note is in substitution for and replacement of that certain Term
Note, dated as of [January 27, 2006], made by the Borrower and payable to the
order of the Lender.]

 

Upon the occurrence and during the continuance of any one or more of the Events
of Default specified in the Credit Agreement, all amounts then remaining unpaid
on this Term Note shall become, or may be declared to be, immediately due and
payable, all as provided therein. In the event this Term Note is not paid \.vhen
due at any stated or accelerated maturity, the Borrower

 

--------------------------------------------------------------------------------

 

agrees to pay, in addition to principal and interest, all costs of collection,
including reasonable attorneys’ fees.

 

All parties now and hereafter liable with respect to this Tenn Note, whether
maker, principal, surety, endorser or otherwise, hereby waive presentment,
demand, protest and all other notices of any kind.

 

THIS TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

 

--------------------------------------------------------------------------------

 

 

THE PEP BOYS- MANNY, MOE & JACK,
a Pennsylvania corporation

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

SCHEDULE 1
to

Term Note

 

LOANS AND PAYMENTS OF PRINClPAL

 

 

 

 

 

 

 

 

 

 

 

Principal

 

 

 

 

 

Amount

 

Type

 

 

 

 

 

 

 

Paid

 

 

 

 

 

of

 

of

 

Interest

 

Interest

 

Maturity

 

or

 

Principal

 

Notation

 

Loan

 

Loan (1)

 

Rate

 

Period

 

Date

 

Converted

 

Balance

 

Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

The type of Loan may be represented by “L” for LlBOR Rate Loans or ‘‘ABR” for
Alternate Base Rate Loans.

 

--------------------------------------------------------------------------------

 

Schedule 2.6

 

[FORM OF]

NOTICE OF CONVERSION/EXTENSION

 

[Date]

 

Wachovia Bank, National Association,

as Administrative Agent

201 South College Street

NC0680/CP8

Charlotte, North Carolina 28288-0680

Attn: Syndication Agency Services

 

Ladies and Gentlemen:

 

Pursuant to Section 2.6 of the Amended and Restated Credit Agreement, dated as
of October [      ], 2006 (as amended, restated, amended and restated or
otherwise modified, the “Credit Agreement”), by and among The Pep Boys - Manny,
Moe & Jack, a Pennsylvania corporation (the “Borrower”), the Domestic
Subsidiaries of the Borrower from time to time party thereto, the Lenders from
time to time party thereto, and Wachovia Bank, National Association, as
administrative agent for the Lenders (the “Administrative Agent”), the Borrower
hereby        requests conversion or        extension of the following Loans be
made as follows (the ‘‘Proposed Conversion/Extension”):

 

Applicable
Loan

 

Current
Interest
Rate and
Interest
Period

 

Date

 

Amount to
be
Converted/
Extended

 

Requested
Interest
Rate
(Alternate Base
Rate/LIBOR
Rate)

 

Requested Interest
Period
(one, two, three or six
months
- for LIBOR Rate only)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE:    PARTIAL CONVERSIONS MUST BE IN AN AGGREGATE PRINCIPAL AMOUNT OF
$5,000,000 OR A WHOLE MULTIPLE OF $1,000,000 IN EXCESS THEROF.

 

Terms defined in the Credit Agreement shall have the same meanings when used
herein.

 

The undersigned hereby certifies that no Default or Event of Default has
occurred and is (continuing or would result from such Proposed
Conversion/Extension or from the application of) the proceeds thereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

--------------------------------------------------------------------------------

 

 

Very truly yours,

 

 

 

THE PEP BOYS -MANNY, MOE & JACK,
a Pennsylvania corporation

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

Schedule 3.3- Credit Party Jurisdictions

 

Each Credit Party is organized in the following states:

 

Credit Partx

 

Jurisdiction of
Organization

Pep Boys

 

Pennsylvania

PBY-California

 

California

PBY-Delaware

 

Delaware

PBY-Puerto Rico

 

Delaware

Carrus

 

Delaware

PBY

 

Delaware

 

Each Credit Party is qualified to do business in the following states:

 

Credit Party

 

Jurisdiction

 

 

 

 

 

Pep Boys

 

AL, AR, DE, FL, GA, IN, KY, LA, MD, NC, SC, TN & VA

 

 

 

 

 

PBY-California

 

AZ, IL, KS, ME, MN, NV, NH, NM, OR, TX & LIT

 

 

 

 

 

PBY-Dclaware

 

CO, CT, DC, MA, MI, MO, NJ, NY, OH, OK, RJ, TX & WA

 

 

 

 

 

PBY-Puerto Rico

 

PR

 

 

--------------------------------------------------------------------------------

 

Schedule 3.5- Violations; Defaults

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 3.12- Subsidiaries

 

I. Wholly-owned subsidiaries of Pep Boys:

 

·    PBY-DE

·    PBY-PR

·    PBY

·    Carrus

·    Colchester

 

2. Wholly-owned subsidiaries ofPBY:

 

PBY-CA

 

3. Wholly-owned subsidiaries of Colchester:

 

The Pep Boys, LLC

 

--------------------------------------------------------------------------------

 

Schedule 3.19(a) - Mortgaged Properties

 

See Schedule l.l(c).

 

--------------------------------------------------------------------------------

 

Schedule 3.19(b) Credit Parties’ Chief Executive Offices

 

1.        Pep Boys

PBY-DE

PBY-CA

PBY-PR

Carrus:

 

3111 West Allegheny Avenue

Philadelphia, PA 19132

 

2.        PBY:

 

11 05 North Market Street

Wilmington, Delaware 19801

 

3.        Colchester:

 

Seven Burlington Square, 6th Floor

Burlington, Vermont 05402

 

--------------------------------------------------------------------------------

 

Schedule 3.22 - Labor Matters

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 3.24- Material Contracts

 

1.  Merchandise Vendor Agreements

 

·                  Vendor Agreement, dated November 1, 1995, between the
Borrower and Cooper Tire & Rubber Company, as amended by the Amendment to Vendor
Agreement dated November 20,2001.

 

·                  Supply Agreement- Johnson Controls Batteries, dated as of
April 1, 1995, between the Borrower and Johnson Controls Battery Group, Inc.

 

·                  Merchandise Vendor Agreement between the Borrower and Wen
Products -Great Lakes Tool Mfg.

 

·                  Merchandise Vendor Agreement between the Borrower and Hankook
Tire America Corp.

 

·                  Vendor Agreement #PBY 28 dated November 28, 2005 between the
Borrower and Baja Motorsports, LLC and related Addendums

 

·                  Vendor Agreement #PBY 273 dated December 23,2005 between the
Borrower and Sopus Pennzoil Oil and related Addendums

 

·                  Vendor Agreement #PBY 233 dated January 3, 2006 between the
Borrower and Castro! Inc. and related Addendums

 

2.               Amended and Restated Private Label Consumer Credit Card Program
Agreement, dated as ofNovember 14, 2005 among the Borrower, The Pep Boys- Manny,
Moe & Jack of California, The Pep Boys- Manny, Moe & Jack of Delaware, Inc., The
Pep Boys- Manny, Moe & Jack of Puerto Rico, Inc. and GE Money Bank.

 

3.               IBM Customer Agreement, dated October 11, 1999, between the
Borrower and International Business Machines Corporation, as amended by the
Amendment to the IBM Customer Agreement dated November I 0, 1999.

 

4.               Term Lease Master Agreement, dated October 27, 1999, between
the Borrower and IBM Credit Corporation, as amended by the Addendum to Term
Lease Master Agreement dated October 27, 1999.

 

5.               Any and all documents evidencing the Indebtedness and Synthetic
Leases set forth on Schedule 6.1(b).

 

--------------------------------------------------------------------------------

 

Schedule 3.25- Insurance

 

1. Pollution & Remediation Legal Liability Insurance Policy (Policy #
PECOO19972) issued by Indian Harbor Insurance Company, with a tenn from
January 27, 2006 through January 27, 2011.

 

2. See attached schedule.

 

--------------------------------------------------------------------------------

[g23582kn53i001.gif]

PEPBOYS AUTO Executive Risk Program Directors’ and Officers’ Liability Insurance
7/1/06 to 7/1/2007 Aggregate Limit: $50 million Fiduciary Liability 7/1/06 to
7/1/2007 Crime Insurance 10/14/05 to 10/14/06 Employment Practices Liability
Insurance 10/14/05 to 10/14/2006 $50MM Chubb $10mm xs $40mm Aggregate Limit: $20
million Per Occurrence Limit: $10 million Aggregate Limit: $40 million $40MM St.
Paul $40MM XL Bermuda $40mm $10mm xs $30MM $30mm Chubb $0 $2.5 million retention
$15mm xs $15mm $20MM St.Paul Lloyds of London 19.05% Catlin, 4.29% Harrington
19.05% ACE, 9.52% Hiscox 23.8% AIG Europe (UK) Ltd 14.2% Brit $10mm xs $10mm
$10MM $15mm AIG $10mm $15MM $0 Chubb $10mm $0 $0 $1,000,000 retention per loss
(indemnifiable claims) $0 (non-indemnifiable claims) $50,000 retention per loss
(indemnifiable claims) $0 (non-indemnifiable claims) $200,000 deductible

 

 

[g23582kn55i001.gif]

[LOGO]  Casualty Program Policy Period : June 30, 2006 to June 30, 2007 $100M
Chubb / Federal Insurance Company Policy Number: 7913 09 75 Limits of Liability:
$25,000,000 Each Occurrence $25,000,000 Prods-Comp Operations Aggregate
$25,000,000 Other Aggregate (where applicable) Occurrence Form Excess Liability
Policy Form #07-02-1344 (12/97) $75M Liberty Insurance Company Policy
Number:[ILLEGIBLE] Limits of Liability: $25,000,000 Each Occurrence $25,000,000
Aggregate (where applicable) Occurrence Form Excess Liability Policy Form
[ILLEGIBLE] $50M Great American Assurance Company Policy Number: EXC4718578-1
Limits of Insurance: $25,000,000 Each Accident or Occurrence and in the
Aggregate Occurrence Form Excess Insurance Policy Form #GAJ6524(06/97) $25M ACE
American Insurance Company Policy Number: X00 023574548 Limits of Insurance:
$25,000,000 Each Occurrence $25,000,000 Aggregate $500,000 Self Insured
Retention Occurrence Form Commercial Umbrella Liability Policy Form
#[ILLEGIBLE]  $2M $1M $250K ACE USA / ACE American $250,000 SJR ACE USA / ACE
American $250,000 Deductible $1,000,000 Deductible Zurich American Insurance
Company Policy Period: January 1, 2006 to January 1, 2007 GL AL [ILLEGIBLE]
General Agg. [ILLEGIBLE] $4,000,000 Liability - CSL [ILLEGIBLE] $2,000,000
Coverage A-WC Statutory Prods-Comp Ops. $4,000,000 PIP Reject/Minimum Coverage
B-EL Personal & Adv. Injury $1,750,000 Auto Medical Pay Nil Bodily Injury by
Acc. $1M Each Accident Each Occ Limit $1,750,000 Uninsured Motorists
Reject/Minimum Bodily Injury by Disease $1M Policy Limit [ILLEGIBLE] $1,750,000
[ILLEGIBLE] Motorists Reject/Minimum Bodily Injury by Disease $1M Each Employee
Medical Expense Nil Deductible $250,000 Deductible $1,000,000 ALAE is included
in the SIR / Outside the Limit of Liability, SIR is $250,000 ALAE is included in
the Deductible / Outside the Limit of Liability ALAE is included in the
Deductible / Outside the Limit of Liability Note: The following coverage is also
provided (not scheduled to the Umbrella Excess Liability policy) Off Shore
[ILLEGIBLE] Damages Wrap Around Policies ACE Bermuda-Limits: $25M & Magna Carts
[ILLEGIBLE] Limits: $25M

 

 

[g23582kn57i001.gif]

[LOGO] $ [ILLEGIBLE] $50 MM Cal EQ in program, $10MM add/[ILLEGIBLE] DIC Policy
Period 3/1/06 - [ILLEGIBLE]/1/07 $100 Mn Arch 19.53% [ILLEGIBLE] RE 5.00%
[ILLEGIBLE] 20.00% RSUI 10.00% [ILLEGIBLE] 13.33% Commonwealth 7.69% Swiss Re
10.00% Global Excess Partners 2.78% [ILLEGIBLE] $25 Mn AWAC 20% Axis 16.67%
Lexington 12.22% Max RE 26.67% $10 Mn AWAC 20% Lexington $2.5 MM deductible for
[ILLEGIBLE] in DCs  $250,000 deductible [ILLEGIBLE] Cat Ded DEDUCTIBLES Note
[ILLEGIBLE] deductible apply to stock in DCs’ via Stock Through [ILLEGIBLE]
program

 

 

 

Schedule 3.27- Classification of Senior Indebtedness

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 3.31(b) – Leases

 

Store #

 

Store Name

 

Store Address

 

Tenant Name

0009

 

Hunting Park

 

1050 E Hunting Park Avenue

Philadelphia, PA 19124

 

Hong Thach

0009

 

Hunting Park

 

1050 E Hunting Park Avenue

Philadelphia, PA 19124

 

Li Duan Ren

0009

 

Hunting Park

 

1050 E Hunting Park Avenue

Philadelphia, PA 19124

 

Rent-A-Center

0009

 

Hunting Park

 

1050 E Hunting Park Avenue

Philadelphia, PA 19124

 

Mag 1020, Inc.

0059

 

Cherry Hill

 

316 Haddonfield Road

Cherry Hill NJ, 08002

 

J&L Pets, LLC

0171

 

East Brunswick

 

538 Route 18

East Brunswick NJ, 08816

 

Vacant

0213

 

Pleasant Hills

 

320-330 Clairton Blvd., Route 51

Pleasant Hills PA, 15236

 

Allcare Dental Management, Inc

0213

 

Pleasant Hills

 

320-330 Clairton Blvd., Route 51

Pleasant Hills PA, 15236

 

Mattress World, Inc

0636

 

Downey

 

10227 Lakewood Blvd

Downey CA,90241

 

McDonald’s Corporation

0636

 

Downey

 

10227 Lakewood Blvd

Downey CA,90241

 

Farr’s Stationary, Inc.

0636

 

Downey

 

10227 Lakewood Blvd

Downey CA,90241

 

Jason and Judy Cheng, Husband and Wife 99 Cents Mart III

0652

 

Atlantic

 

256 South Atlantic Boulevard

Los Angeles, CA 90022

 

Tony’s Shoe Repair

0668

 

Clovis

 

693 West Shaw Avenue

Clovis CA,93612

 

Caffe e Via, LLC

0670

 

Decatur

 

506 South Decatur

Las Vegas NV, 89107

 

Luxottica Retail

0775

 

Laredo

 

NW Ortiz Street and W San Francisco Avenue

Laredo TX, 16830

 

United Equipment Rental Gulf, LP

0824

 

Kellogg East

 

9045 E. Kellogg, Wichita, KS 67207

 

Clear Channel

 

--------------------------------------------------------------------------------

 

Schedule 3.31(e)

 

I. 0656   Visalia, CA.  The proposed partial fee taking comprises 149 SF on the
corner of Highway 63 and Sunny Side Avenue.

 

2. 0659   T mpe, AZ.  This is a partial taking of a strip along Apache Boulevard
that turns the comer onto McClintock Drive.  The taking comprises 2,935 SF fee
taking, 162 slope easement and a I ,614 SF temporary construction easement.

 

--------------------------------------------------------------------------------

 

Schedule 4.1 (b)

 

[FORM OF) SECRETARY’S
CERTIFICATE

 

[CREDIT  PARTY)

 

[Date]

 

Pursuant to Section 4.1 (b) of the Amended and Restated Credit Agreement, dated
as of October [   ], 2006 (as amended,  restated, amended  and restated, or
otherwise  modified, the “Credit Agreement”; capitalized  terms used herein 
and  not defined shall  have the meanings provided  in the Credit Agreement), 
by and among The  Pep Boys - Manny,  Moe & Jack, a Pennsylvania corporation (the
“Borrower”), the Domestic Subsidiaries of the Borrower from time to time party
thereto, the Lenders from time to time party thereto, and Wachovia Bank,
National Association,   as  administrative   agent  for  the   Lenders  (the 
“Administrative   Agent”),  the undersigned                of[CREDIT PARTY} (the
‘‘Companv”) hereby certifies as follows:

 

1.        [Attached hereto as Exhibit A is a true and complete copy of the
(articles of incorporation)  [certificate of formation)(certificate of limited
partnership) of the Company and all amendments thereto as in effect on the date
hereof.] [The [articles  of incorporation] {certificate  of  formation]  
(certificate  of  limited  partnership)   of  the  Company  and  the (bylaws) 
(operating  agreement)   (partnership  agreement)   of  the  Company,  which 
were delivered to the Administrative Agent in connection with the closing of the
Existing Credit Agreement, have not been rescinded or modified, have been in
full force and effect since the closing date of the Existing Credit Agreement
and are in full force and effect as of the Closing Date.]

 

l2.       Attached  hereto  as  Exhibit  B  is  a  true  and  complete  copy 
of  the  (bylaws) (operating agreement]  [partnership agreement)  of the Company
and all amendments thereto as in effect on the date hereof.l

 

3.        Attached  hereto as Exhibit C  is a tme  and complete  copy of 
resolutions duly adopted by the board of directors of the Company
on                    .  Such resolutions have not in any way been rescinded or
modified and have been in full force and effect since their adoption  to and 
including  the  date  hereof  and  are  now  in  full  force  and  effect,  and 
such resolutions  are the only  corporate  proceedings  of  the Company  now 
in  force  relating  to or affecting the matters referred to therein.

 

4.        Attached  hereto as Exhibit D is a true and complete copy of the
certificates of good standing, existence or its equivalent of the Company.

 

5.        The following persons are the duly elected and qualitied officers of
the Company, holding the oftices indicated next to the names below on the date
hereof, and the signatures appearing  opposite the names of the officers below
are their true and genuine signatures,  and

 

--------------------------------------------------------------------------------

 

each of such officers is duly authorized to execute and deliver on behalf of the
Company, the Credit Agreement, the Notes and the other Credit Documents to be
issued pursuant thereto:

 

 

 

Signature

 

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I hereunder subscribe my name effective as of the day and
year first above w-ritten.

 

 

 

 

Name:

 

 

Title:

 

 

 

 

I,           , the                     of the Company, hereby certify
that        is the duly elected and qualified                 of the Company and
that his/her true and genuine signature is set forth above.

 

 

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

Schedule 4.l(g)

 

[FORM OF] SOLVENCY
CERTIFICATE

 

[Date]

 

The  undersigned chief  financial officer of  The  Pep  Boys  -  Manny,  Moe  & 
Jack,  a Pennsylvania  corporation  (the “Borrower”), is familiar with the
properties,  businesses,  assets and liabilities  of the Credit  Parties and is
duly authorized  to execute  this certificate  on behalf of the Borrower.

 

Reference  is made to that Amended and Restated Credit Agreement,  dated as of
October (   ),  2006  (as  amended,  restated,  amended  and  restated,  or 
otherwise  modified,  the “Credit Agreement”), by and among the Borrower,  the
Domestic Subsidiaries of the Borrower from time to time party thereto, the
Lenders  from time to time party thereto, and Wachovia  Bank, National
Association,   as  administrative  agent   for  the   Lenders   (the 
“Administrative  Agent”).      All capitalized  terms used herein and not
defined shall have the meanings  provided in the Credit Agreement.

 

The undersigned  certifies  that he/she has made such investigation  and
inquiries as to the financial  condition  of the Credit Parties as the
undersigned  deems  necessary  and prudent  tor the purpose  of  providing  this
Certificate.   The  undersigned  acknowledges that  the  Administrative Agent
and the Lenders are relying on the truth and accuracy of this Certificate  in
connection  with the making of the Term Loan under the Credit Agreement

 

To the best knowledge of the undersigned, the financial information, projections
and assumptions which underlie  and form the basis for the representations made 
in this Certificate were reasonable  when made and were made in good faith and
continue  to be reasonable as of the date hereof.

 

BASED  ON  THE  FOREGOING, the  undersigned  certifies  that,  both  before 
and  after giving effect to the Term Loan made on the Closing Date:

 

A.                                   The Credit  Parties, as a whole, are
solvent  and are able to pay their debts and other liabilities,  contingent 
obligations and other commitments as they mature in the normal course of
business.

 

B.                                     None  of the Credit  Parties  intends 
to, and  does  not  believe  that  it will, incur  debts  or  liabilities 
beyond  its ability  to pay as such  debts  and  liabilities  as they mature in
their ordinary course.

 

C.                                     None of the Credit Parties is engaged  in
any business  or transaction,  or is about to engage in any business or
transaction,  lor which the assets of such Credit  Party would   constitute  
unreasonably   small   capital   aller   giving   due   consideration  to  the
prevailing  practice in the industry in which such Credit Party is engaged or is
to engage.

 

--------------------------------------------------------------------------------

 

D.                                    The present fair saleable value of the
consolidated  assets of each Credit Party and its Subsidiaries, measured on a
going concern basis, is not less than the amount that will be required to pay
the probable liability on the debts of such Credit Party and its Subsidiaries,
on a consolidated basis, as they become absolute and matured.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

--------------------------------------------------------------------------------

 

IN  WITNESS WHEREOF, the  undersigned  has executed  this  Certificate  as of 
the day and year first above written.

 

 

 

THE PEP BOYS - MANNY, MOE & JACK,

 

a Pennsylvania corporation

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

Schedule 5.2(a)(i)

 

[FORM OF]

OFFICER’S COMPLIANCE CERTIFICATE

 

[Date]

 

For the fiscal [quarter][year] ended-------’               .

 

The undersigned, on behalf of The Pep Boys - Manny, Moe &  Jack, a Pennsylvania
corporation (the “Borrower”), hereby certifies on behalf of the Credit Parties
that, with respect to the Amended and Restated Credit Agreement, dated as of
October LJ, 2006 (as amended, restated, amended and restated, or otherwise
modified, the “Credit Agreement”), by and among the Borrower, the Domestic
Subsidiaries of the Borrower from time to time party thereto, the Lenders from 
time  to  time  party thereto, and  Wachovia Bank,  National Association, as
administrative agent for the Lenders (the “Administrative Agent”):

 

(a)         Each of the Credit Parties during the fiscal period referred to
above observed or performed in all material respects all of its covenants and
other agreements, and satisf1ed in all material respects every condition,
contained in the Credit Agreement to be observed, performed or satisfied by it.

 

(b)         I have obtained no knowledge of any Default or Event of Default
under the Credit Agreement; (1)

 

(c)          Attached hereto on Schedule 1  are calculations in reasonable
detail [(i)] demonstrating compliance by the Credit Parties with the financial
covenant contained in Section 5.9 of the Credit Agreement as of the last day of
the f1scal period referred to above and [(ii)  determining the Senior Leverage
Ratio as of the last day of the tlscal period referred to above to the extent
the Senior  Leverage Ratio meets the Senior Leverage Ratio Target].

 

(d)         Attached hereto on Schedule 2 is a certificate detailing the amount
of all Asset Dispositions that were made during the fiscal period referred to
above, and amounts received in connection with a Recovery Event during the
fiscal period referred to above.

 

(e)          [Attached hereto on Schedule 3 is an updated copy of Schedule 3.12
to the Credit Agreement.]’

 

--------------------------------------------------------------------------------

If a Default or Event of Default shall have occurred, an explanation of such
Default or Event of Default shall be provided on a separate page anached hereto
together with an explanation of the action taken or proposed to be taken by the
Borrower with respect thereto.

’             Attach Schedule 3 if the Borrower or any of its Subsidiaries has
formed or acquired a new Subsidiary since the Closing Date or since Schedule
3.12 to the Credit Agreement was last updated.

 

--------------------------------------------------------------------------------

 

(f)          (Attached hereto on Schedule 4 is an updated copy of Schedule 3.24
to the Credit Agreement.]’

 

(g)         [Attached hereto on Schedule 5 is an updated copy of Schedule 3.25
to the Credit Agreement.]’

 

(h)         The financial statements delivered for the fiscal period referred to
above present fairly the financial position of the Borrower and its Consolidated
Subsidiaries, for the periods indicated, in conformity  with GAAP applied on a
consistent basis.

 

Capitalized  terms  used herein and not defined herein shall have the meanings
assigned thereto in the Credit Agreement.

 

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

 

--------------------------------------------------------------------------------

Attach Schedule 4 if any new Material Contract has been entered into since the
Closing  Date or since Schedule 3.24 to the Credit Agreement was last updated
(together with a copy of such Material Contract(s)).

’             Attach Schedule 5 if the Borrower or any of its Subsidiaries has
altered or acquired any insurance policies since the Closing Date in any
material respect.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this officer’s compliance
certificate as of the day and year first above written.

 

 

THE PEP BOYS - MANNY, MOE & JACK,

 

a Pennsylvania corporation

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

Schedule I

 

Financial Covenant Calculations

 

Financial Covenant Calculation Worksheet

 

A.

 

Consolidated EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

Consolidated Net Income

 

1.

 

 

 

 

 

 

 

 

 

 

 

 

2.

Consolidated Interest Expense

 

2.

 

 

 

 

 

 

 

 

 

 

 

 

3.

tax expense (including, without limitation, any federal, state, local and
foreign income and similar taxes) of the Credit Parties and their Subsidiaries
for such period

 

3.

 

 

 

 

 

 

 

 

 

 

 

 

4.

depreciation and amortization expense of the Credit Parties and their
Subsidiaries tor such period

 

4.

 

 

 

 

 

 

 

 

 

 

 

 

5.

other non-cash charges (excluding reserves for future cash charges) of the
Credit Parties and their Subsidiaries for such period

 

5.

 

 

 

 

 

 

 

 

 

 

 

 

6.

the sum of Lines I through 5:

 

6.

 

 

 

 

 

 

 

 

 

 

 

 

7.

non-cash charges previously added back to Consolidated Net Income in determining
Consolidated EBITDA to the extent such non-cash charges have become cash charges
during such period

 

7.

 

 

 

 

 

 

 

 

 

 

 

 

8.

any other non-recurring cash or non-cash gains during such period

 

8.

 

 

 

 

 

 

 

 

 

 

 

 

9.

the sum of Lines 7 and g

 

9.

 

 

 

 

 

 

 

 

 

 

 

 

10.

Line 6 minus Line 9: Consolidated EBITDA

 

10.

 

 

 

--------------------------------------------------------------------------------

*Line I 0 must equal at least S 170 million.

 

--------------------------------------------------------------------------------

 

Schedule 2

 

Asset Dispositions/Recovery  Events

 

I.

 

Asset Dispositions

 

I.

 

 

 

 

 

II.

 

Recovery Events

 

II.

 

--------------------------------------------------------------------------------

 

Schedule 3

 

Schedule 3.12 to Credit Agreement

 

--------------------------------------------------------------------------------

 

 Schedule 4

 

Schedule 3.24 to Credit Agreement

 

[Please attach a copy of each Material Contract]

 

--------------------------------------------------------------------------------

 

 Schedule 5

 

Schedule 3.25 to Credit Agreement

 

--------------------------------------------------------------------------------

 

Schedule 5.2(a)(ii)

 

[FORM OF]

COLLATERAL VALUE REPORT

 

[Date]

 

For the fiscal [quarter][year] ended - - - - -                   ,           .

 

The undersigned, on behalf of The Pep Boys - Manny, Moe & Jack, a Pennsylvania
corporation (the “Borrower”), hereby certifies on behalf of the Credit Parties
that, with respect to the Amended and Restated Credit Agreement, dated as of
October [ ], 2006 (as amended, restated, amended and restated, or otherwise
modified, the “Credit Agreement”), by and among the Borrower, the Domestic
Subsidiaries of the Borrower from time to time patty thereto, the Lenders from
time to time party thereto, and Wachovia Bank, National Association, as
administrative agent for the Lenders (the “Administrative Agent”):

 

l.         The Collateral Value, as demonstrated by the calculations attached
hereto as Schedule l, is true and accurate on and as of the last day of the
fiscal period referred to above.

 

[Use the following paragraphs 2 and 3 for {a) substituting additional Properties
as Collateral for Properties previously pledged as Collateral or (b) releasing
certain Collateral, in each case pursuant to Section 5. 12.]

 

2.        No Default or Event of Default exists and is continuing on the date of
this Certificate, or after giving effect to the [substitution of
Collateral][release of Collateral] set forth on Schedule 2 (the
“(Replaced][Released] Collateral”).

 

3.        The total aggregate amount of all Replaced Collateral does not exceed
fifteen percent (15%) of the aggregate total value of the Collateral as
determined by the 2005 Appraisals, the 2006 Appraisals or such later appraisals
as may be required by the Administrative Agent.

 

4.        After giving effect to the Released Collateral (and any new Collateral
pledged in substitution therefore) the Collateral Value of the Mortgaged
Properties will be greater than or equal to 2.0 times the principal amount of
the then outstanding Term Loan and will be at least $150,000,000, as
demonstrated by the calculations attached hereto as Schedule 3.

 

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the day
and year first above written.

 

 

THE PEP BOYS - MANNY, MOE & JACK,

 

a Pennsylvania corporation

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

Schedule 1 Collateral Value

 

Calculation See attached.

 

[to be completed by the Borrower and subject to review by Administrative Agent]

 

--------------------------------------------------------------------------------

 

Schedule 2

 

[Replaced][Released] Collateral

 

[to be completed by the Borrower and subject to review by Administrative Agent]

 

--------------------------------------------------------------------------------

 

Schedule 3

 

Collateral V alue

 

(to be at least equal to 2.0 times the principal amount of the then outstanding
Term Loan)

 

I.

 

Collateral Value (See Schedule I calculations)’

 

 

 

 

 

 

 

II.

 

outstanding Term Loan

 

 

 

 

 

 

 

III.

 

I. equals at least 2.0 times II.

 

yes/no

 

--------------------------------------------------------------------------------

‘ Collateral Value should take into account any [Replaced][Released] Collateral
and any Collateral pledged in substitution therefore.

 

--------------------------------------------------------------------------------

 

Schedule 5.5(c)- O&M Plans

 

See attached.

 

--------------------------------------------------------------------------------

 

[g23582kn67i001.gif]

 

PEP BOYS STORE ASBESTOS POLICY

 

Prior to its identified hazards, asbestos was commonly used in construction and
general industry. For these reasons, Pep Boys has established the following
procedures to identify, manage, and when appropriate, remove asbestos containing
materials {ACM).

 

Real Estate Development

 

Since Pep Boys began 1t’s expansion in the early 1990’s, our extensive due
diligence process mandates that a Phase l Environmental Site Assessment is to be
performed on all properties, without exception When recommended by the
environmental consultant or if required by Pep Boys, a Phase II is also
performed. In new store remodels, it is Pep Boys’ policy to perform ACM studies,
regardless of the Phase I results. Based upon these results, any ACM that is
identified is to be removed in accordance with all local, state and federal
regulations.

 

Remodel Activity

 

Prior to a remodel of an existing store, an asbestos survey is to first take
place for ail stores constructed before 1980. If no asbestos is identified, Pep
Boys Environmental Department will sign-off for the remodel to begin. If any ACM
is found to be present, the following protocol must be followed

 

1.                           The condition of the ACM must be identified.

2.                           The scope of work for the remodel must be reviewed
to identify if any of the affected areas are to be altered many way

3.                           If the ACM is found to be in poor condition,
regardless of the extent of the remodel, it shall be removed m accordance With
all local, state and federal regulations

4.                           If the ACM 1s found to be in good condition, and
the scope of the remodel does not affect the ACM, the asbestos is labeled and an
Asbestos Management Plan is created for the store (see Attachment A for a sample
plan).

5                             If the ACM ts found to be in good condition and
the scope of the remodel encompasses the ACM, a determination must be made to
e1ther remove the ACM or alter the scope of work to exclude the remodel

 

3/Jl West AIIegheny Avenue· Philadelphia,
PA. 19132

215-430-9876 {phone) 215-430-4665 (fax)

 

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ATTACHMENT

 

A

 

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Health Building International, Inc.

 

HBI ASBESTOS OPERATIONS AND MAINTENANCE PROGRAM

 

Date of Site Visit: March 16, 2005

Date Report Issued: April 6, 2005

 

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Table of Contents

 

1  General Introduction

2

2  Administrative Policy and Procedures (Responsibility of Key Participants)

3

2.1  Building Owner Agent

3

2.2  Maintenance Workers

3

2.2.1  Class Ill Asbestos Work

3

2.2.2  Class Asbestos Work

5

2.2.3  Custodial and Routine Housekeeping Duties

7

3  Operations and Maintenance Program

8

3.1  Notification

8

3.1.1  Maintenance and Custodial Employees

8

3.1.2  Contractors

8

3.1.3  Building Occupants and Tenants

9

3.2  Surveillance

9

3.2.1  Re-inspection - (for sample form, refer to Appendix B. Form 1)

9

3.2.2  Visual Evaluation - (Appendix B Form 1 may be used)

10

3.2.3  Air Monitoring

10

3.3  Controls for Asbestos Containing Material - (for exact descriptions and
wording of signs and labels refer to Appendix I)

10

3.3.1  Floor Tile Mastic-Throughout most of retail area of site

10

3.3.2  Building Rooftop

11

3.3.3  Work Practices

11

3.3.4  Worker Protection

11

3.3.5  Protective Clothing

12

3.3.6  Operations and Maintenance Procedures

12

3.4  Record Keeping

13

3.4.1  Operations and Maintenance Plan

13

3.4.2  Asbestos Program Participants

13

3.5 Notification

13

3.6  Surveillance

14

3.7  Controls for Asbestos Containing Material

14

3.8  Work Practices

14

3.9  Training

14

 

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1 General Introduction

 

The purpose of an Asbestos Operations and Maintenance Program is to establish
and maintain a system which implements and documents an asbestos control program
in the building located at      . The steps taken to identify asbestos
containing material and associated hazards and to minimize the potential
exposure to employees and occupants of a building must be implemented, recorded
and maintained for future reference. It is the responsibility of the Asbestos
Program Manager(s) to establish and maintain the required controls and record
keeping system of the Operations and Maintenance Program.

 

Asbestos Program Manager

 

Authority for all asbestos related activities has been designated to:

 

The Asbestos Program Manager shall be, through training and experience, actively
involved and oversee all asbestos related activities.

 

Requisite training for the Asbestos Program Manager shall be E.P.A.
accreditation under the Asbestos Hazard Emergency Response Act (AHERA) and/or
state certification as a Building Inspector/Management Planner.

 

The Asbestos Program Manager shall either train or have training provided for
building workers in the techniques of the Operations and Maintenance Program.

 

The Asbestos Program Manager shall provide notification to tenants, employees
and contractors concerning any asbestos related issue. The tenants shall be
bound by written agreement or legal contract to inform the Asbestos Program
Manager of any renovation or demolition project undertaken by the tenant.

 

The Asbestos Program Manager shall be responsible to review and update the
Operations and Maintenance Program on an annual basis and an as needed basis.

 

--------------------------------------------------------------------------------

 

2 Administrative Policy and Procedures (Responsibility of Key Participants)

 

2.1 Building Owner Agent

 

Building owners of buildings constructed prior to 1981 are required to undertake
a number of measures regarding the possibility of asbestos containing materials
in their facility. Per A.S.H.A. Asbestos Construction Standard 29 CFR 1926.110 1
(k) (2) “building and facility owners shall determine the presence, location and
quantity of Asbestos Containing Material (ACM) and/or Presumed Asbestos
Containing Material (PACM).” Identification and recordkeeping of potential
hazards is required. Notification by means of signage to warn of potential
asbestos hazards as well as the communication of information as to potential
asbestos hazards is required. If work is to be performed involving asbestos
containing material(s), the building owner (agent) shall ensure that only
qualified asbestos contractors may conduct the work and that all required
notifications to local, state, and federal agencies have been completed.

 

2.2 Maintenance Workers

 

2.2.1 Class III Asbestos Work

 

Employees who, during the course of their work, do repair and maintenance
operations where ACM or PACM is likely to be disturbed must be protected from
exposure to asbestos fibers. The work as described above is classified a
Class III asbestos work under the A.S.H.A. Asbestos Construction Standard 29 CFR
1926.1101 (g) (9).

 

Under this regulation an operation fitting this description must be conducted
and demarcated within a regulated area. The use of signs, critical barriers or
negative pressure enclosures are considered adequate methods of demarcation.

 

Proper training and respiratory protection of workers is required where the
A.S.H.A. Permissible Exposure Limit (PEL) of 0.1 fibers per cubic centimeter of
air as an 8 hour time weighted average or 1.0 fibers per cubic centimeter of air
during a 30 minute period is expected to be exceeded as a result of the work.

 

Eating, drinking, smoking, chewing tobacco or gum, or applying cosmetics in the
regulated area is not permitted.

 

A competent person must supervise all work involving the disturbance of ACM or
PACM. A competent person is an employee who is knowledgeable about construction
safety and health and who is capable of identifying asbestos hazards, selecting
the appropriate control strategy, and will take prompt action to correct or
eliminate problems. The competent person who supervises Class III asbestos work
must receive training equivalent to EPA’s 16 hour operations and maintenance
training and an annual refresher training at no cost to the employee.

 

Training must focus on the locations of suspect materials, work practices, job
assessment and methods of control.

 

An initial exposure assessment must be conducted by a competent person to
determine whether or not airborne asbestos fibers in excess of the PEL may be
present.

 

The following work practices and engineering controls are required for all
Class ill work:

 

(1)           Vacuum cleaners with HEPA filters

 

(2)           Wet methods or wetting agents

 

(3)           Clean-up and disposal using leak tight containers

 

--------------------------------------------------------------------------------

 

(4)           Impermeable drop cloths and isolation methods such as
mini-enclosures or glove bag systems must be used where the disturbance involves
drilling, cutting, abrading, sanding, chipping, breaking or sawing ACM or PACM.

 

(5)           The work area must be contained using a critical barrier or the
operation must be isolated using a control system such as a negative pressure
enclosure or glove bag.

 

Protective clothing is required when it is expected that the PEL will be
exceeded by the work or where a negative exposure assessment is not produced.

 

Hygiene practices are required when it is expected that the PEL will be exceeded
by the work or where a negative exposure assessment is not produced. Hygiene
practices include an equipment room or decontamination area, which guards
against contamination beyond the work area. Work clothing must be vacuumed and
equipment must be cleaned prior to removal from the work area.

 

Employees who perform Class ill asbestos work must receive 16 hours of EPA
required operations and maintenance training. The training shall be equivalent
in curriculum, method and length to the EPA Model Accreditation Plan. Annual
refresher training for this group is required without specific duration.

 

Medical surveillance is required for all workers who perform Class I, II, ill
work for a cumulative total of 30 days or more per year, or whoever wears a
negative pressure respirator, or who ever is exposed above the PEL for 30 days
or more per year. The 30 day limit excludes days in which less than one hour is
spent in Class ill work when required work practices are followed.

 

The following work practices are prohibited:

 

(1)           The use of high abrasive disk saws without HEPA filtered exhausts
or point-of-cut ventilators.

 

(2)           The use of compressed air without an enclosed ventilation system
such as a capturing device.

 

(3)           Dry sweeping, shoveling or other dry clean-up method.

 

(4)           Employee rotation to circumvent the PEL.

 

For workers who do any Class ill asbestos work where an initial exposure
assessment indicates the possibility that airborne asbestos fibers may exceed
the PEL of 0.1 fibers per cubic centimeter of air as an 8 hour time weighted
average or 1.0 fibers per cubic centimeter of air during a 30 minute period, the
following applies:

 

(1)           Air sampling that represents a full shift exposure must be
conducted periodically over the course of a job to determine accurate
concentrations of airborne asbestos fibers. (Air monitoring may be discontinued
if it shows exposure to asbestos fiber concentrations less than the PEL and this
condition is expected to continue.)

 

(2)           Appropriate respirators are required (refer to Appendix E
Respiratory Protection Recommendations)

 

(3)           Appropriate protective work clothing and equipment, at no cost to
the employee, must be provided.

 

(4)           An equipment room or area must be established next to the
regulated area for decontamination of employees and their equipment. All
personal protective equipment and clothing must be decontaminated and all
persons must enter and exit the regulated area through the
equipment/decontamination area.

 

--------------------------------------------------------------------------------

 

(5)           The regulated work area must be enclosed by critical barriers or
the work operation must be isolated using a control system such as glove bags or
a negative pressure enclosure. Ventilation and dust collection systems must be
equipped with HEPA filters.

 

(6)           Medical surveillance is required for all workers who wear negative
pressure respirators or who do Class I, II, or ill asbestos work for 30 or more
days per year. Days in which less than one hour is spent in Class ill asbestos
work when work practices are followed are not included in the accumulation of 30
days per year.

 

2.2.2 Class IV Asbestos Work

 

Employees who, during the course of their work, may clean up dust or debris
after work that involved disturbance or removal of ACM or PACM must be protected
from exposure to asbestos fibers. The work as described above is classified as
Class IV asbestos work under the A.S.H.A. Asbestos Construction Standard 29 CFR
1926.1101 (g) (10), if the work is the result of Class I, II or ill asbestos
work.

 

Under the regulation as described above, a competent person must supervise all
Class IV asbestos work involving contact with and clean up of ACM or PACM. A
competent person is an employee who has received specialized training to
identify asbestos hazards, to select the best control strategy and to take
prompt action to correct or eliminate problems. The competent person who
supervises Class IV asbestos work must receive training equivalent to EPA’s 16
hour operation and maintenance training and annual refresher training at no cost
to the employee. Training must focus on the locations of suspect materials, work
practices, job assessment and methods of control.

 

An initial exposure assessment must be conducted by a competent person to
determine whether or not airborne asbestos fibers in excess of the PEL may be
present.

 

Employees who do asbestos construction clean up work must receive annual
asbestos hazard awareness training at no cost to the employee.

 

Smoking is not allowed in the work area.

 

Wet methods and/or wetting agents and appropriate work practices must be
followed.

 

HEPA vacuums must be used.

 

Prompt clean up and disposal of debris in leak proof containers is required.

 

The following work practices are prohibited:

 

(1)  The use of high speed abrasive disk saws without HEPA filtered exhausts or
point of cut ventilator.

 

(2)  The use of compressed air without a capture device.

 

(3)  Dry sweeping, shoveling or other dry clean up method.

 

(4)  Employee rotation to circumvent the PEL.

 

(5) Medical surveillance is required for all workers doing Class IV asbestos
work who are exposed to asbestos above the PEL for 30 days or more per year. The
30 day requirement excludes days in which less than one hour is spent in
Class III asbestos work when required work practices are followed.

 

For workers who clean up any job where the exposure assessment (refer to
Appendix J) indicates the possibility that airborne asbestos fibers may exceed
the PEL of 0.1 fibers per cubic centimeter of air over an 8 hour time weighted
average or 1.0 fiber per cubic centimeter of air averaged over a 30 minute
period.

 

--------------------------------------------------------------------------------

 

(1)           Periodic exposure monitoring, which represents full shift
exposures, must be performed at the work area to determine the airborne asbestos
fiber concentration. Monitoring may be discontinued if it shows asbestos fiber
concentrations less than the PEL.

 

(2)           Negative pressure air purifying respirators or higher level
protection are required. (Refer to Appendix E Respiratory Protection
Recommendations)

 

(3)           Appropriate protective work clothing and equipment must be
provided at no cost to the employee.

 

(4)           Work clothing must be HEPA vacuumed and equipment decontaminated
on a plastic drop cloth. If Class IV clean up takes place in a regulated area,
the clean up must comply with the hygiene required in a higher classification of
asbestos work.

 

(5) A regulated area must be established and demarcated in any manner that
minimizes the number of persons in the area and protects persons outside the
area from exposure to airborne asbestos. Signs must be provided and displayed.

 

(6)           Medical surveillance is required for all workers doing Class IV
work who are exposed to asbestos above the PEL for 30 days or more per year. The
30 day requirement excludes days in which less than one hour is spent in
Class III work when the required work practices are followed.

 

2.2.3 Custodial and Routine Housekeeping Duties

 

Employees who perform routine custodial duties that involve working near or
cleaning known ACM or PACM that is not enclosed, sealed or otherwise protected
from release of asbestos fibers into the air are covered by the O.S.H.A. General
Industry Standard for Asbestos 29 CPR 1910.1001.

 

The affected workers must be provided with asbestos awareness training each
year. The course must be provided at no cost to the employee. The course must
cover the health effects of asbestos exposure, the hazards of smoking and
asbestos, the use of respirators, the locations of asbestos materials and signs
of damage, and who to notify and what procedures to follow should such materials
be dislodged or become non-intact. This training must be provided regardless of
the expected exposure levels to housekeepers.

 

If it can be reasonably expected that any of your housekeeping employees may be
exposed in excess of a PEL, then the following must be done:

 

(I)            Air monitoring according to the O.S.H.A. General Industry
Standard for Asbestos to accurately determine the airborne concentration of
asbestos fibers.

 

(2)           Provide employees with medical surveillance. A medical
surveillance program requires the worker to complete a health questionnaire and
may include a physical examination at no cost to the employee. Exposure and
medical surveillance records must be kept for the duration of employment plus 30
years.

 

(3)           Access to areas of expected over exposure shall be restricted.

 

(4)           An annual asbestos awareness course must be provided at no cost to
the employee. The course must cover the health effects of asbestos exposure,
hazards of asbestos and smoking, use of respirators, locations of asbestos
materials and signs of their damage, how to respond to asbestos exposure and
required housekeeping work practices.

 

Provide appropriate respirators and protective clothing at no cost to employees
to use while working in the areas of potential over exposure. Respirators must
be equipped with HEPA filters.

 

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3 Operations and Maintenance Program

 

3.1 Notification

 

A system to inform workers, tenants, and building occupants where ACM or PACM is
located, how to avoid disturbing the material. Before construction activity,
including maintenance, repair or renovation is undertaken, information regarding
the presence, location and quantity of ACM or PACM must be provided to those who
may come in contact with the material. Building occupants should be informed of
any potential hazard in their vicinity. Building owners (agent) may inform
building occupants by written notices, posting signs or labels in a central
location where affected occupants can see them, and holding awareness or
information sessions.

 

3.1.1 Maintenance and Custodial Employees

 

Information regarding the location of ACM or PACM which may be disturbed during
the course of their work.

 

The condition of the ACM or PACM and the response in the form of protective
measures required in the vicinity of such material.

 

Convey the fact that asbestos only presents a health hazard when the fibers
become airborne and are inhaled. The mere presence of ACM or PACM does not
represent a health hazard.

 

Do not intentionally disturb ACM or PACM.

 

Report any evidence of disturbance, damage or deterioration of ACM or PACM to
the Asbestos Program Manager.

 

Take special precautions to properly clean up any asbestos debris which may be
discovered.

 

3.1.2 Contractors

 

Information regarding the location of ACM or PACM which may be disturbed during
the course of their work.

 

The condition of the ACM or PACM and the response in the form of protective
measures required in the vicinity of such material.

 

Convey the fact that asbestos only presents a health hazard when the fibers
become airborne and are inhaled. The mere presence of ACM or PACM does not
represent a health hazard.

 

Do not intentionally disturb ACM or PACM.

 

Report any evidence disturbance, damage or deterioration to the Asbestos Program
manager.

 

Notify the Asbestos Program Manager as soon as possible of any dust or debris
that might come from ACM or PACM, any change in the condition of the ACM or
PACM, or any improper action (relative to ACM or PACM) of building personnel.

 

Convey that all ACM or PACM is inspected periodically and additional measures
will be taken if needed to protect the health of the building occupants.

 

--------------------------------------------------------------------------------

 

3.1.3 Building Occupants and Tenants

 

Information regarding the location of ACM or PACM which may be disturbed during
the course of their work.

 

The condition of the ACM or PACM and the response in the form of protective
measures required in the vicinity of such material.

 

Convey the fact that asbestos only presents a health hazard when the fibers
become airborne and are inhaled. The mere presence of ACM or PACM does not
represent a health hazard.

 

Do not intentionally disturb ACM or PACM.

 

Report any evidence of disturbance, damage or deterioration of ACM or PACM to
the Asbestos Program Manager.

 

Notify the Asbestos Program Manager as soon as possible of any dust or debris
that might come from ACM or PACM, any change in the condition of the ACM or
PACM, or any improper action (relative to ACM or PACM) of building personnel.

 

Convey that all ACM or PACM is inspected periodically and additional measures
will be taken if needed to protect the health of the building occupants.

 

3.2 Surveillance

 

3.2.1 Re-inspection (for sample form, refer to Appendix B. Form 1)

 

A visual inspection accompanied by an assessment of the condition of each type
of ACM or PACM shall be done at least every 3 years.

 

The reinsertion shall be performed by an accredited asbestos inspector or the
asbestos program manager.

 

Recommendations on the course of action regarding the ACM or PACM shall be
provided.

 

Air monitoring for the presence of airborne asbestos fibers should be performed
in conjunction with the re-inspection.

 

Documentation of the re-inspection must be incorporated into the Operations and
Maintenance Program.

 

3.2.2 Visual Evaluation -(Appendix B Form 1 may be  used)

 

Every six months, a visual evaluation of the ACM or PACM shall be performed.

 

The visual evaluation may be performed by custodial or maintenance staff with
sufficient asbestos awareness training, typically 16 hour asbestos awareness
training.

 

Air monitoring for the presence of airborne asbestos fibers may be performed in
conjunction with the visual evaluation.

 

Observations and any changes in condition should be noted and reported to the
Asbestos Program Manager.

 

Documentation of the visual observations must be incorporated into the
Operations and Maintenance Program.

 

3.2.3 Air Monitoring

 

Air monitoring for the presence of airborne asbestos fibers should be performed
in conjunction with the re-inspection of ACM or PACM.

 

--------------------------------------------------------------------------------

 

Air monitoring may be performed at any time in the vicinity of known asbestos
containing material.

 

Observations in the condition of ACM or PACM in the vicinity of the air
monitoring shall be done.

 

A knowledgeable and experienced individual should be consulted to design a
proper air sampling strategy.

 

Documentation of the observations and air analysis results must be incorporated
into the Operations and Maintenance Program.

 

Note: Air monitoring does not replace re-inspection and visual evaluation.

 

3.3           Controls for Asbestos Containing Material -(for exact descriptions
and wording of signs and labels refer to Appendix I)

 

3.3.1 Floor Tile Mastic -Throughout most of retail area of site

 

The material in this group is the mastic or glue that holds the floor tile to
the floor. This material is enclosed by the adhering floor tile. Periodic
monitoring of the adhering floor tile to ensure that it has not become damaged
is all that is necessary. If the adhering floor tile does become damaged, the
affected area should be repaired using a non-asbestos patch or replacement
material. The floor tile mastic is a non-friable material and was found to be in
good condition. It is recommended that if a renovation is to be performed in the
same areas as the floor tile mastic, consideration should be given to removing
floor tile mastic.

 

3.3.2 Building Rooftop

 

Sampling of roofing components can be problematic. Over time it is not unusual
for rooftops to undergo repeated repairs, both major and minor. These repairs
can range from an almost complete replacement to a minimal patch with roofing
tar, sealant compound, flue tape, etc. With weathering, it is difficult to
distinguish new from old or original components. Further, if sampling involves
even a minimum amount of rooftop penetration, this can raise liability and
insurance concerns.

 

For these reasons, HBI generally does not sample roofing materials unless they
are relatively “safe” samples to take; examples might include a “pinch” of a
sealant/compound or putty or piece of tape sealant. Where such samples were
taken they are generally not friable and are not readily accessible and
currently do not pose a significant health hazard. However, these materials
should be periodically inspected and if they should become friable, then they
become a regulated asbestos containing material with more stringent
requirements.

 

Long term however, with roofing materials generally not sampled, roofs should be
“assumed” to have asbestos containing materials. This becomes an important issue
if rooftop work involving significant disturbance, component removal, or any
sort of destructive activities is to be performed. If any such projects are
planned, an asbestos inspection of the rooftop will need to take place and
identified asbestos containing components will need to be properly removed.

 

3.3.3 Work Practices

 

All work by employees or contractors to be performed in the vicinity of ACM or
PACM shall have:

 

An Application for Maintenance Work (refer to Appendix B. Form 2) must be
properly filled out and signed by the Asbestos Program Manager.

 

A Maintenance Work Authorization Form (refer to Appendix C. Form 1) must be
properly filled out and signed by the Asbestos Program Manager.

 

--------------------------------------------------------------------------------

 

An Evaluation of Work Affecting ACM or PACM (refer to Appendix C. Form 2) must
be properly filled out and signed by the Asbestos Program Manager.

 

3.3.4 Worker Protection

 

Respiratory Protection - (refer to Appendix E Respiratory Protection
Recommendations)

 

Appropriate respirators shall be made available to employees who perform certain
activities which may reasonably expose them to asbestos fibers. (Typically a
NIOSH and MSHA approved half-face or full-face negative pressure, air purifying
respirator equipped with HEP A canister filters for asbestos dusts, mists and
fumes)

 

A respiratory protection program shall be developed according to the O.S.H.A.
respirator standard 29 CFR 1910.134 and should include:

 

(a) written operating procedure for respirator use

 

(b) personnel responsibilities for respirator cleaning, storage and repair

 

(c) medical examinations of workers for respirator use

 

(d) training in proper respirator use and limitations

 

(e) respirator fit testing

 

(f)  respirator cleaning and care

 

(g) work site supervision

 

Air monitoring shall be performed in the form of personal air sampling to verify
that the respirator protection level is adequate.

 

The respiratory protection program shall be administered by the Asbestos Program
Manager.

 

3.3.5 Protective Clothing

 

Protective clothing consists of coveralls, a head cover and foot cover made of a
synthetic fabric which does not allow asbestos fibers to pass through.

 

Workers shall wear protective clothing whenever they are exposed or likely to be
exposed to asbestos fiber levels above the A.S.H.A. PEL.

 

3.3.6 Operations and Maintenance Procedures

 

(a) Activities in the vicinity of ACM or PACM which are unlikely to involve
direct disturbance of ACM or PACM such as wiping, dusting or sweeping.

 

Wet methods or wetting agents shall be used.

 

HEPA vacuums should be used to sweep up any dust or debris.

 

(b) Where the disturbance involves drilling, cutting, abrading, sanding,
chipping, breaking or sawing ACM or PACM, impermeable drop cloths and isolation
methods such as mini-enclosures or glove bag systems must be used.

 

--------------------------------------------------------------------------------

 

The work area must be contained using a critical barrier or the operation must
be isolated using a control system such as a negative pressure enclosure or
glove bag. Provide appropriate respirators and protective clothing at no cost to
employees to use while working in the areas of potential over exposure.
Respirators must be equipped with HEPA filters.

 

(c) Asbestos Fiber Release Episodes (Involving more than three square or linear
feet of ACM or PACM):

 

Notification of asbestos program manager as soon as possible

 

Isolation of the area by closing doors and/or erecting temporary barriers.

 

Signs shall be posted immediately outside the fiber release site to prevent
persons not involved in the clean up from entering.

 

If necessary, the HVAC system shall be modified or shut down and sealed off.

 

Thorough clean up procedures, careful visual inspection and final clearance air
monitoring to verify satisfactory clean up.

 

Documentation of how episode occurred, measurements taken and final verification
of satisfactory clean-up shall be done.

 

3.4 Record Keeping

 

3.4.1 Operations and Maintenance Plan

 

The Asbestos Operations and Maintenance Plan along with the designated Asbestos
Program Manager, Address, Phone Number shall be kept updated and on file.

 

Previous inspection and assessment reports shall be kept on file

 

Documentation regarding the removal of ACM or PACM shall be kept on file.

 

Drawings and/or sketches identifying the locations of ACM or PACM shall be kept
on file.

 

3.4.2 Asbestos Program Participants

 

The name, address and phone number of the building owner (agent) shall be kept
updated and on file.

 

Any and all accreditation and training certifications of the Asbestos Program
Manager, maintenance workers and custodial staff for asbestos shall be updated
annually and kept on file.

 

Personal air monitoring documentation shall be kept on file for the length of
employment plus 30 years.

 

Documentation of medical surveillance records for any employee shall be kept on
file for the length of employment plus 30 years.

 

Documentation for any employee required to wear a respirator shall be updated
annually and kept on file.

 

3.5 Notification

 

Any and all documentation regarding the notification of employees, workers,
contractors, tenants or building occupants of the presence, location and
quantity of ACM or PACM shall be kept on file.

 

--------------------------------------------------------------------------------

 

3.6 Surveillance

 

Any and all asbestos re-inspection documentation shall update the Asbestos
Operations and Maintenance Program and be kept on file.

 

Any and all asbestos visual evaluation documentation shall update the Asbestos
Operations and Maintenance Program and be kept on file.

 

Any and all air monitoring documentation for asbestos shall be kept on file.

 

3.7 Controls for Asbestos Containing Material

 

Any and all actions taken to repair ACM or PACM shall be documented and the
Asbestos Operations and Maintenance Program shall be updated and kept on file.

 

Any and all actions taken to abate ACM or PACM in the form of removal,
encapsulation or enclosure shall be documented and the Asbestos Operations and
Maintenance Program updated and kept on file.

 

Any and all documentation regarding an asbestos fiber release episode shall be
kept on file.

 

3.8 Work Practices

 

If any employee is required to wear a respirator, a respiratory protection
program shall be developed according to O.S.H.A. respirator standard 29 CPR
1910.134 updated as necessary and kept on file

 

Work procedures for employees who work in the vicinity of ACM or PACM, but are
unlikely to disturb ACM or PACM shall be developed, updated as necessary and
kept on file.

 

Work procedures for employees who work in the vicinity of ACM or PACM and may
disturb ACM or PACM shall be developed, updated as necessary and kept on file.

 

Work procedures for employees whose activities involve the disturbance of ACM or
PACM shall be developed, updated as necessary and kept on file.

 

Procedures for an accidental asbestos fiber release episode shall be developed,
updated as necessary and kept on file.

 

3.9 Training

 

Awareness Training for employees who are required to perform cleaning and simple
maintenance tasks where ACM or PACM may be accidentally disturbed. (2 to 8 hour
training)

 

(1) Background information on asbestos.

 

(2)           Health effects of asbestos.

 

(3)           Worker protection programs.

 

(4)           Locations of ACM or PACM in buildings.

 

(5)           Recognition of ACM or PACM damage and deterioration.

 

(6)           Operations and Maintenance Program.

 

(7)           Proper response to fiber release episodes.

 

--------------------------------------------------------------------------------

 

Operations and Maintenance Training -for employees who are required to repair or
remove small sections of ACM or PACM. (16 hour training)

 

(1)           Federal, State and local asbestos regulations.

 

(2)           Proper asbestos related work practices.

 

(3)           Descriptions of the proper methods of handling ACM or PACM,
inducing waste handling and disposal.

 

(4)           Respirator use, care and fit-testing.

 

(5)           Protective clothing donning, use and handling.

 

(6)           Hands-on exercises for techniques such as glove bag work and HEPA
vacuum use and maintenance.

 

(7)           Appropriate and proper worker decontamination procedures.

 

--------------------------------------------------------------------------------

 

APPENDIX A

 

Glossary

 

Asbestos -includes chrysotile, amosite, crocidolite, tremolite asbestos,
anthophyllite asbestos, actinolite asbestos.

 

Asbestos Containing Material (ACM) -Any material that contains more than 1%
asbestos.

 

Asbestos Program Manager -A building owner or designated representative who
supervises all aspects of the facility asbestos management and control program.

 

Friable Asbestos -Any materials that contain greater than 1 % asbestos, and can
be crumbled, pulverized or reduced to powder by hand pressure. Previously
non-friable material may become broken or damaged by mechanical force and thus
rendered friable.

 

HEPA Filter -High Efficiency Particulate Air filter rated to trap 99.97% of all
particles 0.3 microns or larger.

 

Medical Surveillance -A periodic comprehensive review of a worker’s health
status. The required elements of an acceptable medical surveillance program are
listed in the O.S.H.A. standards for asbestos.

 

NIOSH -The National Institute for Occupational Safety and Health which conducts
research, issues technical information and tests and certifies respirators.

 

Personal Air Samples -An air sample taken with a sampling pump directly attached
to the worker with the collecting filter and cassette placed in the worker’s
breathing zone.

 

Presumed Asbestos Containing Material (PACM) -Thermal system insulation,
surfacing material and vinyl/asphalt flooring materials in a building built or
renovated before 1981 and not tested for asbestos content.

 

Regulated Area -An area established to demarcate where Class I, II, III asbestos
work is conducted and any adjoining area where debris and waste from such
asbestos work may accumulate and a work area within which the airborne
concentrations of asbestos may exceed or there is a reasonable possibility they
may exceed the PEL.

 

--------------------------------------------------------------------------------

 

APPENDIX B

Sample Record Keeping Forms

 

Form 1: A sample form for recording information during ACM reassessment

 

Re-inspection of Asbestos-Containing Materials

 

Location of asbestos-containing material (address, building, room, or general
description):

 

Type of asbestos-containing material(s):

 

1. Sprayed-or ceilings or walls

 

2. Sprayed-or troweled-on structural members

 

3. Insulation pipes, tanks, or boiler

 

4. Other (describe):

 

Abatement Status:

 

1. The material has been encapsulated enclosed neither removed

 

Assessment:

 

1. Evidence of physical damage:

 

2. Evidence of water damage:

 

3. Evidence delamination or other damage:

 

4. Degree of accessibility of the material:

 

5. Degree of activity near the material:

 

6. Location in an air plenum, air shaft or airstream:

 

7. Other observations (including the condition of the encapsulant or enclosure
if any):

 

*Recommended Action:

 

Signed: Date:     (Evaluator)

 

--------------------------------------------------------------------------------

 

Form 2: A sample application form for maintenance work approval

 

Job Request Form for Maintenance Work

 

Name: Date:

 

Telephone No. Job Request No. 

 

Requested starting date: Anticipated finish date:

 

Address, building, and room number(s) (or description of area) where work is to
be performed:

 

Description of work:

 

Description of any asbestos-containing material that might be affected, if known
(include location and type):

 

Name and telephone number of requestor:

 

Name and telephone number of supervisor:

 

Submit this application to:

(The Asbestos Program Manager)

 

NOTE: An application must be submitted for all maintenance work whether or not
asbestos-containing material might be affected. An authorization must then be
received before any work can proceed.

 

Granted (Job Request No)

With conditions*

Denied

 

--------------------------------------------------------------------------------

*Conditions

 

--------------------------------------------------------------------------------

 

APPENDIX C

 

Form 1: A sample maintenance work authorization form

 

Maintenance Work Authorization Form No.

 

Authorization

 

Authorization is given to proceed with the following maintenance work:

 

Presence of Asbestos Containing Materials

Asbestos-containing materials are not present in the vicinity of the maintenance
work.

 

ACM is present, but its disturbance is not anticipated; however if conditions
change, the Asbestos Program Manager will reevaluate the work request prior to
proceeding.

 

ACM is present, and may be disturbed.

 

Work Practices if Asbestos-Containing Materials Are Present

 

The following. work practices shall be employed to avoid or minimize disturbing
asbestos:

 

Personal Protection if Asbestos-Containing Materials Are Present

The following equipment/clothes shall be used / worn during the work to protect
workers:

(Manual on personal protection can be referenced)

 

Special Practices and/or Equipment Required:

Signed: Date:     (Asbestos Program Manager)

 

--------------------------------------------------------------------------------

 

Form 2. As sample work evaluation form

 

Evaluation of Work Affecti9ng Asbestos-Containing Materials

 

This evaluation covers the following maintenance work:

 

Location of work (address. building. room number(s). or general description):

 

Date(s) of work:

 

Description of work:

 

Work approval form number:

 

Evaluation of work practices employed to minimize disturbance of asbestos:

 

Evaluation of work practices employed to contain released fibers and to clean up
the work area:

 

Evaluation of equipment and procedures used to protect workers:

 

Personal air monitoring results (in-house worker or contract?)

Worker Name Results:

Worker Name Results:

 

Handling or storage of ACM waste:

Signed: Date:     (Asbestos Program Manager)

 

--------------------------------------------------------------------------------

 

APPENDIX D

 

Additional Assistance and Training

 

EPA Regional Contacts

 

Additional assistance can be obtained from your U.S. EPA Regional Asbestos
Coordinators. NESHAP Regional Coordinators and OSHA Regional Offices. Their
telephone numbers are listed below:

 

EPA Region 1: (CT, ME, MA,.NH, RI, VT)
Asbestos Coordinator (617) 565-3835
NESHAP Coordinator (617) 565-3265

 

EPA Region II: (NJ, NY, PR, VI)
Asbestos Coordinator (201) 321-6671
NESHAP Coordinator (212) 264-6770

 

EPA Region III: (DE, DC, MD, PA, VA, WV)
Asbestos Coordinator (215) 597-3160
NESHAP Coordinator (215) 597-6550

 

EPA Region IV: (AL, FL, GJ\. KY, MS, NC, SC, TN)
Asbestos Coordinator (404) 347-5014
NESHAP Coordinator (404) 347-2904

 

EPA Region V: (IL, IN, MI, MN, OH, WI)
Asbestos Coordinator (312) 886-6003
NESHAP Coordinator (312) 353-2088

 

EPA Region VI: (AR, LA, NM, OK, TX)
Asbestos Coordinator (214) 655-7244
NESHAP Coordinator (214) 655-7229

 

EPA Region VII: (lA, KS, MO, NE)
Asbestos Coordinator (913) 551-7020
NESHAP Coordinator (913) 551-7020

 

EPA Region VIII: (CO, MT, ND, SD, UT, WY)
Asbestos Coordinator (303) 293-1442
NESHAP Coordinator (303) 294-7685

 

EPA Region IX: (AZ, CA, HI, NV, AS, aU)
Asbestos Coordinator (415) 556-5406
NESHAP Coordinator (415) 556-5526

 

EPA Region X: (AK, ID, OR, WA)
Asbestos Coordinator (206) 442-4762
NESHAP Coordinator (206) 442-1757

 

--------------------------------------------------------------------------------

 

OSHA REGIONAL OFFICES
Region 1-Boston, MA: (617) 223-6710
Region II -New York, NY: (212) 944-3432
Region II1-Philadelphia, PA: (215) 596-1201 
Region IV -Atlanta, GA: (404) 347-3573 
Region V -Chicago, 11: (312) 353-2220 
Region VI -Dallas, TX: (214) 767 4731 
Region VII -Kansas City, MO: (816) 374-5861
Region VIII Denver, CO: (303) 844-3061
Region IX -San Francisco, CA: (415) 995-5672
Region X -Seattle, WA: (206) 442-5930

 

Toxic Substances Control Act (TSCA)
Assistance Hotline

 

Copies of the EPA Guidance Documents, Technical Bulletins and other publications
cited here can be obtained by calling the TSCA Assistance Hotline, in Washington
DC: (202) 554-1404.

 

Approved Training Centers

 

Certain training centers and satellite centers were initially funded by EPA to
develop asbestos training courses. They, and other training providers approved
by EPA or states, offer courses for professionals such as asbestos inspectors
and management planners involved with ACM detection and control, for asbestos
abatement project designers, project supervisors and abatement workers, and
others. In general, qualified professionals trained as inspectors and asbestos
management planners would be good choices to design an O&M plan. Original
training centers are located at the following sites:

 

Georgia Institute of Technology
GTRIIEDUESTD
29 O’Keefe Building
Atlanta, GA 30332
(404) 894-3806

 

Tufts University
Curtis Hall
Asbestos Information Center
474 Boston Avenue
Medford, MA 02155
(617) 381-3531

 

University of Kansas Asbestos
Training Center 6600 College
Blvd. Suite 315
Overland Park, KS 66211
(913) 491-0181

 

University of Illinois at Chicago
Midwest Asbestos Information
Center Box 6998
Chicago, IL 60680
(311) 996-6904

 

--------------------------------------------------------------------------------

 

Pacific Asbestos Information
Center University Cal Extension
2223 Fulton Street
Berkeley, CA 94720
(415) 643-7143

 

Additional training providers are listed in the Federal Register on a regular
basis. Call (202) 554-1404 for information. In addition, information on how to
receive a copy of an O&M Course produced by an EPA contractor may be obtained at
the same number.

 

OTHER ORGANIZATIONS
National Conference of State Legislatures (NCSL) Denver, CO
(303) 623-7800
National Institute of Building Sciences (NIBS) Washington, DC -(202) 289-7800
American Board of Industrial Hygiene (ABIH)
Lansing, MI -(517) 321-2638
National Institute for Standards and Technology (NIST) Gaithersburg, MD
-(contact for lab accreditation)
(301) 975-4016

 

--------------------------------------------------------------------------------

 

APENDIX E

 

Respiratory Protection Recommendations

 

EPA recommends that the following guidelines be followed for respiratory
protection during various custodial and maintenance tasks. These guidelines are
issued to cover tasks that do not always create routine fiber levels high enough
to trigger OSHA respiratory protection requirements. Therefore, building owners
should note they go beyond OSHA requirements

 

· Routine maintenance where contact with ACM is unlikely. No respiratory
protection required. (Air-purifying respirator with high-efficiency filters
should be available if needed; half-face or full face piece).

 

· Routine maintenance where there is reasonable likelihood of ACM disturbance.
Air-purifying respirator with high efficiency filters (half-face or full face
piece).

 

· Maintenance or repair involving intentional small-scale disturbance of ACM.
Powered air-purifying respirator with high-efficiency filters or air-purifying
respirator with high efficiency filters (half-face or full face-piece). If glove
bags are used to contain the ACM during disturbance, either half-face or full
face piece air-purifying respirators with high-efficiency filters may be used.

 

· Any O&M activity requiring sawing, cutting, drilling, abrading, grinding, or
sanding ACM. (NOTE: specially equipped tools with local exhaust ventilation
should be used for these activities. See 29 CFR 1910.) Powered air-purifying
respirator with high-efficiency filters, or full face piece, air purifying
respirator equipped with high-efficiency filters should be used.

 

· Cleanup after a minor asbestos fiber release. Air-purifying respirator with
high-efficiency filters (half-face or full face piece).

 

· Cleanup after a major asbestos fiber release. Air-supplied respirators, either
the “Type C” airline respirator equipped with a backup high-efficiency filter or
SCBA (Self-Contained Breathing Apparatus).

 

The U.S. EPA, in collaboration with NIOSH, has issued a guidance document, “A
Guide to Respiratory Protection for the Asbestos Abatement Industry,” which
recommends levels of respiratory protection for those engaged in large-scale
asbestos abatement projects that are beyond routine O&M procedures. Air-supplied
self-contained and “type C” airline respirators are the focus of the EPAINIOSH
document. These respirators allow workers to breathe fresh air supplied through
hoses and face masks, and are generally used only by asbestos abatement workers
engaged in large-scale asbestos removal projects. They are usually not
considered either practical or necessary for most custodial and maintenance
jobs.

 

An industrial hygienist or environmental/occupational health professional should
assist workers with respirator selection and fitting, and train them in
respirator use. Fit-testing (which means determining whether a particular brand
and size c respirator properly fits an individual worker) is essential, sine
respirators which leak at the face seal provide significantly leg protection.
OSHA requires fit-testing initially and every month employees are required to
wear a negative pressure respirator for protection against asbestos, or for
individual exposed at or above the OSHA-specified limits.

 

A respirator’s effectiveness is also influenced by how it is handled, cleaned,
and stored. Custodial and maintenance staff should clean their respirators after
each use, and disinfect their respirators at the end of a day’s use. This
improves comfort and also reduces the chances of skin irritation or infection
after cleaning the respirator, custodial and maintenance staff should place the
respirator (with the worker’s name) in a clean and sanitary location and store
the unit in a secure place for future use. Respirators should be visually
inspected by the use before and after each use, during cleaning and at least
monthly when not in use. Inspection records should be maintained accordingly.
When the respirator’s high-efficiency filters are discarded, they should be
disposed of as asbestos waste.

 

--------------------------------------------------------------------------------

 

APPENDIX F

 

Existing EPA Guidance for Each Step That a Building Owner May Take to Control
ACM

 

Action

Appoint Asbestos Program

F. Lanager and Develop an Organizational Policy.

 

Inspect the facility to determine if ACM is present. Take bulk samples of
suspect: EM and assess the material’s condition.

 

Establish an O&M program.

 

Implement and Conscientiously Manage the O&M Program; Assess the Potential for
Exposure to Asbestos and Select Response Actions.

 

Select and Implement Abatement Actions Other Than O&M When Necessary.

 

Existing EPA Guidance/Regulations*

 

“Guidance for Controlling Asbestos-Containing Materials in Buildings” (“Purple
Book”) EPA publication number: 560(5-85-024

 

“Guidance for Controlling Asbestos-Containing Materials in Buildings” (“Purple
Book”, chapter 2) EPA publication number: 560/5-85-024

 

“Simplified Sampling Scheme for Surfacing Materials” (“Pink Book”) EPA
publication number: 560/5-85-030a

 

“Asbestos-Containing Materials in Schools; Final Rule and Notice” (Asbestos
Hazard Emergency Response Act, or AHERA). Federal Register-October 30,1987.
(Sections 763.85 to 763.88)

 

Model training course materials for accrediting asbestos building inspectors in
accordance with AHERA (inspection/assessment materials).

 

“Purple Book”, Chapter 3

 

AHERA Regulations, Sections 763.91 and 763.92

 

EPA Guidance for Service and Maintenance Personnel. EPA publication number
560(5-85-018

 

“Purple Book”, Chapter 4

 

Model training course materials for accrediting asbestos management planners in
accordance with AHERA (assessment materials).

 

AHERA Regulations. Section 763.88 and 793.92

 

“Purple Book”, Chapter 6

 

AHERA Regulations, Section 763.93 (including 763.85 through 763.92)

 

AHERA Regulation. Appendix A: Determining completion of Response
Actions-Methods.

 

“Abatement of Asbestos-Containing Pipe Insulation” U.S. EPA;
Asbestos-in-Buildings Technical Bulletin 1986-2.

 

--------------------------------------------------------------------------------

 

U.S. EPA National Emission Standards for Hazardous Air Pollutants (NESHAP)
Regulations (40 CFR 61)

 

Model training course materials for accrediting asbestos management planners in
accordance with AHERA (assessment materials).

 

Most of these guidance materials are available through EPA’s TSCA Assistance
Hotline, at (202) 554-1404.

 

--------------------------------------------------------------------------------

 

APPENDIX G

 

Sample List of Suspect Asbestos-Containing Materials

 

Cement Pipes

 

Elevator Brake Shoes

Cement Wallboard

 

HVAC Duct Insulation

Cement Siding

 

Boiler Insulation

Asphalt Floor Tile

 

Breeching Insulation

Vinyl Floor Tile

 

Ductwork Flexible Fabric Connections

Vinyl Sheet Flooring

 

Cooling Towers

Flooring Backing

 

Pipe Insulation (corrugated air-cell, block, etc.)

 

 

 

Construction Mastics (floor tile, carpet. Ceiling tile)

 

Heating and Electrical Ducts

 

 

 

Acoustical Plaster

 

Electrical Panel Partitions

Decorative Plaster

 

Electrical Cloth

Textured Paints/Coatings

 

Electric Wiring Insulation

Ceiling Tiles and Lay-in Panels

 

Chalkboards

Spray-Applied Insulation

 

Rooting Shingles

Blown-in Insulation

 

Roofing Felt

Fireproofing Materials

 

Base Flashing

Taping Compounds (thermal)

 

Thermal Paper Products

Packing Materials (for wall/floor penetrations)

 

Fire Doors

 

 

 

High Temperature Gaskets

 

Caulking/Putties

Laboratory Hoods/Table Tops

 

Adhesives

Laboratory Gloves

 

Wallboard

Fire Blankets

 

Joint Compounds

Fire Curtains

 

Vinyl Wall Coverings

Elevator Equipment Panels

 

Spackling Compounds

 

NOTE: This list does not include every product/material that may contain
asbestos. It is intended as a general guide to show which types of materials may
contain asbestos.

 

--------------------------------------------------------------------------------

 

APPENDIX H

 

References

 

USEPA. 1984. U.S. Environmental Protection Agency. National Emission Standards
for Hazardous Air Pollutants. 40 CPR 61, April 5,1984.

 

USEPA. 1985. U.S. Environmental Protection Agency. Measuring airborne asbestos
following an abatement action. Washington DC: USEPA. EPA 600/4-85-049. (“Silver
Book”)

 

USEPA. 1985. U.S. Environmental Protection Agency. Asbestos in buildings:
Simplified sampling scheme for surfacing materials. Washington DC: USEPA. EPA
560/5-85-030A. (“Pink Book”)

 

USEPA. 1985. U.S. Environmental Protection Agency. Guidance for controlling
asbestos-containing materials in buildings. Washington DC: EPA 560(5-85-024.
(“Purple Book”)

 

USEPA. 1985. U.S. Environmental Protection Agency. Asbestos in buildings:
Guidance for service and maintenance personnel Washington DC: EPA 560/5-85-018.
(“Custodial Pamphlet”).

 

USEPA. 1986. U.S. Environmental Protection Agency. Abatement of
asbestos-containing pipe insulation. Washington DC: Technical Bulletin
No. 1986-2.

 

USEPA. 1986. U.S. Environmental Protection Agency_ A guide to respiratory
protection for the asbestos abatement industry. Washington DC: EPA
560{OPTS-86-001.

 

USEPA. 1987. Asbestos Abatement Projects; Worker Protection, Final Rule. 40 763.
February 1987.

 

USEPA. 1987. U.S. Environmental Protection Agency. Asbestos Containing Materials
in Schools; Final Rule and Notice. 40 CPR 763. Federal Register, October 30
1987.

 

USEPA. 1988. EPA Study of Asbestos-Containing Materials in Public Buildings:
Report to Congress, February 1988.

 

USEPA. 1989. Asbestos Ban and Phase-out Rule. 40 CPR 763.160 to 763.179, Federal
Register, July 12 1989.

 

USEPA. 1989. Guidelines for Conducting the AHERA TEM Clearance Test to Determine
Completion of an Asbestos Abatement Project, Washington DC: EPA 560 (5-89-001.)

 

USEPA 1989. Transmission Electron Microscopy Asbestos Laboratories: Quality
Assurance Guidelines, Washington DC: EPA 560{5-90-002.

 

U.S. Department of labor: OSHA Regulations. 29 CFR 1910.1001¬General Industry
Asbestos Standards and 29 CFR 1926.58 Construction Industry Asbestos Standard,
June 1986; Amended September 1988.

 

U.S. Department of Labor: OSHA Regulations. 29 CFR 1910.134 ¬Respiratory
Protection Standard, June 1974.

 

Keyes, Dale L. and Chesson, Jean. 1989. A Guide to Monitoring Airborne Asbestos
in Buildings. Environmental Sciences, Inc., 105 E. Speedway Blvd., Tucson,
Arizona  5705.

 

--------------------------------------------------------------------------------

 

APPENIX I

 

Signs

 

1.             Signs must be posted in or near areas where there is known or
presumed ACM or PACM. The signs must be posted at a distance that will allow
workers to read them and take protective steps before entering the area marked
by the signs.

The signs must read:

 

DANGER ASBESTOS CANCER AND LUNG DISEASE HAZARD AUTHORIZED PERSONNEL ONLY

 

2.             If respirators and protective clothing are required in a
regulated area, the warning signs must also include the following:

 

RESPIRATORS AND PROTECTIVE CLOTHING ARE REQUIRED IN TIDS AREA

 

3.             Warning labels must be affixed, if feasible, to known ACM or PACM
and to all known or presumed asbestos containing scrap, waste, debris, raw
materials, or their containers.

 

The warning labels must read:

 

DANGER CONTAINS ASBESTOS FIBERS AVOID CREATING DUST CANCER AND LUNG DISEASE
HAZARD

 

--------------------------------------------------------------------------------

 

APPINDIX J

 

Exposure Assessment

 

An exposure assessment shall be conducted immediately before or at the
initiation of the operation of work directly involving or in the vicinity of ACM
or PACM. The assessment must be completed in time to comply with the
requirements which are triggered by exposure data or the lack of a negative
exposure assessment and to provide information necessary to assure that all
controls planned are appropriate for that operation and will work properly.

 

The exposure assessment shall be based on monitoring. The assessment shall take
into consideration both monitoring results and all observations, information or
calculations which indicate employee exposure to asbestos, including any
previous monitoring conducted in the workplace, or of the operations of the
employer which indicate the levels of airborne asbestos likely to be encountered
on the job.

 

Negative Exposure Assessment

 

For anyone specific asbestos job which will be performed by employees who have
been trained in compliance with the standard, the employer may demonstrate that
employee exposures will be below the PEL’s by data which conform to the
following criteria:

 

a)             Objective data demonstrating that the product or material
containing asbestos minerals or the activity involving such product or material
cannot release airborne fibers in concentrations exceeding the PEL’s under those
work conditions having the greatest potential for releasing asbestos.

 

b)            Where the employer has monitored prior asbestos jobs for the PEL
and the excursion limit within 12 months of current or projected job, the
monitoring and analysis were performed in the compliance with the standard in
effect; and the data were obtained during work operations conducted under
workplace conditions closely resembling the processes, type of material control
methods, work practices, and environmental conditions used and prevailing in the
employer’s current operations, the operations were conducted by employees whose
training and experience are no more extensive than that of employees performing
the current job, and these data show that under the conditions prevailing and
which will prevail in that current workplace there is a high degree of certainty
that employee exposures will not exceed the PEL’s.

 

c)             The results of initial exposure monitoring of the current job
made from breathing zone air samples that are representative of the PEL’s of
each employee covering operations which are most likely during the performance
of the entire asbestos job to result in exposures over the PEL’s.

 

--------------------------------------------------------------------------------

 

APPENDIX K

 

Training Providers

 

1. Medical College of Virginia Dept. of Preventative Medicine Richmond, VA
804-786-9785

 

2. Industrial Training Company Richmond, VA 804-648-7836

 

3. National Asbestos Training Center University of Kansas Overland Park, KS
913-491-0181

 

4. White Lung Association 410-243-5864

 

5. Mantech Environmental Corp. Rockville, MD 301-315-0080

 

Training Videos

 

1. NUS Training Corp. Gaithersburg, MD 800-338-1505

 

2. Summit Training Source Inc. Grand Rapids, MI 800-842-0466

 

3. Asbestos Control Technology Inc. Pennsauken, NJ 800-228-3282

 

Safety Equipment

 

1. H.B. Fuller Co. (encapsulants) Houston, TX 713-926-3125

 

2. Asbestos Control Technology Inc. Pennsauken, NJ 800-228-3282

 

3. Abatement Technologies Inc. Duluth, GA 800-634-9091

 

--------------------------------------------------------------------------------

 

Schedule 5.10

 

[FORM OF}

JOINDER AGREEMENT

 

THIS JOINDER AGREEMENT (this “Agreement”),  dated as of
                  ,             , is by and among
                                  ,
a                                              (the “Subsidiary Guarantor”), The
Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation (the “Borrower”), and 
Wacho\<ia Bank, National  Association,  in its capacity  as administrative 
agent  under  that (certain  Credit  Agreement  (the “Administrative  Agent”), 
dated  as  of  October  U, 2006  (as amended,  restated, amended  and restated,
or otherwise  modified, the ‘‘Credit  Agreement”),  by and  among  the
Borrower,  the Domestic Subsidiaries of the Borrower from time to time party
thereto (the “Guarantors”), the Lenders from time to time party thereto, and the
Administrative Agent.     Capitalized  terms  used  herein  but  not  otherwise 
defined  shall  have  the  meanings provided in the Credit Agreement.

 

The Subsidiary  Guarantor  is an Additional Credit  Party, and, consequently, 
the Credit Parties are required by Section 5.10 of the Credit Agreement to cause
the Subsidiary Guarantor to become a “Guarantor” thereunder.

 

Accordingly,  the Subsidiary  Guarantor  and the Borrower hereby agree as
follows with the Administrative Agent, for the benefit of the Lenders:

 

1.             The Subsidiary Guarantor hereby acknowledges, agrees and confirms
that, by its execution  of this Agreement,  the Subsidiary  Guarantor will be
deemed  to be a party to and a “Guarantor” under the Credit Agreement and shall 
have all of the obligations  of a Guarantor thereunder as if it had executed the
Credit Agreement.  The Subsidiary Guarantor hereby agrees to be bound by all of
the terms, provisions and conditions contained in the applicable Credit
Documents, including without limitation (a) all of the representations and
warranties set forth in Article III of the Credit Agreement and (b) aU of the
affirmative and negative covenants set forth in Articles V and VI of the Credit
Agreement.   Without limiting the generality of the foregoing terms  of this 
Paragraph  1, the  Subsidiary  Guarantor  hereby  guarantees,  jointly  and
severally together  with  the  other  Guarantors,  the  prompt  payment  of 
the  Credit  Party  Obligations  m accordance with Article X of the Credit
Agreement.

 

2.             The Subsidiary Guarantor acknowledges and confirms that it has
received a copy of  the  Credit  Agreement  and  the  schedules  and  exhibits 
thereto.    The  information  on  the schedules  to the Credit Agreement are
hereby supplemented  (to the extent permitted under the Credit Agreement) to
reflect the infom1ation shown on the attached Schedule A.

 

3.             The Borrower confirms  that the Credit  Agreement  is, and upon
the Subsidiary Guarantor becoming a Guarantor, shall continue to be, in full
force and effect.  The parties hereto confirm  and agree that immediately  upon
the Subsidial}’ Guarantor  becoming a Guarantor the term “Credit Party
Obligations,” as used in the Credit Agreement, shall include all obligations of
the Subsidiary Guarantor under the Credit Agreement and under each other Credit
Document.

 

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4.             Each of the Borrower and the Subsidiary Guarantor agrees that at
any time and from time to time, upon the written request of the Administrative
Agent, it will execute and deliver such further documents and do such further
acts as the Administrative Agent may reasonably request in accordance with the
terms and conditions of the Credit Agreement in order to effect the purposes of
this Agreement.

 

5.             This Agreement may be executed in two or more counterparts, each
of  which shall constitute an original but all of which when taken together
shall constitute one contract.

 

6.             This Agreement shall be governed by and construed and enforced in
accordance with the laws ofthe State of New York (including Sections 5 1401 and
5-1402 of The New York General Obligations Law).  The terms of Sections 9.14 and
9.17 of the Credit Agreement are incorporated herein by reference, mutatis
mutandis, and the parties hereto agree to such terms.

 

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}

 

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IN WITNESS WHEREOF, each of the Borrower and the Subsidiary Guarantor has caused
this Agreement to be duly executed by its authorized officer, and the
Administrative Agent, for the benefit of the Lenders, has caused the same to be
accepted by its authorized officer, as of the day and year first above written.

 

SUBSIDIARY GUARANTOR:

[SUBSIDIARY GUARANTOR]

 

 

 

By:

 

 

Name=

 

 

Titlc:

 

 

 

 

 

BORROWER:

THE PEP BOYS MANNY, MOE & JACK, a Pennsylvania corporation

 

 

 

By:

 

 

Nan1e:

 

 

Title:

 

 

 

 

 

Acknowledged, accepted and agreed:

 

 

 

WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent

 

 

 

I3y:

 

 

Name:

 

 

Title:

 

 

 

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SCHEDULE A

to

Joinder Agreement

 

Schedules to Credit Agreement

 

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Schedule 5.15 -Post-Closing Surveys

 

10

54

74

79

90

103

108

l16

141

146

147

151

152

164

184

185

214

236

259

269

277

337

375

383

426

504

551

645

661

674

698

713

716

717

721

726

737

743

754

756

758

764

769

779

788

791

818

824

856

924

 

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Schedule 6.1(b) - Indebtedness

 

Description

 

Balance($)

 

Miscellaneous Mortgages

 

 

 

Gale/Ida Cook (Store #65)

 

272,760

 

 

 

 

 

Capital Leases

 

 

 

Miscellaneous

 

763,739

 

 

 

 

 

Congress Revolver

 

Up to 400,000,000

 

 

 

 

 

7.5% Senior Subordinated Notes

 

200,000,000

 

 

 

 

 

Colchester Note

 

80,000,000

 

 

 

 

 

PNC VISA Purchasing Card Agreement

 

Up to 7,500,000

 

 

 

 

 

GMAC Trade Payables Agreement

 

Up to 50,000,000

 

 

 

 

 

Synthetic Leases

 

 

 

Lombard Equipment Lease

 

Up to 35,000,000

 

WDC Synthetic Lease Facilit

 

132,000,000

 

 

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Schedule 6.5 - Existing Loans, Advances and Guarantees

 

None

 

--------------------------------------------------------------------------------

 

Schedule 6.9- Existing Encumbrances and Restrictions

 

None

 

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Schedule 9.6(c)

 

[FORM OF]

ASSIGNMENT AGREEMENT

 

This  Assignment  Agreement  (the  “Assignment  and  Assumption”)  is  dated 
as  of  the Effective Date set forth below and is entered into by and between
[the][each] Assignor identified in item I   below ([theJLeach, an] ‘‘Assignor”) 
and [the][each] Assignee identitled in item 2 below ([the][each, an]
“Assignee”).   [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees] hereunder are several and not joint.f   
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement idcntitled below (as amended,  the “Credit 
Agreement”),  receipt  of  a  copy  of  which  is  hereby  acknowledged  by
[the][each) Assignee. The Standard Terms and Conditions set forth in Aru1ex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, [the][each) Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees), and [the][eachJ Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the 
respective Assignors’] rights and obligations in [its capacity as a
Lender][their respective capacities as Lenders] under the Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the  respective Assignors]
under the respective  facilities identified below (including  without 
limitation  any guarantees included in such facilities)  and (ii)  to the extent
permitted to be assigned under applicable law, all claims, suits, causes of
action and any other  right of  [the  Assignor  (in  its  capacity  as  a 
Lender)][the  respective  Assignors (in  their respective capacities as
Lenders)] against any Person, whether known or unknown, arising under or in 
connection  with  the  Credit  Agreement,  any  other  documents  or 
instruments  delivered pursuant thereto or the loan transactions governed
thereby or in any way based on or related to any of the foregoing, including,
but not limited to, contract claims, tort claims,  malpractice claims, statutory
claims and all other claims at law or in equity related to the rights and
obligations sold and  assigned  pursuant  to  clause  (i)  above  (the  rights 
and  obligations  sold  and  assigned  by [the][any] Assignor to [the][any]
Assignee pursuant to clauses (i) and (ii) above being referred to herein
collectively as [the][an] “Assigned  Interest”).   Each such sale and assignment
is without recourse  to  [the][any]  Assignor  and,  except  as  expressly 
provided  in  this  Assigrunent  and Assumption, without representation or
warranty by [theJ[any] Assignor.

 

1.             Assignor[s]:

 

 

2.             Assignee[s]:

 

 

[for each Assignee, indicate [Affiliate][Approvcd Fund] of [identify Lender]

 

--------------------------------------------------------------------------------

‘Include bracketed language if there are either multiple Assignors or multiple
Assignees.

 

--------------------------------------------------------------------------------

 

3.

 

Borrower:

 

The Pep Boys- Manny, Moe & Jack, a Pennsylvania corporation

 

 

 

 

 

4.

 

Administrative Agent:

 

Wachovia Bank, National Association, as the administrative agent under the
Credit Agreement.

 

 

 

 

 

5.

 

Credit Agreement:

 

The Amended and Restated Credit Agreement dated as of October (U. 2006), (among
The Pep Boys — Manny), (Moe & Jack), (a) Pennsylvania corporation, the Domestic
Subsidiaries of the Borrower from time to time party thereto, the lenders and
other financial institutions from time to time party thereto, and Wachovia Bank,
National Association, as Administrative Agent.

 

 

 

 

 

6.

 

Assigned lnterest[s]:

 

 

 

 

 

 

 

[g23582kn77i001.jpg]

 

 

 

 

 

[7.

 

Trade Date:

 

                               js

 

Effective Date:                          , 20  .

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

--------------------------------------------------------------------------------

‘To be completed if the Assignor(s) and the Assignee(s) intend that the minimum
assignment amount is to be determined as of the Trade Date.

 

--------------------------------------------------------------------------------

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

 

ASSIGNOR[Sl

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Title:

 

--------------------------------------------------------------------------------

 

 

 

ASSIGNEE[SJ

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Title:

 

--------------------------------------------------------------------------------

 

[Consented to and) Accepted:

 

 

 

 

 

WACHOVJA BANK, NATIONAL ASSOCIATION,. as

 

 

Administrative Agent

 

 

 

 

 

 

By

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

[Consented to:]

 

 

 

 

 

[NAME OF RELEVANT PARTY]

 

 

 

 

 

 

By

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

Al-..TNEX 1

 

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

 

1.               Representations and Warranties.

 

1.1              Assignor[s].  [The][Each] Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of [the][the relevant] Assigned
Interest, (ii) [the][such) Assigned Interest is fre.e and clear of any lien,
encumbrance or other adverse claim and (iii) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby; and
(b) assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the. Credit Agreement or any other
Credit Document, (ii) the execution, legality, validity,  enforceability, 
genuineness,  sufficiency or value of the Credit Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any
Credit Document or (iv) the performance or observance by the Borrower, any of
its Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Credit Document.

 

1.2.           Assignee[s].  [The][Each] Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assigmnent and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all the requirements to be an assignee under
Section 9.6 of the Credit Agreement (subject to such consents, if any, as may be
required under Section 9.6(b)(iii) of the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of [the][the relevant]
Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is
sophisticated with respect to decisions to acquire assets of the type
represented by the Assigned Interest and either it, or the person exercising
discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the
Credit Agreement, and has received or has been accorded the opportunity to
receive copies of the most recent financial statements delivered pursuant to
Section 5.1 thereof, as applicable, and such other documents and information as
it deems appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase [theJfsuchJ Assigned Interest,
(vi) it has, independently and without reliance upon the Administrative Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase [the] [such] Assigned Interest, and
(vii) if it is a Foreign Lender, attached to the Assignment and Assumption is
any documentation required to be delivered by it pursuant to the terms of the
Credit Agreement, duly completed and executed by [the][such] Assigm:e; and
(b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, [the][any] Assignor or any other Lender, 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 the Credit
Documents, and (ii) it will perfom1 in accordance with their tenus all of the

 

--------------------------------------------------------------------------------

 

obligations which by the terms of the Credit Documents are required to be
performed by it as a Lender.

 

2.               Payments.  From and after the Effective Date, the
Administrative Agent shall make all payments in respect of [the][each] Assigned
Interest (including payments of principal, interest, fees and other amounts) to
[the}[the relevant} Assignor for amounts which have accrued to but excluding the
Effective Date and to [the][the relevant} Assignee for amounts which have
accrued from and after the Effective Date.

 

3.               General Provisions.  This Assigrunent and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.  This Assignment and Assumption may be
executed in any number of counterparts,  which together shall constitute one
instrument.  Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption.  This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State ofNew York.

 

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